LDCs and ITOs in
Tourism:
Critique and recommendations
with focus on Morocco
Lexicon:
·
LDCs: Less Developed countries
·
ITOS: International Tour Operators
·
SDT: Sustainable Development of Tourism
·
Plan Azur: plan for the six seaside resorts that
will allow
·
Oligopsonistic power: arises where there are broadly
competitive conditions on the supply side and the supply curve is not perfectly
inelastic, and so the Oliopsonists or the monopsonists can exert their buying
power by restricting demand and thereby purchase at a less than competitive
price
·
3S: Sea, Sand, and sun
·
4S: sea, sand, sun and sky
·
SMTEs: Small and Medium Tourism Enterprises
·
SMHTs: Small and Medium Tourism hoteliers
I- Identification
The issue:
It has been shown in the past tourism
development policies in LDCs that a big importance is given to ITOs in order to
penetrate international markets and increase at max the number of tourists. It
also has been noticed that, while this is an efficient way of marketing a
destination based on mass distribution, it engenders many costs and constitutes
one of the hindrances to sustainable development of tourism in LDCs. This case
study will tackle these issues, relating to Morocco as a real case, and propose
a code of ethics that should accompany the promotion policy taking into account
most of the costs related to the promotion of Morocco in international markets,
and that must be respected by all the concerned market players like
national/International tour operators, tourism offices as an attempt to reduce
the obstacles to SDT.
Description:
Developing mass tourism in developing
countries can engender many drawbacks and heavy costs for the concerned nation,
as the need for the country to urgently develop a certain sector might lead to
many concessions from the government. As Britton (1982) states "the
tendency of so many LDCs to seek to expand their tourist sectors through
attracting foreign investment and management forces them into lopsided trading
partnerships that favor transnational Companies" (Tosun, timothy &
Ozturk, 2003).
Sustaining growth in the tourism sector is
one of the Moroccan government's high priorities. Today, with liberalization
and privatisation at the forefront of King Mohammed VI's economic reforms,
Morocco is aiming to attract 10 million foreign visitors by 2010, versus 4.5
million now (of which only 2.3 million are foreigners and the remaining are
Moroccans living abroad) and tripling the hosting capacity in the kingdom, of
which 81.3% concerns the seaside resorts as a means to better match the
market's demand (The Washington Times Advertising Department, 2000). The plan
signed into law on
This new vision aims also at generating
annual receipts in foreign currency 80 billion Dirhams, which is four times the
current performance. This should allow providing 600,000 employment vacancies,
adding 2 to 3 points to GDP growth in a yearly basis, and reaching 20% of the
sector's contribution to the 2010 GDP.
Plan AZUR, which is the code of the six
seaside resorts construction, management and development, is one of the pillars
of this new strategy. According to a special report on tourism by Medina, which
held an interview with the Minister of Tourism, this choice aims to adjust the
Moroccan product, dominated by the cultural element (62% of hosting capacity),
to the international demand that is more driven towards the seaside tourism (4
tourists out of 5 want sea, sand and sun: 3S).
To reach these objectives, the emphasis
has to be put mainly on
·
The ITOs are the best expert in their market
·
Rely the max on their marketing
·
Share risks with the ITOs".
This is justified by the positive
contributions of ITOs in marketing a destination. In fact, one of the major
advantages of the ITOs on destinations is the support in marketing and
promotion of the destination, and the increased visibility mainly in the
international market (Bastakis et al. TM 25, 2004). Yet, other comparable
countries' experience showed the other side of the coin, which even prove to be
heavier.
In order to understand the link between
STD and ITOs, it is essential to know the meaning and implication of each.
Tosun (2003) defines sustainable development (SD) as a tourism that is
developed and maintained in an area (community, environment) in such a manner
and at such a scale that it remains viable over an indefinite period and does
not degrade or alter the environment (human and physical) in which it exists to
such a degree that it prohibits the successful development and well-being of
other activities and processes. In this context, the United Nations 'World
Commission on the Environment and Development defines sustainable development
as a 'development that meets the needs of the present without compromising the
ability of future generations to meet their own need' (WCED, 1987). Repetto
(1986:15, cited in Pearce et al., 1990) has also said that sustainable
development as a goal, rejects policies and practices that support current
living standards by depleting the productive base, including natural resources,
and that leaves future generations with poorer prospects and greater risks than
our own.
