DECEMBER 2013 91179 INVESTMENT CLIMATE Global Investment Promotion Best Practices Winning Tourism Investment Investment Climate l World Bank Group World World Bank Bank World Group Group Bank Group In partnership with Global Investment Promotion Best Practices Winning Tourism Investment Investment Climate l World Bank Group World World Bank Bank World Group Group Bank Group In partnership with © 2013 The World Bank Group 1818 H Street, N.W., Washington D.C., 20433 All rights reserved December 2013 Available online at www.wbginvestmentclimate.org and www.globalinvestmentpromotion.com This work is a product of the staff of the World Bank Group with external contributions. The information included in this work, while based on sources that the World Bank Group considers to be reliable, is not guaranteed as to accuracy and does not purport to be complete. The World Bank Group accepts no responsibility for any consequences of the use of such data. The information in this work is not intended to serve as legal advice. The findings and views published are those of the authors and should not be attributed to IFC, the World Bank, the Multilateral Investment Guarantee Agency (MIGA), or any other affiliated organizations. Nor do any of the conclusions represent official policy of the World Bank or of its Executive Directors or the countries they represent. The denominations and geographical names in this publication are used solely for the convenience of the reader and do not imply the expression of any opinion whatsoever on the part of IFC, the World Bank, MIGA, or other affiliates concerning the legal status of any country, territory, city, area, or its authorities, or concerning the delimitation of its boundaries or national affiliation. Rights and Permissions The material in this work is subject to copyright. Because the World Bank Group encourages dissemination of its knowledge, this work may be reproduced, in whole or in part, for noncommercial purposes as long as full attribution to this work is given. Any queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, the World Bank, 1818 H Street, NW, Washington, DC 20433, USA; telephone 202-522-2422; email: pubrights@worldbank.org. About the Investment Climate Department of the World Bank Group The Investment Climate Department of the World Bank Group helps governments implement reforms to improve their business environments and encourage and retain investment, thus fostering competitive markets, growth, and job creation. Funding is provided by the World Bank Group (IFC, the World Bank Group, and MIGA) and over 15 donor partners working through the multidonor FIAS platform. Acknowledgments The Investment Climate Department wishes to thank the European Commission, ProInvest, and the Swiss State Secretariat for Economic Affairs (SECO), for their support in funding Global Investment Promotion Best Practices: Winning Tourism Investment. Global Investment Promotion Best Practices: Winning Tourism Investment has been produced by a core World Bank Group team comprising Robert Whyte, John Perrottet, Valeria Di Fiori and Hermione Nevill. Special thanks to Julien Haarman who prepared an excellent early draft. The Investment Climate Department gratefully acknowledges the contributions of peer reviewers who helped make this report a practical tool for organizations mandated to attract tourism investment: Tuomo Airaksinen, Head, Invest in Finland; Carolyn Cain, Chief Industry Specialist, IFC; Shaun Mann, Senior Investment Policy Officer, South Asia Region, IFC; Hannah R. Messerli, Senior Private Sector Development Specialist, Africa Region, World Bank; Justin Yap, Senior Private Sector Development Specialist, Investment Climate Department, World Bank Group. Acknowledgments 1 Table of Contents INTRODUCTION .........................................................................................................................................................5 Tourism: The Importance of Good Investment Facilitation ..........................................................................7 Global Investment Promotion Best Practices and Tourism .........................................................................9 Quality of tourism sections on IPI websites ........................................................................................................10 Quality of IPI response to inquiries from tourism investors .................................................................................11 Promoting Tourism Investment: Improving Performance...........................................................................13 Defining the investors .......................................................................................................................................13 The tourism investment process.........................................................................................................................14 The five-step approach to successful tourism investment promotion...................................................................15 Beyond the Provision of Information .............................................................................................................27 Conclusions.........................................................................................................................................................29 Annex: Key Data and Sources for Facilitating Investment in Tourism......................................................31 Boxes Box 1. The GIPB 2012 tourism investor inquiry.....................................................................................................9 Box 2. PRONicaragua: Best practice tourism investment facilitation on a shoestring ...........................................12 Box 3. Austrian Business Agency (ABA)-Invest in Austria: Focus on strategic tourism segments achieves strong results.............................................................................................................16 Box 4. Getting up to speed with the tourism market..........................................................................................17 Box 5. Investment climate information commonly sought by tourism investors and operators............................18 Box 6. Sample testimonial questionnaire............................................................................................................20 Box 7. Checklist of useful tourism-focused elements on websites ......................................................................21 Box 8. Suggested tailored materials and approaches..........................................................................................21 Box 9. Invest in Greece Agency: Building a portfolio of tourism investment opportunities...................................24 Box 10. Mozambique: Lessons from a highly focused investment generation program.......................................25 Table of Contents Acknowledgments 3 Figures Figure 1. Elements of the GIPB assessment...........................................................................................................9 Figure 2. Breadth of information provided on IPI websites listing tourism as a priority sector for investment.......10 Figure 3. Depth and quality of information relevant to tourism available on IPI websites ....................................11 Figure 4. GIPB tourism inquiry-handling results..................................................................................................11 Figure 5. Completeness of GIPB tourism inquiry responses ................................................................................11 Figure 6. The tourism investment process...........................................................................................................14 Figure 7. The five key steps to successful tourism investment promotion ...........................................................15 Figure 8. Partnerships upstream and downstream of investment facilitation ......................................................22 TABLES Table 1: The broad spectrum of tourism investors...............................................................................................13 4 Global Investment Promotion Best Practices: Winning Tourism Investment Introduction Global Investment Promotion Best Practices (GIPB) assesses how well national investment promotion intermediaries (IPIs) from 189 countries attract investment. The assessment is carried out by a review of IPI websites and “mystery shopper” inquiries that mirror the process in which foreign investors decide the location of their next projects. GIPB 2012 assessment results revealed poor performance of a staggering majority of IPIs in providing information and assistance to prospective investors in the tourism sector (investment facilitation) — a core function of IPIs worldwide. It should also be noted that less than half of the IPIs that listed tourism as a priority sector responded to the inquiry, which even then was often with incomplete information. Responses were particularly short of sector-specific statistics, detailed information about potential sites as well as mechanisms for acquiring land, and insights into potential construction companies. On the positive side, some IPIs showed professional standards of investment facilitation were achievable even with limited resources. Based on international best practices, this report recommends that IPIs adopt five key steps in order to position their agencies and locations more competitively for new tourism investment: 1. Develop more strategic, focused, and relevant approaches to tourism investment promotion. 2. Improve overall capacity and skills to deliver effective investment promotion with an emphasis on developing better tourism-specific knowledge in-house, especially regarding the market and the product. 3. Present tourism information succinctly, using up-to-date facts and data as well as testimonials from successful tourism companies. 4. Disseminate information to investors more effectively through a mixture of existing and customized instruments (such as websites, detailed sector profiles, and tailored presentations). 