By Nathalie Bredthauer, Leonie Zens, Christian Pucher, Mandy Messerschmidt, Ian Guedes
Table of Contents
Limitations
Introduction to the country
History of the tourism industry
Domestic Vs. International tourism
Tourism organisations in Ecuador.
Tourism legislation and Policies
Proposed Tourism Legislation
Destination Mix
Transportation
Infrastructure
Attractions
Connection between legislation and policy and practice or implementation
Economic Incentives or Obstacles for Tourism Development, Investment or Operations (Domestic and Foreign)
Corruption
Monetary Legislation: Change to US dollar
Incentives and Benefits for Investors
Tourism Market Profile
Key Trends
Origin & Destinations of Travellers
Interior Transportation Systems used
Key Tourism Attractions & Purposes of Travel
Tourism Marketing Distribution System
Financing
Governments support and Role of banking institutions
Key sources used and proposed support to development.
Sustainability
Environmental Policy
Eco-Tourism Policies
Ecotourism and Sustainability
Challenges for Sustainability
Tourism and Related Planning
Status of Planning Efforts/Sponsors
Scope of Plans and Level (National, Regional and Local)
Impacts of Planning
Supply Quality & Physical Distribution (Location), and Trends
Problems, Issues and Strategies
Tourism Economic Impacts
Balance of tourism trade and paymnets
Tourism benefits
Measurement of Tourism
Expenditures
Costs
Investments
Tourism Multipliers, Assesments and Satelite Accounts
Linkage and leakage
NTO Recommendations & Review of Learning Experiences
Recommendations
Learning experience
References
Articles
Websites
Interviews
authors of the projet
Ecole Hôteličre de Lausanne
Executive Summary
The main limitation when analysing Ecuador’s tourism industry is the country’s political instability rendering findings outdated and unreliable. The tourism industry is now the 3rd largest component of the country’s GDP. The main focus of its public and private tourism organisations is on Ecuador’s sustainability. Looking at the Ministry of Tourism, we find that they seek to involve locals as well as municipal governments in its overall tourism planning process. Ecuador’s main attraction is its natural resources, which are vital for the survival of local communities and the eco-systems. Despite the existence of several laws to ensure sustainability, foreign investment is often deemed more important than the environment by the government. Another issue is corruption in Ecuador, as many of its Presidents have been involved in this. Furthermore, contradicting laws exist, one stating foreigners will not be discriminated, and another prohibiting them from buying land in certain areas. Most tourists coming to Ecuador are from the United States or from South America, and Eco-tourism is becoming more popular among travellers, giving Ecuador a good opportunity. However, due to a large scale banking crisis in 1999, most banks capable of extending credit are foreign owned, causing leakage out of the country. Moreover, there are plans to decentralise, which could be a threat as it might facilitate corruption. Yet, Ecuador is currently experiencing a positive trade balance by increasing tourism exports. In the future, tourism planning should consist of a framework that includes the interests of all parties concerned. Public and Private sector have to find a common ground; this on the other hand may prove to be very difficult considering the current unstable political conditions.
Acknowledgements
During the course of this study we encountered some difficulties when trying to gather information. We found it was hard to obtain, and what was found was often incomplete or inaccurate.
We would like to extend our sincere thanks to those who have helped us to find information and have been valuable sources of information themselves.
Mr. Leon Rojal, a diplomat with extensive knowledge of the country and its customs and Mrs. Yolanda Rojal, a permanent correspondent working with the united nations in Geneva. They have patiently answered all of our questions and given us numerous ideas for the possibilities of further development of the country.
Mr. Patrick Bredthauer, is Swiss by nationality and has been active in the tourism industry in Ecuador. He has also assisted us and provided another insight to Ecuador’s tourism industry, as well as information on reality compared to the laws.
Limitations
The main limitation to this paper resides in the ongoing political instability in Ecuador. During the course of this study, on 20th of April 2005 the President was overthrown, caused by the fact that he had abolished the Supreme Court (The Economist, 2005). At the moment, Ecuador’s democracy is deeply discredited, giving it a bad image, and affecting the development in the tourism sector as it creates mistrust of potential travellers and investors (ibid). We have also found that a new Ministry of Tourism has been appointed, due to the change of government, and it is unclear if they will adopt the policies, plans and programs of the former one. Another serious limitation is that it is very difficult to find out if legislations are actually enforced and applied. Experts and people in the sector were contacted or interviewed to determine what actually occurs in Ecuador. These gaps are discussed throughout the study.