Since the WTO suggestion in 1975 of the
tourism distribution channels' description, many scholars have attempted to
provide a more integrated description, incorporating all the elements and
functions of tourism distribution channels (Mill & Morisson, 1985;
Middleton, 1994; Buhalis, 2001). Tourism distribution channels are organized
and serviced systems that have the responsibility to package tourism products
and promote them; provide information for prospective tourists; and also
establish mechanisms that enable consumers to make, confirm and pay for
reservations. Nowadays, distribution channels often influence consumer behavior
and effectively determine whether destinations and local suppliers can be
included in the set of decision-making models of prospective consumers (WTO,
1975; Buhalis, 2001).
In the contemporary European leisure
tourism environment, a “packaged” travel is a predominant form of tourism
activity. The Northern-European tour operators became the biggest channel
leaders thanks to their large integrated travel organizations (C. Bastakis et
al., 2004).
ITOs concentration approach has been
expanded to destinations and raised some delicate issues. In fact, "large
ITOs merge with, acquire or develop accommodation establishments and incoming
tour and coach operators (Bastakis, 2004). Also, these large consortiums the
only feasible way to sustain their activity is via packages' standardization, which
means supplying a high volume at a low cost and a low profit margin strategy,
targeting to increase their market share (C. Bastakis et al., 2004).
These ITO's accumulated forces have
produced signs of oligopoly and unfair trade practices in the origin markets
(Monopolies and Mergers Commissions, 1986, 1997; Cleverdon & Kalish, 2000;
Hutson, Miller, & Snaith, 2001; ABTA, 2002), and sharp 'oligopsonistic'
phenomena for the destination's suppliers. For example, in
The ITOs became intense competitors to the
SMTEs. They also take advantage from the unfavourable business environment of
the SMTEs during the negotiations, pushing them to reduce their prices, which
reduces their profit margins and threatens their viability. In other words, the
small size of these firms, their inefficient organization, low professionalism
level, lack of resources and the marketing expertise, lack of a unified body or
a federation that speaks their rights and contributes to the strengthening of
their sector. This, hence, maintains and even nourishes the “dependency”
continuum of SMTEs on Tos.
Indeed, in both
Where lays the major power of tour
operators? Actually, significant decisions as to which destination regions are
to be favoured with tourism development are frequently exercised by travel
intermediaries, based not in the destination regions but in the tourist
generating countries. Hence, the type and the scale of tourism development in
the developing world are at the mercy of the international tour operators to a
large extent.
In Turkey, as a comparative case to Morocco, tourism
as a major source of foreign currency earning and employment creation is
perceived as a national priority that comes before secondary objectives as
preserving cultural heritage, environment, fair distribution of economic
growth, and other principles of sustainable tourism development. Therefore, the
development approach of
One more reason empowers tour operators
and is related to time dimension. In fact, the state's will to maximize foreign
currency earning in the present tourism season, has lead them to adopt short
term planning, bringing about more dependency on foreign tour operators.
In this respect, we have seen the
wealthier coastal regions endowed with amenities required to satisfy the
demands of mass tourism induced by international tour operators given
preferential by the successive Turkish government. This stimulated regional
favouritism reflects a no consideration for the long-term effects on
geographical disparities and overall development (Tosun, 2001, p: 293).
According to Soysal (1982), Cultural
values in many local tourist destinations have become a part of the tourism
product. They have been used as a commodity and a marketing tool to increase
the average length of stay of the tourists and maximize foreign currency
earnings. Many traditional ceremonies, such as circumcision and Turkish nights,
have been in fact transformed and used to entertain the tourist, no matter what
the result is on the country's image, on the business future, and on the local
people with regard to their psychology and cultural reference marks (Tosun, 2001,
p:297)
Also, it can be argued that traditional
handicrafts have become a matter of mass production without paying much
attention to their origins owing to the ‘get-rich-mentality’ that has been
brought by over-commercialisation. This trend results in a degradation of the
cultural heritage and affects the continuity of historically rooted traditions.
