Public-Private Partnerships for Sustainable Tourism

Presented by:Art Smith

asmith@mainet.com

San Salvador, September 29th – 30th, 2011

The Challenge of Sustainable Tourism

• Developing and maintaining a sustainable tourism industry has always been a challenge

• Over the past decade, however, the challenge has grown, due to:– Heightened competition from new and emerging

destinations in an increasingly global market– Changing market demand and preferences – New and rapidly changing technologies

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Growing Emphasis on Public-Private Cooperation

• Creating sustainable national or regional tourism programs in today’s larger and more complex marketplace requires greater investment of financial and human resources

• Faced with the finite availability of these resources in the public sector, and recognizing the assets and expertise available in the private sector, governments have turned to private partners

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Types of Partnership Opportunities

• Marketing and Promotion• Product Development– Infrastructure development/renewal– Attraction development/renewal/diversification– Enhanced productivity and service– Community development/renewal– Cultural and heritage protection– Environmental protection/enhancement

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Types of Partners

• Partnerships create opportunities for private sector enterprises of all sizes, and for NGOs, throughout the tourism value chain

• Large infrastructure PPPs will be awarded to large contractors, but MSMEs typically participate as subcontractors, and benefit from the project outcomes.

• Other partnership models may offer greater scope for MSME direct participation.

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Chumbe Island EcoTourism PPP, Tanzania

• Chumbe, off the coast of Zanzibar, was an uninhabited, 55-acre island, with only a single structure, an old lighthouse.

• An infestation of non-native rats was ravaging the island’s ecosystems, while overfishing was damaging the adjacent coral reef.

• An NGO approached the Government with a concept for a PPP.

• Under this concept, the Government granted the NGO long-term concessions for both the island and the reef, and banned fishing in the vicinity of the reef.

• The NGO made all the capital investments necessary to turn the island into an ecotourism destination, and restore the reef and island environments.

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Chumbe Island Ecotourism PPP, Tanzania

• The NGO hired displaced fishermen to patrol the no-fishing zone, and trained local villages to understand the value of healthy reefs.

• The NGO exterminated the invasive rat population, and helped the native flora and fauna recover.

• The NGO built environmentally-friendly bungalows, and a visitor and science center.

• Today, the PPP is entirely self-sustaining, with operating revenues covering all operating expenses and environmental programs.

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Union Station, Washington, DC

• Union Station was the largest train station in the world when it opened in 1907.

• By the 1970s, declining rail passenger traffic led to its closing; the unmaintained structure was ultimately condemned and slated for demolition.

• In 1981, the U.S. Congress passed the Union Station Redevelopment Act, authorizing the use of a PPP to restore the Station.

• The success of the redevelopment effort would depend on creating a revenue stream capable of sustaining the Station.

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Union Station: The Keys to Success

• The redevelopment plan had two foci: - Creating a multi-modal transportation hub, and- Generating retail revenue.

• To improve access and encourage through-traffic, the redevelopment included:- A multi-deck public parking garage (total capacity in

excess of 2,000 spaces)- A tour bus area capable of accommodating 80 buses,

and - A rail service waiting area.

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Union Station: The Retail Space

• More than 120 stores, restaurants, and cafes, and a nine-screen cinema were constructed, totaling 210,000 square feet of retail space.

• The old baggage handling area in the basement was converted into a food court.

• 100,000 square feet of office space was built, and leased by Amtrak for its national headquarters.

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Union Station in 1925

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Conclusions• PPPs can be a powerful tool for tourism product development and

enhancement, as well as for research, marketing, and promotion. • The strategic use of partnerships can contribute significantly to the

development of a sustainable tourism program, and PPPs can be a vital tool for facilitating tourist access and improving the destination experience.

• PPPs for sustainable tourism encompass a variety of different models, from simple social collaborations designed to improve the tourism experience, to major infrastructure and project development projects. As the capital investment required for the partnership increases, so does the need for a formal enabling environment.

• The maximum benefit can be obtained from PPPs that support the national or regional tourism strategy, and contribute to tourism cluster development. Governments should carefully evaluate partnership opportunities to ensure that the anticipated outcomes will support the public sector’s sectoral objectives in a sustainable manner.

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