Introduction to the country
History of the tourism industry
Tourism in developing countries is growing at double the speed of that in developed countries, yet this can be a risk as the infrastructure is not present to support large amounts of tourism, the country’s environmnet will be destroyed unless precautions are taken to develop tourism in a sustainable way (Rojal, 2005). Due to the the country’s poverty, the tourism is based in large part on natural resources, and is attracting people who are looking for a natural environment to travel to rather than an overly touristic one, Giving it the opportunity it further develop in a sustainable way.
Quito, the capital city, has always been a very important city for tourism, as it posseses a rich cultural heritage and has monuments constructed during the colonial era (www.goecuador.com). This region has also always been the most influential and to this day still contains the most political power. Guayaquil however, is the country’s most important city economically and also has Ecuador’s first port (ibid). Historically, Ecuador’s main strengths have been, the export of products such as bananas, oil and especially cacao but tourism is now number three in the GDP contribution (ibid).
A large obstacle in the development of the country as a whole, including the tourism industry, has been the tremendous political instability. In 1931-1940 alone Ecuador saw 12 different presidents (www.encyclopedia.com). From 1996 to 2005 there have been a futher 6 presidents in office (The Economist, 2005). With each new president and government, come new policies and laws, making it very hard to have a consistent touristic development (ibid).
Domestic Vs. International tourism
Domestic tourism normally accounts for about 20% of total tourism according to statistics of the past two years of the total tourism movements in Ecuador (WTO). This number has been rising gradually, and in December of 2001 reached an all time high percentage of 36% of domestic travel, compared to only 16% for the same month the year before (ibid). Domestic tourism is mostly focused on the country’s most famous cities. Quito, is the most popular followed by Guayaquil (ibid). Quito however has lost some popularity in the results of the first quarter of 2003, and travel seems to have spread to the smaller cities of Ecuador (Encuesta de Turismo Interno). Many Ecuadorians own vacational properties in the country and trends in travel to these areas cannot be accurately measured (Bredthauer, 2005). Despite the recent growth in domestic travel the country has experienced, international travel is still the strongest source of revenue for tourism in Ecuador (WTO).
Tourism organisations in Ecuador.
When searching for Tourims organisations active in Ecuador, a list is shown of both public and private sector organisations, however information is only found on the public sector ones. Please refer to appendix I for the list of existing organisations.
Apart from the national tourism organisation (Ministry of Tourism), which is later analysed in detail, there is a separate tourism organisation called Ministerio del Medio Ambiente that is in charge of creating policies and startegies that focuses on sustainable tourism development as well as protecting the environment (www.ambiente.gov). This organisation wants to involve relevant parties in the decision making process in order increase the likeliness of achieving their goals. Apart from these, there is also a governmental organisation called INEFAN, focusing on the protection of Ecuador’s wildlife and biodiversity (www.explored.com). Looking at these organisations we see that there is, in fact, a strong priority towards the sustainable development of tourism and promoting the country with it’s best competitive advantage which is undoubtedly its varios natural regions (Ibid).
As for the private sector industries, information on these cannot be found, possibly due to their size and budgets. There is however information that they exist. While researching for this paper we have tried to contact Gino Luzi, who is responsible for the hotel industry of Guayas (Ahotegu-Associacion hotelera del Guayas). Unfortunately, we did not receive a reply, and thus do not know to what extent the policies and legislations are actually being implemented in the hotel sector. There is also an organisation uniting the travel agencies of Ecuador (Associasion de Agencias de Viajes ASECUT), but once again this company does not have a website allowing us to find information on it. The same goes for another private organisation focusing on Ecotourism (Asociacion de Ecoturismo, ASEC), and for the airline companies organisation (Associacion de Lineas Aereas, ARLAE).
Tourism legislation and Policies
The Ministry of tourism is there to ensure that all the laws regarding tourism created by the government are carried out, as well as suggest further laws for improvement. The main goals and objectives of the ministry of tourism is to involve the regional, provincial and municipal governments in the tourism development (www.vivecuador.com). Moreover it supports the development of infrastructure and improves the basic public services. It also focuses on conserving the natural and cultural resources of the country, and promotes the involvement of locals, to maintain their culture and traditions, protecting their identity (ibid). The Government must guarantee the proper use of nature, history, culture and archeological resources. Together with the public and private sector, it seeks to promote the country and its attractiveness nationally and internationally (ibid).