An exploratory research done in 2002
(Bastakis et al. 2004, p: 155), the most important concerns to SMTEs owners or
managers in the Mediterranean basin,
·
Loyalty and commitment: these destinations have been
developed like undifferentiated and hence substitutable 4S products. This is
reinforced by the intention and the ability of Tos to control the image and the
promotion of destinations and tourism firms in the international markets; Large
TOs prefer to operate under the umbrella of uniformity and standardization, as
previously stated, and to promote what is determined by their own branding
rather by the typical specificities of the destinations ignoring any additional
characteristics of the destination. This renders destinations and SMTEs even
more vulnerable to competition and substitution threats, and again this an
issue that concerns mass market resorts, where the long reliance on ITOS clientele
led to the commodification of the destination's product by intermediaries
·
Price profit margins and contractual negotiations: These
research interviewees perceived the price they are currently forced to accept
to be at least 35% depreciated relative to standards of services they offer.
Also the negotiations are very coercive prior to the signing of the season's
contracts. The vast power of ITOs coupled with the lack of alternative
distribution options, assigns them great advantages during negotiations and
allows them not only to force SMTEs to accept prices offered but also to
manipulate a considerable part of the bargaining framework in which
negotiations take place. Many SMTEs interviewees felt "locked" in the
existing system and powerless to move forward.
·
Contractual inconsistency with regard to the level of
coverage of allotment contracts and overbooking mainly.
·
Tos demand maximum service vs. minimum contract price
leading tourism firms and more notably the SMTEs to a vicious cycle of
declining quality and depreciated price.
A worrying trend is depicted concerning
large Tos. Interviewees noted that these latter are less concerned with quality
in comparison with the past. This trend not only affects the SMTEs cycle but
also spoils the travel experience and the satisfaction levels of their
customers, and so affects the destination's image and future in the long run
(Bastakis et al., 2004)
3. Related cases:
·
Caffin & G. Jobbins. Governance Capacity and stakeholders’
interaction in the development and management of coastal tourism: Examples from
morocco and
·
Bastakis. C. (2004). The Perception of small and
medium sized tourism accommodation providers on the impacts of the tour
operators’ power in
·
Scott Youngstedt, Tourism in
·
Mortour, 1998 (Jim Lee database)
·
World
Wide Web: http://www.reliefweb.int/w/rwb.nsf/WCT?OpenForm
·
World
Wide Web: http://allafrica.com/northafrica/
4.
Author and date:
Nadia Sandi,
Master in Tourism Administration
candidate
Department of Tourism and
Hospitality Management
School of business and Public
Management
The
II- Policy impacts:
1.
Social:
·
Culture: risk of losing authenticity and traditions by
adjusting some local cultural aspects to what the Tos would require in order to
further market the destination.
2.
Environmental:
·
Moroccan businesses, as their peers in the other
developing countries, do not have an efficient and complete legal structure
that supports their activity and assures a fair business environment between
ITOS and SMTEs. Also, patron-client relationships and imperfect market
conditions brought on by large scale, non-local tourism investments that
receives significant fiscal support from the government kills the locally owned
small establishments.
·
Some seaside resorts should be protected from an over
usage. A report from the Organisation for Economic Co-operation and Development
on
3.
Economic:
·
Tax: verify if there is a possibility to impose even a
small tax contribution
·
Employment: While tourism development creates in
general tens of thousands of jobs more jobs, most of the jobs which will be
filled by Moroccans will be at the lower end of the service industry, such as
maids, waiters and so on. This looks like very beneficial in the short run,
mainly if it absorbs an unemployed population. However definitely reduces unemployment and appears
beneficial in the short run.