5. Learn to leverage partnerships to maximize results. This report provides practical recommendations, tips, and examples aimed at helping IPIs implement the five-step approach, and it highlights actual cases from some of the best performers. For example, Invest in Greece Agency shows how specific investment opportunities can be identified through effective partnerships, whereas PRONicaragua demonstrates how to provide best-in-class investment facilitation to prospective investors. Introduction 5 Tourism: The Importance of Good Investment Facilitation Tourism is a key sector for economic development and accounts for five percent of global GDP and 30 percent of employment generation in both advanced and developing the world’s exports of services, and it creates 235 million economies. A strong tourism sector contributes in many jobs worldwide. Tourism’s share of world employment, ways to a country’s economy by: consistent across every region, is greater than that for the automotive and chemicals manufacturing industries • Raising national income and increasing export combined.2 revenues. • Creating a large number of jobs — including for young However, shortage of capital is a major obstacle for tourism development in many countries — especially people and women. in the developing world. Therefore, these economies • Promoting economic diversification. increasingly look to foreign investors to provide capital • Helping to revive and develop declining urban and that will help develop the sector. Foreign direct investment remote areas. (FDI) is broadly recognized as a source of capital, jobs, knowledge, and market access across economies. In the • Making indirect contributions via its linkages to other tourism sector, where increased mobility has driven higher sectors and by providing the basis for connecting customer expectations, foreign investors and operating countries.1 companies can help bring international experience to Despite an uncertain global economic outlook, the bear in the quest for higher hospitality standards. This can tourism sector has remained relatively resilient. As a result translate into improved training, management, and ability of ongoing globalization, travel continues to increase in to attract tourists through better links with international mature markets and especially in developing economies, distribution networks.3 driven by the rising purchasing power of the middle class in many of these countries. According to 2011 data from the World Tourism Organization (UNWTO), the sector World Economic Forum, The Travel & Tourism Competitiveness Report 2 2013 World Economic Forum, The Travel & Tourism Competitiveness Report 1 2013; United Nations Conference on Trade and Development, FDI in United Nations Conference on Trade and Development, FDI in Tourism: 3 Tourism: The Development Dimension (2007). The Development Dimension (2007). Tourism: The Importance of Good Investment Facilitation 7 Growing awareness of tourism’s potential contribution to Although IPIs cannot influence external factors or global trends, economic development has meant, however, that attracting they can certainly have an impact on investment decisions tourism investment has become a highly competitive business. through effective investment facilitation. By gathering and According to GIPB 2012, 57 percent of national IPIs worldwide packaging detailed market data, providing in-depth information actively target tourism investment. on investment opportunities, and offering support and key contacts throughout the investment process, IPIs can help Investment in tourism is affected by a number of variables such reduce the transaction costs for investors, thereby making the as external economic factors, government policy, incentives, investment proposition more attractive. global trends, corporate strategies, and lifestyle choices. Investors’ decisions are also influenced by the destination’s The ensuing chapters provide guidance on how IPIs can improve fundamentals: market data, the investment process, the their investment facilitation services to tourism investors with a operating environment, and future growth plans for the sector focus on attracting long-term growth businesses in the sector. and the country. But ultimately, as is the case with other sectors, the key decision factor is whether the investment proposition is profitable. 8 Global Investment Promotion Best Practices: Winning Tourism Investment Global Investment Promotion Best Practices and Tourism The GIPB assessment examines how IPIs perform when Box 1). This section briefly presents the main findings of approached by foreign investors looking for information tourism-specific assessment results. For ease of comparison, during the early stages of the location selection process. results are presented in the form of percentages with 100 This assessment has been conducted every three years percent being the highest possible result. For more details on since 2006, and has grown from a review of 96 countries the approach and results, please refer to the GIPB 2012 global in 2006 to 189 countries in 2012. GIPB 2012 focused report, which includes an annex that describes the inquiries and on how information was provided in tourism and elaborates on how IPI performances were evaluated.4 agribusiness, two sectors commonly selected as priorities by a majority of IPIs. The assessment comprises a review of IPI websites and two “mystery shopper” inquiries (see Figure 1 and 4 The World Bank Group, Global Investment Promotion Best Practices 2012. Figure 1. Elements of the GIPB assessment Box 1. The GIPB 2012 tourism investor inquiry In addition to the website review, GIPB evaluates IPIs by sending them two “mystery shopper” inquiries. The tourism inquiry submitted by a site- selection company was based on a project for an investor from an emerging economy. In this scenario, the client was in discussions with various hotel operators, all of whom had significant portfolios of international hotel developments, including several high-profile luxury resorts. The request for information included: • Background macro data: data on the economy and GDP, demography, the hospitality market, FDI flows, tourism-related statistics, and a list of major local hotels. • Potential sites: information on sites, associated development incentives such as loan guarantees, tax incentives, waiving of import duties, and grants. • Costs and operating environment: the cost of labor for the hospitality sector and utilities (especially electricity), regulations or quotas for expatriate workers, training, taxes in the hospitality sector, and any fiscal incentives available. • Construction: local construction companies for the developer, regulations, the process for obtaining permits, and associated IPI support. The inquiry was initially distributed by e-mail and followed up by telephone after 48 hours. The potential investor requested a response within 12 days. When there was no reaction to the initial e-mail or the initial follow-up call, two final calls were made to allow for any temporary staff shortages or system failures. When an IPI indicated that the mandate for tourism was with another organization, the project inquiry was forwarded to that organization. (GIPB methodology favors IPIs that are proactive in facilitating a dialogue between the inquirer and the third party.) Global Investment Promotion Best Practices and Tourism 9 Of the 189 IPIs assessed, 107 indicated that tourism was a Highlights of existing investment, success stories, and priority sector for their economies. A regional comparison shows testimonials are used in less than a quarter of IPI websites that tourism is most often prioritized in developing economies, reviewed; they are critical to enhancing the credibility of of which Latin America and the Caribbean and Sub-Saharan IPIs’ marketing messages because they illustrate real cases Africa comprise more than half. of investment. Very few IPI websites provide contacts for specialized sector staff that could help investors gather facts, Quality of tourism sections on IPI websites figures, and technical information. Some IPIs, however, do introduce relevant tourism regulatory bodies or professional A review of 107 IPI websites that listed tourism as a priority associations that could further assist investors. sector revealed mixed results (Figure 2).5 More than a quarter of 107 IPIs that stated tourism was a priority did not offer Tourism sections on IPI websites often focus on providing a tourism sector section or profile on their website, which market information and a general overview of the location’s would list the key strengths of the sector for investment. Even strengths as a tourism destination. However, they typically fail when they do, most fail to provide important facts and figures to offer prospective investors relevant details on the operating required to substantiate key messages and help capture the environment (see Figure 3). Information on taxation, incentives, interest of potential investors. Furthermore, their sources and the process of acquiring property, the location’s relevant facilities dates are generally poorly referenced and rarely updated. and infrastructure as well as an overview of relevant legislation, and detailed cost data are most relevant for tourism investors (see the Annex for more details on tourism-specific content and sources). Figure 2. Breadth of information provided on IPI websites listing tourism as a priority sector for investment Note: since not all locations are competitive for tourism, some IPIs do not focus 5 on attracting FDI into the tourism sector. Therefore, this part of the website evaluation was not part of IPIs’ overall GIPB assessment. 