Proposed Tourism Legislation
As Ecuador is competing with other countries like Costa Rica and Peru, that offer good flight connections, roads, competitive prices and quality facilities, there was a need to revise the current legislation to improve the image of the country (www.vivecuador.com). The priority of the new legislation is to work with a functional infrastructure and to involve the local people (ibid). The simplification and delegation of control, supervision, and monitoring to decentralized bodies, will increase transparency of government activities and cut down on beaurocracy when carrying out administrative procedures related to the tourism industry (ibid). Furthermore tax incentives will be put in place to attract foreign investment, to develop infrastructure and increase the quality of products and services in the country (www.vivecuador.com). This proposed legislation has yet to be approved by the Ecuadorian government, however, since President Lucio Gutierrez has recently been overthrown, it may take several months to be approved and thus implemented, negatively affecting the tourism industry (Bredthauer, 2005). According to Rojal it is even unsure and there is no way of knowing if this new legislation will be applied by the new government (2005).
Destination Mix
The destination mix is made up of transportation, infrastructure, attractions, facilities, and hospitality. Only some of these are discussed to show how government legislations are linked to the destination mix.
Transportation
The Ecuadorian National Train Company (ENFE) recently made a proposal to expand the railway system permiting the transportation of cargo and promoting tourism (Coellar, n.d). In 2001, the Ecuadorian Congress passed a legislation to rebuild the country's principal lines (www.ecuadorexplorer.com). Unfortunately, the resources allocated in 2002 are 5.5 million dollars short of what ENFE requested. Since there is no transport of bulk goods on this route, the government does not consider the project profitable (ibid). Because of insufficient action on the part of the federal government, the ENFE is hoping to get help from private enterprises in order to complete the project (ibid). Political discord has disrupted renovation and shows the lack of support from the Government (ibid).
Infrastructure
In Ecuador, most of the potential to improve the economy is in export industrie and therefore focus should be on infrastructure services that facilitate access to international markets and enhance the competitiveness of export industris while benefiting the tourism sector (www.sica.gov.ec). These include air, maritime, rail and road transportation (ibid). In major touristic areas, infrastructure requires investment from both private and public sources (ibid). As the experience of many countries shows, participation of foreign investors in privatization programmes does not always lead to greater efficiency and improvement in the quality of services due to leakage and the wrong kind of foreign investment being attracted (ibid). According to the government, care should be taken to ensure that public monopolies are not simply replaced by private foreign ones (www.sica.gov.ec). The lack in infrastructure development, where the government is involved, leads to an increase in costs for the tourism activities (ibid). Electrical energy costs are one of the highest in the world and telecommunications are expensive and of very bad quality (Bredthauer, 2005). In many regions water supply is insufficient and irregular (ibid).
Attractions
Ecuador’s main attraction is its natural resources. The environmental law states that: “The State shall protect the right of the population to live in a healthy and ecologically balanced environment that guarantees sustainable development.” (Art 86). According to Ycaza (2005) there is a clash of interests between groups wanting to preserve the natural resources and the government, which sees profits that can be made from tourism in the natural areas. He expresses that the government should change the idea that tourism economic revenues are more important than preserving the environment (ibid). He proves the lack of law enforcement from part of the government with the case of the Galapagos islands where ilegal fishing of sharks and sea lions is still carried out (ibid). Recently a legal framework has been put in place recognizing the importance of SMEs and protects the indigenous communities for which the ministry of tourism is responisble (www.planeta.com). The government, together with the Ecotourism Association will promote training activities for members of local communities and expresses that this policy tries to guarantee the conservation of Ecuador’s national resources and is fundamental for the survival of local communities and the sustainability of the country (ibid).