·
“According to
the New Internationalist data, the percentage of leakage in tourism in
developing countries ranges from 30% to 70%. This is undoubtedly rising as
foreign investments are even further encouraged and needed for the ambitious
and quick development of the tourism sector. This would be more likely to
enhance the inequalities between wealthy nations and developing countries as
the case of
4.
Other: N/A
5.
Suggestions/ Intervention
·
Tax: verify if there is a possibility to impose even a
small tax contribution
·
Employment: a minimum requirement of local employees in
the contractual agreements with the transnational, of which are the incoming
operators.
·
SMTEs strategic
options to collaborate via:
Economies of scope, where neighboring SMTEs collaborate to improve
their facilities and enhance their services by pooling resources to develop a
shared facility i.e. swimming pool, sport facilities, etc
Economies of scope and scale, where SMTEs create a vertical network in the form of
consortia on a regional basis.
This
can be more efficient in undertaking tasks difficult for the private sector
businesses, and more adequate for lobbying and putting pressure on the state or
on larger organizations:
-Break
the isolation of SMTEs from Market evolutions and trends, as information
intelligence, accurate statistics and detailed databases, market research, etc,
which can be done in collaboration with the National Tourism Office
-Establish
guidelines in SMTEs’ pricing policies, such as a minimum price limits for both
allotment and commitment contracts, a collective yield management systems,
programs of central negotiations with TOs
-Facilitate
promotion and distribution of destinations/resorts: develop internal portals,
use the free “Open
-Provide
basic IT training and support to the SMTEs
Put
pressure on the state to create incentives and developmental laws focusing on
the improvement of the SMTEs, and on the consistency of contractual agreements
between SMTEs and TOs, as well environmental measures.
III- Legal Clusters:
1.
Policy issue:
Marketing policy for tourism industry
development in
2.
Existing policy framework: national/international/regional/local:
N/A
3. Decision Breath/stakeholders/policy
actors:
As far as LDCs
are concerned, the tourism industry is mainly controlled by the local authorities,
the wealthy of the country via national corporations or international
organizations as ITOs.
4. Suggested policy intervention
Ų
A legal procedure needs to be created to protect both
the tourists and the locals from the abuses of some ITOs. All recommendations
are stated in the code of ethics and in the conclusion.
Ų
Code of Ethics:
·
Recognizing that tourism, as an ambivalent phenomenon, since it has the
potential to contribute positively to socio-economic and cultural achievement,
while at the same time it can contribute to the degradation of the environment
and the loss of local identity, should be approached with a global methodology
(Charter for Sustainable Tourism, Code of Ethics
for tourists*).
·
Recognizing the objective of
developing a tourism that meets economic expectations and environmental
requirements, and respects not only the social and physical structure of the
location, but also the local population (Charter for Sustainable
Tourism, Code of Ethics for tourists*).
·
The understanding and promotion
of the ethical values common to humanity, with an attitude of tolerance and
respect for the diversity of religious, philosophical and moral beliefs, are
both the foundation and the consequence of responsible tourism; stakeholders in
tourism development and tourists themselves should observe the social and
cultural traditions and practices of all peoples, including those of minorities
and indigenous peoples and to recognize their worth (WTO)
·
Development shall be based on
criteria of sustainability, which means that it must be ecologically bearable
in the long term, as well as economically viable, and ethically and socially
equitable for local communities (Charter for Sustainable
Tourism, Code of Ethics for tourists*).
·
Tourism must consider its
effects on the cultural heritage and traditional elements, activities and
dynamics of each local community. Recognition of these local factors and
support for the identity, culture and interests of the local community must at
all times play a central role in the formulations of tourism strategies,
particularly in developing countries (Charter for Sustainable
Tourism, Code of Ethics for tourists*).
·
Quality criteria both for the
preservation of the tourist destination and for the capacity to satisfy
tourists, determined jointly with local communities and informed by the
principles of sustainable development, should represent priority objectives in
the formulation of tourism strategies and projects (Charter
for Sustainable Tourism, Code of Ethics for tourists*).