10 Global Investment Promotion Best Practices: Winning Tourism Investment Figure 3. Depth and quality of information relevant to tourism Only 68 (or 36 percent) out of 189 IPIs responded to the tourism available on IPI websites inquiry. If they did respond initially, very few followed up with the potential investor, and even the follow-ups were often lacking relevant information or answers to investors’ questions. The assessment concluded that once investors are interested in developing potential projects in a given destination, many IPIs end up missing out on the opportunities to secure the deal. Results are illustrated in Figure 5. Figure 5. Completeness of GIPB tourism inquiry responses Quality of IPI response to inquiries from tourism investors The GIPB assessment evaluates both the way IPIs handle inquiries (such as contactability, responsiveness, and follow- up) and the quality of the response itself (see Box 1 for more details). Figure 4 shows the weight, top score, and average The PRONicaragua example below illustrates how much can be scores for each dimension of the tourism inquiry assessment. done on a relatively small budget. It suggests that “response” and “customer care”, the most heavily weighted dimensions, are where IPIs generally perform worst. Figure 4. GIPB tourism inquiry-handling results Global Investment Promotion Best Practices and Tourism 11 Box 2. PRONicaragua: Best practice tourism investment facilitation on a shoestring With an annual budget of only $900,000 and a staff of 25, PRONicaragua achieved the best overall results in the GIPB 2012 assessment, demonstrating both a strong sector expertise and robust internal systems to deliver best practice investment facilitation. When contacted by the “mystery shopper” investor, PRONicaragua immediately acknowledged receipt of the inquiry, confirming that the agency understood the deadline to respond to questions and attaching a country profile brochure. The detailed response to the inquiry came a few days later and included a professional-looking, well-ordered report with the agency’s branding. Answers to the questions were detailed and backed by evidence from reputable sources. As requested in the inquiry, the response included: • Requested macro data on Nicaragua and information about the lodging industry (in line with the investor’s focus) with relevant statistics, including the number of rooms in each hotel category, disaggregated average occupancy rates and prices, major hotel brands already established, and a description of key projects in the pipeline. • A comprehensive profile of the city of Managua, the main suggested location for the project, including information on the main tourist attractions in and around the city; short profiles of five individual site options (location, size, price, plot maps, satellite pictures, and descriptions). • Information on the operating environment relevant to the investor’s project such as labor wages and benefits, expatriate labor regulations, training programs, utilities and communications costs, and taxes. • Lists of construction companies and construction material suppliers with website links; information on construction regulations. The response was professional-looking, well-ordered, and branded Every question of the inquiry was answered in detail and Short profiles of potential sites were provided, with backed by adequately referenced facts and figures descriptions and visuals (such as maps and aerial pictures) The work of PRONicaragua paid off. The agency attracted over $80 million in new tourism investment during the 2005-2012 period, resulting in 1,700 new jobs in the sector. Sources: www.PRONicaragua.org; www.globalinvestemntpromotion.com; e-mail exchanges with agency staff. 12 Global Investment Promotion Best Practices: Winning Tourism Investment Promoting Tourism Investment: Improving Performance Defining the investors The operators themselves are increasingly unlikely to engage in equity arrangements. Private sector investment is broadly recognized as a source of capital, jobs, knowledge, and market access The benefits of international operating expertise include: across economies — emerging economies in particular. As with most sectors, investments in the tourism sector • Professional management. are made by both domestic and foreign investors, each • International service. with their own set of information needs and facilitation • Quality standards. requirements. Typically, domestic investors are individuals and companies that are relatively familiar with the • Comprehensive training and skills development. destination and often have existing business interests in • Destination branding. the sector, or in other unrelated sectors. FDI in tourism tends to come from private equity groups, international • Extended sales and marketing reach through hotel companies, high-net-worth individuals, real estate established loyalty programs and distribution networks. investors, sovereign wealth funds, and development In many destinations, however, there are growing corporations at the national level. Both domestic and numbers of independent and bespoke service providers foreign investors increasingly recognize the value of that are meeting consumer requirements for more tailored international management expertise or operators (such or niche experiences. These businesses bring different as Hilton, Avis, and Burger King), and typically enter into but equally valuable benefits to the sector and may have franchise or management contracts with these operators. different requirements in investment facilitation services. Table 1: The broad spectrum of tourism investors INVestMeNt SPONsOR PROJeCt PROJeCt OPeRAtOR ReQuiReMeNts FROM IPI CAteGORY eXAMPLe SiZe (USD) DOMestiC Small firm/ Guesthouse, < 1 million Owner as Low priority, sponsor likely to have good Individual travel agency, operator on-ground information restaurant DOMestiC Diversified Hotel, resort, 1 – 50+ Owner as High priority, sponsor likely to want existing airport, marina, million operator or incentives, market data if available, business golf course looking for matchmaking to operators international or domestic operator FOReiGN Small firm/ Boutique hotel, 1–5 Owner as Medium priority, sponsor likely to want Individual restaurant, activity million operator information on generic rules, incentives, center (such as process/ procedure advice, market data diving) if available FOReiGN Hotel group Hotels (3 – 5*) 20 – 100+ Owner as High priority, sponsor likely to want million operator or “project opportunities” (sites), contacts looking for (short-cuts) in process, market data international if available, updates on direction of operator destination, and confirmation of fit with destination strategy and growth plans FOReiGN Private Hotels, mixed-use 50 – 200+ Likely already High priority, sponsor likely to want equity funds, developments, million identified “project opportunities” (sites), sovereign transport, ground operator, or contacts (short-cuts in process), links wealth funds, operations, may be to operators, market data if available, developers entertainment, looking for updates on direction of destination, meetings, one and confirmation of fit with destination incentives, strategy and growth plans conferences, and exhibitions (MICE) facilities, resorts Promoting Tourism Investment: Improving Performance 13 The processes used across the spectrum of tourism investors to The tourism investment process identify and complete tourism projects vary, and this presents a challenge for IPIs in meeting their needs. All investors will go through a process to identify and complete their deals, but each phase will present different challenges for There are many common needs of potential investors, however. different investor profiles (foreign, domestic, large, small, and so All of them value transparency, a defined process, and on). IPIs can help facilitate this process. Figure 6 illustrates the responsiveness at all stages of the investment process. IPIs, as various phases and identifies the most likely audience, partners, the intermediaries, can play a significant role in delivering this and priority actions for each. Cutting across each one of these effectively. phases are various mechanisms to improve overall performance for IPIs promoting tourism that will ensure effective delivery and increased competitiveness. These are discussed in the next section. Figure 6. The tourism investment process 14 Global Investment Promotion Best Practices: Winning Tourism Investment To improve on cross-cutting fundamentals for facilitating guidance on project types, building densities, desired investment, IPIs may refer to existing toolkits and sources clustering, market orientations, related infrastructure available online6 and listed in the Annex. needs, and the priority locations for such developments. Aligning priorities for promoting tourism investment with The five-step approach to successful tourism investment such overarching strategic frameworks helps foster stronger promotion partnerships and broader stakeholder support throughout the process of investment generation. Experience shows that Countries that are successful in attracting tourism investment the most effective promotion is found where the country has follow a proven five-step approach outlined below. The an obvious investment strategy and a tourism development following sections provide tourism-specific guidance and case strategy clearly reflected in the promotion of the sector for studies designed to help implement this process. investment, and in the specific investment opportunities identified. Figure 7: The five key steps to successful tourism investment promotion 1. Be strategic: Prioritize and focus your investment As for many other sectors, the lack of concrete investment facilitation efforts opportunities and detailed information about them is a In any sector, good investment facilitation seeks to reach the barrier for investors. Even if investors are persuaded by the right investors with the right information at the right time. more general marketing messages about the location, they The best way to achieve this is to focus on a limited number still need to identify potential sites within the country and of subsectors and individual investment opportunities that conduct detailed research in what will often be a relatively fit a particular target investor group, and to reach out to unfamiliar environment. Therefore countries may gain a them proactively. Many investment promotion efforts lack competitive edge over other destinations by covering more the focus required to reach and convince the desired target ground on behalf of the investor and presenting specific investors. and well-researched opportunities that fit the investor’s requirements. Tourism is a broad sector, spanning a wide range of business lines. These include not only hotels and restaurants but Once opportunities are identified and researched, they also tour operators, airlines, car rental services, cruise lines, should be brought to the attention of the right potential entertainment, training, equipment suppliers, and other investors. IPIs often rely on passive forms of facilitation, support services. Research confirms that focus brings results: assuming investors will come forward. Unfortunately, when IPIs concentrate their efforts, more than twice as much foreign investors and operators are often unaware of the FDI goes to priority sectors relative to non-priority sectors.7 available opportunities. In many cases, they may even By the same logic, efforts should be focused on a limited have negative preconceived ideas about a destination and number of priority subsectors within tourism (Box 3 provides