Licensing Case Studies: Tourism Sector

Licensing Case Studies: Tourism Sector
February 2009
Draft for discussion not for circulation outside WBG. A revised version of this paper will be published in March/April 2009
FIAS The Investment Climate Advisory Service A multi-donor service managed by the International Finance Corporation, the Multilateral Investment Guarantee Agency and the World Bank
Disclaimer
The Organizations (i.e., IBRD, IFC and MIGA), through FIAS, endeavour, using their best efforts in the time available, to provide high quality services hereunder and have relied on information provided to them by a wide range of other sources. However, they do not make any representations or warranties regarding the completeness or accuracy of the information included this report, or the results which would be achieved by following its recommendations.
About FIAS
For almost 21 years, FIAS has advised more than 130 member country governments on how to improve their investment climate for both foreign and domestic investors and maximize its impact on poverty reduction. FIAS is a joint service of the International Finance Corporation, the Multilateral Investment Guarantee Agency and the World Bank. We receive funding from these institutions and through contributions from donors and clients. FIAS also receives core funding from: Australia Canada France Ireland Luxembourg Netherlands New Zealand Norway Sweden Switzerland United Kingdom
Contents
Executive Summary .......................................................................................vii The tourism sector................................................................................vii Business licensing as a form of regulation ..........................................vii Key findings .......................................................................................... ix 1 2 Introduction .......................................................................................... 1 Tourism Sector Overview.................................................................... 3 Defining the tourism sector.................................................................... 3 How big is the tourism sector?............................................................... 4 Recent trends in the tourism sector ........................................................ 5 Country experiences with developing tourism ...................................... 5 3 Regulation of the Tourism Sector ....................................................... 7 Rationale for government regulation ..................................................... 7 Regulatory and institutional duplication ................................................ 8 Other trends in the regulation of the tourism sector ............................ 13 4 Licensing and the Tourism Sector .................................................... 19 Licensing of tour operators .................................................................. 21 Comparison of good (Australia) and bad (Tanzania) practice for design and administration of a tour operators license ..................................... 22 Context ..................................................................................... 22 Licensing of accommodation ............................................................... 27 Comparison of good (South Africa) and bad (Bulgaria) practice for design and administration of a guest house operators license ............. 30 Context ..................................................................................... 30 Discussion ................................................................................ 33 Licensing of tour guides....................................................................... 34 Discussion ................................................................................ 38 5 Tourism Sector Licensing: Case Studies......................................... 41 Setting a context ................................................................................... 41 Discussion ................................................................................ 45 Discussion ................................................................................ 48 Discussion ................................................................................ 50 Satisfaction of tourists.............................................................. 50
Content
Sustainable destinations ........................................................... 51 Competitive firms .................................................................... 52 Discussion ................................................................................ 54
Appendixes A B Regulatory and Administrative Environment for Tourism in Kenya ... 55 Institutional and Administrative Environment in Tourism in Kenya ... 59
List of Boxes Box 1: Balancing tourism sector interests: the 2008 Olympic Games ............. 8 Box 2: Comparison of good and bad practice for design and administration of a tour operators license................................................................... 23 Box 3: Comparison of good and bad practice for design and administration ..................................................................................... 31 Box 4: Comparison of good and bad practice for design and administration of a tour guide license......................................................................... 36 Box 5: World Travel and Tourism Council (WTTC) 2008 World Tourism Review. ............................................................................................... 44 Box 6: World Travel and Tourism Council (WTTC) 2008 World Tourism Review. ............................................................................................... 47 List of Figures Figure 1: Economic effects of tourism: direct, indirect, and induced .............. 3 Figure 2: International tourism receipts by developing regions, 1974-2004 .... 4 Figure 3: Tourism sector framework .............................................................. 41 List of Tables Table 1: Features of selected tourism licensing areas .....................................xii Table 2: Tourism: what can be regulated? ....................................................... 8
Content
vi
Executive Summary
The tourism sector
Broadly defined the tourism sector includes provision of a wide range of goods and services used or consumed by tourists who visit a destination. Core tourism services include tour operators, accommodation and tour guides. However, this sector also can include airlines and airports, national parks and recreation areas, historic and culturally important places, public transport, taxis, travel agencies, casinos, sports and recreation services, restaurants, bars, retail outlets and financial and insurance services, etc. The tourism sector as defined internationally is large and has grown rapidly since the 1960s when tourist numbers were estimated at little over 100 million. In 2006 the sector generated around 10 per cent of world gross domestic product (GDP) and provided around 8 per cent of world employment. Tourist numbers have grown to 900 million per year and around 35 per cent of World tourists travel and stay in developing countries. Licensing as a form of regulation is commonly used to regulate the tourism sector.
Business licensing as a form of regulation

What is business licensing? Business licensing is a commonly used form of regulation which affects specified businesses and occupations by regulating entry into markets and conduct within markets. Licenses typically impose on businesses a range of conditions, obligations and rights. Developed and implemented appropriately, licenses as a regulatory tool can address market failure and offer a number of potential benefits. These include allowing governments to identify, verify and contact businesses, exclude businesses unlikely to meet minimum standards and allow the controlled use of valuable and scarce community resources (such as forests or fisheries). Potential costs of business licensing However, from an economic and business point of view licensing is a potentially costly and potentially damaging regulatory intervention compared to other types of regulation (such as broadly applied competition law and accounting rules, or other light and targeted forms of regulation). This is because licensing requirements not only impose regulatory compliance burdens (as do most types of regulation), but also can restrict healthy competition by establishing significant and unnecessary entry barriers to any particular economic activity. Unnecessary restrictions on competition and
Executive Summary
vii
highly prescriptive licenses can be very damaging to the operation of effective markets. 1 Importantly, the discretion often provided to officials in issuing, implementing and interpreting licensing criteria can also lead also to a mushrooming of licenses, corruption and associated compliance costs for businesses and broader society. Indeed, regulatory systems in many developing countries have grown beyond quality control or even measurement. Recent studies by the World Bank Group (WBG) in Kenya and Ghana found that the scope of licensing regulation was far larger than previously identified and that businesses were overwhelmed with licenses, fees, and compliance costs. One conclusion is that regulatory bodies, including at local levels, have a direct financial interest in creating new licenses and business fees because these revenues support staff salaries (Jacobs, 2006). 2 When should licensing be used? As with other all other forms of regulation, licensing should only be used where net benefits are generated through its use and where licensing is the best way of achieving broader specified objectives. Indeed, cognizant of these constraints and potential negative effects of licensing, many governments apply international good practice by limiting licensing to specified sectors and activities where prior control of the behavior of businesses is deemed necessary to achieve important economic, social, safety, security or environmental outcomes. Licensing and the tourism sector For this paper, licensing practices in the tourism sector were reviewed in 32 countries. This report critically examines the role and effectiveness of tourism sector licensing in enhancing the tourism sector in a range of developed and developing countries. This report explores why regulation and more specifically licensing interventions can be justified in the tourism sector, what specific aspects of the sector could be subject to sector-specific regulation and licensing, and how these interventions can be organized to deliver most effectively and efficiently on sector policy objectives. Good and bad licensing practices This report also describes and analyzes examples of good and bad licensing practices in different regions of the world and in different subsegments of tourism. This includes identifying where tourism sector licensing
1
They often impede competition, innovation and the capacity of firms to respond to external shocks (such as significant and unexpected changes in input prices) or changes in consumer preferences, thus reducing significantly levels of productivity and wealth creation. 2 For example, in Mozambique, where tourism investors feel that the business environment is hampered by excessive regulation and fining by the public sector, it was found that local government inspectors salaries are subsidized by fines collected from tourism operators (2008 Mozambique Country Economic Memorandum; Tourism Chapter).
Executive Summary
viii
is appropriate and how such licensing can be applied in an effective and efficient manner. It also identifies where licensing is not appropriate or where its use can be justified, but where it has been administered in a way that generates unnecessary costs and burdens on business and society.
Key findings
The regulatory environment in tourism is most effective when it acknowledges and encourages the well-being and image of the destination and also the suppliers that constitute its tourism sector. However, internationally, a common feature of regulation of the tourism sector is the provision of a poor regulatory environment which often lags behind and impedes the economic development and growth of the sector. The general failure of regulation in the tourism industry has given rise to a more thorough discussion of alternatives to traditional command and control regulation, including a shift towards self-regulation (but always with credible government endorsement and monitoring) and ex-post regulation combined with risk-based, heavy-penalty enforcement. The report also notes that countries apart from a few exceptions have generally failed in providing integrated, effective and efficient regulatory regimes for the tourism sector. Licensing has significant impacts on the tourism sector The report notes that well-considered policy approaches to tourism sector licensing are very relevant to the overall sustainability and growth of the tourism sector. Licensing as a form of regulation is used extensively in the tourism sector worldwide, even though many parts of the tourism sector do not warrant such heavy-handed government regulation. For example, there is a tendency for developing countries to treat tourism licensing as an up-front tax on enterprises. A recent study on tax regimes in developing countries (World Bank, 2008, Draft Note on Taxation in Tourism) found tourism enterprises are heavily taxed on essential inputs that would otherwise improve their quality of service and thereby their growth and profitability. This is in contrast to approaches to taxation in many developing and developed countries which facilitate rather than impede private sector growth in tourism. That said, there are parts of the tourism sector where government intervention such as licensing is warranted to mitigate risks, enhance the reputation of destinations and promote tourism. Reforms of licensing in the tourism sector should obviously be informed by sector-wide perspectives beyond licensing. However, evidence suggests that licensing practices in the tourism sector are particularly susceptible to many of the general abusive bad practices associated with licensing generally, including corruption, lack of coordination, duplicative regulation. Onerous licensing requirements are often applied due to an intent to micro-manage and control the market, but do so in a very damaging manner which impedes development and growth of the sector in this case, tourism, but this is often a systemic licensing problem across sectors.
Executive Summary
ix
This suggests that a significant share of problems (and solutions) of licensing in tourism can be dealt with as part of a comprehensive business licensing reform. Licensing streamlining (guided by overall policy considerations) is often the most appropriate way to review and streamline licensing regulatory systems. Other supporting regulatory and institutional reforms can follow the initial comprehensive reforms to licensing. Licensing, cost recovery and taxation Regulation, including interventions through licensing, is clearly justified in many segments in the tourism sector. However, evidence suggests that the de facto reasons for establishing and maintaining licensing in the tourism industry are often not regulatory but fiscal. Indeed, as in other areas of licensing, tax revenues from licensing are in some cases the only way some local government authorities can raise revenue to pursue other legitimate policy objectives and obligations (i.e., health, safety, primary education). The implication of this is, among others, that sustainable solutions also need to address the inter-governmental fiscal transfers as well as licensing reform. Licensing of tourism transport, accomodation providers and individual tour guides good and bad practices This report examines licensing practices in the tourism sector by focusing on three segments where there appears to be justification for licensing; (i) tour operators (typically tourist transport, activity and excursion providers), (ii) accommodation providers, and (iii) individual tour guides. The report illustrates examples of inconsistencies and duplication in licensing in these segments worldwide. For example, in Zambia hotels require annual licenses to operate from the Ministry of Tourism, Environment and Culture, and the Ministry of Local Government (under new decentralization legislation) and also from the local municipal authority. With harmonization there need only be one such license, at no detriment to legitimate policy goals and significant savings in government resources. In reporting on good and bad licensing practices in these market segments, this report also contrasts examples of good and bad licensing practices. For example, bad licensing practices include excessive regulatory and financial requirements in Tanzania making it difficult for local operators to participate in this market. As a good practice for licensing of accommodation, South Africa has made it easy for small and medium enterprises to participate by applying a light-handed approach which is tailored to the type of accommodation provided and also integrated with broader regulatory requirements. By contrast, licensing in Bulgaria discourages provision of a wide range of tourist accommodation options, including the participation of small and medium sized enterprises. For the licensing of tour guides, in Belize the requirements are tailored to the needs of tourists (including in niche markets) and do not impose onerous obligations on tour guides. By contrast, in Vietnam licenses for tour guides emphasize academic achievement, which
Executive Summary
creates unnecessary barriers to entry (including for potential guides from rural areas and representing ethnic minorities) and does not emphasize qualities which are generally recognized as being important for successful tour guiding. Approaches to regulation and licensing of tourism in different countries The report uses examples of tourism sector regulatory environments in different countries to highlight the connection between a national vision for tourism, policies and legislation and illustrates how licensing practices may or may not support policy objectives. The tourism policy in Kenya for instance is disconnected from licensing practices that are narrowly focused on revenue generation. In Mauritius, the government has recently introduced a licensing regime aimed at regulating mushrooming informal operators that are a potential threat to the established exclusive image of tourism. However, there has been little attempt to communicate this new legislation to the intended target groups and there is no support mechanism envisioned to encourage informal operators to become licensed. In Mexico there is a strong connection between policies and institutions and their role in regulation of the sector. The light regulation of the sector has helped Mexicos tourism industry grow in to one of the top ten destinations in the world. However, in some areas (Cancun for instance) light regulation has resulted in environmental and social threats that will require mitigation. Finally, the regulation of the tourism industry in Switzerland is viewed as good practice in connecting institutions, policies, and the private sector to common national objectives. The report highlights the importance of integrating the use of licensing in the tourism sector with broader approaches to licensing by different agencies and across sectors, as well as with tourism sector policy. The following table presents an overview of key features and issues relating to the three areas selected for detailed review in the text: licensing of tour operators, accommodation and tour guides. The table combines sound regulation principles (why regulate?, why license?) with real world practices (typical problems) drawn from the examples in the report. It is apparent that whilst most countries acknowledge the rationale for regulation and licensing in policy statements, practices on the ground do not reflect simple principles. For instance, while the rationale for regulating tour operators should be limited to ensuring public or tourist safety and ethical practices it was found licensing requirements were often aligned to a range of other objectives such as raising revenue and excluding foreigners. Licensing requirements tend to be excessive, but actual regulation is weak.
Executive Summary
xi
Table 1: Features of selected tourism licensing areas

Why regulate? Key activities subject to licensing? 1. Transport 2. Trade in foreign exchange 3. Personnel Why license? (what are the advantages / benefits of licensing?) 1. Ensure public/ tourist safety 2. Formalize enterprises 3. Market access Typical problems associated with licensing 1. Onerous prelicensing capital requirements 2. Too long to obtain license 3. Inspections 4. Often centralized, but operators are in remote areas 5. Unclear and difficult to enforce regulations 1. Onerous prelicensing requirements 2. Too long to obtain license 3. Inspections 4. Multiple licenses required 5. Unclear mandates for issuing licenses Restricts competition Key tools / approaches to streamlining Reduce licensing requirements Eliminate inspections Localize licensing Best practices (and why, very briefly) Localized licensing and enforcement Emphasis on consumer feedback and selfregulation
Licensing tour operators
Public safety Ensure ethical practices
Licensing of accommodation
Public health and safety Enviro nmental impact Formal ization
Licensing of tour guides
Public safety
1. Construction 2. Fire and safety 3. Health and hygiene 4. Key personnel 5. Multiple operationa l aspects Specialize d areas of practice
1. Ensure public/ tourist health and safety 2. Improved planning for the sector 3. Establish standards 4. Market access
Consolidate multiple licenses Clarify mandates
Preopening inspection carried out by a joint team Inspection thereafter carried out jointly
1. Formalization 2. Market access
Localization of the guiding service
Executive Summary
xii
Introduction
The report is divided into four sections. Section A provides a brief overview of the tourism sector, including data on the size and relative importance of the sector globally, overall growth trends and particular issues and risks which are relevant to the discussion of licensing in this sector. Also, an overview of licensing principles and a description of kinds of economic activities in this sector subject to licensing, noting divergences across countries. Specific rationales for licensing regulation in the sector and conceptual advantages and disadvantages of using licensing are also described. The section also provides an overview of licensing reform experience from different regions of the world including, where appropriate, aspects of the costs of licensing both to the licenser and the licensee. Section B uses the results from a structured template and diagnostic framework to analyze licensing design and administration processes in three different subsegments of the tourism supply chain: tour operators, accommodation and tour guides. Case study examples from Tanzania and Australia are used to illustrate different approaches to tour operator licensing, South Africa and Bulgaria are used to compare approaches in licensing guest houses and the approaches in Belize and Vietnam to tour guide licensing are contrasted. Section C takes the discussion to the national level and cites four country case studies to illustrate good and bad practices at the macro level, focusing particularly on the underlying objectives and principles used for licensing in the sector in the selected country and an overall summary of the effectiveness, efficiency and transparency of licensing. The legal basis for licensing is described and commentary on features of licensing regulation and/or administration in the country and sectors that is particularly good, innovative or bad is provided. Country case studies from Kenya, Mauritius, Mexico and Switzerland are used to illustrate different approaches.
1 Introduction
1 Introduction
Tourism Sector Overview
Defining the tourism sector

Anyone who travels away from their usual home for more than a day is considered a tourist 3; on any given day in 2005, 300 million people slept away from home (Buhalis and Costa, 2006). What that traveler spends in their final destination is measured as tourist expenditure or spending. Anybody who provides a service, either directly or indirectly, in connection with that journey (e.g., advertising and marketing, transport, accommodation, insurance or excursions), or a good purchased as a result of that travel (e.g., souvenirs and crafts) is considered part of the tourism industry. Figure 1 shows how tourist spending drives a tourism economy in a host destination through direct, indirect and induced expenditure. Figure 1: Economic effects of tourism: direct, indirect, and induced
Tourist Spending Tourism Economy
Accommodation Tour Operators Travel Agencies Activities Entertainment
Direct Effects
Indirect Effects
General Economy
Other sectors - Agriculture - Manufacture - Services
Induced Effect
LINKAGE
Wages
World Economy
Imports
Source: Adapted from Lejarraga and Walkenhorst (2006)
In relation to a given country the following three basic forms of tourism can be distinguished:
The most widely accepted definition of a tourist (utilized by the UN World Tourism Organization and all its member countries) is someone who travels away from their home for more than one day and less than one year. For foreign tourists this involves visitors who stay at least one night and less than one year in collective or private accommodation in the country. In the domestic market, a tourist is a resident who spends the night away from their usual environment and also less than one year.
2 Tourism Sector Overview
LE AK AG E
3
E AG AK LE
Domestic tourism, which includes the activities of resident visitors taking trips within this country; Inbound tourism, which includes the activities of non-resident visitors taking trips to this country; it includes all visits parts of those trips, even those outside this country; Outbound tourism, which includes the activities of resident visitors taking trips outside this country; it includes all visits parts of those trips, even those within this country.
How big is the tourism sector?