Connection between legislation and policy and practice or implementation
The following example shows how the aforementioned environmental law (art 86) is not enforced by the government, as oil profits from foreign companies are deemed more important than the environment. The Ecuadorian Amazon Jungle is the most extensive area of the country’s territory (48%). According to Nunink (n.d.), a researcher implementing a project to protect the indigenous group “Shuan” and trying to encourage sustainable tourism in the Amazon, it is unprotected by the law. It is not specific enough and needs to be much stricter in order to protect its environment and cultures on the verge of extinction (Ninink, n.d). Research has shown that government legislation supports and encourages mining and oil companies, invading these culture’s habitats and threatening their extinction (ibid). Furthremore according to Rojal only 20% of the profits generated by the oil industry are reinvested in the country, however, this does represent 28% of the country’s total revenue (2005). The Ecuadorian government is currently being asked by the Amazon indigenous organizations to stop granting concessions for lumber and oil companies and to strictly control the entrance of foreign companies to indigenous lands in order to preserve their culture (ibid). We can see that this law is disregarded not only in the cultural sense but also when it comes to natural resources (ibid). The country’s official deforestation is 150,000 hectars per year, however the real numbers is likely to be double that (The Economist, 2003). This shows the government’s lack of co-ordination between the different interests of the environment preservation of cultures and the economy (www.un.org).
Another law states tourist operations of natural and protected areas will be administered by national operators: however it is possible for foreigners to operate these areas with government authorization and that it is prohibited to exclude or discriminate foreigners in tourism activities (www.vivecuador.com). In reality this is legally not the case (a second contradicting law exists) since, for example, it is prohibited for foreigners to purchase land on the beach (Bredthauer, 2005). Nevertheless the fact that this prohibition is part of a law creates legal insecurity and certainly sends the wrong message to investors (ibid).
Economic Incentives or Obstacles for Tourism Development, Investment or Operations (Domestic and Foreign)
Corruption
Corruption in Ecuador undermines the capacities of the state, causes bad distribution of funds, distortion of priorities, lack of trust of the population in the government, and a bad international image affecting tourism and investment (www.cipe.org). In Ecuador, corruption is present in the private and public sectors on all levels of administration such as customs, juridical, police and education (ibid). The most common corruption problems in Ecuador are committed by their presidents and government officials (www.admin.corisweb.org). Please refer to appendix II for an article that includes a short overview of corruption.
Monetary Legislation: Change to US dollar
In March 2000, Ecuador changed its monetary situation by adopting the US dollar as its official currency. In 1999, the economy suffered its worst recession ever. The gross domestic product (GDP) decreased by 7.3%, inflation reached 61%, and unemployment exceeded 17% forcing the country to make serious changes (www.icfaipress.org). The Dollarization set off a dynamic trend in which the imbalances between domestic and international prices could be eliminated more quickly (ibid). This Dollarization made Ecuadorian tourism products more expensive in relation to neighbouring countries (ibid). Higher prices for tourism products and services tend to amplify quality ratings according to Soler (n.d.), thus discourageing foreign investors or tourists to come to the country, when neighbouring countries offer better prices (ibid).
Incentives and Benefits for Investors
The state guarantees the national and international investment in any tourist activity, meaning that foreigners will benefit from the same rights and obligations as nationals (art 25) (www.vivecuador.com). Companies and persons that present tourism projects approved by the government will benefit from exoneration of certain taxes by presenting to the local government, the tourism license to operate (art 27) (ibid). Furthermore the companies and private investors that have qualified projects will have the right to be fully reimbursed for the custom duties in the import of airplanes, boats, vehicles, used in the transportation of national and foreign tourists (ibid). The same benefits will be applied to construction equipment and other necessary instruments to provide the tourism service (www.vivecuador.com). Furthermore, marketing and promotion expenses used to promote the project or the country internationally will be tax deductible, but cannot exceed 5% of the total revenues of the company (www.vivecuador.com). According to Bredthauer (2005), despite these laws, government and tourism agencies put so many barriers that it is almost impossible for investors in the tourist sector to access to these benefits.
A legal framework for the treatment of foreign investment started in 1969, when Ecuador signed the Andean Sub Regional Integration Agreement (Andean Pact) (www.bomchilgroup.org). Objectives of this decision were to create a policy to allow investment in sectors to maintain control and attain a better business capacity level (ibid). There was greater government control however, and foreign investors perceived this as an obstacle (ibid). At the same time other parts of the world approached foreign investment encouragement and did not place major restrictions (ibid). In the 1980’s economic reforms to this laws were implemented and foreign trade in Latin America was liberated (www.bomchilgroup.org). As a result, the investment procedures relaxed and new policies encouraged foreign investment by giving it the same treatment as local investment (ibid). This new focus on foreign investment has certainly helped the negotiation and execution of bilateral investment conventions between Latin America and other exporting countries despite the fact that they still lag behind the rest of the world (ibid).