require some prompting before they turn their attention to an example). the opportunities. By failing to attract the most qualified investors in the first place, governments often end up In many countries, medium-term (~10 years) regional, negotiating suboptimal deals with less-experienced national, and subnational tourism strategies and master investors who may not be able to unlock the plans are in place. Typically, they contain valuable specialized opportunities’ full potential. Approaches IPIs can take to reduce this risk include: For example, the GIPB website on www.globalinvestmentpromotion.com 6 • Using proactive identification of investors and targeted and World Bank Group Investment Generation Toolkit on direct outreach, to ensure that as many well-qualified www.wbginvestmentclimate.org/toolkits/investment-generation-toolkit. investors as possible are aware of the opportunities Torfinn Harding and Beata S. Javorcik, “Roll out the Red Carpet and They Will 7 available. Come: Investment Promotion and FDI Inflows,” The Economic Journal, vol. 121, issue 557 (December 2011). Promoting Tourism Investment: Improving Performance 15 Box 3. Austrian Business Agency (ABA)-Invest in Austria: Focus on strategic tourism segments achieves strong results Data shows that Austria won 17 new tourism projects in the sector in the five years leading up to 2011 based on an offer for high-end “wellness” and winter tourism. These include major hotel players such as Arabella Sheraton, Hilton, and Le Meridien. The strategy’s success has helped make Austria the 11th largest tourism market in the world by revenue. Not surprisingly, ABA-Invest in Austria, the national inward investment promotion agency under the Austrian Ministry of Economy, achieved a “close to best practice” result in the GIPB 2012 tourism inquiry. Source: FDI Markets from the Financial Times • Adding an element of competition between investors be able to help gather intelligence and develop promotional (such as competitive tendering of well-prepared and materials, IPIs need specialized staff in-house to be able to packaged sites) to increase the number of prospective identify suitable opportunities, develop winning materials, projects and sponsors, which may also help attract keep them updated and relevant, and adapt them to specific stronger offers.8 audiences. These skills are also necessary to respond quickly It is critical to support the targeted foreign investors by to investor inquiries, develop working relations with relevant proactively identifying and mobilizing qualified and credible agencies locally, and engage effectively with investors. local partners and broker contacts. Local partners would In order to build confidence among prospective investors, typically include: sector specialists must be able to refer to key statistics, • Local tourism operators looking for foreign partners. discuss industry trends with authority, and introduce investors to local figures such as senior government • Domestic investors well established in other sectors with representatives. Accordingly, they must develop a deep an interest in expanding into the tourism sector. understanding of the broader tourism market, a strong • Owners of sites and properties that may be suitable for familiarity with the product offering as well as key relevant greenfield or brownfield projects in the priority tourism stakeholders, and knowledge of who the target investors subsectors and locations. are, how they think, and how they conduct transactions. Box 4 suggests some steps that IPI officers can take to get Information prepared for foreign investors and operators on up to speed with the tourism market. subsector opportunities may also be relevant to domestic investors, especially those coming from other sectors. Box 5 provides a checklist of some of the investment climate data most relevant to tourism projects; the Annex provides To both enhance the proposition for foreign investors or a more comprehensive list with possible sources for each. operators and to maintain credibility as business facilitators, However, this information may have to be complemented IPIs have a vested interest in identifying the most credible with additional data specific to the particular tourism local and foreign partners. To this end, IPIs may develop subsectors and the specific opportunities being promoted. basic assessment tools to evaluate the quality and credibility Information may also need to be adapted to individual of local partners. However, IPIs cannot be seen as substitutes investor inquiries. for due diligence that companies need to conduct. Finally, IPIs should develop and maintain databases of 2. Develop tourism-specific knowledge potential investor targets and successful tourism projects, For IPIs to improve the quality of information provided to locally and in competitor countries detailing project prospective investors, they must demonstrate that they have descriptions, ownership and management type, long-term the required sector expertise. While external consultants may finance source, and terms. The database of potential investor targets, developed 8 While some IPIs have some degree of ownership of opportunities and have the according to the tourism subsectors and specific mandate to run tender processes, others may have a mandate that stops at opportunities being promoted, is the basis for any proactive promoting opportunities that belong to others — private individuals or other investor outreach program. In the tourism sector, this government agencies. 16 Global Investment Promotion Best Practices: Winning Tourism Investment Box 4. Getting up to speed with the tourism market IPI officers tasked with preparing for and maintaining good investment facilitation services for tourism should incorporate the following steps into their operations: • Review existing tourism strategies, master plans, and materials from key sector institutions such as the Ministry of Tourism, Tourism Board, and National Tourist Office. • Develop a network of partners locally and internationally (see section on partnering, page 19). • Keep up to date with global trends and market developments through the World Tourism Organization (UNWTO) and World Travel and Tourism Council (WTTC) publications as well as annual industry reports from organizations such as PwC (PricewaterhouseCoopers), HVS and World Travel Market. • Gather the relevant statistics and data needed to sell both the destination and specific investment opportunities (see the Annex for relevant data and possible sources). Unmet demand, as indicated by high hotel occupancies and consistent real growth in room rates among existing properties is perhaps the most important driver of new investments, but information requirements are broader and may change based on the tourism subsector or the specific opportunities being promoted. • Regularly meet existing investors locally as part of the aftercare activities and take the opportunity to understand their businesses, demand and supply trends, cost and revenue drivers, as well as constraints and barriers to reinvestment. • Systematically read sector news in the media, subscribe to specialized media, or simply start by using online news search engines (automatic e-mail updates can be set up, with key words such as “investment” and “tourism”). • Look up tourism strategies, investment flows, and tourism projects in competitor countries and understand the relative strengths and weaknesses of the location. • Undertake a critical assessment of the attractiveness of the country as a destination for tourism investment. In particular, the World Economic Forum’s Travel and Tourism Competitiveness reports provide detailed insights into the relative competitiveness of countries for tourism investment. • Participate in relevant forums (such as regional tourism associations) and search for media articles about successful projects abroad within the relevant subsectors; understand the typical modes of investment in these subsectors and sources of financing; and identify key investor source markets and individual companies with high propensity to invest. Attend regional tourism investment conferences to make contacts, meet investors, monitor global and regional investment trends, and find out what investors think about the country and region. • Proactively engage with target investors and industry experts, either directly or through relevant networking opportunities, and understand their activities, news, strategy, and — very importantly — their perceptions and concerns about your destination. • Engage with real estate brokers, existing domestic investors in tourism or other sectors, and other types of partners to proactively identify greenfield or brownfield investment opportunities in line with the strategy. • Develop a detailed knowledge of potential foreign investors, operators, and local partners in order to be in a position to broker fruitful contacts while mitigating reputational risk for IPIs (for example, when less reliable partners are introduced to more reputable ones). By helping local partners develop high quality business proposals to investors (for example, by providing templates for sales presentations and developing detailed descriptions of the business opportunity), IPIs can increase the chances of bringing quality partners together. • Provide feedback to policymakers on matters that affect the attractiveness of the destination to investors. Promoting Tourism Investment: Improving Performance 17 being promoted. For example, the following messages were developed by IPIs to engage the attention of investors:9 Box 5. Investment climate information commonly sought by tourism investors and operators “Nicaragua offers 720 square kilometers of coastline in • Land costs and acquisition procedures the Pacific and Atlantic, 25 volcanic formations, more than 10,000 square kilometers of lakes, lagoons and rivers, with • Construction permit costs and procedures the second largest lake in Latin America, which in turn holds the largest island in a lake in the world. In addition, the • Relevant licenses inventory, costs, and procedures country has 22,088 square kilometers of natural reserves • Relevant taxes, levies and custom duties, and procedures and colonial cities with great cultural richness, among which the city of Granada stands out for being one of the oldest • Labor costs and regulations including expatriate labor cities founded in mainland American soil.” regulations • Utility costs and connection procedures “Tourism in Brazil keeps