Tourists travel predominantly for three reasons, 4 business, leisure and to visit friends or relatives. The places that tourists travel to are destinations. Destinations too fall into three broad categories: cities and towns, natural sites, and cultural and historic places. Depending on their location and level of protection or importance, national, sub-national or municipal governments may have overall custodianship of these destinations as they are generally considered public goods. In some cases destinations may be subject to international oversight (e.g., UNESCO World Heritage sites). Figure 2: International tourism receipts by developing regions, 1974-2004
40.0 EAP 35.0 30.0 25.0 20.0 15.0 10.0 5.0

1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
LAC
MENA SSA SA
0.0
Source: Lejaarraga and Walkenhorst (2006), compiled from data of the World Tourism Organization (various records). Note: Countries are classified according to World Bank developing regions. EAP is East Asia and Pacific; LAC is Latin America and the Caribbean; MENA is Middle East and North Africa; SSA is Sub-Saharan Africa; SA is South Asia. Central and East Asia is omitted due limitations of available data for the region. According to UNWTO Statistical Abstract 2008, these three categories account for over 89% of global arrival statistics. Other categories include: Education and training; Health treatment; Religion/pilgrimages; Shopping; Transit and Others.
4
Travel & Tourism is currently one of the worlds largest economic activities. It is a leading industry in many countries, as well as the fastest growing economic sector in terms of job creation worldwide. In 2006, the sector generated 10.3% of world gross domestic product (GDP), providing 234 million jobs, or 8.2% of total world employment. According to the latest research by the industrys World Travel and Tourism Council (WTTC) released in 2008, world travel and tourism is expected to generate close to US$8 trillion in 2008, rising to approximately US $15 trillion over the next 10 years. The long term forecasts by WTTC also point to a steady phase of growth for world travel and tourism between 2009 and 2020 with an average growth rate of 4.4 per cent per annum, supporting 297 million jobs by 2020. For 83 per cent of countries in the world, tourism is one of the top five sources of foreign exchange.
Recent trends in the tourism sector

Global tourist numbers have grown from roughly 50 million recorded arrivals in 1960 to about 900 million in 2007 and during that time, arrivals to developing countries have increased from 3% to 42% as a percentage of global totals. Globally, tourism accounts for roughly 35 per cent of exports of services (UNWTO, 2008). In OECD countries, 10 per cent of total employment is in the tourism sector. In developing countries, employment rates may be higher as informal employment is generally high in the tourism sector. The prognosis for growth in tourismeven with growing fuel costsis a steady 4.8% for the coming decade (WTTC, 2008). In 1950, 97% of international tourists went to Europe or North America (in fact, to just 15 countries). By 2007 this had fallen to 58%. In the mid-1970s, only 8% of all international tourists visited developing countries. By the mid-1990s, this had risen to 20% and in 2007 over 35%. By 1999, more than 70 countries received over a million international tourist arrivals. In 2006, Asia and the Pacific was the second best performing region in the world after Africa with an estimated 8% rise in arrivals. In recent years, domestic and intra-regional tourism in the South has grown rapidly, especially in emerging economies such as China, Thailand, India, Korea, Brazil and Mexico (WTTC, 2008).
Country experiences with developing tourism

A few countries (e.g., Thailand, Mexico, the Maldives, and Mauritius) have used their tourism assets to help transition from low to middle income status. In these countries a strong political economy for tourism has facilitated extensive policy and legislative reform which, coupled with infrastructure investments, have created an appropriate enabling environment for private sector led growth in tourism. However, for most countries, tourisms political economy remains weak (Dieke, 2000) and tourism legislation and policy review and reforms have not
received adequate attention, particularly in the context of fast-growing tourism economies. The experience of Spainone of the most successful countries in international tourism developmentmay provide guidance to developing countries, many of which are in a similar situation to that of Spain in the 1970s. Spain's tourism development basically underwent two phases (UNCTAD, 2000). The first phase relied on strong backing of the State, including through the creation of hotel and tourism schools, investment in infrastructure, promotion of the destination abroad, the provision of credits for tourism development projects and the establishment of the paradores network, which set an important benchmark for quality standards in the hospitality sector. During this initial phase, Spain had to deal with several of the problems which plague tourism suppliers from developing countries, such as the bankruptcy of tour operators; in order to tackle this problem, the country set up a guarantee fund. The second, and current, phase is characterized by a narrower role for the Government, the deregulation of transport (including air transport) and of tour operators, and the rise of domestic tourism, which has strengthened national tourism service suppliers and provided a counterweight to the power of tour operators. Using tourism for shared economic growth objectives is a dimension gaining the attention governments. Tourism is largely free of the market-distorting price support and tariffs that inhibit developing country access to markets for agricultural and manufactures trade. The industry is labor-intensive compared with other non-agricultural activities and generates jobs that are more accessible to women workers than other sectors. Tourism also encompasses a range of enterprises from the large multi-national corporation to the micro-enterprise and can provide a rich diversity of downstream economic linkages into the local economy (Ashley, 2005). Also, tourism provides a critical avenue for off-farm diversification that the Operationalizing Pro-Poor Growth in the 1990s study identified as being a central aspect of pro-poor growth (World Bank, 2005).
Regulation of the Tourism Sector
Rationale for government regulation

Governments seek to achieve a wide range of social, economic, environmental and equity objectives through spending, taxation and through regulation. Government regulation provides rules, standards and guidance for individuals and organizations. Effective government regulation in tourism may be necessary to address a range of issues including: identified market failures such as providing consumers with information about costs or risks; achieving specific public interest objectives such as fostering a particular segment of tourism or the image of a destination (e.g., pro-poor tourism, community-based tourism, nature-based tourism); externalities such as pollution and public or consumer safety; contribution to public and common goods such as biodiversity conservation and the environment; and monopolies, where one producer (such as a national airline) exercises non-transitory market power to the detriment of consumers In this context, and in pursuit of good practice, it is also important that tourism sector licensing regimes should, through harmonization with other sectors legislation, contribute to macro level government or public interest objectives, such as inclusive economic growth, poverty reduction or environmental protection. Furthermore, it is generally considered inappropriate to introduce and operate licensing systems to restrict competition or generate additional tax revenues from the tourism sector. Challenges with determining appropriate levels of regulatory interventions are related to political ideologies, different interpretations of what constitute public goods, public interest, information failures, etc., and the different values societies attach to collective interests, protection of the individual against market abuse, and individual and entrepreneurial opportunity (World Bank, 2006). Having an effective regulatory system within specific sectors of economic activity, such as tourism, is a fundamental platform that enhances governance, international competitiveness, safety and health of tourists, environmental standards, investment, economic growth and employment within that sector.
3 Regulation of the Tourism Sector
Box 1: Balancing tourism sector interests: the 2008 Olympic Games

A good illustration of balancing different interests, including the tourism sector, is the action the Chinese government took partly in response to international media attention to curb pollution in Beijing ahead of and during the 2008 Olympic Games; the biggest tourism event in Chinas history. The Chinese government deemed the success and image of the Olympics to be the priority public interest and took heavy measures to penalize polluters such as heavy industry (factories deemed heavy polluters were to shut down for three months) and vehicle traffic (there was a 50% ban on vehicles entering the city during the games). This example illustrates the extent to which a tourism interest can drive public policy. One outcome discussed by the Chinese Government is to permanently change the regulations and standards for pollution control, requiring factories to install filtration systems that emit less pollution. 5
It is also important to recognize that public and private actors have different responsibilities and meet different cost/benefits during the use of a destination. Each destination product combines goods and services produced by the market with the local natural and cultural resources that represent the reason why the tourist chose this destination over its competitors. The preservation of such public goods and attractions is vital for tourist activities, but the costs to implement conservation measures are usually met by tourists and the host community (e.g., through taxes, access fees, etc.) and only marginally through licensing fees applied to private operators who receive the greatest economic benefits from being licensed. Consequently the public sector has a crucial role in ensuring optimal use of public resources and balancing the costs and benefits among all stakeholders.
Regulatory and institutional duplication

Perhaps the most challenging aspect of regulating and operating tourism-related enterprises is the fact that the activities of most enterprises cross-cut many different aspects of a countrys regulatory environment. The following table illustrates what can be regulated, under seven broad categories of activity. 6 Table 2: Tourism: what can be regulated?
Tourism Goods & Services Provided Related areas of regulation Planning and land use Construction Utilities Labor
5 6
http://www.guardian.co.uk/environment/2008/jul/19/pollution.china TSA is a system of accounting developed primarily by the UNWTO in order to foster the development of national systems of tourism statistics along the lines of existing Systems for National Accounting that are used in compiling the Balance of Payments. The objective was to give credibility to the measurement of tourism and provide comparability with that of other economic and social activities.
Tourism Goods & Services Provided
Related areas of regulation Import licenses Investment licenses Environmental Impact Assessment Operating license Work permits Senior Personnel (e.g., hotel managers license) Trading licenses (incl. catering, beverage, food, conferences, i.e.) Live music and events Business registration license Health and hygiene standards Food preparation and sale Fire safety standards Fuel storage Swimming pool, spa operation Grading and classification Foreign exchange Import licenses Security Insurance Real estate and time share regulations Planning and land use Construction Utilities Labor Import licenses Investment licenses Operating license Work permits Senior Personnel (e.g., managers license) Trading licenses (incl. alcohol) Business registration license Health and hygiene standards Food preparation and sale Fire safety standards Foreign exchange Import licenses Security Insurance Operational plans Route clearances Civil aviation regulation Maritime regulation Safety standards Investment licenses Import licenses Personnel (drivers, pilots, boat captains, balloon operators) Safety inspections Fuel storage
Accommodation
Restaurants, Bars, Nightclubs & Casinos
Air, Road and Water Transport Services
Tourism Goods & Services Provided
Related areas of regulation Foreign exchange Business and trading licenses Commercial passenger carriage Vehicle registration Speed governance Rental Insurance Labor Import licenses Investment licenses Operating license Work permits Trading licenses Business registration license Foreign exchange Insurance Promotion regulation Access limitations Non-governmental organizations Licensing and certification of specialized staff Pre-event licenses and approval permits Health and safety standards Licensing and certification of specialized staff (diving instructors, professional hunters, guides, etc.) Inspection and licensing of equipment Trading licenses Business registration Import and export licenses Retail space
Travel Agency and Tour Operator Services
Cultural and Natural Services Sports and Recreation Services
Retail Goods/Crafts
Compiled by Author
Whilst not exhaustive, the above list presents areas of regulation to which tourism-related enterprises are often subjected. Kenyas regulatory, institutional and administrative environment provides a useful example because it is considered somewhat typical for a developing country context. Appendix A illustrates the regulatory and administrative environments that potentially affect the regulation of tourism activities in Kenya; the list includes 44 different legislative instruments. The regulatory environment in Kenya is further complicated by fifteen government organizations regulating the tourism sector and 11 associations and civil societies which represent different markets in the broader tourism sector (Appendix B). A major compliance burden facing tourism-related enterprises is the requirement to deal with several different regulating bodies. For example, one city hotel in
10
Nairobi confirmed 7 that it holds 48 different annual licenses obtained from 31 different government administrative bodies. Whilst the face cost of these licenses is not high, the hotel employs one full-time licensing officer to keep these licenses up-dated. One challenge in trying to streamline licensing practices is that tourism ministries (or other agencies responsible for tourism) actually regulate only a small proportion of the licenses required in most countries. In the above example of the Nairobi city hotel, only 4 of the 48 licenses were issued by the tourism ministry. The distinction between the responsibilities for the well-being of the destination versus its constituent tourism enterprises presents a unique challenge for regulators because a recognized destination (or a mega-event like the Olympic Games) creates an economic opportunity with relatively easy market access (because the market comes to you) and low barriers to entry for SME service providers (e.g., tour guides, transporters, guesthouses, activity providers), as well as informal operators who free-ride the destinations brand. There is always a risk that the economic opportunity outweighs potentially damaging environmental and social issues leading to unsustainable tourism growth, and ultimately a decline in the attractiveness of the destination a tragedy of the commons or anti-commons argument (Heller, 1998). Other regulatory issues and challenges impacting the tourism sector There are numerous other regulatory issues and challenges impacting the tourism sector. This section identifies some issues that must be taken into consideration when reviewing a given tourism licensing system. Licensing can be a particularly powerful tool for sustainability by addressing certain market failures. At a micro level, a compelling example is informal (or illegal) hawkers, guides, and taxi drivers who crowd almost any site where tourists congregate (e.g., airports, markets, historical sites) negatively impacting the consumer experience. At a macro level, uncontrolled accommodation development, the result of a weak regulatory environment, in otherwise pristine natural or historic environments (e.g., beaches, wilderness areas, adjacent to historic or cultural sites) can negatively impact those destinations. The case study example of Mauritius presented later expands on these issues. To date most of the analytics related to regulatory reform have been directed at streamlining procedures to improve business environments and investment climates (investment climate assessments, enterprise survey reports, value chains, Doing Business reports, etc.). While this perspective is obviously important for industries trying to gain a competitive edge in manufacturing cotton garments or exporting peaches, in tourism, competition is primarily between destinations, and only secondarily between individual service providers (Buhalis, 2000, Inskeep, 1991). Consumer research shows that a tourist has typically already made a
7
Asst. Manager Serena Hotel, pers. comm, 08/15/08
11
decision to visit the destination where these services are then consumed (Kotler et al., 2006). Tourism trade and consumer markets such as World Travel Market in London and International Tourism Bourse in Berlin showcase destinations first and service providers second; consumer advertising usually leads with the name of the destination. Therefore the relationship between the assets, or unique selling points, of the destination (the features that pull tourists and on which the industry and the services it offers in that destination are dependent) and the service providers who sell access to these resources is just as critical to identify, regulate, and manage as the operations of the service providers and where possible policies should result in positive causal relationship. 8 Entry visas grant permission to visitors to enter a country under certain conditions (upon payment of a fee, restricted duration, without committing any crimes, etc.). Visa fees vary significantly from country to country and affect the price of entry into that country for the individual consumer; lowering fees lowers entry barriers, while higher fees have the opposite effect. Zambia is on the cusp of accelerated tourism growth based on the decline of tourism in Zimbabwe and increased investments in accommodation in the country. However, and apparently without wider consultation, the Ministry of Foreign Affairs has increased visa fees by 500%, sending the local tourism industry and their distribution channels abroad into a tailspin (Tourism Council of Zambia, 2008). 9 Regional and international trade agreements also contain regulations specific to the tourism sector, some of which have licensing implications for outbound tourism. From an analytical or advisory perspective, licensing provides: a) an opportunity to focus on upstream policies and legislation both in the tourism sector and where they relate to other sectors such as environment, labor, land, and
A further contextual dimension worth mentioning but outside the scope of this report, is the extent to which externally focused government policies in tourism sector (e.g., air transport regulation policy, immigration policy, and trade service agreements) may affect competitiveness and restrict or facilitate growth in the sector. For example, many countries with weak, state-owned airlines feel the need to protect their airlines by restricting competition (ComMark Trust, 2005). They focus on the potential impact on the national airline rather than evidence from around the world that the broader economic benefits of cheaper, convenient air travel far exceeds the direct revenue and employment generated by a national airline, particularly when the operation of the national airline may be contingent on direct financial subsidies, as most are. Air transport plays a crucial role in the development of tourism in developing countries, since it accounts for approximately 80 per cent of their tourist arrivals (UNCTAD, 2000). In many cases there is no alternative to air transport for consumers to reach tourist destinations in developing countries. However, the lack of coherence between air transport and tourism policies can seriously erode the potential of those countries' tourism sectors. The more governments restrict competition in their air traffic markets, the less competitive their own airlines become. 9 The most comprehensive treatment and thereby definitionof tourism characteristic goods and services is used in industrial statistics in the International Standard Industrial Classification (ISIC) that is used to derive the Tourism Satellite Account (TSA), Tourism Council of Zambia (May, 2008), Issues Note to Cabinet.
8
12
transport; b) reforms in the business or investment climate; and c) as a mechanism to support tourism growth strategies. There is enormous value in countries and destinations knowing how they can use tourism sector licensing to augment and align policies and growth strategies.
Other trends in the regulation of the tourism sector