Tourism Market Profile
Key Trends
A current trend in the market is a tendency towards eco-tourism, rural and responsible tourism. Alliance Internationale de Tourisme (AlT) found that nature and a clean environment and increasing environmental awareness will be the most important factors for international and domestic travellers when choosing a destination (Eplerwood, 2000). AIT sees the rebirth of educational and environmental niche market travel (ibid). Sun and sand tourism is expected to grow at a slower pace, because it is perceived as being damaging to the environment (ibid). Therefore, ecotourism in Ecuador is enjoying high growth prospects as it will increasingly fit with the growing environmental concerns of travellers worldwide (Appendix III).
According to Eplerwood, new technology will have more influence on how people travel resulting in travelling with more ease and at a lower cost, and with increased personalised services (2000). As Ecuador does not have the facilities to update its technology to keep up with this trend, it may be at a disadvantage in this aspect (ibid). Another emerging trend is the pro-poor tourism movement. (Mera, n.d., Ashley, 2002). It focuses less on expanding the size of tourism, and more on opportunities for specific groups within the region (Mera, n.d.). Ecuador may be able to benefit from this movement due to the lack of infrastructure and other basic services if proper policies and plans are implemented (ibid).
Origin & Destinations of Travellers
Ecotourists have always been strongly attracted to national parks and protected areas. In general, these individuals have higher than average incomes and are college educated (Eplerwood, 2000). This group will, therefore be the main target of regions, like Ecuador, focusing on ecotourism (ibid). Please refer to appendix IV for an insight of the amount of visitors to natural areas.
Visitors coming to Ecuador have been increasing by 46.91% from 1999 to 2003 (www.wtoelibrary.org). The biggest market is coming from the Americas, followed by the European market and tourists from East Asia and Pacific (ibid). All off these overall markets have been increasing the last 4 years, with Americas being with 55.8% the fastest growing market (ibid). In South America, Colombia (205’353 thousands) is the biggest market with a slight but constant growth rate and Peru (153’520 thousands) with a huge growth rate of 43.12% (www.wtoelibrary.org). Looking at North America we find the USA as a big market at the moment is increasing by 6.16% (ibid). In the US the Roper Organization classifies about 22% of Americans (about 49 million adults) as “true environmentalists'', which are a direct target of Ecuador’s ecotourism focus (Eplerwood, 2000). The biggest European tourist segments are from Spain, followed by UK and Germany (www.wtoelibrary.org).
Tourism officials in Quito believe that the UK, Germany and Spain have the biggest growth potential concerning tourism (Macefield, 2004). However, as UK firms already promote Galapagos Islands, Ecuador wants to increase tourism promotion to other areas of Ecuador (ibid). At the moment most European tourist only stop over at Quito or Guayaquil to reach their final destination: “Galapagos Islands”. Most tourists are visiting Quito (38%), followed by Carchi (23%), then Guayaquil (21%) and El Oro (15%). The Galapagos region is extremely popular, however due to its size, it is not among the most visited areas. Please refer to appendix XI for a detailed list of origins of travellers and appendix V for description of the destinations of travellers.
Interior Transportation Systems used
Ecuador has a more efficient air transportation system than most other Andean countries (www.lonelyplanet.com). All of Ecuador's top travel spots are within a day's ride from Quito and prices are very low. (www.vivecuador.com). The main domestic airline is TAME, though there are other small airlines and charter planes available (Icaro, Aerogal). Almost all flights begin or end in Quito or Guayaquil (www.lonelyplanet.com). It is possible to rent a car with agencies such as Hertz and Avis and travel the country, however, safety and public transportation , urban and rural road condition and availability of roadside assistance are all poor (ibid). Bus travel throughout Ecuador is dangerous, especially at night, because of poorly maintained and unmarked roads and bridges (ibid). Bus passengers are often targets of crime, including robbery and rape (ibid). Moreover, travelers should guard against theft of personal belongings on all forms of public transportation. (www.instantpassport.com).
Boat travel is a popular and necessary means of transportation in Ecuador to travel down Amazonian rivers in canoes or sail between the Galapagos Islands in luxury cruise ships (www.vivecuador.com). Taking the train in Ecuador should be thought of less as a means of transportation than as an adventure (ibid).