expanding. Unlike most countries, • Communications costs and connection procedures Brazil has suffered no significant impact on the number of foreign tourists, which is around 5 million people per year. • Names and contacts of support institutions, lawyers, notaries, accounting firms, financial institutions, and construction For the next ten years, the sector is estimated to grow, on companies the domestic level, at around 4.5 percent per year, besides encompassing a 2.8 percent increase in direct jobs and 4.5 • Inventory of relevant policies, laws, and regulations percent in tourists’ expenditures in Brazil. Domestic tourism is increasing as well: in 2010, the number of Brazilians who • Inventory of relevant reports (research by accounting firms, development partners, and others) traveled within the country over the last two years reached 58.8 percent.” “Greece was the 4th most popular tourist destination in database will likely include private equity groups and the European Union for the year 2010, according to the high-net-worth individuals known to invest in tourism, Eurobarometer poll, and among the top 10 destinations for international hotel companies and operators, real estate 2010 (Lonely Planet Best Travel 2010). “ investors, and local targets. Wherever possible, it should include the names and contacts of senior management Messages to sell specific opportunities will be needed to and decision makers within the company (head of business make the proposition more tangible in the eyes of potential development, relevant regional or country head, or the investors. If investors are attracted to particular subsectors CEO). at the destination, they will want to understand the specific location best suited for the project, potential partners, and Details on successful tourism projects locally and in other specific project sites. In marketing specific opportunities, the relevant locations (regional or competitor countries) are main objective is to distinguish them from projects that other useful in identifying, for example, new projects on the countries and destinations offer. market, opportunities and challenges, and sources of finance. “The colonial segment is well represented by the cities of 3. Organize information and craft key messages Leon and Granada, which hold first place as the most visited With good investment facilitation skills and a strong cities by tourists visiting Nicaragua. Their unique natural and knowledge of the tourism sector, IPIs must then develop cultural attractions and proximity to Managua represent good messages in line with their strategies, emphasizing ample opportunities for those looking to explore the area. relative strengths and addressing key concerns for target Both cities have developed primarily in the concept of investors. Messages which sell the destination are critical boutique hotels and one to four star hotels.” to capture the attention of investors, particularly when they are looking across several potential locations. These messages should be based on the priority subsectors that are 9 Messages extracted from IPIs’ websites and responses to the GIPB 2012 tourism inquiry. 18 Global Investment Promotion Best Practices: Winning Tourism Investment “Around 842,000 (65 percent of total) visitors were in Without a performance comparison, messages can remain Porto Alegre, Brazil in 2009 for business reasons, not only weak. to participate in meetings with one of the many local • Use industry testimonials and case studies to support companies but also to attend conferences, trade shows and messages. Private investors tend to trust the experiences other events held in the city. “ of existing projects and other private investors; IPIs’ marketing messages alone may not suffice. Box 6 provides guidance for developing testimonials. “The cosmopolitan island of Corfu, Greece is probably the 4. Disseminate the information most well-known island of the Ionian complex and one of the most popular in the whole Mediterranean. It is a pole of IPIs have to balance information provided on their website and other general promotional media with targeted attraction for hundreds of thousands of visitors every year communication materials better tailored to individual as well as a source of inspiration for all kinds of art, carrying investors or investor groups. Ideally, IPI websites serve as a huge cultural heritage and disposing special splendor a vehicle to motivate an initial contact from the potential which combined with its natural beauty, marvelous climate, investor. Following this initial contact, IPIs will be able to beaches, and interesting sights, makes the island one of the better understand the investor’s interest and develop tailored top destinations for Greek and foreign travelers.” propositions through customized research and materials. Although there is no hard rule about what specific data It is also important to develop messages which address should go on a website as opposed to tailored materials, known concerns of target investors. In tourism, these Boxes 7 and 8 offer some insights to help IPIs consider their concerns commonly have to do with cross-cutting issues options (tourism-specific data and suggested sources are about the destination, such as corruption, conflict, disease, provided in the Annex). and safety. Urgent action may be required if a problem Up-to-date investor information on the website offers the becomes blown out of proportion by international media opportunity to reach many investors simultaneously at a and word of mouth. IPIs can proactively address these low cost. IPI websites can draw attention to a destination’s concerns by: unique selling points for a tourism subsector, help • Using hard evidence (facts and data) to qualify, quantify, correct misperceptions, reduce uncertainty, and increase and allay investor fears about a location. competitiveness. Conversely, a low-quality or outdated website may deter investors from looking further at the • Showing how the issue has been identified and is being opportunities the location has to offer. The tourism sector handled by relevant stakeholders. profiles used for the website may also be used for printed • Sharing positive trends that indicate progress or news that brochures and leaflets, promotional videos, and as an initial the issues are resolved. response to the more general tourism investor inquiries. The following is a good example of a message which Presenting material to investors requires a balanced addresses known investor concerns in Sierra Leone: approach. If investment opportunities provided on the website are too detailed and narrow, they may not quite “Sierra Leone has a strong heritage of liberty and religious fit the strategy of a potential investor. In that case, target tolerance. Since 2002, it has held two internationally investors may turn away without initiating any contact and recognized free and fair elections, including a peaceful offering the IPI a chance to better adapt the product to investors’ individual strategies. transition of government. During this time the country has collectively rebuilt the institutions of civil society and More tailored materials can be prepared for targeted, it is currently one of Africa’s best business reformers, as direct marketing efforts and in response to specific investor evidenced by the World Bank Group’s Doing Business inquiries (“tailored information preparation phase” report.” mentioned in Figure 6). This information will naturally be more detailed and relevant to a particular investor or well-defined investor group (such as in the tendering of an A common weakness of IPI messages is the lack of individual opportunity). well-sourced and dated statistics, facts, and figures to give them the credibility and depth investors expect. Without 5. Develop a network of partners to enhance service them, messages are often too vague or meaningless, delivery and do not allow investors to make calculations and comparisons. Good practice here is to use benchmarking Gathering all the required information and keeping it up-to- and testimonials: date is no simple task. IPIs therefore have to rely on a variety of partners who can provide it when needed. IPIs can then • Demonstrate comparative strengths and competitiveness; package data adequately for promotional purposes. Beyond benchmark the location against competitor countries. investment facilitation, partnerships can also be instrumental Promoting Tourism Investment: Improving Performance 19 Box 6. Sample testimonial questionnaire From IPIs’ perspective, testimonials by successful investors already established in the country are very powerful in delivering an overall positive message to potential new investors. The objective of a testimonial is to let real investors highlight specific attributes of the country or a specific opportunity. Testimonials may be in the form of interviews, short videos, a short sentence, or a paragraph to reinforce marketing messages. Below is a proposed checklist of questions to ask existing investors in preparing a testimonial. It may be adapted to focus on specific sectors or messages. Profile of the company’s current operations: • When was it established? Internationally? In the location? Activities on site and results to date (turnover, profits, appropriate success indicators for the given sector)? • Employment profile (number, types, skill levels, skill sets, growth trends)? • Corporate role? How does the country subsidiary fit into the overall activity of the investor? Where does it report? How does it interact with other units? • Country supplier or customer links — supply chain, university links, other relevant services (such as training, transportation)? Who are your customers? National, international, and where? • Type and location of premises? Size infrastructure, location, special infrastructure requirements? • Why did you choose this location? • What other countries did you consider before you chose this location? Was this a competitive situation? What were the determining factors in choosing this location? • What business reasons (economy, political situation, land, supply chain, climate, raw materials and services, market opportunity) led the company to consider the location? • What was your experience in setting up your operations and getting started? We are looking for comments regarding topics such as speedy and efficient bureaucracy, support received from IPI and others, and so on. Experience to date in this location: • Since you started operations, are you satisfied with