Issue 1: The regulatory environment is lagging Despite the large economic and employment potential, the tourism sectorand particularly growth in the sectoris poorly managed in most developing countries. Even established destinations with abundant tourism resources, such as Kenya, have not invested in harmonizing appropriate policy, institutional and legislative frameworks to nurture tourism growth, protect core assets, and ensure equitable benefits for citizens (Global Development Solutions, 2007). Regulation and institutional organization in the sector is often left to outdated legislation, in many cases a legacy of colonial governance when the role of the private sector was very limited and regulation was designed to control competition to publicly owned enterprises. In Mozambique, for example, tourism until 2004 was regulated by Portuguese legislation enacted in 1957. In Lesotho, the sector is still regulated by British legislation from 1919. In Tanzania legislation before parliament in 2008 is repealing 1962 and 1963 legislation. In Bulgaria, the sector is regulated by legislation from 1952 when standards were developed for stateowned facilities and operations. The evidence from the literature reviewed and data collected during the preparation of this report is that in low income countries, licensing in tourism is not generally used as an opportunity to regulate and improve standards within the industry (giving it a better platform to grow and compete globally) but rather as a means of generating revenue for multiple government agencies; in other words a form of taxation or rent collection (the case study example of Kenya presented later illustrates this). Tourism sector enterprises, especially those involved in accommodation, are subject to multiple license requirements, such as construction, incorporation and registration, different aspects of business operation (such as food preparation and sale of alcohol), fire, security, health and labor, all valid for different periods, with different renewal times, fee structures and inspection procedures. Whilst it is recognized that all of the above contribute significantly to the compliance burden, there has been little effort on the part of governments to streamline these requirements by, for instance, including multiple licenses in one common operational license for an accommodation facility. Rather, in many cases, government decentralization in developing countries has further complicated licensing by abrogating some licensing responsibility to municipalities or local governments, often introducing inconsistencies, duplication, and a lack of transparency in the process. As examples in this report will show, in most countries tourism sector licensing is a complex and timeLicensing Case Studies: Tourism Sector 3 Regulation of the Tourism Sector 13
consuming process for both licensers and licensees and the rules of the game are in constant flux. Countries where tourism has been prioritized as a key economic sectorsuch as Mauritius, the Maldives, Thailand and Mexicohave revised national policies and legislation to foster efficiencies in public sector regulation including implementing second and third generation reforms of tourism legislation; Mauritius is on its fourth revision of tourism legislation. On the other hand, countries just beginning to recognize the value of tourism resources such as Zambia, Albania and Ethiopia, are stuck with outdated policies and legislation that hamper the growth of the sector. Issue 2: The sector is neglected This is not surprising given the context. Rapid growth in demand in tourism has occurred during a time when most developing countries have been going through transition of one form or another; from colonial governance to independent states, from centrally planned and public sector driven economies to private sector led economic growth and democratization, as well as different forms of decentralization. Most importantly, these governments lack resources and opportunities to bring revenue (through license fees, permits, etc.) directly into the coffers of a local municipality for instanceversus waiting for subvention from central governmentare few and far between; licensing fees and related fines are one such opportunity. Development partners have focused support on more traditional economic sectors such as agriculture and manufacturing; tourism, until the past decade, has received little attention (Hawkins and Mann, 2007) and tourism sector growth is unchecked in most developing countries. Despite most countries possessing tourism master plans that describe steps for sustainable tourism growth, few have found resources to implement these plans and tourism growth is largely opportunistic and in many cases unsustainable. The uncontrolled growth of tourism accommodation facilities in the Masai Mara National Reserve and similarly uncontrolled growth of accommodation along the southern Belize coastline are examples (among hundreds of others) of this unregulated and opportunistic environment. The lack of central government or specific development assisitance oversight and resources in the sector has resulted in opportunistic and predatory practices both in the public and private sectors. Overall licensing is excessive but actual regualtion is weak. Issue 3: Self-regulation is a growing feature Perhaps in response to the neglect described above, voluntary initiatives are playing an increasing role in regulating tourism operations; they usually address environmental, economic and social issues, targeting tourism suppliers, such as accommodation, restaurants, sport and leisure facilities, tourist attractions,
Licensing Case Studies: Tourism Sector 3 Regulation of the Tourism Sector 14
destinations, tour operators, (tourist) transport companies, tourist guides, and tourist associations. They have two principal definitional elements: on the one hand, the initiator is not obliged by law to propose and run the initiative; and on the other, the target groups are not obliged to apply or join. Examples of such voluntary schemes are, among others, eco-labels and certification schemes, prizes and awards, environmental management systems, codes of conduct, selfcommitments and self-declarations. In all over 100 global eco-label schemes exist (ECOTRANS). 10 Whilst it is acknowledged that many companies use voluntary initiatives for the label or brand value-added they provide, there is a legitimate consumer tide moving towards more responsible tourism. At the same time policy makers, business managers, government officials and consumers need clear and reliable information about goods and services in the tourism industry. Certification labels, awards and self-commitment schemes provide that orientation, along with guarantees of quality standards for different tourism-related products and services. The relevance of this for government regulation is that through promoting voluntary initiatives in self-regulation, governments may be able to gradually pull out of some areas of licensing, confident that the market is doing its job. The governments laissez-faire attitude in Switzerland and Austria, which are ranked first and second in WEFs 2008 Travel and Tourism Competitiveness Report, are good examples of this being accomplished successfully. Switzerland was chosen as a country case study for this reason. Issue 4: Competition is between destinations, not firms Unlike other industries, in tourism, products and services are consumed in situ and generally paid for as they are consumed; e.g., a taxi ride, a hotel room and a rafting trip. Therefore market presence and penetration is dependent on a strong brand which in turn contributes to an attractive tourism destination. The value addition and profit for the destinations suppliers of goods and services is underwritten by the image and uniqueness of the destination, or its brand value (Crouch and Ritchie, 1999). These comparative advantages (e.g., Mt. Kilimanjaro vs. Victoria Falls or Angkor Wat vs. Machu Picchu) are what countries or destinations base their competitiveness and marketing strategies on. Differentiation is the market strategy of destinations and these strategies work because of the need for variety in the market place. This feature of the sector places greater emphasis on governments getting the destination vision, policies and strategies right in order to tackle downstream regulation of the sector players. The implication for licensing is that governments could use it as a tool to enhance the brand of the destination. Clearly a destination positioning itself in the market
10
ECOTRANS is an independent non-profit organization that has been monitoring, analyzing and publishing voluntary schemes and best practices in tourism for over 10 years (ECO-TIP).
15
place as exclusive and uncrowded would need a regulatory instrument that limits use of the destinations resources. There is potential value-added (not to mention conservation benefits) for the use of a natural wonder like Ngorongoro Crater in Tanzania to be limited so that experience is perceived by consumers as being somewhat exclusive. Issue 5: Globally tourism has developed a dual economic structure The international travel and tourism industry is primarily driven by large multinational companies that collectively provide transport (airlines, cruise ships, coaches), accommodation (e.g., Intercontinental Hotels, Starwood Hotels and Resorts, Accor, Hilton, Marriott, Carlson) and tours and travel agency services (e.g., Globus, Thomas Cook, Mark Travel, Thomsons and emerging internet intermediaries like Hotels.com, Orbitz.com, Lastminute.com) on an industrial basis. They offer standardized products, and develop global strategies that enable them to make the best use of the local potential. On the other hand, in destinations SMEs dominate the supply side through offering tourism services such as accommodation, leisure activities, transport, and tour operations. The significance of this dynamic is that demand, hence purchasing power, is influenced by large companies with market access. Local SME suppliers who want to link up with these distribution channels need to meet their standards as well as being able to negotiate with them business to business. An effective licensing regime can facilitate this through providing benefits like marketing and training linked to licensing requirements. Issue 6: Informality is high A dilemma facing many countries is that high compliance requirements keep a number of establishments and individuals in the informal sector. This phenomenon strongly affects tourism, due to the prevalence of microestablishments and individual service providers (e.g., especially in transport, guiding and activities) in the sector. In Mauritius, for instance, because the cost of business registration remains higher than the expected benefits, only 2,500 out of an estimated 95,000 small businesses are registered; the informal sector captures about 30% of the tourist clientele (World Bank, 2006.). 11 In Nigeria, the informal sector is estimated to represent more than two thirds of the economic activity, and the absence of an adequate licensing regime in tourism leaves many tourism service providers (e.g., guides and drivers, for whom there is no entry point into the formal sector) almost entirely to the informal sector. Beyond obvious problems associated with informality (lack of access to credit, insecurity and unpredictability of business), the importance of the reputation of the destination in tourism make it a serious issue to address; a tourist who has had
World Bank, Mauritius, from Preferences to Global Competitiveness, Report of the Aid for Trade Mission, April 2006.
11
16
an unpleasant stay is unlikely to come back to the country or recommend the trip to anyone. The negative impact on the environment of unregulated tourist activities is a further consequence of informality: in many coastal tourism hotspots, in Indonesia, the Caribbean, Kenya and Mauritius, for instance, coral reefs are damaged by unregulated tour operators and in Zambia and Central African Republic unlicensed tourism hunting is contributing to a depletion of wildlife stocks (World Bank, 2007). 12 Issue 7: Externalities strongly influence demand Many factors outside the control of a given destinations stakeholders have the potential to dramatically influence demand, some of these include: a) Foreign exchange risk: tourism is an invisible export, meaning that tourists who spend their money in a host destination bring the same benefit to the host economy as if they bought goods in their own country exported from the host destination. Firms in host destinations that promote their products in source market countries have to price in the currency of that country, often, as in the case of forward-sold packages, up to a year in advance. For developing economies with unstable exchange rates this is a significant risk. Allowing tourism enterprises to deal in foreign exchange through licensing them to open foreign exchange accounts is a good practice that was not very common 10 years ago. Climatic disasters have a devastating impact on destinations and on their tourist industry. Recent examples include the hurricane which hit Grenada badly in 2003 and the tsunami which devastated Southeast Asia in late 2004. The tsunami resulted in the deaths of hundreds of thousands of people across twelve countries. Apart from the appalling human toll, the livelihood of the survivors is threatened because of the devastation of the infrastructure and the reluctance of many tourists to return to the area. Even minor climate change affects tourism. If there is a particularly hot summer in the UK there is usually an increase in domestic tourism and a corresponding decrease in outbound tourism the next year. Licensing regulations concerning insurance may go some way to mitigating the negative effects of climate disasters. Terrorism and insecurity: The devastating terrorist attacks on New Yorks World Trade Centre on 11 September 2001 also had an impact on the worldwide tourism industry, as people became afraid to fly. The result was a decline in worldwide travel for leisure and business. In October 2002 terrorists bombed a resort in Bali, killing over 200 people. The tourism industry in Bali was ruined at the time and only began to pick up again two years later. There have also been terrorist bombings in Turkey, Kenya, Tanzania, Sri Lanka, India, England, and Spain in the past few
b)
c)
12
World Bank (2008), The Economic Impact of Wildlife Tourism in Zambia
17
years. Each of these events results in loss of tourism for the area affected. Again insurance aspects linked to licensing may help cushion these impacts. d) Technology development: The main impact of new technology on consumers has been the Internet, which has given people the opportunity to be more independent and make their own travel and holiday plans and arrangements. This trend places a greater onus on the host destinations consumer protection standards, a practice is still lagging in developing countries. Also, tourism packaging trends in source markets such as intermediation and dynamic packaging, which allow consumers to tailor their tourism and travel purchases, are outpacing the regulation of SME service providers in host destinations.
Issue 8: Innovation Global distribution systems/computer reservation systems (GDS/CRS) and increasingly Internet distribution systems (IDS) such as expedia.com and hotels.com, are crucial in international tourism because of their growing use as a distribution channel and marketing tool for tourism products. They cater for the needs of different segments of the market, including the management of air and land transport services, the hospitality sector and entertainment services, as well as other ancillary services (such as payment, insurance and car hire) which make the commercial transactions and risk coverage feasible. As a result, they are extensively used by all suppliers of tourism services, such as tour operators, travel agencies, restaurants, hotel chains and car rentals, small and medium enterprises, and independent consumers of tourism products. In light of the increasing importance of GDS/CRS/IDS as a tool for marketing and trade efficiency, lower-cost access to the infrastructure, equipment and on-line services is crucial. Innovation dimensions are driven mainly by market forces and their implications on licensing regimes in the tourism sector in developing countries are not clear. However, other sectors such as international financial services, insurance and IT services are relevant and may be subject to regulation in other sectors.
18
Licensing and the Tourism Sector
Licensing is a form of government regulation that imposes on businesses (or individuals) a range of conditions, obligations and rights that in turn serve to regulate entry into markets and conduct within markets. As noted above, licensing is one of several themes within the overall administration of regulations impacting the tourism sector. Others include business registration, customs and taxation, land and construction, and inspection. Licensing has up to four key features, including: Search, application and payment Search where businesses identify regulatory requirements that apply to them. Application where businesses provide specified information (often a range of specified documents/forms) to a regulator to apply for a license to conduct specified business activities often in a particular sector. Payment where the applicant pays an administration fee to the regulator for processing the application; Approval to operate the regulator receives the business application for a license and provides approval to a business to operate in a specified sector; Conditions the business is expected to comply with standards, conditions and requirements specified in the license. Conditions can be applied prior to and/or after prior approval and; Enforcement the regulator enforces the specified license conditions, standards and requirements through a variety of measures. These can include screening processes prior to approval (ie. verification of the information provided) and verification processes after the license has been issued, such as audits and inspections. Each of these licensing elements can generate significant challenges for businesses which require a license, as well as for the licensing authorities. This section examines licensing design and administration processes in different countries for different sub-segments of the tourism sector. This is a logical entry point for understanding the implications of upstream policy and institutional harmonization on business operations and thereby aspects of the competitiveness of the sector. Though tourism is considered a broad and cross-cutting sector, this report only examines licensing regimes in those segments of the sector typically regulated by tourism ministries or related institutions. These include: tour operators (typically licensed tourism transport providers and activity/excursion providers), accommodation providers and tour guides. Taxis, restaurants, bars and retail outlets that may be used by tourists are excluded as they are typically licensed by local municipalities and/or industry ministries.
4 Licensing and the Tourism Sector
19
A framework of guidance for good regulatory design 13 has been developed by the OECD and can be applied to all regulation, including licensing: 1) Licenses must have a stated purpose 2) Licenses should be the minimum needed to achieve objectives benefits greater than the costs avoids unnecessary restrictions focused on the problem does not impose unnecessary burdens does not restrict competition unless demonstrated net benefit 3) Licenses should not be unduly prescriptive performance and outcomes focused general rather than overly specific 4) Licenses should be accessible, transparent and accountable readily available to the public and business easy to understand fairly and consistently enforced flexible enough to deal with special circumstances open to transparent and where appropriate independent appeal and review 5) Licenses should be integrated and consistent with other laws/regulations addresses a problem not addressed by other regulations recognizes existing regulations and international obligations 6) Licenses and procedures should be communicated effectively written in clear and concise language 7) Regulators should be mindful of compliance burden imposed by licenses proportionate to the problem
13
OECD 1995, 2002, Argy and Johnson (2003).
20
set at a level which avoids unnecessary costs 8) Licenses should be enforceable provides minimum effective incentives for reasonable compliance able to be monitored and polices effectively In this section of the report, templates (illustrating specific examples of good and bad licensing practices) based on the frameworks developed by OECD are used to standardize information collection and presentation, and allow meaningful comparison between commonly offered services.
Licensing of tour operators