Key Tourism Attractions & Purposes of Travel
The main reason to come to Ecuador is either for business mainly in Quito or Guayaquil, or for leisure benefiting from different ecotourism offers (www.lonelyplanet.com). Ecuador’s international tourism offerings revolve around nature and business travel, focusing mainly on cultural, adventure, rural, nature and sun and beaches tourism (ibid). Ecuador can be divided in five main tourism clusters Central- Northern Andes, Coast, South, Amazon and the Galapagos Islands (Ministry of tourism). 97% of the Galapagos Islands is made up of a protected National Park and almost exclusively offer eco-tourism activities (www.ecuador.org). The Amazon offers eco and cultural tourism where 20% of the territory is still indigenous; the Coast offers ecotourism with emphasis on adventure, beach and archaeology tourism activities (ibid). Business tourism is also present in this area, located mainly in the city of Guayaquil and Manta (ibid). The Andean cluster, which includes Quito, concentrates on historical, ethnic, and cultural tourism (ibid). The South offers cultural and historic tourism with cities like Loja, Bolivar and Canar (ibid). It is also the home of Cajas National Park which attracts religious tourism because it is perceived by the Catholic Church as a holy place (ibid).
According to 2000 numbers from the Ministry of Tourism 64% of tourism arrivals come for sun-beach and ecotourism reasons (392,000) (Ministry of tourism). Approximately 19% come to visit friends and family (118,000). Furthermore it is important to highlight that a high percentage of Ecuadorians residing abroad spend part of their time in eco-tourism activities (ibid). The business segment, including arrivals for conventions and fairs, represents 9% of total arrivals in the country (ibid).
Tourism Marketing Distribution System
The National Marketing Department is in charge of establishing a central, coherent image to raise awareness of Ecuador at the national and international level (www.viveecuador.com). It is in charge of producing audiovisual and printed material to hand out at national and international fairs (ibid). It is also the entity which coordinates with the private sector working together to promote the country (ibid). The Ministry of Tourism has transferred all the competences in tourist matters to 60 municipalities, which are responsible for local promotion (ibid). Regional organizations contribute to the development of the tourist sector in the region, by means of participative and joint processes, promoting the tourism industry as a strategic element of sustainable development in accordance with the Ministry of Tourism and representatives from the Ecuador’s tourism industry (ibid).
Ecuador attended six international tourism fairs to present itself as a tourism destination (Fitur 2001, Madrid - Spain; BIT, Milan - Italy; ITB, Berlin - Germany; ANATO, Bogotá - Colombia; and the Salón de París) in the first half of the year 2005 (ibid). The International Tourism Trade Fair of Ecuador, (B.I.T.E.) is a private entity, sponsored by the Ecuadorian government through its Ministry of Tourism. BITE was created to promote Ecuador’s natural resources and tourism services, through exhibits, conferences, business meetings, and personal interviews. Local companies participate as “sellers” offering tour services and products (ibid).
The web-page of the NTO (Ministry of Tourism), which is also a promotional tool, www.vivecuador.com can be only read in two languages (English and Spanish). Furthermore, there is no list of hotels available on the site, or a link to other web-pages. This forces the potential consumer to go to each individual hotel web page to check prices and contact them per e-mail to get further information about availability as an example. The page is more of an information portal than an interactive program helping the client to finalize its bookings or vacation plans. There were only 6 tourism offices found located in Ecuador. The is no evidence of Ecuadorian tourism offices located outside Ecuador, however we are not convinced that they do not exist. Confusion is created between the official website of the country, vivecuador, and an unofficial one viveecuador, which in fact gives more information than the governmental one.
Financing
Governments support and Role of banking institutions
Tourism is an important industry and will play a key role in the country’s development, yet, the main factor that attracts investment in Ecuador is the petroleum industry (www.sica.gov). A problem arises however when all of the money made by these foreign industries is then taken out of the country, leaving no real economic benefit to Ecuador (ibid). Unfortunately this is a common problem the country is faced with as foreign direct investment was heavily encouraged in the 1990’s and the country did not really benefit much from this, as most of the money was leaking back out of the economy rather than helping it (ibid). Leakage is further discussed in a later part of this paper.