progress? Is the business on schedule and are targets being met? • What has gone well in particular? Specify. • Did you find it easy to hire qualified staff? Is staff quick to learn, hardworking, and productive compared to staff in other locations? • What has gone less well? Were measures to address these negative aspects implemented? Is the situation improving? Specify. • If you had to make the decision again, would you still choose this location based on your experience to date? • If a potential investor were to contact you tomorrow to ask about this location, how would you advise them? What would your headline message be? • What are your future plans in this location? And what can the government/IPI do to help? Source: Thorburn Associates, 2013 20 Global Investment Promotion Best Practices: Winning Tourism Investment Box 7. Checklist of useful tourism-focused elements on websites • Tourism market—“selling the destination.” Examples include comparative strengths, size, key segments, projections, and infrastructure. • A few strategic subsectors, such as culinary tourism or business hotels, and short subsector profiles for each, containing relevant market data, samples of specific opportunities for investment, and examples of companies that have already invested. • A map that shows industry cluster or the location of existing investors. • Relevant information and data on key costs and skills relevant to tourism (using benchmarking where possible). • A list of downloadable documents for investors (for example, library of laws, statistics). • A bimonthly “interview” with an existing tourism operator and testimonials. • A list of events the IPI will be attending internationally, and list of useful local events investors can join. • News feed for the sector. • Social media links (Twitter, Facebook, YouTube). • Dedicated contact person and details. Box 8. Suggested tailored materials and approaches • Detailed subsector profiles, including detailed market data (arrivals, existing supply in the segment, occupancy rates, average daily rates, evidence of unmet demand for the segment). • Site profiles with detailed site-specific information (type of transaction, site location, highlights and key tourism attractions, infrastructure/ amenities, ownership and terms/procedures of acquisition, and photos; tender documents for individual “packaged deals”). • A roadmap detailing the market entry procedures specific for the subsector (including estimated time and cost). • Tables and flowcharts displaying more details of the operating environment and cost factors: specific administrative requirements and procedures (licenses, permits, certificates), taxes and levies, construction costs and supplier contacts, other relevant input costs (labor, utilities, land), labor availability, skills and available training programs. • Issue-sheets around key “pre-conceived” investor concerns identified. • Presentations and road shows to targeted investor audiences. • Monthly e-mail updates and newsletters to pipeline investors. • Presentations and short (1–2 page) briefs on messages and opportunities to inform local audiences such as relevant government executives (highlight impacts expected from investment), embassy staff, donors, local private sector associations, and other “insiders”. Promoting Tourism Investment: Improving Performance 21 in fulfilling other aspects of IPIs’ investment generation tourism agencies, clarify respective mandates and roles, mandate (Figure 8). and formalize close collaboration with them (for example, involving focal points in all aspects of investment promotion Therefore, regardless of their own capacity and resources, such as the development of promotional materials and to enhance investment facilitation and other critical IPI sector profiles, participation in promotional missions/ services, IPIs should strive to develop strategic partnerships. roadshows, and investor visits). Significant work may be required by IPIs to communicate the objectives and rationale of the promotion efforts, highlight Local authorities mutual priorities and benefits, and build consensus around the approach. With their local knowledge, decentralized government offices — regional, district, and provincial — can help Some useful partnerships to consider for tourism investment identify sites, especially for new greenfield investments promotion are described below: where real estate and land markets are weak or nonexistent. IPIs may partner with the ministry in charge Government partners of local governments or any other relevant ministry with decentralized representatives that might be aware of key The Ministry of Tourism, Tourism Board, or National Tourist assets which could be available for particular tourism Office are among the obvious government partners to IPIs investment opportunities (e.g. the Ministry of Tourism, as they are commonly mandated with destination marketing Ministry of Lands, and so on). and promotion; many have a mandate to promote the development of the destination which links them directly Network of embassies abroad with the investment function. These government offices can usually provide most of the relevant information, Embassy staff abroad may be used to disseminate messages expertise, data, and statistics required for tourism investment about opportunities, identify potential investor targets, facilitation (see Annex). Therefore IPIs would do well and to collect feedback on investor concerns and decision to align their efforts to existing strategies of national factors. Many embassies also house representatives of Figure 8. Partnerships upstream and downstream of investment facilitation 22 Global Investment Promotion Best Practices: Winning Tourism Investment the Ministry of Trade who are responsible for facilitating materials and information about opportunities to their economic activity between countries and promoting trade members. and investment opportunities amongst the host community. Accordingly, IPIs should seek to partner with the ministry in Existing investors charge of the network of embassies. In this way they can Feedback from existing investors can have a strong influence inform embassy staff, disseminate promotional materials, on prospective investors. Moreover, current investors often and establish communication with focal points within have a strong network of potential target investors. Local embassies in key investor source markets. private sector figures and companies can serve as great Foreign embassies and development partners “ambassadors” to market opportunities and disseminate information to potential targets, with whom they may even Similarly, it is common for potential investors seeking new end up partnering on new ventures. IPIs would be well opportunities in a foreign country to approach their own advised to consider individual briefings for these audiences. national embassy and development partners located in that country. IPIs may find it useful to brief relevant staff Relevant partners to lift individual barriers to within key foreign embassies on marketing messages and investment opportunities, and make arrangements to share information Finally, other strategic partners may help in the process about potential investors, investor visits, and investment of “hand holding” as investors progress through the opportunities. development and operation of new projects. Partners can Private sector groups manage specific barriers to investment, such as access to land, staff training, priority infrastructure development, Relevant local or regional private sector associations, such supply chain development, and regulatory reform. as those in the hotel industry, are likely to be interested Identified on an ad-hoc basis according to project-specific in partnering; new investment will help grow association requirements, these partners commonly include other membership. Associations may aid in identifying new government agencies and development partners. opportunities (such as existing members looking for international partners), gathering information about the Box 9 illustrates how Greece’s investment promotion agency market (supply and demand) and relevant operating leverages partnerships to build a portfolio of tourism costs and procedures, and disseminating promotional investment opportunities. Promoting Tourism Investment: Improving Performance 23 Box 9. Invest in Greece Agency: Building a portfolio of tourism investment opportunities The Invest in Greece Agency (IiG) is among the few IPIs to achieve high scores on both the tourism-specific website content and the GIPB 2012 investor inquiry assessment. The tourism section of the agency’s website describes Greece’s key strengths as a tourism destination, tourist arrival trends, and relevant growth drivers. Short paragraphs on priority tourism subsectors and target areas link to more detailed subsector profiles. These introduce some successful existing projects as well as projects in the pipeline, and are enriched by success stories, links to existing projects, and contacts for further information. In its response to the GIPB 2012 “mystery shopper” inquiry, IiG was able to build on the website content to deliver more detailed data customized to individual investor requirements: • Suggestions on which Greek regions are best suited for the intended investment project, describing their main highlights and critical tourism market information. • A list of nine projects in the pipeline that might fit the investor’s requirements, including public tenders for concessions of public assets, privately and publicly owned land plots available for tourism development, and private tourism projects seeking equity investment. Individual profiles comprise a description, map, photos, details of the owner, and type of transaction proposed. This comprehensive response was the result of the agency’s systematic effort over the last four years to compile an investment projects portfolio, from which the investment promotion unit could draw information based on the interests of individual investors. The portfolio includes greenfield projects, business plans, and real estate assets of existing companies, from public and private sponsors. Private project owners range from small firms to listed companies. For each project, a nondisclosure agreement is signed between the project owner and IiG. The agency then compiles a short project teaser for potential investors in coordination with the project owner. When asked how the projects were identified and screened for quality assurance, the agency’s