Tour operators are the most diverse tourism sector players with most of their revenue coming from commissions from other industry suppliers, as they typically bundle transport, accommodation, insurance, health, activities, and excursions for consumers. They range in size from one-man operations to huge companies with thousands of employees, and from a local focus to a multidestination one. They may offer packages (e.g., a week on the beach) or tailored products directed at a specific market segment (e.g., diving, rafting, kayaking, cycle tours, walking, trekking, wildlife safaris, balloon trips, anthropology, conferences, etc.). As destinations evolve, tour operators take on different roles (Carey et al, 1997). In emerging destinations, tour operators start as small companies and pioneer product and market development, creating links between the host destination and source market distributions channels (often other tour operators) and open up the destination. As the destination grows and matures, two tiers of tour operator emerge; larger companies that become destination management companies (DMCs) and dominate the destination in terms of offering the mainstream products (in large destinations like the UK or USA there are dozens of DMCs, but in small destinations like Zambia there only two), and smaller companies that exist in niche markets offering specialized products. From the evidence of procedures examined for tour operator licensing in 16 countries (seven OECD, nine LIC and MIC), there are some major differences between practices in licensing design and administration for tour operators in developed countries and those in developing countries. Four major trends are noticeable. Firstly, in developing countries licensing frameworks for tour operators are fragmented and involve multiple government agencies. Whilst compliance costs associated with each individual license may not be onerous, the cumulative effect bears a significant administrative cost to companies. Secondly, in developing countries licensing design and administration is heavy and handled mainly by central tourism ministries whereas in developed countries it is light and issued by commerce-related local authorities. For example, the United
Licensing Case Studies: Tourism Sector 4 Licensing and the Tourism Sector 21
States, the UK, Switzerland, France, Germany (all in the top 10 destinations in the world) do not have dedicated tourism ministries. Thirdly, the role of the private sector in formulating policy and self-regulation is significantly different; in developing countries the role and influence of private sector associations remains weak. Rodrick (2004) suggests, in relation to industry regulation, that the right image to carry in ones head is not of omniscient planners who can intervene with subsidies to internalize any and all externalities, but of an interactive process of strategic cooperation between the private and public sectors which, on the one hand, serves to elicit information on business opportunities and constraints and, on the other hand, generates policy initiatives in response. The evidence of licensing procedures for tour operators suggests that tourism sector regulation more or less follows this rubric, with more advanced destinations in developing countries having developed a good model of collaboration and balance between state and industry-led regulation. Fourthly, in developing countries, tour operators, whatever size or activity they are engaged in, are treated in the same way by regulators, with a catch-all, heavy licensing regime that in many cases is a significant barrier to entry, but with very little capacity to review or monitor standards and then to ensure compliance. For example, 2007 tourism legislation in Tanzania requires tour operators to own a minimum of five vehicles and to prove the existence of an office and various equipment before they are licensed (each of which in turn requires various licenses). These are significant, and unnecessary, barriers to entry for local entrepreneurs. A final contextual observation is that in developed countries where strong institutional and regulatory structures in supporting industries exist (such as national parks services, tax authorities, transport regulators, accommodation regulators), licensing regimes are light, but the level of regulation, for example, for access to attractions such as national parks, operating tourism transport vehicles, or health, fire and safety standards in a hotel, are strictly enforced and may be subject to licensing requirements of their own.
Comparison of good (Australia) and bad (Tanzania) practice for design and administration of a tour operators license
Context Australia is especially relevant for this review as it is considered a low yield destination 14 and 95% of its tourism sector players are SMEs (OECD, 2006).
Yield (expressed as cash spent in the destination) per tourist is a commonly used benchmark for productivity of different destinations.
14
22
Tanzania is aspiring to grow the SME sector in tourism, trying to break open the tourism value chain to include more local players. Box 2: Comparison of good and bad practice for design and administration of a tour operators license
Location: Australia: Commercial Tour Operations License Activities Allowed: Commercial Tour Operations including safari tours and guided walks. Additional license required for operating motor boats or for interaction with protected areas. Examples of the types of operations that may be conducted commercially include: Vehicle tours or safaris guided walks, charter tours, adventure operations such as white water rafting and rock climbing, and minor facilities and services such as souvenir outlets. Location: Tanzania: Tour Operators License Activities Allowed: Tour or safari operators,
motor vehicle hire enterprises offering tour transport facilities, whether self-driven or chauffeur-driven, big-game fishing outfitters and operators, safari, hunting or sightseeing lodges and proprietors of tented camps catering to tourists, travel bureau or booking office, which (alone or with other business) offer tour safaris other than those of an airline, professional safari photographers, mountain climbing.
Comments: Similar types of activity are allowed by the overall license. The differences emerge when for example an operator wants to run a fishing safari. In the Tanzanian case further licenses (and large payments - $16,500 required for a charter boat license) are required whereas in the Australian case proof of knowledge through certification is the requirement for a license. Also in Australia gaining access to protected areas or other fragile ecosystems requires certification. Only fees are required in Tanzania and the opportunity to use licensing to regulate access to fragile natural resources is lost. Who Issues and Administers the License: Who Issues and Administers the License:
City of Perth: Department of Environment and Conservation (DEC) Ministry of Natural Resources and Tourism (MNRT), Licensing Board, and Directorate of Tourism. Approvals from all three sections of the same ministry are required before a license may be issued.
Comments: Fully decentralized administration in Australia, down to borough level vs. centrally administered in Tanzania. Administration process is more onerous in Tanzania. Rationale for the License: By issuing of Rationale for the License: The government of
licenses, not only can DEC allow legal access for appropriate commercial use of public land, but it can monitor access, use and environmental impact of commercial businesses to ensure natural and cultural values are protected. Through a license fee, commercial operators contribute to the management and protection of these areas so everyone can revisit them in an unspoiled condition and ensure that the conservation values of these areas are maintained. Tanzania is determined to maintain its tourist resource base in an adequate manner as it forms part of the public resources, improve the existing tourism infrastructure and develop it further so as to accrue higher revenues. In this regard, quality is essential across all elements of tourism.
Comments: Both captions above are taken directly from the mission statements of the respective government bodies. Both are essentially aiming to preserve public resources. However, the rationale for licensing and its link to broad objectives are clear in the Australian case, but vaguely expressed in the Tanzanian one. The Australian case embraces the operator as a stakeholder and partner, while the Tanzanian sets a more autocratic tone of government control. Licensing Steps: 1. Fill out the form, 2. Attach Licensing Steps: 1. Fill out the form, 2. Attach
form, all required documents and admin fee and send to local Licensing Officer, 3. License issued within 7 days, any problems licenser will contact applicant (silence is consent rule applies). form, all required documents and admin fee and send to Tourism Directorate in capital, 3. No time limit specified and no defined recourse if the process is delayed.
23
Comments: The steps in the Australian case place emphasis on the applicant to fulfill clearly described requirements on a 2-page form, after which the licenser will do their part. In the Tanzanian case the form is 8 pages long and the role of the licenser is more pervasive with many opportunities for delay based on a very long list of requirements, some of which allow the application reviewer to make subjective judgments and provide opportunity to revert (such as Have you made every effort to employ a Tanzanian?), causing delays and a lack of transparency. Information Required by Authorities: Information Required by Authorities: If the
A copy of public liability insurance with a minimum of ten million dollars ($10,000,000) coverage, which includes all proposed activities and locations and the period of insurance. Copies of current vehicle registration certificates and/or survey certificates indicating license and/or vessel SPV numbers and the date of expiry. If accredited, a copy of your accreditation certificate showing date of expiry. For abseiling/rock climbing activities, proof that you have been registered with NOLRS (National Outdoor Leader Registration Scheme) or equivalent. Any promotional material in use. Marine based operators are required to indicate on the maps provided the specific area of operations. All other operators are also encouraged to supply this information as it will assist in the assessment of your application. applicant is a citizen of the United Republic of Tanzania, he/she must submit the following: A Certificate of Registration and Memorandum and Articles of Association of the Company registered in Tanzania. He must have suitable office premises for carrying out the business of tour operator. He must have a fleet of not less than five roadworthy vehicles. The vehicle must not be more than five years old since first registration. The vehicles must be registered under the Companys business name. All tour vehicles must be comprehensively insured. All tour vehicles shall vividly display in writing the name of the Tour Operator on each side of the vehicle. Stickers shall not be allowed. All tour vehicles shall vividly display the Tourist Agents License on the vehicle subject for inspection (Non-Citizen) Companies applying for Tour Operator license but not owned fully by Tanzanians will have to meet above requirements and in addition must satisfy the following conditions before they are issued with Tour Operator License: Have a fleet of new vehicles (not less than ten vehicles) of the type approved for tour business by the Licensing Authority. The vehicles must be registered under the name of the company/business name
Comments: There are two important distinctions between the designs of these two regimes: 1. The Tanzanian version places a large emphasis on financial capital, setting these as the entry requirements whereas the Australian version is more focused on human capital (such as knowledge of the resources), deemphasizing the financial requirement, 2. Insurance for the Tanzanian operators is limited fully comprehensive vehicle insurance whereas the Australian version covers the operator and the tourist during the whole experience, not only when they are in a vehicle. Additional Requirements: Operators must Additional Requirements: None specified
attend any training workshops relating to the values and management of land managed by the Department as requested to by the Director General (condition 5.10(e)). This training benefits the operator as it ensures they understand the limits of their license, are aware of current issues relating to their operations, and that their leaders and guides are appropriately qualified so that they too understand
24
the limits and requirements of the license. It also aids the Department in reducing the risk of the operator breaching their license conditions, and aids in producing safe, high quality tourism products.
Comments: The Australian regime, where there is a stronger culture of compliance, continues to emphasize partnership and shared responsibility for fulfilling licensing requirements. There is no outreach attempt from the Tanzanian government, indicating a different approach that is more prescriptive and less trusting of the private sector. Fees: All applications incur a non-refundable Fees: a) Where the applicant is citizen of the United
application fee of $50, with the license fee additional depending on the length of the license period being applied for (which is dependent on the amount of accreditation). This total amount must be paid upfront on application. The current license fees are as follows: Republic and a company incorporated in the United Republic = US $ 2000 or its equivalent amount in Tanzanian shillings. b) In the case of a joint venture where the majority participation is Tanzanian with 50% or more shares and the company is incorporated in the United Republic = US $ 2000 or its equivalent amount in Tanzanian shillings. c) In the case of joint venture where the minority participation is Tanzanian with less than 50% shares = US $ 5000 or its equivalent amount in Tanzanian shillings.
Licensee Period 2 months 1 year 3 years 5 years
License Fee $100 $300 $900 $1,500
Comments: Again much higher capital requirements in Tanzania for entry into the business with less benefit from the government. More flexibility in the Australian approach rewarding higher accredited firms with savings in fees as well as the hassle factor of applying. Time Taken to Issue: Almost all licenses are issued for tour operators within 7 working days if they are compliant with the conditions in the tour operator handbook. Time Taken to Issue: Unspecified, but tour operator interviews conducted during the preparation of a Trade Integration Study in 2005 indicate that approvals for a first-time license took upwards of 6 months and renewals at least 3 months.
Comments: More efficiency and transparency in the Australian system. Benefits: Some of the benefits a commercial Benefits: None
operator may receive as part of their license include: A complementary subscription to LANDSCOPE, the Department's award winning nature conservation magazine Touring WA, a bi-monthly tourism e-newsletter Regular Tour Operator Alert emails relaying up to-the-minute news and information on the State's conservation estate, including notification of fire and road closures; and A FREE entry to searchable "TourFinder" database of licensed commercial operators, which will include a link to your web site and email address. This will be another useful business tool to help potential clients find the tours of their choice.
Comments: Again, this emphasizes partnership, ownership, and joint custodianship. In Tanzania the message from government is that they are there to collect fees, penalize defaulters, and police the sector. There is an implicit lack of trust between the government and the private sector. Dispute Resolution Process: If the Operator fails Dispute Resolution Process: The Tourism Act
to comply with the Conditions of the License, the of 2007 details some 70 clauses for possible
25
Director General may by notice to the Operator require the Operator to remedy such failure within a reasonable time. (b) If the Operator fails to comply with the notice within the time specified, the Director General may immediately cancel or suspend the License. (c) Any notice to the Operator shall be in writing. Other aspects of dispute resolution such as labor or trade description go through normal commercial arbitration.
penalties and disputes. There is an elaborate process of appeal aimed at creating (an illusion of) transparency and good governance through a dispute resolution committee.
Comments: A guiding principle for good practice in licensing is that it should be a minimum to achieve objectives. The Tanzanian licensing regime is cited here as bad practice because it is trying to achieve too much. The Australian authorities are focused on ensuring that public assets are not abused. The Tanzanian authorities are trying to address social, environmental as well as economic concerns through a catch-all licensing regime. The extensive dispute resolution section in the legislation tries to give the government the right to step in at any time during the operation of a business if there is even a suspicion of malpractice. The legislation implies that the government does not trust the operators. Renewal Process: Licenses will not be Renewal Process: Licenses will not be
automatically renewed upon expiry of the License period. The Operator should expect that License Operations will be reviewed upon expiry of the License Period. Inspection Procedures: Ad hoc ex-post compliance audits automatically renewed upon expiry of the License period. The Operator should expect that License Operations will be reviewed upon expiry of the License Period. Inspection Procedures: Ad hoc ex-post compliance audits
Why Good Practice? In Australia, the Tour Operators Handbook issued with the license provides the best answer: Commercial Operation Licenses are strategically linked to achieving DECs corporate objectives, one of which is to generate social, cultural and economic benefits through the provision of a range of services that are valued by the community and are consistent with the principles of ecological sustainability. The rationale for this licensing system to create the opportunity for the private sector to contribute and share the burden of ecological sustainability. In addition this statement, and the subsequent evidence of the design and administration procedures presented above, supports the three principles of good sector licensing outlined earlier in this report. The administration and design of the tour operators license also follows the guiding principles of good design and administration; minimum needed to achieve objectives: it is not being unduly prescriptive; it is accessible, transparent and accountable; it is integrated and consistent with other laws/regulations; it is communicated effectively; it is mindful of compliance burden imposed; and it is enforceable. Why Bad Practice? On several different levels the Tanzanian licensing regime is contradictory to guiding principles for effective licensing. At the policy level, the
26
Tanzanian government is committed to lowering barriers to entry for local citizens to participate in the tourism economy. The excessive regulatory and financial requirements for tour operators actually make it very difficult for local entrepreneurs to become tour operators. At the design and implementation level the licensing regime: does not have any stated purpose; is not transparent; imposes unnecessary restrictions and burdens; is not consistent with existing policies and regulations; and is not easily enforceable. Whilst essentially trying to achieve the same objectives as the Australian approach, the Tanzanian licensing system is focused on maximizing revenue for the government to achieve those objectives; in other words, intervention and control versus facilitation and cooperation. The political context of the two countries is of course very different, but it remains important to recognize that principles of effective licensing regimes remain relevant in analyzing good and bad practices as they affect the sustainability and competitiveness of destinations.
Licensing of accommodation
Accommodation is a fundamental element of the tourism product; tourists spend more time in accommodation facilities than any other aspect of their destination experience. The growth and development of the accommodation sector is closely related to the overall development and success of tourism destinations in general. It is the largest and most ubiquitous sub-sector within the tourism economy, typically accounting for around one-third of total trip expenditure (Goss-Turner, 1996). The choice of accommodation reflects, by and large, the needs and expectations of the tourist and, as a result, both the quantitative and qualitative characteristics of the accommodation services directly influence the type of tourism/tourists attracted to destination areas. Similarly, the physical location, density and quality of accommodation, and the extent to which it is balanced with the broader development of infrastructure and tourism-related facilities, is an important element in the overall tone or attraction of tourism destinations. This, in turn, directly influences the ability of destinations to survive in an increasingly competitive international tourism market. In short, the success of tourism destinations is largely dependent upon the appropriate development of the accommodation sector. The dilemma facing government policy makers is assessing what is appropriate and then how to regulate that in a market-led economy where an emphasis is increasingly placed upon self-regulation within the accommodation sector (Sharpley and Telfer, 2002).
27
It follows that the development of the accommodation sector should be a fundamental and integral element of the overall destination planning process and sector strategies, and that regulation should be in place to ensure that the supply of accommodation reflects and contributes to wider tourism development plans and objectives. However, it is widely recognized that an integrated approach to destination planning and management has proved to be the exception rather than the rule. Many destination areas have experienced rapid, excessive or inappropriate development of the accommodation sector which, in some instances, threatens the longer-term viability of the tourism industry (e.g., the discussion of Spain in Barke and France, 1999; the Greek Islands in Brotherton and Himmetoglu, 1997; and Cyprus in Sharpley 2000). In the cases of Spain, Cyprus and the Greek Islands discussed in the papers cited, the government priority was growing tourism quickly and the respective governments facilitated this by laying down infrastructure, opening air access, and creating attractive financial incentives for hotel developers. Licensing plays a significant role in the development and operations of the accommodation sector and multiple government bodies get involved as accommodation facilities can have a significant economic impact, environmental footprint as well as being an agent of change in local society. Accommodation operators also have a responsibility for consumers health and safety. Tourism legislation specifies minimum requirements for the category of accommodation and the operator is expected to meet these before being registered and receiving a final operating license from tourism authorities. Categories of accommodation vary from large hotels down to small guest houses, camps and hostels. From the evidence reviewed, accommodation licensing with respect to requirements stipulated in tourism sector legislation is fairly standard. Legislation in some countries like Bulgaria and Albania is overly prescriptive, detailing sizes of rooms and public areas for different categories of accommodation, whereas requirements in other countries are more open, allowing market forces to dictate investors choices; Fiji and Mauritius are examples. The major issue and source of bad licensing practice in this sub-segment is other licenses and the lack of harmonization in the legal and regulatory framework. This will be discussed further through the case studies in Section C. Recent FIAS/World Bank work in Kenya (reported in Jacobs, Ladegaard, Musau, 2007) identified 1325 business licenses and associated fees. A tourism value chain analysis (Global Development Solutions, 2007) in Kenya revealed that a five star city hotel in Nairobi was subject to 48 different licenses and fees, many of them duplicated. The study also showed that 18 different ministries or departments with jurisdiction over 44 Acts had legislative reach on the tourism sector. A tourism enterprise survey in Livingstone, Zambia (DCDM, 2006) revealed that accommodation enterprises found excessive licensing requirements to be the single biggest nuisance factor in the business environment. One example cited was that three different fire safety certificates were required; one national, one
Licensing Case Studies: Tourism Sector 4 Licensing and the Tourism Sector 28
district and one municipal. This is a significant finding given that standard enterprise surveys do not pick up on licensing requirements as being especially onerous, perhaps because the tourism sector is not targeted for sampling. Accommodation operators have two phases of licensing to contend with; a) licenses required to obtain land, plan, construct, staff and open the hotel, and b) those required to operate it on an annual basis. In most developing countries an autonomous investment promotion agency (IPA) exists to help fast-track the first phase, particularly for large hotel investments, and therefore this report will not cover those aspects, apart from mentioning that good practice in this area requires strong collaboration between the tourism part of government and the IPA; a tourism ministry does not usually have the expertise to handle FDI procedures and the IPA may not have dedicated tourism expertise. Good practice in this area is the example of the Mauritius Export Development and Investment Authority (MEDIA) that has been successful in attracting hotel investment in line with government policies. In the context of the issues presented aboveparticularly that there is not very much variance in government tourism authorizing requirements for hotel operating licensesand given the developing country focus of this report, the following section will focus on licensing regimes covering guest houses or bed and breakfasts (B&B), a mushrooming sub-segment of SMEs in the accommodation sector that have a large pro-poor impact in most economies. For developing countries, guest houses are especially significant as they offer lower barriers to entry and are accessible to local entrepreneurs (Harrison and Schipani, 2007). With increased market access through the internet, tools such as IFCs World Hotel Link are contributing to growing this segment. In several countries (particularly in Francophone Africa) guest houses are below the radar because they are too small and are consequently poorly regulated. In Mali, Burkina Faso and Benin there is no regulation covering the licensing and operation of guest houses and as a consequence these facilities are sub-standard and not utilized by tourists or tour operators. Namibian Government regulations for the registration of tourism accommodation facilities and tourism guides are intended to ensure minimum standards and define grades. But the Government realized that they were unintentionally preventing rural people from getting involved in tourism. For example, the lowest category of accommodation facility required 5 bedrooms with modern plumbing, setting standards well above a minimum needed for health and safety. So there was no category suitable for bed and breakfast home stays. Following the South African example, the Namibian Government is now developing tourism accommodation grades that include guest houses, community campsites and home-stays. Good regulation to facilitate the growth of this sub-sector while maintaining standards is becoming a relevant policy issue and the case study examples
29
presented here contrast two policy frameworks; one that is actively encouraging (accommodation) SME development in tourism and one that ignores it.
Comparison of good (South Africa) and bad (Bulgaria) practice for design and administration of a guest house operators license
Context South Africa and Bulgaria receive roughly the same number of foreign visitors (about 6 million per year) but have a very different supply side industry structure, dictated primarily by the government administration of the sector. The tourism sector in South Africa is characterized by the high number of small, medium and micro players (99% of licensed enterprises according to the Department of Trade and Industry15). This is recognized by the government which has invested heavily in the promotion of this sector of the economy. This has not happened in Bulgaria. In tourism, SMEs are not considered in the governing legislation at all and the tourism policy is directed towards mass tourism ventures. The government (officially the Ministry of Economy) still classifies hotels according to an obsolete star rating system that was developed during the communist regime. Interestingly guest houses and B&B count for over 10,000 rooms 16 (growing at 12% per annum) in South Africa and nearly 6,000 in Bulgaria. 17 Despite the lack of government attention in Bulgaria, the market has identified the demand for guest house-type accommodation and has moved forward to create this subsegment of the accommodation sector. The issue identified in Bulgaria is that due to the lack of specific policy attention, small accommodation operators have the same procedures to follow as large hotels and there are many who operate in the informal sector. It could be argued that the guest house segment has thrived in Bulgaria only because of donor intervention. The USAID sponsored Alternative Bulgaria initiative supported many of the guest house start-ups. Current governance arrangements in Bulgaria relating to tourism and those relating to entrepreneurship and SME development do not seem to be connected at any level, even though at state level the agencies even share the same building. SMEs are not considered by the State Tourist Authority (STA) and as a consequence are not helped with market access or tourism training and the STA is not able to tap into the creativity and innovation of tourism SMEs or to identify through dialogue what the business development needs of a range of sub-sectors in contrasting locations (notably rural and urban) might be. The development of the guest house sub-segment in South Africa has been a government-led initiative. Initially this was articulated through policy but later
15 16
http://www.thedti.gov.za/sectors/Tourismsector.htm#i Guest House Association of South Africa Newsletter, April 2007. 17 http://www.travel-library.com/b&b/europe/bulgaria/
30
supported through schemes providing access to finance, training and markets. The smaller enterprises are extremely valuable to the tourism economy in any country as they are able deliver a set of highly diverse and customized experiences that larger enterprises find difficult to offer as well as providing easier-to-access opportunities for employment and income generation. The determining characteristics of the SME brand of alternative tourism are in direct contrast to those of mass tourism. For example, alternative accommodation forms such as guesthouses are styled as small-scale and locally owned, with low import leakage and a higher proportion of profit remaining in the local economy (Ranck, 1987; Khan, 1997; Weaver, 1991). By promoting this smaller scale of tourism, growth prospects for SME enterprises are seen as more promising than under mass tourism. Nevertheless, it should also be recognized that a policy line is not enough. The example of Costa Rica is shows that while the government promoted small scale tourism and ecotourism opportunities, local residents had limited awareness of investment opportunities. As a result, business opportunities were taken up by outside and large investors (Weaver, 1991). This suggests that, in the absence of formalized planning or intervention, the possibilities for local communities to benefit from business opportunities linked to small scale tourism may be reduced (Campbell, 1999). Box 3: Comparison of good and bad practice for design and administration
Location: South Africa Tourism Sector Administration The Department of Environmental Affairs and Tourism (DEAT) is the principal tourism agency. The Tourism Grading Council of South Africa (TGCSA) was established by DEAT and is mandated to provide a framework and process for grading across all relevant sectors of the tourism industry in South Africa. TGCSA is a partnership with the private sector that utilizes a consumer feedback mechanism. The aim of the TGCSA is a scenario where all tourism industry providers in South Africa are willing and committed to a partnership. It is envisaged that this commitment would bring about the highest levels of quality assurance, the best possible value for money and the recognition that customer expectations are paramount. The legislative framework was laid out by the 1996 White Paper on Tourism Development. The only modifications have been the abrogation of responsibility for licensing to Location: Bulgaria Tourism Sector Administration There are four government agencies that oversee elements of the tourism industry along with their local bodies. The Ministry of Economy is responsible for licensing and categorization; the Ministry of Health is responsible for controlling sanitary standards; the Ministry of Environment and Waters is responsible for controlling outdoor pollution and protecting the environment; and the Ministry of Regional Development and Public Works is responsible for road construction and urban planning. The legislative framework in the tourism area consists of the Tourism Act, the Ordinance for Licensing of Tourism Activities and the Ordinance for Classification of Tourist Objects.
31
provincial and in some case municipal authorities. Comment: There are two main observations: a) there is a tourism industry focus in South Africa and active participation of the private sector in policy making and standards setting, b) there is little cooperation and coordination between the main government bodies in Bulgaria and frequent delays in processing and administration of licensing. . Who Issues and Administers the License: Who Issues and Administers the License: The license for a guest house operation is Minister of Economy, Central Expert issued by the provincial tourism authority after Commission for Licensing and Categorization, inspection by the TGCSA. Municipalities, State Tourism Agency (STA) administers. Comments: The practice in South Africa of localized licensing with ample opportunity for dialogue between licensee and licenser seems effective and may be a good example of how to implement decentralized responsibilities. Rationale for the License: Rationale for the License: The clear policy rationale in South Africa is to The policy states that licenses for allow informal operators access to the formal accommodation are issued to Stipulate control tourism economy. The license is a means to this over the tourist activities and the quality of the end. tourist product. Comments: The rationale in the South African case is related to broader policy objectives linked to Black Economic Empowerment and the development of the SME sector. In Bulgaria the rationale is linked to government control of standards though government does not have standards for guest house accommodation. Licensing Steps: Within 14 days of submission Licensing Steps: There is no license required to operate a B&B of the application, but before registration, the or guest house, but in order to get graded by STA issues a so-called temporary document TBCSA the following are requirements: that allows the applicant to start operation. The Business registration entitling the guest temporary document, which is valid for two house to operate legally (including tax months, confirms that the submitted application status). is formally complete. The final registration is Provincial registration (if applicable). issued after an on-site inspection and a decision Public liability insurance. by a committee established in the STA with Compliance with local authority private sector participation. The first regulations fire safety certificate; registration is valid indefinitely, and building accessibility regulations; hygiene inspections are not conducted during the period regulations. of validity. According to STA officials, the registration procedure for classification takes between one and three months. However, business associations report that the classification procedure may take up to 12 months Comments: Whilst the South African system requires contact with numerous different agencies, the system for obtaining these licenses and certificates is transparent and efficient. Fees: Grading fees depend on the number of Fees: Classification fees depend on the size of rooms of the establishment, varying between the categorized establishment, varying between US$150 US$ 750 for all accommodation. US$340 and US$3,420 for hotels
32
Benefits: Graded organizations have the right and are required to display the Grading Council plaque outside their premises and the certificate inside their premises to display their star rating and indicate that they meet or exceed the Grading Council's requirements. Graded organizations may use the Grading Council logo (star) in all their marketing collateral. All graded organizations will be listed on the Tourism Grading Council website with the following details: name of establishment, contact person, telephone and fax number, category, address, email address and web-site details with link to organizations website for reservation purposes. All graded establishments get a free listing in the annual TGCSA Accommodation Guide and advertising is also available. The TGCSA Accommodation Guide is the only accommodation guide distributed by SA Tourism via its call centre and offices worldwide. South African Tourism endorses and uses star graded organizations ahead of nongraded organizations as listed on the official South African Tourism website www.southafrica.net. Grading assists organizations in positioning their products. All government departments are required to procure services from graded establishments only. The Grading Council actively markets star grading directly to consumers, tour operators and travel agents.
Benefits: Classification is mandatory. No official benefits are communicated but obviously being a formal part of the tourism sector will have advantages in terms of market access, perhaps donor programs such as www.authenticbulgaria.com
Discussion Why Good Practice? South Africa has tried to make it easy for SMEs to become part of mainstream tourism and share in its benefits. It has recognized the role of SMEs in a broader policy agenda and the broader tourism economy and has proactively created an enabling environment for its growth. The government has clearly recognized its role and has articulated this in policy, strategies and the implementation of regulations. The government has reached out to the private sector in a genuine partnership.
33
The government has invested heavily in decentralization, supporting the provincial authorities to fulfill their mandates. There is a clear correlation between policy and practices and the role of licensing in supporting government policies is fully recognized. Why Bad Practice? In common with many of the Balkan states, European integration is a priority policy in Bulgaria. Therefore one would expect that tourism development had significant leadership from government in terms of meeting European standards. However, tourism development in Bulgaria in the past 10-15 years has been market-led and not policy- or strategy-led, and although there have been some strategic documents 18 prepared, recommendations have not been officially adopted. The sector has been more responsive to market demand and more so to the international market than the domestic market (which actually has significant potential). In a developing country context (albeit, middle income) with perhaps weak institutional planning and regulatory capacity, it is important that development is policy-led and that the opportunistic approach of the private sector does not dominate. The experience of countries like Cyprus (Sharpley, 2000) and Spain show that this approach will ultimately damage the environmental and social well-being of the different potential destinations in the country. The licensing regime for accommodation in Bulgaria does not consider diversification opportunities for accommodation providers and there is a myopic approach to low cost / high volume mass tourism and the development of large resort areas. The overly prescriptive legislation in Bulgaria does not provide for easy entry of smaller operators.
Licensing of tour guides

