Blog written for Business Fights poverty by Jon Mitchell, Tourism Programme Leader, Overseas Development Institute and Caroline Ashley, Independent Consultant on Business and Development
Belief in the power of business to fight poverty unites this on-line community. But when the business in question involves flying affluent tourists into places full of poor people - and organising the high quality food, excursions and entertainment that they need to enjoy themselves - does your belief in the power of business falter?
Our new book, Tourism and Poverty, Pathways to Prosperity, drawing on a plethora of research suggests that - if you want to base your opinion on evidence rather than assertion - then ‘yes’ tourism can fight poverty. Note, we say ‘can’, not that it always does. The share of spending by tourists within a destination that reaches poor people can vary from less than 10% to a high of 30%.
The tourism sector seems to attract an unusually large share of both condemnatory critics and enthusiastic proponents. To some, islands of luxury in poor countries combine the worse aspects of colonialism with commoditisation of local culture. Others are on a mission to reveal the size of the tourism-related economy, through years of in-depth modelling, using the argument that if the sector is big, it must be good for the hosts.
In over a decade of research at the Overseas Development Institute (ODI), we have built an evidence base that challenges positions based on assumptions. Economics, fortunately, gives us a lens that does not analyse the attitudes, colour or waistline of international tourists, but on where the money goes: who gets what from international tourism? The ODI has explored this question in a dozen destinations across Africa and Asia.
Our findings have surprised many. When it works, international tourism is actually a very good way of channelling resources from rich to poor. In destinations as diverse as hiking on Mount Kilimanjaro in Tanzania, business tourism in Vietnam and cultural tourism in Ethiopia, between one quarter and one third of all in-country tourist spending accrues to poor households in an around the destination. Evidence from the distributional performance of ethical trade in agricultural commodities suggests that the share of final retail price which accrues to poor producers from trade in tourism services compared favourably with ethical trade in many agricultural commodities.
However, sometimes tourism works much less well as a Robin Hood strategy. Around the Angkor Wat temples in Cambodia, gorilla tourism in Central Africa and beach tourism in The Gambia, the poor see little of the tourism dollar. (That said, when we first discovered that 13% of tourism spending on package holidays run by 7 international tour companies on a short strip of beach in The Gambia reached the poor, people were surprised that the number was not a lot lower).
So what explains the difference in the earnings of the poor in different destinations? How business behaves – who is employed, at what rate of pay, where goods are sourced – is an important factor. Business practice interplays with three other factors to shape pro-poor impact. First, the sophistication of the economy: more developed economies can readily link farmers and furniture-makers to the tourism sector. Second, the behaviour of tourists: when tourists shop in local markets and hire local guides, the amount may seem small but the total effect can be huge. Third, government decisions influence the shape of the economy, from whether the poor can get hospitality training and qualifications, to whether functioning markets enable the poor to provide their products and services to hotels and their guests.
What does this mean for tourism business? Whether it’s a mainstream package holiday company or a specialist niche tour operator, there are some common messages, that we could summarise as the 4Ps: pay, procurement, persuasion and partnership: pay a living wage to local employees; take a hard look at procurement and potential to source locally (which in turn can enhance the product offer to tourists); persuade –or at least inform – your clients how to take up opportunities to spend in the local economy – and partner with government on destination development in which tourism is well integrated with the local economy.
Our new book pulls together many strands of knowledge that exist so far. More work is needed to incorporate climate change impacts. Work developing market-based and evidence-based interventions is proceeding apace. The issue of the impact of tourism on local development is not going to go away. As a result of the hammering of Sterling on foreign exchange markets, the major destinations for British tourists are changing from traditional markets in southern Europe to more affordable tourism beyond the Euro-zone – to Egypt, Turkey and Morocco. So destination impact in transition economies is not just an issue for adventurous backpackers, business travellers and retired couples on safari. It is now core to the business of mainstream tour operators.