investment promotion team explained: “IiG’s project portfolio is continuously fed thanks to effective partnerships with various government entities, local communities, businesses and business associations, and other public and private stakeholders who bring projects to the attention of the agency. We do not perform a complete due diligence for each project because the ultimate responsibility rests between the project owner and investors. However, the experience that we have gained over the years allows us to rapidly screen and assess the viability and the maturity of investment projects. We do check certain indicators of the financing capacity of the company, the maturity of the project (for example, licenses and permits), and its compatibility with national and European laws.” Project portfolio system of the Invest in Greece Agency: • Selection of sectors that can yield attractive investment projects based on Greece’s competitive advantages. • A dialogue with the international investment community to assess the appetite of potential investors and derive criteria for selecting portfolio projects by sector. • Creation of a network of state and privately owned companies, associations, public sector bodies, and local community partners that will help feed the portfolio with potential investment projects. • Creation of a common layout and a presentation template for the promotion of projects. • Signing of a nondisclosure agreement with project owners. Demonstrated professionalism and confidentiality by the agency’s executives is key to building confidence with project owners and ensuring a constant flow of potential investment projects. • Selection of projects according to specific criteria, site visits, and preparation of detailed project presentations, sometimes with the aid of renowned investment banks; all materials are vetted by the project owners. • Maintenance and promotion of portfolio projects. Promotion strategies are designed for individual portfolio projects or groups of projects in accordance with the sector, project size, and target investors. • Arrangement of business meetings between project owners and potential investors, and support for project owners to build the business case. The effectiveness of this matchmaking process is key to fueling the interest of project owners. Sources: www.investingreece.gov.gr, www.globalinvestmentpromotion.com 24 Global Investment Promotion Best Practices: Winning Tourism Investment Box 10. Mozambique: Lessons from a highly focused investment generation program This case study presents a non-IPI initiative that provides a good example of focused and targeted investment promotion and facilitation. With 2,700 kilometers of tropical coastline, “protected areas” comprising about 15 percent of the country and a vast range of cultural attractions, Mozambique has a wealth of natural tourism assets. Yet tourism growth has been slow and erratic, in part because of the difficulties perceived by international investors in accessing suitable investment sites. In this case, investors may have been aware of the country’s potential for tourism investments, but individual opportunities were hard to find, and the acquisition procedures were unclear. Determined to address this issue, Mozambique’s Ministry of Tourism decided to proactively prepare and facilitate a number of landmark tourism investments in priority areas identified in the National Strategic Tourism Development Plan. In 2006, the Mozambique Tourism Anchor Investment Program was born. The program’s approach involved five main steps: • Identify target investment sites. Four suitable sites were initially selected for resorts and eco-lodges, in line with the country’s strategic tourism objectives and early industry feedback. • Create an environment conducive to investment. A new Tourism Interest Zones regulation was created to allow the government to earmark certain sites for tourism development. Moreover, a new Investment Law regulation was approved, allowing certain types of tourism investment projects to apply for Special Economic Zone status. This status requires specific obligations on the part of the project, but also specific incentives not otherwise available outside the zones. • Proactively secure selected sites. The sites were secured and allocated to either an agency of the Ministry of Tourism or community-owned structures for onward concessioning to private investors. This ensured that the sites were legally ready for acquisition. • Promote the sites to potential investors. Based on the site characteristics, potential target investor profiles were identified and investor outreach activities were rolled out to target investors with matching profiles. An online inventory of downloadable documents relevant to tourism investors was created. It included sector strategies and plans, sector profiles and statistics, relevant reports, a comprehensive set of laws and regulations relevant to tourism (such as land, environmental impact assessment, tax, labor, investment), and process guides (such as investment, funding, licensing, land, environmental impact assessment, immigration, employment, and procurement). This measure contributed significantly to removing the barriers to information access as identified previously by investors. • Bring the sites to market through open and competitive bidding. An investor procurement toolkit was produced, including practical tools such as standardized tender documents (such as Request for Expressions of Interest and Request for Proposals), tender evaluation tools, sample contracts, and more. This proactive, focused, and targeted program won the Africa Investor “Tourism Investment Program of the Year” award in 2009 and 2011. It attracted more than 40 expressions of interest from investors, 15 site visits, and the first successfully completed tender for an eco-lodge with local community participation. Currently under construction, this lodge brings $3 million in foreign investment to a remote “protected area”, will generate 50 direct jobs, and crucially, provides a sound case for investors in the next round of promotion to this unexplored segment. Sources: www.ifc.org; www.tourisminvest.org; Investment Climate Advisory Services of the World Bank Group, 2012, Facilitating Large-Scale Tourism Resorts in Mozambique (Case Study). Promoting Tourism Investment: Improving Performance 25 Beyond the Provision of Information With the assumption that effective investment facilitation 3. Investor aftercare: once the investment project is up brings investors to IPIs’ doorsteps, IPIs must be able to and running, IPIs should be in regular contact with convert these leads into real investments and ensure that the investor; a happy investor is likely to reinvest and they are implemented smoothly. The following elements serve as an ambassador for promotion. This includes: should be part of this process. • Finding out about the progress, successes, and 1. Investor visits: this is often the next step, as investors challenges faced by the investor. seek to validate the information they have received. • Communicating successes through testimonials or IPIs can facilitate these visits by: success stories. • Planning itineraries. • Offering support to ease some of the challenges • Making local recommendations and bookings. and follow up with other government agencies. • Arranging meetings based on the investor’s 4. Policy advocacy: IPIs often play a key role on behalf preferences. of investors in advocating to initiate and steer • Showing investors the market, the sites, and the actions and reforms that are favorable to the success competition. and competitiveness of the investments and the destination. This role can entail: 2. Investor servicing: if all goes well, the investor will • Organizing private sector roundtables or start the investment process. Here again, IPIs have to public-private dialogue (PPD) to map and be reliable partners in: discuss key issues. • Guiding and catalyzing the investment process • Participating in government decisions to present (administrative procedures). and interpret the views of investors. • Brokering useful contacts (such as lawyers, consultants, financial institutions, and potential business partners). Beyond the Provision of Information 27 Conclusions Foreign investment in tourism is recognized as a significant 3. Develop information for investors in a form that is source of growth, employment, and improvement for meaningful for them. Generate powerful marketing a country’s overall tourism offering and revenues. This messages that emphasize relative strengths; positively fact is accepted by most countries and usually well address key concerns of target investors through the reflected in national tourism strategies and master use of well-sourced and up-to-date statistics, facts, plans. Unfortunately, many IPIs do not live up to those figures, benchmarked data, and testimonials. ambitions, as they are unable to deliver appropriate levels of investment facilitation service, and thereby miss out 4. Disseminate the broader messages through general on these opportunities. The GIPB assessment shows that communication channels such as IPI websites. Also a majority of IPIs, particularly in developing economies, develop more targeted communication materials lack basic investment facilitation skills as well as technical tailored to individual investors or groups offering knowledge in specific sectors. tangible and detailed information on specific opportunities. In relation to tourism, the five-step approach IPIs can take to improve investment facilitation performance includes: 5. Identify and leverage strategic partnerships to enhance promotion and facilitation of tourism 1. Strategically focus efforts on a limited number investments. Before an investment decision is made, of tourism subsectors and individual investment partners are essential in gathering and keeping opportunities based on competitive advantage and the information potentially required by investors the country’s tourism investment strategy; reach out up-to-date, identifying opportunities and sites, to particular target investor groups that best fit these disseminating the information, and helping identify opportunities. target investors locally and internationally. After investment, effective partnerships can help ensure a 2. Build IPIs’ capacity, systems, and tools to deliver smooth project implementation and remove obstacles best practice investment facilitation services with a faced by investors in their initial operations or