Tour guides are an essential part of a destinations tourism network, given their direct interaction with tourists. A tour guide assumes the role of an expert on the destination, functioning as host, interpreter and educator. There is significant diversity in guiding services (and therefore employment opportunity) ranging from the highly specializedsuch as guides at particular cultural sites, bird watching guides, mountaineering, sport fishing and dive guidesto local guides who take tourists on walking tours or to shop in local markets. Many tourism small business owners start as tour guides and it is an acknowledged low barrier opportunity for entry into the sector (Ashley and Roe, 2005). There is considerable debate about officially licensed and unlicensed or informal guides; licensing can ensure quality and reliability, but so can certification, training and personal interest; on the other hand licensing can exclude those without formal education but with good conversational language skills (in Vietnam and China,
18
http://www.tourism.government.bg/files/politics/file_60_bg.pdf Bulgarian State Tourism Agency 2007, Stategic Plan for the Development of Tourism
34
for instance, an applicant needs a foreign language degree and a Bachelors in Tour Guiding before applying for a tour guide license. 19) In the Arctic region 20 one of the most successful management techniques for conserving Arctic resources and directly influencing lawful visitor behavior is guide licensing (therefore covering the critical aspects of the rationale for licensing: safety, health and environment). Wildlife managers realized long ago that an effective way to insure regulatory compliance was to require anglers and hunters to employ licensed guides. Guide licensing programs have been established by wildlife management agencies in all Arctic nations (UNEP, 2004). 21 The programs instruct specialized knowledge of environmental conditions, resource laws and regulations, survival skills, and emergency response skills. Guide licenses are issued based on demonstrated competency of the requisite knowledge and skills. In most jurisdictions refresher courses are required to sustain both educational knowledge and practical skills. Guide licensing in the Arctic has expanded well beyond angling and hunting. The pursuit of Arctic recreation activities such as mountaineering, rafting, kayaking, and wildlife photography frequently require licensed guides with the special skills required to safely conduct those activities. Licensing requirements vary considerably among Arctic jurisdictions and responsible resource agencies, but fundamental requirements required by all include: proven knowledge of specific locations, technical skills, safe and efficient recreation delivery systems, waste removal, emergency response systems, and detailed reporting of activities and observations. This skill and knowledge takes time to acquire, thus Arctic jurisdictions established a process that evolves from apprenticeship to master status very similar to professional hunting guide licensing procedures in Zimbabwe, Botswana, Namibia and South Africa, and the innovative Luangwa Safari Association guide certification in Zambia. Guide licensing regulations not only have beneficial effects on tourist behavior, but on tourist numbers also. Legal prescriptions effectively limit tourist access by requiring they be accompanied by a licensed guide. Numbers are controlled by means of guide-to-visitor ratios, length of season, and sometimes duration of stay at a particular location. All of these methods strictly control the maximum number of people that may be on-site. These requirements may be further specified in special use permits used to govern recreation activities, for example, the terms and conditions of river rafting, mountaineering, and wildlife viewing expeditions can be defined by special use permits. This approach to sustainable tourism has also established mutually beneficial partnerships between local communities and resource agencies. Native People and local residents who
19
China National Tourism Association website (www.cnta.gov.cn) and Vietnam government website (www.business.gov.nv) 20 Greenland, Canada, Finland, Denmark. 21 UNEP, Sustainable Tourism in the Polar Regions; Setting an Agenda, 2004.
35
depend on polar resources for their cultural and economic well-being often serve as guides or possess special use permits to conduct recreation activities. Zambia provides a good illustration of public-private cooperation in guide licensing. Zambia is best known on the safari circuit in Africa for being an authentic wilderness experience. Private operators in South Luangwa National Park introduced a tour guide certification program in 1981 in an effort to raise the level of knowledge and ecological awareness of local guides. Selected candidates undergo formal training courses and an apprenticeship with an experienced field guide who mentors and advises them as they build experience. Candidates need to have logged over 200 hours of safari drives before they are even allowed to take a written examination. Those who pass are then eligible for a practical wildlifedrive evaluation. On successfully passing the practical component, and completing a first aid course, a class two guiding license will be awarded. This allows the new guide to conduct safaris from vehicles only. Walking guides take many seasons to train. Candidates slowly accumulate their 200 hours of walking safari experience and in the process amass a wealth of in-depth knowledge of animal behavior and spoor, birdlife, calls, vegetation as well as safety procedures. The written and practical exams for walking safari guides are more thorough and extremely challenging. The parks guiding standards ensure that guests are delivered a value-for-money service. A South Luangwa guide won a global award in 2006 for being the worlds best guide. 22 The success in South Luangwa has now led to the guide-licensing program spreading to other Zambian parks. The following illustration of licensing practices focuses on the gap between licensing for the purpose of government control on the activities of citizens, as is the case in Vietnam, versus licensing for the purpose of improving the quality and safety of the tourism product, as is the case in Belize. Obviously political context is a major factor in these differences, but as stated earlier in this report, the case study illustrations are chosen for their compliance/non-compliance with good guiding principles for licensing in the sector. Box 4: Comparison of good and bad practice for design and administration of a tour guide license
Location: Belize Activities Allowed: A Tour Guide is defined as one who leads, manages, or provides tour services whether marine-based, or terrestrial or land-based tours. Location: Vietnam Activities Allowed: Guiding for foreign tourists.
A tourist guide can only practice his/her occupation when he/she works at a tour business enterprise.
Comments: Narrow scope in Vietnam and the requirement to work for a company is inflexible. Who Issues and Administers the License: Who Issues and Administers the License:
Belize Tour Guide Licensing Committee Provincial Department of Tourism (DoT)
Comments: The approach of having a specialized committee in Belize will inevitably result in an
22
http://www.greentraveller.co.uk/node/382.
36
improved quality of licensee due to a more transparent adherence to key criteria. The committee meets and interviews each applicant and assesses their suitability for the job at hand. The general tourism administration approach in Vietnam is less onerous on the applicant but may not result in a better quality of service provider. Rationale for the License: Not Clear Rationale for the License: To certify and
supervise the competency of tourist guides.
Comments: This is a weakness in the Belize regulations. They do not make an adequate link between the license and its role in the overall tourism sector. Licensing Steps: 1. Fill out the form, 2. Attach Licensing Steps: Applicants submit the dossiers to
form, all required documents and admin fee and send to local Licensing Officer, 3. License issued within 7 days, any problems licenser will contact applicant. provincial Department of Tourism (DoT) where he/she is living. DoT examines the dossiers and grant license within 15 working days.
Comments: Clear Information Required by Authorities:

