|November 1998 - A recent presentation by the World Tourism
Organization (WTO) on national tourism administration (NTA) and national
tourism organization (NTO) budgets provides a few surprises, especially
as far as NTA/NTO promotional budgets in Pacific Asia are concerned.
The presentation, which was a partial update of a report initially published
by WTO in 1996, analyses the promotional and advertising budgets of a number
of countries around the world. It should be noted that the WTO ranking
produced as a result of its research excludes certain countries for which
adequate data was not forthcoming. Nevertheless, the information makes
In 1997, according to the WTO, the Singapore Tourism Board had the biggest promotional budget of all NTAs and NTOs worldwide - US$99 million, or 84.7 percent higher than in 1995. The U.K. followed in second place in the ranking ahead of Spain, Thailand and Australia. Thailand's US$66.6 million promotional budget was 30.1 percent up on 1995's level, while Australia's reportedly represented a 25.8 percent decrease on the same year.
As far as advertising budgets were concerned, Australia and Thailand enjoyed much greater funding than most other countries surveyed by WTO. Advertising and promotional activities account for the highest shares of NTA/NTO promotional budgets, although advertising is less important in countries where there is a strong tour operator base that dominates demand.
The public sector still accounts for the major share of funding of NTA/NTO promotional budgets. However, given the current economic climate - and notably, the difficulties facing countries in the Pacific Asia region it is not surprising that governments are looking more and more to the private sector to share the burden. Local currency depreciations have made it almost impossible to undertake any meaningful promotional and marketing campaigns in leading source countries, let alone cover administrative costs.
The impact of all this will become much clearer once 1998 budget details are available, and there are clearly mixed views on the relative roles of the public and private sectors - as shown by our "Guest Column" this month.
Fortunately, few governments in the region have taken things to the extreme that the U.S. has. The adjournment for a further 12 months of a decision by the U.S. Congress on funding of the U.S. National Tourism Organization (USNTO) leaves the U.S. the only country in the developed world without a government-funded NTO and bodes badly for the country's future tourism growth.
The share of long-haul travel by the Dutch has grown from around six to seven percent of total foreign holiday trip volume in 1992 to 42 percent, or an annual total of some 1.3 million trips. North America accounts for more than one-fifth of these. The Pacific Asia region generated some 500,000 Dutch long-haul trips in 1997. After Indonesia - whose share has fluctuated widely over the past few years - the most popular destinations in the region are India, Thailand and Malaysia.
In its latest Pacific Asia edition of Trends and Forecasts for the Business Travel Industry, American Express predicts the following:
The growth of travel and tourism in China is forecast to be explosive, according to a new report from the World Travel & Tourism Council (WTTC). More than 5.5 million jobs will be created directly in China's travel and tourism industry over the next 12 years, as well as a further 16 million jobs in related sectors of the economy. Demand for travel and tourism should grow at an annual rate of nine per-cent in real terms.
Horwath Asia Pacific forecasts that Yangon, Penang, Kuala Lumpur, Langkawi
and Seoul will suffer thc biggest declines in average room rates over the
full 12 months of 1998. In some cases, these will be down 40 percent from
1997 levels. Singapore's rates should suffer the least. However, the best
RevPar (revenue per available room) will be achieved by Tokyo, Hong
Kong, Sydney; Manila and Taipei.
A survey by the U.S. travel trade journal Travel Weekly points to a
US$126 billion sales volume for U.S. travel agencies in 1997 - up 25 percent
on 1995's level. As many as 75 percent of U.S. travel agencies made a profit
in 1997, and close to 90 percent said they expect to do so again this year
However, more than 50 percent said they have not made up revenue lost by
the airlines' imposition of commission caps.
Over the past couple of decades, it has been fashionable to urge national tourism organisations (NTOs) to get out of the business of promotion and turn it over - if only partially - to the tourism industry's private sector There are many examples of successful partnerships. However, they have almost always operated until now in a climate of tourism growth.
The current decline in tourist arrivals and revenues will put heavy pressure on the private members of these partnerships. Just at the time when spending needs to be increased, money will be less available. Airlines, retailers, hotels-all are suffering a dra-matic drop in income. Will they be willing to donate an ever-increasing percentage of their income to promotional activities?
Many governments have failed to under-stand the huge investment they have in their tourism sectors. This is reflected by the lack of weight vested by governments in the tourism portfolio. Finance and development ministers rarely appreciate the significance of tourism - whether to employment, to tax revenues, to development, or even to the conservation of cultural identity. This phenomenon is usually attributed to the fragmented nature of the industry and to the fact that it is a relatively young one. I would prefer to think that it is because the disparate elements of the industry have preferred to act alone, rather than admit the symbiotic relationships that exist. Perhaps the current difficulties will bring these elements together, if only to share the misery.
If the assumption that the private sector will draw back from funding responsibilities is correct, then how will destinations assemble the war chests for promotional spending to fight for their share of world travellers? Who will pay for the advertising campaigns which will get the masses moving again?
It is my long - held opinion that the best engine to deal with this kind of emergency is a well -funded NTO. By all means, the private sector should fight for a voice in the spending decisions. But the required funds, however large, should not become an added burden to tax-paying companies struggling to stay alive. Governments should be willing to appropriate what is necessary for the health of their tourism industry.
Several NTOs are funded, wholly or partially, from hotel room and departure taxes, and by visa fees. Experience has sadly shown that, once the size of these taxes are recognised by the local authority, appetites are whetted, the taxes are raised (after all, tourists are not voters), and the money collected transferred to the government treasury!
All of this is wrong thinking and it is up to the industry to set the record straight. In the absence of government understanding of the importance of the industry, the private sector needs to put as much pressure as possible to see that beefed-up spending on promotion is budgeted. It will be interesting to see how the U.S. fares under the present pressures. Having relinquished its responsibilities - for the worst possible reasons - and with no assurances that others are ready to pick up the slack, it may well see tourism revenues dwindle.
Other countries which have recently transferred responsibility for tourism promotions to a public - private partnership may wish to reconsider that decision before it is too late - before there is a shortfall in promotional funds as the country loses out in the race to sustain or rebuild its tourist volumes and earnings.
||German Market Has Huge Potential for Pacific Asia According to PATA Outbound Market Study / July 1998|
|The Youth Travel Market - Important Generator of Tourism / PATA / Oct 1998|