26 Jul, 2012

OECD Tourism Report Highlights Three Top Policy Challenges

Imtiaz Muqbil

The Paris-based OECD last week released a report identifying three of the most important trends and policy challenges facing global tourism: effective governance practices, evaluation of policies and programmes, and human resources development. The report says that major changes will need to be made in the three areas to boost tourism competitiveness and sustainability for each OECD country, and selected non-members.

In a foreword, Sergio Arzeni Director, OECD Centre for Entrepreneurship, SMEs and Local Development notes that this third edition of OECD Tourism Trends and Policies has been produced for the first time in partnership with the European Commission.

At 426 pages, the report makes cumbersome reading but presents some interesting points to ponder in analysing the state of the industry. A comprehensive summary of the tourism industries in all the OECD countries, plus 17 non-member countries, it provides a very good snapshot of  policies and strategies being used to cope with challenges such as the financial crisis in the Eurozone and the growing impact of natural disasters.

Says the report, “OECD Tourism Trends and Policies indicates that governments are becoming increasingly aware of the importance of tourism as an economic driver and for achieving their stated economic development policies and goals. There is also an understanding of the need to incorporate tourism thoroughly across all arms of government in policy development and implementation, and to co-operate effectively with the private sector.”

The report notes that OECD member countries play a leading role in international tourism, representing 66% of global arrivals in 2010, while EU member countries accounted for 50.2%. Domestic tourism consumption represents a very significant share of the total tourism economy, averaging 61%, and above 80% for Chile, Germany, Japan, Mexico, the United Kingdom and the United States.

However, the report says emerging tourism destination countries are outperforming the OECD and global averages for GDP and employment. Countries such as Argentina, Brazil, Egypt, India, Indonesia, and South Africa hold significant potential as sources of growth for traditional tourism destinations.

The three key points examined in the report conclude thus:

● The adoption of effective governance practices that reflect the changing business and policy environment can help to facilitate an integrated, whole-of-government approach to tourism, supporting stronger, greener and more inclusive tourism growth.

● Evaluation is the most appropriate means of demonstrating tourism’s value to an economy and should play an integral role in the development and implementation of policy. Adhering to an evaluation road map can help countries to improve the evaluation process.

● In many countries, tourism jobs remain vacant due to a lack of appropriately skilled workers, and there is a need for governments to assume a greater leadership role in shaping the training and education agenda. A national tourism strategy, including a workforce development strategy, is necessary to fully address labour and skills shortages.

The third point is considered to be especially important.

The report “highlights the increasing gap between labour demand growth and labour supply, as well as significant changes in labour force composition, which is putting pressure on employers to improve tourism industry attractiveness and the retention of workers. Confronted with a looming labour and skills shortage, employers must develop strategies that will allow them to remain competitive with a smaller but better trained workforce.

“Numerous drivers, including an aging clientele, changing lifestyles and consumer demands, the increasing use of information and communication technologies, and globalisation, all contribute to growing pressure to upgrade skills levels, even among workers who are considered well trained. The general lack of a training culture and management skills among employers is a major hurdle that needs to be overcome.”

One key challenge facing the OECD countries is the issue of migrant workers, which is becoming a global issue, not just in the travel & tourism industry.

Says the report, “The seasonal and cyclical nature of the tourism industry makes the option of migrant workers an attractive one for many employers, as they can expand and contract their workforce as demand fluctuates. However, while migrants can be a partial solution to the labour shortage, they often do not contribute to addressing the skills shortage.

“In addition, without strong government initiatives that help migrants integrate into the host community and improve their skills, the precarity of their working and living conditions will likely increase. Without such initiatives, the temptation to utilise these lower skilled migrants to fill employment gaps will be to the detriment of the quality of the experience delivered.”

The report also notes the increasing complexity of changes at the policy level.

It says, “Although national, regional and local governments are playing an increasing role in the delivery of tourism, a challenge is that in many countries this role has evolved in an ad-hoc manner and often with no clear definition of the overall role of tourism beyond its contribution to economic development.”

Tourism policy has expanded beyond promotion and marketing into areas such as encouraging additional (often low cost) aviation services; developing new niche markets such as health and wellness tourism, ecotourism, meetings and convention travel; increasing the diffusion of ICT among small businesses; examining the impact of tourists on regional sustainability; and dealing with the effects of crises and disasters on the industry.