Eligibility of Applicants: Belizean or Caricom National
Information Required by Authorities:

Eligibility of Applicants: 1. Vietnamese citizenship, permanently residing in Vietnam, with full civil act capacity; 2. In good health, not infected by contagious diseases, do not use addictive substances; 3. Obtained bachelor or higher degree and certificate on tourist guiding granted by a competent training establishments; 4. Obtained bachelor degree in foreign language or certificate of tourism foreign language(s), granted by competent training establishments; Application Dossier: 1. Application form 2. CV certified by local authorities or place of work 3. Notarized copies of: o The bachelor diploma and certificate on tour guide; o The bachelor diploma in foreign language(s) or certificate of tourism foreign language(s); 4. Health certificate (not later than 6 months); 5. 2 passport photos (3x4, no later than 6 months).
Application to include: Training Certificate received form the Belize Tourism Board Medical Certificate issued by a registered medical practitioner Recent Police Record. Two (2) Recommendations from persons who are in good standing and are well aquatinted with the applicant. Formal recommendation from a recognized local tour guide association Two (2) passport size photographs Proof of Belizean citizenship or Caricom nationality. Proof of accreditation in the courses listed in regulations A copy of your First AID/CPR.
Additional Requirements: None specified. Fees: USD 25 Time Taken to Issue: 7 days
Additional Requirements: None specified Fees: USD 10 Time Taken to Issue: 15 days
37
Benefits: Tour guide license grants access to cruise passengers (market) Licensees benefit from membership to the following resources: Belize Tourism Industry Association (BTIA) http://www.btia.org/ Belize Eco Tourism Association (BETA) http://www.bzecotourism.org/ Caribbean Tourism Organization (CTO) http://onecaribbean.org/ Caribbean Association for Sustainable Tourism (CAST) http://www.cha-cast.com/index.html Organization of American States (OAS) Tourism Section http://www.oas.org/tourism/home/ World Tourism Organization (United Nations Agency) http://www.unwto.org/ Every licensed tour guide with the Belize Tourism Board is listed in the Tour Guide Directory of Travelbelize.org. The listing is free and includes information on type of services offered, and most importantly the contact information so that guests can make direct contact with the provider. Renewal Process: 12 months. Inspection Procedures: None specified
Benefits:
A tour guide can only practice his/her occupation when he/she works at a tour business enterprise. The tour guide card is valid nationwide. Tour guides using Chinese but who do not have a Bachelor degree in Chinese language will be granted temporary tour guide license and this license will be valid to the end of the calendar year. When a tourist guide has his/her card withdrawn, s/he may only be considered for re-granting of a license only after 6 (six) months from the date of withdrawal.
Renewal Process: Every 3 years. Inspection Procedures: Constant monitoring

through government agencies.
Discussion Why Good Practice? Considering that tour guides may come from a variety of backgrounds, the procedures for obtaining licenses in Belize are clear and userfriendly. In Belize the procedures and requirements have been specifically designed to accommodate the kinds of individuals who will add value to the experience, who are passionate about the sector. Entry requirements are not onerous and place emphasis on predefined (and desired) criteria for the role of a tour guide. The requirement for first aid certification is a good practice. The benefits of becoming licensed are significant. The practice of posting guides on travelbelize.org is a good example of the public sector providing a useful service that benefits consumers, tour guides and the government. The process of administering the license provides an opportunity for government policy to be linked to a licensing practice.
38
Why Bad Practice? Whilst recognizing that political context is an obvious determinant of these differences, in the Vietnam licensing regime there is no emphasis on the qualities recognized for good tour guiding, but rather a focus on minimum academic standards; these academic standards are very high for what is considered a low barrier-to-entry job opportunity in most other countries. There is explicit policy-level recognition of this opportunity but inadequate follow through in terms of regulation: The policy of the Government and the Administration of Tourism to develop tourist infrastructure aims at economic development, including job creation for the people. As an economic sector, tourism has its own features which are the linkages with various sectors, localities and a large number of stakeholders and the requirements for a high standard of quality of services provided. Therefore, development of human resources in tourism is of great importance, especially the contingent of tour managers, hotel managers, tour guides, receptionists, and chefs, bar tenders, room service staffs, waiters and waitresses (Vietnam National Tourism Administration website: http://www.vietnamtourism.gov.vn/english/) The licensing regime for tour guides does not recognize the role of tour guides and the opportunity for this to be a significant employment opportunity for rural or minority cultures.
39
40
Tourism Sector Licensing: Case Studies
Setting a context
Countries (and destinations) seeking to improve the sustainability and competitiveness of their tourism sector must have a clear vision, policy and strategy for the development of the sector, and licensing then has its place is supporting those objectives. The following figure illustrates the sector framework into which licensing fits, bridging sector management and governance and enterprises and ultimately aiming to contribute to achieving outcomes like jobs created, increased asset values and competitiveness. This framework results in a virtuous cycle that is a continually evolving paradigm with the destinations tourism product life cycle (Butler, 2007). Figure 3: Tourism sector framework
LEVEL 1 (Macro) Sector Management and Governance Vision Sector Policy LEVEL 2 (Meso) Enabling Environment (Sector Conditions) Licensing and Standards Taxes and Incentives Training & Education LEVEL 3 Tourism Enterprises Clusters Goods and Services Supplying Tourism Access and Transport LEVEL 4
Sector Strategy Legal and Regulatory Instruments Public Institutional Arrangements Civil Society Involvement Planning Environmental & Cultural Management Security, Health and Safety Private Sector Institutions Monitoring Results Framework
Resource Base Natural Environment Culture and Heritage Cities, Towns and Villages
INCREASED CAPITAL / ASSET VALUES
Access to Finance Access to Land Image and Marketing Physical Infrastructure Platform for Public/ Private Dialogue Information and Statistics
PLATFORM FOR COMPETITIVENESS
Accommodation Activities, Facilities & Attractions