special focus on developing in-house knowledge of expansion phases. In addition, partnerships can help the tourism market and a detailed understanding implement priority reforms. of the relative strengths of specific tourism investment opportunities. In particular, developing an understanding of how investors actually think and conduct transactions is critical to providing confidence to prospective tourism investors. Conclusions 29 Annex: Key Data and Sources for Facilitating Investment in Tourism Selling the Destination DATA POSSIBLE SOURCES Country overview and macro data such as: • CIA Factbook • Geography • Economist Intelligence Unit • Climate • World Bank Doing Business report and data • Politics • National Central Bank • Economy (GDP) • Satistics agency, and others • FDI flows • Investment climate indicators • Global benchmarking data Global benchmarking of tourism competitiveness World Economic Forum’s Travel and Tourism Competitiveness Indicators Trends and projections of: • National ministry in charge of tourism • Tourism spending • Tourism Board • Capital investment • Statistics agency • Revenues • Tourism investors/industry associations • Contribution to GDP and employment • World Tourism Organization (UNWTO) Statistics and • Visitor exports Tourism Satellite Accounts • Visitor numbers • World Travel and Tourism Council (WTTC) database Tourism offering such as: • National ministry in charge of tourism • Hotels by category • Tourism Board • Number of convention centers • Tourism investors • Beach lodges • Tourism industry associations, and others • Ski resorts • Golf courses • Marinas • Entertainment centers • Spas • Events and festivals Tourist access such as: • National agencies in charge of customs, transport, • Visa requirements airport, and others • Airlines and direct flights • Database of car rental agencies, travel and tour • Domestic/international airports agencies, and others • Road network • Conveniences such as ATMs Natural beauty indicators and key attractions: • National ministry in charge of tourism • Coastline • Tourism Board • Beaches • Travel guides • Islands • Peaks • Glaciers • Rare species and ecosystems • Cultural sites Awards such as: • National ministry in charge of tourism • Best beach • Tourism Board • Best destination • Specialized media • Best airline (continued on next page) Annex: Key Data and Sources for Facilitating Investment in Tourism 31 Protected sites such as: World Database on Protected Areas • National Parks • Nature Reserves • UNESCO World Heritage Sites • Ramsar Wetlands Other key tourism demand drivers. For example, large private • National ministry in charge of tourism sector or nongovernmental organizations attracting large • Tourism Board numbers of foreign visitors, conventions, sporting events, and • Other groups fairs Indicators of government commitment to the tourism sector: • National ministry in charge of tourism • National budget share for tourism sector • Tourism Board • Institutions • Investment code • Fairs and destination marketing activities • Other relevant policies and legislation • Specific legislation to promote tourism • FDI and foreign ownership laws and regulations • Description of IPI services News and events such as: • National ministry in charge of tourism • Recent demand drivers • Tourism Board • Key infrastructural developments • Domestic and international media • New tourism projects • Government agencies • New infrastructure projects • News websites • Relevant policy/legal/regulatory developments • Official gazette • Awards and benchmarking results • Relevant media appearances • Interviews/speeches Case studies highlighting existing tourism success stories and • Interviews with existing tourism operators and other testimonials by existing private sector or relevant government credible investors already established, or with senior executives executives of relevant infrastructures (such as airports) and government (for example, the Minister of Tourism) • National ministry in charge of tourism • Tourism Board • Tourism investors/industry associations Measures of: • World Economic Forum’s Travel and Tourism • Health Competitiveness Indicators • Education • Human Development Index (HDI) • Living standards • World Development Indicators • Corruption • Transparency International Corruption Index • Information and communication technologies • Mo Ibrahim Index penetration • Press Freedom Index • Press freedom • World Bank data • Safety • Environmental sustainability • Quality of tourism infrastructures Selling Specific Opportunities DATA POSSIBLE SOURCES Demand data • National ministry in charge of tourism • Foreign tourist arrivals, source markets, yearly and • Tourism Board monthly totals, trends, global ranking • Statistics agency • Arrivals by main tourism centers in country • Tourism investors/industry associations • Profile of tourists (such as type, age range, duration • Airport administration of stay, typical spend per night, repeat vs. one-off, key • Relevant subnational authorities interests) • Interviews and survey questionnaires to existing tourism • Domestic tourism trends and data operators • World Tourism Organization (UNWTO) Statistics and Tourism Satellite Accounts • International Congress and Convention Association (ICCA) for the Meetings, Incentives, Conferencing, Exhibitions (MICE) subsector 32 Global Investment Promotion Best Practices: Winning Tourism Investment Supply data • National ministry in charge of tourism • Lodging offering (number of establishments, rooms and • Tourism Board beds nationally, by region, by main tourism centers, by • Statistics agency hotel segment and star rating, and so on) • Tourism investors/industry associations • International hotel chains, reputable brands; recent • Interviews and survey questionnaires to existing tourism investments and mergers and acquisitions involving operators foreign capital • World Tourism Organization (UNWTO) Statistics and • Profiles of select existing projects (number of rooms, Tourism Satellite Accounts facilities, main clientele, occupancy rates, Average Daily • TripAdvisor and similar sites Rate [ADR], Revenue per Available Room [RevPAR], • IPI pipeline Gross Operating Profit per Available Room [GOPPAR], status and projects, consumer/industry feedback) • Planned new tourism projects (under construction or planned) Individual site data • National ministry in charge of tourism • Best areas to find sites with description and rationale, • Tourism Board relevant contacts including real estate brokers who may • Tourism investors/industry associations help identify property • National ministry in charge of land or other relevant • Individual site profiles, location, highlights, photos, land-owning ministries, possibly the natural parks assets inventories, amenities, relevant acquisition authority procedures, price indication or price range, and any • Subnational government authorities in key tourism applicable fiscal and financing incentives centers • Relevant local demand drivers, infrastructures, major • Real estate brokers development plans, and so forth • Site/areas comparisons with relevant comparable figures (such as local/subnational macro-data where available, number of visitors, number of establishments, rooms and beds, occupancy, RevPAR) Note: Data used to sell specific opportunities may vary greatly per type of tourism activity and should be made specific to the opportunities targeted — the sample data and sources given above are mainly relevant to accommodation. Detailed Investment Climate Information DATA POSSIBLE SOURCES • Tourism strategies • National ministry in charge of tourism • Master plans • Tourism Board • Materials from key sector institutions such as the Ministry of Tourism, Tourism Board, and National Tourist Office General and sector-specific government incentives relevant to • National ministry in charge of tourism, the tourism subsector and to the specific opportunities being • Tourism Board promoted • Relevant taxes • Relevant ministries and government agencies • Levies • World Bank Doing Business dataset • Customs duties (costs and procedures) • Database of construction suppliers with information on • Questionnaires and interviews with existing tourism costs and quality including per m2 costs for a range of project operators and construction suppliers construction types • Database of construction suppliers, with notes on track • Construction permits and procedures record and relevant costs data • National ministry in charge of tourism • Tourism Board, and other relevant ministries • World Bank Doing Business dataset Relevant license costs and procedures such as: • National ministry in charge of tourism • Environmental impact license • Tourism Board • Investment license • Relevant ministries and government agencies • Operating license • Hotel/restaurant/bar/liquor licenses (continued on next page) Annex: Key Data and Sources for Facilitating Investment in Tourism 33 Utilities and communications data: • Relevant ministries and government agencies • Availability • National utility companies • Providers • World Bank Doing Business dataset • Costs • Procedures Labor data: • Relevant ministries and government agencies • Education levels • World Tourism Organization (UNWTO) Statistics and • Literacy rates Tourism Satellite Accounts • Languages • World Travel and Tourism Council database • Employment in tourism segments, wages for various • World Bank data functions and skill levels • World Bank Doing Business dataset • Available training programs • Labor regulations; expatriate labor regulations Support institutions relevant to the tourism sector that can serve • National ministry in charge of tourism as alternative sources of information (list, description, contact): • Tourism Board • National ministry in charge of tourism • Tourism investors/industry associations • Tourism Board • Chamber of Commerce • Tourism investors/industry associations • Relevant sector associations • Legal offices and consultancies • Financial institutions Inventory, description, and an electronic library of relevant laws as • National ministry in charge of tourism well as regulations • Tourism Board • Relevant ministries and government agencies • World Bank Doing Business dataset Inventory, description, and an electronic library of relevant • National ministry in charge of tourism tourism sector reports • Tourism Board • Development partners 34 Global Investment Promotion Best Practices: Winning Tourism Investment World World Bank Bank World Group Group Bank Group In partnership with