·
Governments and the competent
authorities, with the participation of NGOs and local communities, should
undertake actions to the education and training imparted to professionals in
order to contribute to strengthening the SMTES hospitability (Sandi)
·
Tourism professionals have an
obligation to provide tourists with objective and honest information on their
places of destination and on the conditions of travel, hospitality and stays;
they should ensure that the contractual clauses proposed to their customers are
readily understandable as to the nature, price and quality of the services they
commit themselves to providing and the financial compensation payable by them
in the event of a unilateral breach of contract on their part (WTO)
·
It is the task of the public
authorities to provide protection for tourists and visitors and their
belongings; they must pay particular attention to the safety of foreign
tourists owing to the particular vulnerability they may have; they should
facilitate the introduction of specific means of information, prevention,
security, insurance and assistance consistent with their needs; any attacks,
assaults, kidnappings or threats against tourists or workers in the tourism
industry, as well as the willful destruction of tourism facilities or of elements
of cultural or natural heritage should be severely condemned and punished in
accordance with their respective national laws (WTO)
·
Travel for purposes of
religion, health, education and cultural or linguistic exchanges are
particularly beneficial forms of tourism, which deserve encouragement (WTO)
·
Tourism activities should
respect the equality of men and women; they should promote human rights and,
more particularly, the individual rights of the most vulnerable groups, notably
children, the elderly, the handicapped, ethnic minorities and indigenous
peoples (WTO)
·
Tourists and visitors should
benefit, in compliance with international law and national legislation, from
the liberty to move within their countries and from one State to another, in
accordance with Article 13 of the Universal Declaration of Human Rights; they
should have access to places of transit and stay and to tourism and cultural
sites without being subject to excessive formalities or discrimination (WTO)
·
Local populations should be
associated with tourism activities and share equitably in the economic, social
and cultural benefits they generate, and particularly in the creation of direct
and indirect jobs resulting from them (WTO)
·
Special attention should be paid
to the specific problems of coastal areas and island territories and to
vulnerable rural or mountain regions, for which tourism often represents a rare
opportunity for development in the face of the decline of traditional economic
activities (WTO)
·
As an irreplaceable factor of
solidarity in the development and dynamic growth of international exchanges,
multinational enterprises of the tourism industry should not exploit the
dominant positions they sometimes occupy; they should avoid becoming the
vehicles of cultural and social models artificially imposed on the host communities;
in exchange for their freedom to invest and trade which should be fully
recognized, they should involve themselves in local development, avoiding, by
the excessive repatriation of their profits or their induced imports, a
reduction of their contribution to the economies in which they are established
(WTO)
·
Partnership and the establishment
of balanced relations between enterprises of generating and receiving countries
contribute to the sustainable development of tourism and an equitable distribution
of the benefits of its growth (WTO)
·
The press, and particularly the
specialized travel press and the other media, including modern means of
electronic communication, should issue honest and balanced information on
events and situations that could influence the flow of tourists; they should
also provide accurate and reliable information to the consumers of tourism
services; the new communication and electronic commerce technologies should
also be developed and used for this purpose; as is the case for the media, they
should not in any way promote sex tourism (WTO)
·
Any natural or legal person,
provided he, she or it has the necessary abilities and skills, should be
entitled to develop a professional activity in the field of tourism under
existing national laws; entrepreneurs and investors - especially in the area of
small and medium-sized enterprises - should be entitled to free access to the
tourism sector with a minimum of legal or administrative restrictions (WTO)
·
The government
should create policies that encourage domestic demand, as it would help in
achieving a more balanced regional development and increasing bargaining power
against international tour operators (Sandi)
·
Implementation
of the principles of the Global Code of Ethics for Tourism:
The wording of this composed code can be changed, but
the essence is there and should accompany the promotion policy, and even gets
enriched to cover the whole tourism policy.