JOBS CREATED
This framework is effectively a filter through which strategies for development need to be passed. It allows decision makers to see specific sector issues in the context of the whole tourism system. Whilst all aspects of
5 Tourism Sector Licensing: Case Studies
41
the framework are important and integral to success, the different levels (sector management, creating the enabling environment, developing the private sector and securing the asset base) give some indication of the sequence in which the building blocks need to be laid in order to create solid foundations that lead from the cornerstone vision, policy and strategies to the eventual beneficiaries. It is important that the Vision, the Sector Policy, and the Sector Strategy flow sequentially. The vision defines the development objective, the policy defines the guiding principles and the strategy outlines how to achieve the vision. A critical sustaining factor is that the vision and policy must be driven internally while the strategy must be driven by demand (externally). The context of the destinations position on a hypothetical product life cycle curve is an important concept to be aware of for policy makers. There is abundant literature and research (detailed in Butler, 2007, Volumes I and II) supporting the notion that destinations evolve (expressed as increased tourism revenues/visits against time) through early and gradual exploration stages, to faster development and into a period of maturity typified by consolidation, stagnation, and then decline or rejuvenation. 23 More simply, this has also been called the boom and bust cycle. This literature also demonstrates that triggers for moving along this life cycle include reforms in the regulatory and institutional environment (Marois and Hinch in the case of Northern Thailand and Faulkner and Tideswell in the case of the Australian Gold Coast). The following destination case studies aim to highlight tourism sector licensing practices in the context presented above and in the preceding section of this report. Though the four countries selected are from different regions of the world and from 3 different income levels, all are considered mature destinations in the process of trying to rejuvenate themselves. Tourism is a critical sector in all (3% of GDP in Kenya, 5.6% in Switzerland, 10% in Mexico and 26% in Mauritius). All have undergone or are still in the process of policy reform in the tourism sector in the last five years; Kenya currently, Switzerland in 2005, Mexico in 2003, Mauritius currently and all four are targeting policy objectives as either increased growth or increased competitiveness. While an attempt has been made to standardize the presentation of information, this has been difficult as sources do not use consistent methodologies. The case studies focus on sector visions and policies, regulatory harmonization, the role of the private sector in self-regulation, and the effect these have on the resultant licensing design and administration. Mature destinations in a similar state of transition with similarly stated policy objectives were chosen for the sake of clarity and relevance for good practice illustration. In immature or maturing destinations, bad practices are likely linked to the lack of prioritization of the tourism sector. In principle mature
23
All terms initially developed by Butler in describing the life cycle model and subsequently maintained in the life cycle literature.
42
tourism destinations have already prioritized the tourism sector and have undertaken some level of research into thinking about, and articulating, visions into policies. During the preparation of this report the outstanding good practice found was the already mentioned example of tour guides in the Arctic. This was not presented here in more detail as the circumstances are too unique: a strictly protected environment and multi-country cooperation in a contiguous area where international agreements governing social and environmental issues are already in place. Case Study 1: Tourism sector regulatory environment in kenya: Bad practice for establishing a revenue collection mechanism for government.
NOTE: While context is critical, the qualitative view that Kenyas regulatory environment in tourism is not good practice is based solely on the framework of guiding principles presented earlier in this report, as are all the examples presented.
Kenya ranks 100th out of 130 countries in the World Economic Forums 2008 Travel and Tourism Competitiveness Index for the category Regulatory Framework. Whilst it is presented here as an example of bad practice in tourism regulatory environments, it should be recognized that it is a low income country consistently running a budget deficit of between 5-10% of GDP; it is therefore not surprising that different levels of government are squeezing the tourism sector players for revenue. A recent value chain analysis of the sector (Global Development Solutions, 2007) showed that government collects a surprisingly high average of 57% of tourist expenditure in the country in the form of taxes, license fees and permits either paid by tourists directly (e.g., entrance fees to parks, visa fees) or collected from firms (taxes and license fees) providing services to tourists. In Switzerland, which is ranked 1st in the WEF index, the government collects an average of 18.5% from tourists expenditure through taxes on tourism service providers. 24 Kenya is aiming to transition to middle income status by 2030 and has positioned tourism as one of the sectors to drive the economy. Legislation (Tourism Act 2007) before parliament up to September 2008 is meant to be the instrument that will facilitate this.
Approximate calculation by author based on taxes paid by tourism service providers. There are no license fees in Switzerland as government does not regulate service providers in this sector.
24
43
Box 5: World Travel and Tourism Council (WTTC) 2008 World Tourism Review.
2006 National Tourism Policy Vision Statement: The overall aim of the national tourism policy is to ensure that tourism retains its position as leading export, and that it becomes a major vehicle for job creation, poverty reduction and wealth creation for Kenyans in the future, and whose practices are closely harmonized with key national policies and laws pertaining to wildlife conservation, land ownership and physical planning. Comment: There is no actual sector objective in this statement, other than conformance with the overall development objectives of the country. This vision statement is not offering anything tourism specific. Tourism is already a major vehicle for job creation, poverty reduction and wealth creation. The effort to harmonize the vision with a need to address outstanding issues in wildlife conservation, land ownership and planning is no more than recognition that these issues exist. It would be very difficult to draw a strategy for the sector out of this vision and hence difficult to devise specific targets or results. Tourism Legislation (extract from Cabinet Memo prepared by the Ministry of Tourism and Wildlife, June 2007): A comprehensive single Tourism Act shall be promulgated setting out the necessary legal framework to implement the National Tourism Policy. As tourism is linked to several acts, the necessary amendments shall be made to streamline the existing legislation and regulations to make them transparent and enforceable. Towards this end, the following will be undertaken: A review of all the current legislative provisions (including Hotels and Restaurants Authority Act CAP 494 and Tourist Industry Licensing Act CAP 381); Review of licensing and classification provisions and regulations and related enforcement mechanisms; Preparation of a comprehensive Tourism Act. Comment: These actions do not address anything in the policy statement. Perhaps it was unrealistic in the first place to suggest that the tourism policy could address issues in conservation and land ownership? The point about illustrating these disconnects is to show that unless policy statements of intent are more specific, they have nowhere to go. Regulation and Licensing Provisions (extract from Cabinet memo June 2007): There is need to provide for the licensing and grading of operators of other tourist facilities or services not adequately controlled under the existing regulations, and to implement a uniform classification and grading system for other designated tourist facilities, apart from hotels, including provision for the inspection of such facilities. It shall be a condition for the renewal of licenses that the applicant is current with regard to payment of tourism levies and other charges. Regulation of Accommodation In addition, the regulatory and licensing regime shall be extended to include private home stays; private game sanctuaries, villas and other providers of tourist accommodation in order to put them on a par with hotels and other providers of tourism services. In particular, the current definition of hotel in the Hotels and Restaurants Act, which exempts villas and other properties having less than five beds, shall be changed to cover all providers of tourist accommodation (including those who may seek to claim exemption for various reasons) to establish a level playing field and to enhance revenue collection. Providers of all types of accommodation used by international and domestic visitors should be obliged to furnish periodic occupancy and other business details to the appropriate authorities. The hotel and general tourism licensing inspectorate shall be strengthened by establishing laid down regulations, procedures and systems. Methods of regulation for timeshare developments shall be examined.
44
Finally, it shall be a mandatory licensing requirement for operators of designated tourist facilities or services to belong to an industry association duly recognized by the Ministry of Tourism & Wildlife, and which has its own Code of Conduct (thereby prohibiting the sale of safari and other tour operations by unauthorized operators). Regulation of Tourist Vehicles There is need to ensure that high standards are maintained in the transportation of tourists. This should go hand in hand with provision of an enabling environment for regulation and licensing of tourist vehicles. A Tourist Vehicle Service (TSV) category will therefore be introduced to distinguish tourist operations from mainstream PSV vehicles used for general public transportation. The TSV category will be clearly defined and administered under the Tourism Act. Vehicle standards will be clearly defined and administered und the Tourism Act, in consultation with the Ministry of Transport. Regulation of Boating Activities There is need for greatly improved regulation of boating activities (especially craft carrying passengers) on Lake Victoria and other inland waters in the areas of licensing, insurance, training of coxswains, navigation, safety of passengers (life jackets), maintenance, etc., as well as provision of jetties and other facilities. The same need for improved regulations applies to boat operators plying on coastal waters. To this end, existing regulations and the International Maritime Organizations recommendations on inland waters (especially as regards navigation and operation of passenger carrying vessels, and the creation of a body to inspect, license and classify boats and other vessels on Lake Victoria and other inland waters not covered by Kenya Ports Authoritys jurisdiction) shall be implemented so as to establish the necessary pre-conditions for the development of cruise and pleasure boating, especially on Lake Victoria. This shall be done in co-operation with neighbouring countries. Currently, the crafts used for boating activities with regard to tourism operate without adequate minimum standards in terms of seaworthiness, licensing, insurance, training of coxswains, navigation, safety of passengers (life jackets), carrying capacity and maintenance. The tourism industry will develop adequate minimum standards to be used by the Tourism licensing authority in conjunction with the Kenya Maritime Authority when Licensing crafts used for tourism related activities. These standards should incorporate the International Maritime Organizations recommendations. In order to address the above concerns, a representative from the tourism sector should be incorporated on the Kenya Maritime Authority Licensing Board. Comments: With the exception of safety aspects, the subsequent provisions are solely directed at raising revenue.
Discussion In 2005, the government of Kenya (with the support of FIAS and the World Bank) launched an innovative reform to reduce its growing number of business licenses and fees. Many licenses were found to be unneeded, illegal, or unnecessarily costly. Recommendations of the committee for large-scale changes were accepted by the Government, and the process of legal implementation is underway. As of July 2007, 110 licenses have been eliminated, and 8 simplified. Results from
45
the licensing reform were a key contributor to Kenyas status as a top reformer in the World Banks 2008 Doing Business Report. Under the review of the tourism sector the following were the main findings: None of the tourism licenses which fall under the Tourist Industry Licensing Act (Cap. 381) is for safety, health or environment. Their goal is revenue collection. Operators are also required to submit information on their age, country of birth and present nationality which is not practical. They are also required to submit information about whether they are expecting tourists from abroad from the date of application and to give names and addresses of all the banks the enterprise deposits money. The extent of information required discourages entrepreneurs as they are unnecessarily required to disclose sensitive investment information and secrets. Many licenses are duplicated because operators are required to obtain an occupational license from local authorities. Tourism licenses are not good practice when used solely for revenue gains and when other means can be used to protect the consumer (the tourist). These include industry self-regulation or coverage by other regulations for safety, health and environmental concerns and these already exist in Kenya. The duplication is, therefore, unnecessary. The tourism licenses have been noted as an administrative barrier to investment in Kenya through a FIAS study and also through a World Bank growth and competitiveness study and also various studies commissioned by Government and undertaken by the Government think-tank, KIPPRA. There are clearly two totally conflicting policies in this case. One from central government (principally the Ministry of Finance) is driving a reduction in licensing while the other from the line ministry is advocating increasing licenses. The debate may be settled by revenue decisions. Certainly the Ministry of Tourism will make a case for needing more subsidies from the Ministry of Finance to make up the gap from the lost licensing revenue. Perhaps then the government will decide to scale down the role of the Ministry and a reform process in tourism will have been initiated. Case study 2: Tourism sector regulatory environment in Mauritius: attempting to regulate the informal sector Mauritius is facing a sharp transition from dependence on trade preferences to open competition in the global economy. After 20 years of remarkable performance, the economy has halved its growth and the creation of new jobs is now too slow to prevent an increase in unemployment. The government has targeted the tourism sector as a potential area for growing new jobs. However, according to government statistics, the informal sector caters to around 30 percent of arrivals, but has remained largely unregulated to date and this is becoming a concern for the established tourism sector who fear that the informal operators will damage the image and equity value of the destination.
46
New tourism policies and legislation (2006 Tourism Authority Act) have been developed that move to regulate the sector to ensure safety and quality standards will be important for the safety of tourists and the reputation of the Mauritian industry as a whole. Coupled with broader reforms to reduce informality in the economy and encourage business registration, these regulatory reforms are aiming to establish a viable and quality second market in Mauritius below the 4-5 star level that is already well established. Regulation of the sector should also assuage concerns that encouraging the secondary market will harm the quality reputation of Mauritian tourism. Developing this market would provide greater choice to visitors and position Mauritius to better capitalize on the fast growing segment of individuals who book holidays on-line at the last minute and organization their own accommodation, rather than buying a package. These small hotels would be major beneficiaries of further opening of the air access market, in particular for tourists from South Africa and India, from where arrivals in 2005 grew by 11 and 20 percent over 2004 respectively (MPTA). Regulation of the informal sector is also important to ensure sound environmental management in the tourism industry. Mauritius was selected as a case study because it has specifically developed policies targeted at the informal sector in tourism and the principal instrument for entry into the formal sector was the creation of more than 20 new licenses for different tourism activities. The rationale being that through creating the need for a license, the government could regulate market entry and address the concerns of the established sector players that informal operators were impacting the destination brand. Box 6: World Travel and Tourism Council (WTTC) 2008 World Tourism Review.
2007 National Tourism Policy Vision Statement: To develop Mauritius as a world class tourism destination in a sustainable, acceptable and responsible manner so that it will contribute significantly to the improvement of the quality of life of every Mauritian. Accessibility, visibility and attractiveness of Mauritius as a tourist destination, and provision of leisure, entertainment and recreational facilities and opportunities for the citizens and tourists alike, would be the main thrusts driving the tourism and leisure development philosophy of the Ministry. Comment: Aspects of the vision are reflected in the strategic themes the government has identified to carry it forward, but the main message from the themes below is a continuation of a mass tourism strategy. Strategic themes defined by Government: Increase tourism to 2 million arrivals by 2015 Make Mauritius an even higher value added tourism destination Continue to focus on scheduled services Make personal service excellence, a key unique selling proposition (USP) Establish a unique destination image for Mauritius Broaden Mauritiuss product portfolio by raising standards Open up opportunities for Mauritian involvement in the tourism activities i.e.,. more local inclusion.
New Licenses prescribed in 2006 Legislation:
47
1. Dolphin and whale watching 2. Eco-tourism activities (nature-based tourism activities or adventure-related tourism activities, or both) 3. Hawking on beaches facing hotels 4. Hawking in tourist sites 5. Operating helmet diving centre 6. Go-carting 7. Operating aquarium displaying fish or marine animals for public viewing 8. Operating beauty parlor, including hairdressing, within hotel premises 9. Operating boat house 10. Operating cable car 11. Operating ferry boat 12. Operating golf course 13. Operating health and fitness centre within hotel premises 14. Operating pleasure craft for commercial purpose, other than by a pleasure craft licensee 15. Operating rental agency for bicycle 16. Operating rental agency for bus, including minibus 17. Operating rental agency for car 18. Operating rental agency for jet ski 19. Operating rental agency for kite surf 20. Operating rental agency for motorcycle 21. Operating rental agency for paraglide 22. Operating rental agency for quads 23. Operating rental agency for windsurf 24. Operating scuba diving centre 25. Operating spa within hotel premises 26. Operating travel agency 27. Providing non-motorized water sports such as pedaloes, canoes, kayaks and laser 28. Providing tour operator service 29. Working as tourist guide, including tourist guide employed by a tour operator
Discussion The informal sector is unusually large in Mauritius. Some estimates prepared on the basis of electricity consumption conclude that the informal sector may comprise as much as 40 percent of employment. Moreover, the share of the informal sector appears to be rising. For its part, the Ministry of Industry estimates that of 95,000 small establishments, all but 2,500 are unregistered. While exact numbers are impossible to calculate, the general conclusions that the share is larger and larger than estimates in other countries and growing seems robust. In this regard the situation in Mauritius differs from the experience of other countries where informality has declined as income has increased (World Bank, 2006). The country would benefit if the size of the informal sector could be reduced, both because it would contribute to the greater productivity of the sector itself, because small firms would face no disincentives to growing bigger, and because they eventually could make a contribution to growth, to tax revenues and even exports. However, at present, the benefits of registration are significantly lower than the cost. One issue that this new legislation is trying to address is that Mauritius has evolved a dual tourism economy that is posing a significant challenge for the
48
government. Previous policies in Mauritius focused on keeping tourists away from the host population for fear of negative cultural impacts. This long term policy, originating in the 1980s, has resulted in a situation today where a large part of the population is excluded from the tourism economy. In the face of declining agricultural productivity, tourism offers an opportunity for employment and income generation. The efficacy of this attempt, the legislation designed to enforce it, and the incentives created to facilitate it, remains to be seen. However, preliminary assessments 25 of the budgetary allocations that would be required to cope with the increased volume of applications, inspections and overall administration is inadequate and it is likely that an improved information system will be required to receive and process applications as well as increased personnel. There is also no evidence of any kind of support structure or incentive scheme for these new businesses. It is questionable whether simply requiring them to be licensed will in fact improve their quality of service. Case Study 3: Tourism sector regulatory environment in Mexico: good practice in setting a positive upstream policy and institutional context for tourism. Mexico was the first developing country to develop mass tourism in the 1970s and is now the worlds 8th most visited country and ranks 12th in terms of foreign revenue earnings from tourism (WEF, 2008). Despite the large contribution of the tourism industry to national development, until recently there existed only a dim perception of its importance. In common with many other countries (as discussed earlier in this report) the sector has been denied economic and political resources. The recently ratified National Development Plan for Tourism seeks to remedy this contradiction. Mexico has transitioned from a state-led economy to a stable, open and deregulated economy. Tourism is a recently established national priority whose regulatory framework fully backs foreign ownership in tourism as well as strategies for competitiveness and sustainable development. The Ministry of Tourisms (Secretara de Turismo, SECTUR) is responsible for regulating, licensing and inspecting the sector and it operates a National Tourism Registry (a database of all tourism enterprises with detailed information concerning markets, employment, incomes etc.) (something Mauritius could consider introducing) which is voluntary and feeds into a national inventory of tourism services to help with the regulation task.
2007 National Tourism Vision:
By 2025 Mexico will be a leading country in tourism, since it will have diversified its markets, products and destinations, and its firms will be competitive at the domestic and international level. Tourism will be recognized as playing a key role in economic development and it will have grown with full respect for the natural, cultural and social environment, contributing all the while to enhancing national identity.
Author was a team member for the Mauritius Public Expenditure Review for the Tourism Sector, March 2007.
25
49
The mission defined for the public sector at the federal level:
To lead national tourism development, coordinating the actions of the different entities and levels of government, by means of planning activities, the promotion of the development of supply, the support for the operation of tourism services and the promotion of Mexico in the market
Strategic themes defined:

Tourism policy is articulated around four interrelated sets of objectives. In each of them an effectiveness area is defined for the goals the program seeks to achieve: The first of these is the consolidation of tourism as a national priority and acts as the focal point for the other three policy axes; The second set of objectives strives to achieve the total satisfaction of tourists traveling in Mexico; The third deals with the actions directed at attaining sustainable destinations; and Finally, the fourth axis of tourism policy seeks to enhance the development of competitive firms.
Discussion The links between this positive upstream policy environment and the downstream implications for regulation in the sector are manifest in the approach to implementation of the above four strategic themes. Tourism as a National Priority Efforts to curb excessive regulation in the sector have been made through harmonizing the roles and responsibilities of different government agencies. As part of the initial 100 days action program, the government launched an ambitious National Project of Tourism Facilitation. This project attempts to deal with 147 specific issues grouped in seven general headings dealing with the temporary licensing of international vehicles, fishing permits, access to heritage sites, use of beaches, environmental impact studies, and the regulation of marine services. An Executive Commission, which brings together representatives from all ministries having an impact on tourism and the representatives of all segments of the industry, plus local authorities, oversee the implementation of the facilitation project. There are legislative changes that decentralize functions such as licensing of hotels to local authorities. Satisfaction of tourists Providing full satisfaction for tourists involves every aspect of the travelers experience, from the moment he or she is first touched by a promotion action to the moment the traveler returns home. The following are some of the key elements of the strategy: Strengthening promotion: Promotion is the responsibility of Mexicos recently created Tourism Board. The private sector has 14 out of 29 votes in the board, with 12 going to local authorities and 3 to the federal government. The Tourism Board is market oriented and
50
conducts its campaigns on a multi-annual basis and is relatively isolated from political changes. Security, tourist assistance and information: Better coordination with local authorities to make destinations safer for tourists. Improving the quality of tourism services: In an increasingly competitive environment, quality is often the main determinant of the ability to maintain or increase market share. The rapid growth of employment in tourism and the incorporation of technical change by firms demand skills that are not always readily available in the market. Quality must, furthermore, be measured and certified so that it can more easily constitute information of use to consumers when deciding what to purchase. A National System of Tourism Training has been created that certifies skills and abilities in collaboration with workers unions, employers associations and local authorities. The H label is already recognized in Mexico as a symbol of high standards of hygiene in food and drinking water management. The system whereby firms achieve this label will be modernized and extended. Establishment of a national inventory of training firms, certification bodies and consultants in food management subject to strict standards of quality Improving the quality of tourism education: The linkages between higher education institutions and firms, in collaboration with tourism authorities, will be fostered with a view to increasing the efficiency of the educational system and its relevance to the labor market. A national council will be established to bring together academic institutions and tourism firms. It will run an employment exchange and will deal with on-the-job training programs, curriculum design and scholarship programs. Sustainable destinations For several years now, Mexico has acknowledged the need to strive for sustainable economic development. In the case of tourism this need is all the more visible given the trend, among a growing number of consumers, to demand sustainable practices in the places they choose to visit. The National Development Plan, from which the National Program for Tourism derives, stresses sustainability as a fundamental trait of the Growth with Quality that it seeks to promote throughout the economy. Beyond this national dimension, sustainable development is seen as a crucial element in regional development which continues to be one of the underlying themes of tourism policy.
51
Competitive firms The effort to position tourism as a national priority, to have fully satisfied tourists and to progressively build sustainable destinations demands that firms thrive in an increasingly competitive environment. The Ministry of Tourism sees two fields in which state action, or the commitment of public resources, is justified in the quest for competitiveness. The first one has to do with the development of small and medium sized enterprises (SMEs) and the other is the development of new products. Without the coordinating role of Government, fewer resources would be invested in these fields than is socially optimal. Case study 4: Tourism sector regulatory environment in Switzerland: good practice in deregulation and highly focused tourism strategy The example of Switzerland is showcased here to illustrate the focus of public sector engagement in the sector. The government fully recognizes its role as facilitator for this important-to-the-economy sector and public expenditure is channeled to creating favorable conditions for sector operators to compete. There is no obvious effort to generate revenue from the regulation of the sector players, but rather an implicit understanding that if the private sector players are successful, the government will retain its share of revenue from increased tax collection.
National Tourism Policy Statement: It is vital that a country like Switzerland should have an explicit tourism policy; yet, in the interest of allowing freedom of competition and letting the market regulate itself, any such policy has to be confined to improving general conditions in the sector and encouraging tourism. The prime objective of Switzerlands new tourism policy is to increase the countrys competitiveness as a destination. What Switzerland has to offer is often considered in part to be old, boring and out-of-date; hence the importance of adapting the product to the new market conditions in order to improve its competitiveness. Switzerland has to continue to guarantee that all its products are of the best possible quality. Swiss tourism cannot be reinvented since the comparative advantages remain the same: idyllic scenery, attractive infrastructure, an environment that is intact and highly skilled staff. This being the case, it is vital to back innovative projects and encourage tourism companies to work together. Switzerlands tourism policy is designed to be highly market-oriented, with the result that the object is not to regulate the market, but rather to encourage competitive and sustainable tourism development by creating framework conditions favorable to the industry. To this end, public/private partnership structures have been put in place. The second initiative, launched by the FST, relates to a quality label for Swiss tourism. The idea is to train people in tourism companies as quality managers. Once trained, these people are able to initiate thinking along the lines of Total Quality Management in the company where they work, and in this way can help the company to obtain the quality label. In 1998/99, more than 200 establishments had already obtained the label and more than 1 500 quality managers had been trained. Strategic themes defined: 1. Create favorable conditions:
52
Working to create greater acceptance of tourism: the attitude of the native population is essential to the quality of the tourism product. It is a matter of encouraging the Swiss to overcome the critical attitude they may have towards tourism. Promoting innovation: adapting to the new challenges of international competition involves having the necessary financial resources for research and development and for advising tourism companies. Supply needs to be modernized and demand stimulated by adopting an innovative approach. Improving international framework conditions: Switzerlands interests need to be defended on the international scene, in particular by encouraging the liberalization of tourism and blocking, for example, foreign exchange restrictions. Also, it is important to facilitate capital transfers and investment, while at the same time co-operating with other countries. 2. Bolster market presence Enhancing Switzerlands brand image: stimulating demand by means of improved communication. For visitors, brand image is a guarantee of quality. Service providers are called upon to work together under the banner of the destination - tourisms competitive unit. Developing strategic products: this means moving from individual services to integrated products, acting under the destination heading while at the same time monitoring shifts in demand. Improving service quality: tourism services in Switzerland are relatively expensive. To ensure an excellent price/quality ratio, high quality has therefore to be guaranteed. Again, it is a matter of seeing further than individual quality and focusing on the overall quality of the destination. Promoting the use of telematics: ensuring Switzerlands place on the electronic markets, particularly Internet. Switzerland has to be promoted as a destination in such a way that the customer can at any time and from anywhere access precise information on Swiss tourism.
3. Increase the attractiveness of the destination: Developing human capital: with the creation of tourism schools and a federal diploma for tourism specialists, todays young people can specialize in this area. It is vital to improve the image and prestige of such courses, so as to ensure the sectors future. Attracting an enthusiastic labor force: in view of the difficult working conditions and often mediocre wages, there are too few native job-seekers, which is why Switzerland makes substantial use of foreign labor. In order, however, to instill a native service culture, it is important to rationalize repetitive and boring tasks and improve the image of the sector so as to increase the share of native labor. Promoting structural change where accommodation is concerned: give the hotel trade the necessary business advice so as to encourage rationalization and cooperation and thereby enhance the sectors profitability. Increasing the value of infrastructure: the high level of development is one of Switzerlands assets. Existing infrastructure needs to be maintained and improved. Physical planning and ensuring the sustainable development of the countryside: guaranteeing the safeguard of the countryside which is Swiss tourisms main asset. The quality of the environment has to become one of the main pillars of Swiss tourism.
53
Discussion There are many aspects of tourism with which the government is not involved. There are no price controls in tourism, apart from the laws on competition in general, which are mainly designed to prevent the creation of cartels and other illicit practices. Nor does the State intervene in the grading of hotels which is the prerogative of a pubic-private partnership created 30 years ago. The State does not oversee travel agencies or other companies such as tour operators. The latter are free to operate as they wish, there being no federal license for travel agents, for example. That said, the consumer is protected - notably by the Federal Act of 18 June 1993 on package holidays. The Act guarantees the consumer a certain number of rights, in particular if a trip is cancelled by the operator, or does not take place, or if the latter goes bankrupt. It also obliges the organizer to be transparent and to abide by the information given. This final example of a developed country approach to regulation in the tourism sector illustrates the challenges faced by governments in developing countries in moving towards a private sector-led economy fully facilitated by government.
54
Appendix A Regulatory and Administrative Environment for Tourism in Kenya
Laws Relevant to the Tourism Sector in Kenya Laws and Administrative Regulations Mandate Oversight Continental Shelf Act Vest rights in the Government in respect of Attorney General (CAP 312) the natural resources of the continental shelf Government Land Act Regulating the leasing and other disposal of Commissioner of (CAP 280) Government lands, and for other purposes Lands Hotel Impose a tax in respect to the hire and Controller Accommodation Tax occupation of accommodation in hotels and Act (CAP 478) similar establishments Air Passenger Tax Imposition of passenger tax on airline flights Customs and Excise Act (CAP 475) Forests Act (CAP 7) Provide for the establishment, development Kenya Forestry and sustainable management, including Service (Ministry of conservation and rational utilization of Environment and forest resources for the socio-economic Natural Resources) development of the country Investment Promotion Promote and facilitate investment by Kenya Investment Act (CAP 6) assisting investors in obtaining the licenses Authority necessary to invest and by providing other assistance and incentives for related purposes Marine Insurance Act Provision in relation to marine insurance Kenya Port Authority (CAP 390) Value Added Tax Act Impose a tax to be known as value added tax Kenya Revenue (CAP 476) on goods delivered in, or imported into, Authority Kenya; and on certain services supplied in Kenya Environmental Establishment of an appropriate legal and Ministry of Management and institutional framework for the management Environment and Coordination Act of the environment and for matters Natural Resources (CAP 8) connected to the protection of the environment Insurance (Motor Make provision against third party risks Ministry of Finance vehicle third party arising out of the use of motor vehicles risks) Act (CAP 405) Privatization Act Provide for the privatization of public assets Ministry of Finance (CAP 2) and operations, including state corporations. Public Fees Act (CAP Provide for the levying of fees for licenses, Ministry of Finance 424) permits and other matters arising in public offices Regulation of Wages Provide for the establishment of Wages Ministry of Labor and Conditions of Advisory Boards and Wages Councils for and Human Employment Act the regulation of remuneration and Resources (CAP 229) conditions of employment Development
Appendix A
55
Laws Relevant to the Tourism Sector in Kenya The incorporation of representatives of Ministry of Lands groups who have been recorded as owners of land under the Land Adjudication Act Ascertainment and recording of rights and Ministry of Lands interests in Trust land Ascertainment of rights and interests in, and Ministry of Lands for the consolidation of, land in the special areas. Land Titles Act (CAP Provision for the removal of doubts that Ministry of Lands 282) have arisen in regard to titles to land and to establish a Land Registration Court Protected Areas Act Prevent the entry of unauthorized persons Ministry of Lands (CAP 204) into areas which have been declared to be protected areas Registered Land Act Make further and better provision for the Ministry of Lands (CAP 300) registration of title to land, and for the regulation of dealings in land so registered Registration of Titles Provide for the transfer of land by Ministry of Lands Act (CAP 281) registration of titles Trusts of Land Act Relating to trusts of land Ministry of Lands (CAP 290) Local Government Provide for the establishment of authorities Ministry of Local Act (CAP 265) for local government; to define their Government functions Physical Planning Act Provide for the preparation and Ministry of Planning (CAP 6) implementation of physical development and National plans Development Coastal Development Plan and co-ordinate the implementation of Ministry of Regional Authority Act (CAP development projects in whole of the Coast Development 449) Province and the exclusive economic zone Authorities and for connected purposes Kenya Road Boards Oversee the road network in Kenya and Ministry of Roads (CAP 7) thereby coordinate its development, and Public Works rehabilitation and maintenance. Public Roads and Provide roads of public travel and access to Ministry of Roads Roads Access Act public roads and Public Works (CAP 399) Road Maintenance Provide for the imposition of a road Ministry of Roads Levy Fund (CAP 9) maintenance levy on petroleum fuels and for and Public Works the establishment and administration of a Road Maintenance Levy Fund The Wildlife Consolidate and amend the law relating Ministry of Tourism Conservation and to the protection, conservation and and Wildlife Management Act management of wildlife in Kenya (CAP 376) Fisheries Act (CAP Provide for the development, Ministry of Tourism 378) management, exploitation, utilization and and Wildlife conservation of fisheries Hotels and Make provision for the licensing of hotels, Ministry of Tourism Restaurants Act hotel managers, and restaurants; for the and Wildlife (CAP 494) regulation of hotels and restaurants; for the imposition of a levy for training persons to be employed in hotels and restaurants Kenya Tourist Establishment of the Kenya Tourist Ministry of Tourism Land (Group Representatives) Act (CAP 287) Land Adjudication Act (CAP 284) Land Consolidation Act (CAP 283)
Appendix A
56
Development Authority Act (CAP 382) Tourist Industry Licensing Act (CAP 381) Foreign Investments Protection Act (CAP 518) Landlord and Tenant (shops, hotels, and catering establishments (CAP 301) Civil Aviation Act (CAP 394) Kenya Airport Authorities Act (CAP 395) Kenya Maritime Authorities Act (CAP 5)
Laws Relevant to the Tourism Sector in Kenya Development Corporation and Wildlife
Make provision for regulating the tourist industry with a view to promoting its well-being and development Give protection to certain approved foreign investments Make provision with respect to certain premises for the protection of tenants of such premises from eviction or from exploitation Licensing and regulation of civil aviation Construct, operate and maintain aerodromes and other related facilities
Ministry of Tourism and Wildlife Ministry of Trade and Industry Ministry of Trade and Industry
Ministry of Transport Ministry of Transport
Establishment of the Kenya Maritime Ministry of Transport Authority as a body with responsibility to monitor, regulate and coordinate activities in the maritime industry. Kenya Port Establishment of an Authority to be known Ministry of Transport Authorities Act (CAP as die Kenya Ports Authority, for the 391) transfer to the Authority of the undertakings, within Kenya Maritime Zone Act Consolidate the law relating to the territorial Ministry of Transport (CAP 371) waters and the continental shelf of Kenya; to provide for the establishment and delimitation of the exclusive economic zone of Kenya; to provide for the exploration and exploitation and conservation and management of the resources of the maritime zones Transport Licensing Provide for the coordination and control of Ministry of Transport Act (CAP 404) means of and facilities for transport Entertainment Tax Imposition and recovery of a tax in respect Treasury Act (CAP 479) to entertainment Water Act (CAP 8) Provide for the management, conservation, Water Management use and control of water resources and for Resource Authority the acquisition and regulation of rights to (Ministry of Water use water. and Irrigation) Adapted by Author from Report by Global Development Solutions, LLC (2007). Refer to http://www.kenyalaw.org/kenyalaw/klr_home/ for the complete laws of Kenya.
Appendix A
57
Appendix A
58
Institutional and Administrative Environment in Tourism in Kenya
Institutions, Organizations, and Associations Relevant to the Tourism Sector in Kenya Institution Mandate Administrative Oversight Public Sector Institutions National Exercise general supervision and Ministry of Environment Environment coordination over all matters relating to and Natural Resources Management the environment, and to be the principal Authority (NEMA) instrument of the Government in the implementation of all environmental policies National Determine policies and priorities to Ministry of Environment Environmental protect the environment, and promote and Natural Resources Council (NEC) co-operation among public departments, local authorities, private sector, Non-Governmental Organizations and such other organizations engaged in environmental protection programs Ewaso Nyiro South Facilitate and support socioeconomic Ministry of Regional Development development programs to alleviate Development Authorities Authority poverty and enhance wealth creation (ENWDA) 26 through sustainable resources mobilization and utilization Coast Development Coordinate, promote development and Ministry of Regional Authority (CDA) conserve coastal areas of Kenya Development Authorities Kenya Tourism Secure the investigation, formulation Ministry of Tourism and Development and implementation of projects for Wildlife Corporation developing the tourist industry of (KTDC) Kenya Kenya Wildlife Wildlife conservation and Ministry of Tourism and Service (KWS) management Wildlife Bomas of Kenya Promote cultural tourism Ministry of Tourism and (BoK) Wildlife Kenya Tourism Tourism marketing and promotion Ministry of Tourism and Board (KTB) Wildlife Kenya Utalii Human resources development for Ministry of Tourism and College (KUC) the hospitality industry Wildlife Hotels and Make provision for the licensing of Ministry of Tourism and Restaurants hotels, hotel managers, and Wildlife Authority (KRA) restaurants; for the regulation of hotels and restaurants; for the imposition of a levy for training persons to be employed in hotels and restaurants Kenya Investment Promote and facilitate investment by Ministry of Trade and Authority (KIA) assisting investors in obtaining the Industry licenses necessary to invest and by providing other assistance and incentives and for related purposes
26
The Authority covers an area of 47,000 km2 consisting of entire Narok, Kajiado and Transmara Districts and parts of Nakuru and Nyandarua Districts.
Appendix B
59
Institutions, Organizations, and Associations Relevant to the Tourism Sector in Kenya Kenya Maritime Regulate, coordinate and oversee Ministry of Transport Authority (KMA) maritime affairs Kenya Port Maintain, operate, improve and regulate Ministry of Transport Authority (KPA) all scheduled sea ports situated along Kenyas coast. Kenya Airport Maintain, operate, improve and regulate Ministry of Transport Authority (KAA) all scheduled flights situated within Kenya Kenya Civil Licensing and regulation of civil Ministry of Transport Aviation Authority aviation (KCAA) Associations and Civil Society Organizations Kenya Association Leading tourism trade association Independent private, of Tour Operators representing tour operators membership association (KATO) Kenya Association National organization comprised of Universal Federation of of Travel Agents mainly IATA agents operating in Travel Agents' Association (KATA) Kenya (UFTAA) Eco-Tourism Promote ecotourism and sustainable Civil society organization Society of Kenya tourism practices in Kenya representing individuals, (ESOK) community based organizations (CBOs) and corporate organizations Kenya Association Umbrella organization bringing Membership association of Housekeepers together hotels, lodges, restaurants, representing registered hotel, and Caterers membership clubs and prominent lodge, restaurant, caterer or (KAHC) airline caterers to render services in the establishment carrying out hospitality industry the business of hotel keeping or catering Pub, Entertainment Promote pubs, entertainment and Membership association. and Restaurant restaurants in Kenya while abiding by a Association of strict code of conduct to help regulate Kenya (PERAK) the industry Mombasa Coastal Promoting, fostering and maintaining Membership association Tourism tourist traffic within the coastal region consisting of all business Association and Kenya in general involved in the tourism (MCTA) sector, primarily in the Kenya coast Kenya Tourism Umbrella organization for all tourism Membership organization Federation (KTF) organizations Masai Mara Promote local conservation efforts Membership association of Management hoteliers in Masai Mara Association (MMMA) Dupoto Wildlife Promotion and conservation of forested Community-based and Forestry lands association Association Siana Conservation Promote tourism and conservation in Community based Association Siana association consisting of members of Siana Group Ranch Trans-Mara Guides Provide training and promote the Community based tour Association delivery of quality guide service guides association Adapted by Author from a Report by Global Development Solutions, LLC (2007)
Appendix B
60
Bibliography
Ashley, C. (2005), Facilitating pro-poor tourism with the private sector: Lessons learned from Pro-Poor Tourism Pilots in Southern Africa, Overseas Development Institute Working Paper. Ashley, C. and Roe, D. (1998), Enhancing community involvement in wildlife tourism: Issues and challenge, Wildlife and Development Series No. 11. London: IIED. Buhalis, D and Costa, C. (2006), Tourism Business Frontiers, Elsevier Ltd, Oxford. Butler, R. (2006) The Tourism Area Life Cycle, Vols. 1 and 2, Ontario: Channel View Publications Buhalis, D. (2000), Information Technology for the Tourism Industry, Tourism Management, Volume 37, Issue 4, pp.324-39. Butler, R. (2006) The Tourism Area Life Cycle, Vols. 1 and 2, Ontario: Channel View Publications Campbell, L.M. (1999), Ecotourism in Rural Developing Communities, Annals of Tourism Research, 26: 53453. Carey, S., Gountas, Y., and Gilbert, D. (1997), Tour operators and destination sustainability, Tourism Management, Volume 18, Issue 7, pp. 425431. ComMark Trust (2005), The Economic Benefits of Liberalizing Air Transport, Report for SADC. Crouch, G. and Ritchie, B. (1999), Tourism, Competitiveness and Social Prosperity, Journal of Business Research, 44: 137-152. DCDM (2006), Livingstone Tourism Enterprises Survey, A Report for the Government of Republic of Zambia and the World Bank. Dieke, P. (2000), The Political Economy of Tourism Development in Africa. New York, Cognizant. Global Development Solutions (2007), Tourism Value Chain Analysis in Kenya, a Report Prepared for Africa Region Private Sector and Finance. Goss-Turner, S. (1996), The Accommodation Sector, in: Jones, P. (Ed.), Introduction to Hospitality Operations. Cassell, London, pp. 212-35. Harrison. D, and Schipani. A. (2007), in Pro-Poor Tourism: Who Benefits? Edited by C.Michael Hall, Channel View Publications. Hawkins, D., and Mann, S., (2007) The World Banks Role in Tourism Development, Annals of Tourism Research, Vol.34, No. 2, pp. 348363. Heller, M. A. (1998), "The Tragedy of the Anticommons," Harvard Law Review, January 1998.
Bibliography
61
IBISWorld Industry Report: Tour Operators,2007, http://www.scribd.com/doc/531080/IBISWorld-Report-TourOperators-in-the-US Inskeep, E. (1991): Tourism Planning, New York, Van Norstrand Rheinhold. Jacobs and Associates (2006), Effective and Sustainable Regulatory Reform: The Regulatory Guillotine in Three Transition and Developing Countries, A Report Prepared for the World Bank Khan, MM, (1997), Tourism Development and Dependency Theory: Mass Tourism vs. Ecotourism. Annals of Tourism Research, 24: 98891. Kotler, P., Bowen, J., and Makens, J., (2006), Marketing for Hospitality and Tourism, London; Prentice Hall. OECD (2006), Globalization, SMEs and Tourism Development: Enhancing the Role of Australian SMEs in Global Value Chains. Ranck, S.R. (1987), An Attempt at Autonomous Development: The Case of the Tu. Guest Houses, Papua New Guinea. In Britton, S & Clarke, WC (Eds), Ambiguous Alternative: Tourism in Small Developing Countries. Suva: University of South Pacific, 6177. Rodrick, D. (2004), Industrial Policy for the 21st Century, Paper prepared for UNIDO. Sharpley, R. (2000), The Influence of the Accommodation Sector on Tourism Development: Lessons from Cyprus, Hospitality Management 19: 2000, pp. 273-295 Sharpley, R., and D.Telfer (2002), Tourism and Development; Concepts and Issues. London :Channel View Publications. UN World Tourism Organization (2008), Global Tourism Outlook UNCTAD (2000), Report of the Expert Meeting on Strengthening the Capacity for Expanding the Tourism Sector in Developing Countries Weaver, D.B. (1991), Alternatives to Mass Tourism in Dominica, Annals of Tourism Research, 18: 41432. World Bank (2005) Pro-poor Growth in the 1990s: Lessons and Insights from 14 countries. World Bank (2006), Business Licensing Reform: A Toolkit for Development Practitioners, Small and Medium Enterprise Department, World Bank Group. World Bank (2006), Mauritius: from Preferences to Global Competitiveness, Report of the Aid for Trade Mission, April 2006. World Bank (2006), Reforming the Investment Climate: Lessons for Practitioners
Bibliography
62
World Economic Forum (WEF) 2008 Travel and Tourism Competitiveness Report. World Travel and Tourism Council (WTTC) 2008 World Tourism Review.
Bibliography
63

Licensing Case Studies: Tourism Sector

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Licensing Case Studies: Tourism Sector

Uploaded by

Copyright:

Available Formats

Licensing Case Studies: Tourism Sector