“In these areas the challenge is to link tourism policy to that of other ministries,” the report says.

Excerpts from the report:

GOVERNANCE

Developing a multi-actor system that includes public-private partnerships and greater horizontal and vertical co-ordination of relevant government bodies requires consideration of accepted elements of good governance – accountability, responsibility, efficiency and effectiveness, responsiveness, forward looking vision, and the rule of law. In addition, active co-operation and co-ordination of activities requires recognition of the legitimacy of organisations’ authority to govern and inclusiveness of stakeholders.

At the central level, a range of governance practices address the challenges associated with an integrated whole-of-government approach to the development of tourism, including: better defining the roles and responsibilities of tourism organisations; the creation of inter- ministerial committees; the incorporation of tourism administrations into larger departments; and the use of contracts to define outcomes and stakeholder roles.

Increasingly, the development of a national tourism strategy is used as a means of achieving a whole-of-government approach to tourism, while written contracts are a means of improving co-ordination between central and sub-national governments. Governance can also be improved through institutional and human capacity building, ensuring institutions have well-defined objectives and clear mandates, and effective leadership and political support.

At industry level, governments are increasingly encouraging the development of a single peak tourism industry body to facilitate more co-ordinated industry representation. Regionally based Destination Management Organisations (DMOs) can provide a focus for co-ordination and capacity building through the development of cross-sectoral clusters of businesses. DMOs often co-ordinate government and private sector actors at sub-national level. They provide the basis for developing stakeholder networks for policy development.

EVALUATION OF TOURISM POLICIES

National tourism agencies recognise that the evaluation of the economic contribution and impact of the tourism industry, and the assessment of the value generated from public tourism policy spending, require consistent approaches to evidence gathering.

OECD work on evaluation indicates that the evaluation of tourism policies is increasingly part of an integrated approach to policy development and implementation. However, it remains that evaluation in tourism is only partially applied; some policies and programmes are evaluated regularly and with rigour, others are evaluated in a much less challenging manner or avoid scrutiny altogether.

Evaluation has developed different approaches, tools and techniques to address the challenges of assessing the economic, policy and programme contributions of tourism. Robust evaluation will involve a combination of qualitative and quantitative methods.

Tourism evaluation has considerable scope for further development and OECD members can take the initiative in developing a stronger, more co-ordinated future agenda leading to closer collaboration with practical strategic and operational changes in a number of countries. Joint work in key areas such as evaluation training and other elements of capacity building is fundamental in bringing forward evidence, particularly in times of resource constraint, when decision makers require a strong and clear evidence base on which to make decisions.

HUMAN RESOURCES DEVELOPMENT

Confronted with a looming labour and skills shortage, employers must develop strategies that will allow them to remain competitive with a smaller but better trained workforce.

Numerous drivers, including an aging clientele, changing lifestyles and consumer demands, the increasing use of information and communication technologies, and globalisation, all contribute to growing pressure to upgrade skills levels, even among workers who are considered well trained. The general lack of a training culture and management skills among employers is a major hurdle that needs to be overcome.

The seasonal and cyclical nature of the tourism industry makes the option of migrant workers an attractive one for many employers, as they can expand and contract their workforce as demand fluctuates. However, while migrants can be a partial solution to the labour shortage, they often do not contribute to addressing the skills shortage. In addition, without strong government initiatives that help migrants integrate into the host community and improve their skills, the precarity of their working and living conditions will likely increase. Without such initiatives, the temptation to utilise these lower skilled migrants to fill employment gaps will be to the detriment of the quality of the experience delivered.

An analysis of government approaches to tourism development shows that action is being taken across many ministerial portfolios. Given the increasingly competitive nature of international tourism, issues being addressed include the quality of the tourism offering, the sustainability of the tourism sector, the improvement of tourism products and services, and the maintenance of sectoral competitiveness. In addition, efforts are being made to raise the professional standards of workers in the tourism industry through public sector led training programmes.

Education and training in the hotel and food service sectors tends to be more costly than for many other occupations, due to the need for extensive training facilities, equipment, and a low student to instructor ratio. In addition, many educational institutions are reluctant to revise curriculum or allow their staff to take internships with industry, allowing them to be conversant with the work environment, resulting in a gap between the competencies of graduates and the expectations of employers.