IV- Trade Clusters:
1. Type of measure: N/S
2. Relation of Trade measure to environment/ Tourism
impact
a. Directly related to product
b. Indirectly related to product
c. Not related to product
d. Related to process
3. Trade product identification/ trade and services:
N/S
4. Economic data:
5. Impact of trade restriction: no trade restriction
is related to this case.
6. Industry Sector: Tourism
6. Exporters and importers:
ITOs lead to a big financial leakage, as
most of the currency remains in the TO country not transferred to the
destination.
V- Macro/ Environment Clusters/ Tourism
policy clusters
1. Environment Problem type/ environmental aspects:
the relative costs to developing mass tourism, because of a high dependence on
ITOs and other transnational companies.
2. Resource impact and Effect:
3. Urgency and lifetime/ urgency and policy review: based
on the aspects discussed earlier in this case study, the LDCs government might
want to reconsider their currently adopted policies in developing tourism
industry and refer to the recommendations mentioned in sections II, III and
conclusion.
4. Substitutes/Alternative policies: in conclusion.
VI- Conclusions
1. Policy implications:
-
Tourism holds an
important place in the sample countries economy
-
Central governments tend to design a tourism
as a major tool for generating foreign currency and employment
-
The policies tend to
focus on economic growth rather than sustainable development including regional
balance, significant reduction of poverty and the discrepancy among classes
-
It appears very
challenging to use tourism as a means to reach balanced regional development in
a developing country for reasons like: deficit in existing infrastructure and
tourism superstructure in parallel with lack of large capital for needed
investments, the destination over dependence on transnational corporations and
mainly ITOs who tend to market such destinations as a cheap product
-
Predominance of
international tourism with low importance to domestic tourism
2. Recommendations:
·
Elaborate, vote for and adopt a National Code of Ethics for Tourism
including global standards (ITOs & National Tourism offices: Promote and
advertise truthfully; certified products by hotels, restaurants, responsible
tour operators, etc.)
·
Create a legal frame that would allow to tourists to find legal remedies
against ITOs if the final product is different from what they paid for. This
can be considered as one of the ultimate safeguards and a means to legal
redress
·
Invest in local people awareness and training in order to decentralize
the power and dependency on ITOs: use of other distribution channels such as
Internet and specialty clusters that target specialty interest groups, travel
agencies; better market to domestic tourism
·
Develop legislation on minimum and maximum hotel prices by category and
rating that a Moroccan regional tourism organization can supervise. It should
also control the information used by the tour operators to sell their products
like in brochures, internet...
·
Establish specialized legal offices in the country that supervise the
contracts consistency between SMHTs/SMETs and the tour operators.
·
Cooperating with more TOs setting a minimum and a maximum booked rooms
per TO, to reduce the dependency channel.
·
Create a
·
It is crucial to remember
Relevant literature and sites:
Bastakis. C et al.
2004. The perception of Small and medium sized tourism accommodation providers
on the impacts of the tour operators’ power in
Tosun. C. (2001).
Challenges of sustainable tourism development in the developing world: the case
of
Tosun. C. 2003. Tourism
Growth, National Development and Regional Inequality in
Dallen J. Timothy.
2003. Tourism Growth, National Development and Regional Inequality in
Youngstedt. S.
2003. Tourism in
Ozturk. Y. 2003.
Tourism Growth, National Development and Regional Inequality in
Relevant World Wide Web Sites:
·
World Tourism Organization:
http://www.world-tourism.org/frameset/code_ethics.html
·
Charter for sustainable tourism, code of ethics for
tourists: http://www.yorku.ca/dkproj/string/rohr/codes.htm
·
OECD website:
http://www.oecd.org/dataoecd/8/30/2452088.pdf
š
To tour
http://www.exploitz.com/pages/regions/northafrica/morocco/
http://www.bugbog.com/gallery/gallerymorocco/MoroccoDoor.html
http://www.safir-voyages.com/html/casablanca.html
http://www.morocco-pictures.co.uk/
http://www.arabwebsite.com/ctt/
http://www.villadarzina.com/
http://www.washingtonmoroccanclub.org/