Chapter 14 Public Sector and Policy

This Lecture will give you A knowledge of the key organisations globally with an interest in and influence upon tourism; An understanding of the key functions of NTOs and an insight into how such offices might be structured and how responsibilities are divided; An overview of the role of the public sector; and A knowledge of the instruments available to governments in order to manipulate demand for tourism and control the supply of it.

Public Policy Framework The context for government involvement in tourism: International agencies such as the World Tourism Organisation, the World Bank and the United Nations; Regional agencies and banks such as the Pacific Area Travel Association and the European Bank for Reconstruction and Development

Functions of the World Tourism Organisation (1) Helping member countries, tourist destinations and businesses maximize the positive economic, social and cultural effects of tourism; Identifying markets; Assisting in tourism planning as an executing agency of the United Nations Development Programme (UNDP); Advising on the harmonisation of policies and practices; Sponsoring education and training, and identifying funding sources;

Functions of the World Tourism Organisation (2) Promoting the broader relationship of visitors to the physical and social environment, by defining sustainability as development which meets the needs of present tourists and host regions while protecting and enhancing opportunities for the future; Encouraging the implementation of a Global Code of Ethics for Tourism for the observance of human rights and fundamental freedoms.

The Public Administration of Tourism Figure 14.1 The public administration of tourism

Reasons for Government Involvement in Tourism (1) Foreign exchange earnings and their importance for the balance of payments; Employment creation and the need to provide education and training; Large and fragmented industry requiring careful coordination of development and marketing; Maximise the net benefits to the host community; Spread the benefits and costs equitably;

Reasons for Government Involvement in Tourism (2) Building the image of the country as a tourist destination; Market regulation to protect consumers and prevent unfair competition; Provision of public goods and infrastructure as part of the tourist product; Protect tourism resources and the environment; Regulate aspects of social behaviour, for example, gambling; Monitor the level of tourism activity through statistical surveys.

Structure of a National Tourism Organisation Figure 14.2 Structure of a national tourism organisation

Functions of a National Tourism Organisation Marketing Advertising and promotion; Relations with the travel trade and media; Information provision; Business tourism; Tourism services. Development Strategic planning; Project assistance; Research.

Functions of a National Tourism Organisation Administration Internal operations; Tourism legislation; External relations Representing government; Tourism sector liaison; Enquiries and public relations.

Demand and Revenue Management Marketing and promotion; Information provision and network development; Pricing; Controlling access; Security and safety.

Price Controls Figure 14.3 Price controls

Supply and Cost Management Land-use planning and environmental control; Building regulations; Market regulation; Market research and planning; Taxation; Ownership; Education and training; Investment incentives.

Economics of Consumer Protection Figure 14.4 Economics of consumer protection

Principles of Taxation Equity; Efficiency; Simplicity.

Distributive Effects of a Tourist Tax Figure 14.5 Distributive effects of a tourist tax

Categorisation of Investment Incentives Reduction of capital costs; Reduction of operating costs; Investment security.

Impact of Financial Incentives Figure 14.6 Impact of financial incentives

Conclusions The complex nature of the tourist product makes it unlikely that private markets will satisfy all the tourism policy objectives of a country; The role of governmental organisations, particularly the NTO is critical in the shaping of the tourism system; Tourism is a truly global business that has reduced the power of national governments to shield themselves from outside events.