The government tends to attempt to boost the economy by implementing plans that encourage foreign investment, and apart from the petroleum industry, one of the most attractive industries for the foreign investor is the tourism industry (www.sica.gov). This however, cannot develop to its full potential if other factors such as roads and manufacturing industries and the country’s human resources are not attended to as well, these factors are indispensable to the successful economic and sustainable development (Investment policy review Ecuador, 2001).
Due to the banking crisis of 1999, all Ecuadorian banks are still suffering and most are still not able to extend credit (Rojal, 2005). This then means that local people have to go to foreign banks that will charge extremely high interest rates to cover the risk factor (ibid). Furthermore it turns out that most private investment is made by foreigners in the first place who get loans in their domestic country and then proceed to invest in Ecuador (Ibid).
The government has not yet managed to make the tourism industry attractive enough to investors, furthermore, many are hesitant to invest in the country in general due to the tremendous political instability that is currently getting worse, and continues to rise in uncertainty (Investment policy review Ecuador, 2001).
Key sources used and proposed support to development.
There have been some efforts on the government’s behalf to make the tourism industry more attractive for both national and international investment (www.vivecuador.com). Examples of this are exemption from taxes for transfer of ownership and property tax, which have been previously discussed (ibid). Furthermore efforts have been made to attract foreign investment from Canada, as they estimate this to be an important tourism market, and claims it receives about 30,000 visitors from this area (ibid). This however is not what has been found from the data that has been gathered on incoming tourism, please refer to appendix V for exact numbers of incoming tourists per country. Canada is seen as one o the main foreign investors in Ecuador, and this is mainly in the field of petroleum (ibid). Caution should be taken however on the part of the Ecuadorian government to ensure that this actually benefits the economy and does not increase the leakage out of the country conteracting the eco-tourims efforts made (ibid).
A private organization exists aiming to help Ecuadorian businesses called CORPEI (Corporacion de promocion de exportaciones e inversiones) (www.ecuadorinvest.org). This organization composed by Ecuadorian businessmen works together with the United Nations Industrial Development organization (UNIDO). They look for strategic partners to participate in projects inside the country, such as investments in infrastructure and research and development (ibid). The tourism sector has been identified by CORPEI as one of the high potential markets for foreign investment (ibid). The recruiting of potential investors is carried out by UNIDO in Europe and Asia and by CORPEI in the United States and throughout Latin America as it has ofices distributed throughout these areas (ibid). CORPEI also cooperates closely with the government and the Ministry of Tourism in order to promote the country (Rojal, 2005).
Sustainability
Due to the fact that tourism in Ecuador is underdeveloped, it presents a clean slate for creating a tourism industry that is sustainable (Tourism Canada, cited in Murphy, 1994:279). The goal of such a sustainable tourism development would be the, “management of all resources in such a way that we can fulfill economic, social, and aesthetic needs, while maintaining cultural integrity, essential ecological processes, biological diversity and life support systems” (ibid). Tourism in developing countries such as Ecuador represent a hope and a sense of income that could potentially help the country become economically competitive on an international level (Rojal, 2005), especially through the multiplier effect that tourism has on other sectors of the economy (Maldonado, n.d.). However all efforts to develop tourism could prove to be useless in the long run if the three main principles of sustainable development are not respected: ecological sustainability; social and cultural sustainability; and economic sustainability (WTO, 1993:10; Mowforth and Munt, 1998 cited in Velas and Becherel, 1998). While the Ecuadorian administration (and previous administrations) accept these points and are generally even backed by plans, implementation seems to be a problem. In Galapagos for example, fishers and increasingly the local population exert pressure on the ecosystems. No real control of destruction of the rainforests is being carried out and in many parts of the country cut, slash and burn operations are usual to gain agricultural land which is eventually abandoned when the topsoil is eroded (Bredthauer, 2005).
Environmental Policy
When considering environmental policy, Ecuador begins by including the right of Ecuadorians to live in a healthy, ecologically balanced, and contamination free environment. Moreover, it declares of public interest to preserve the environment, its ecosystems as well as the biodiversity of the country (www.ambiente.gov.ec). Inspired by these constitutional rights, the national congress of Ecuador has created the Environment Management Law. This law includes important points such as the responsibilities of the public and private sectors with regard to environment and is based upon the universal principles of sustainable development, as defined by the Declaration of Rio de Janeiro 1992. The most interesting aspect of this law is that the major competencies, both of formulation and regulation are passed down to regional and local levels. We therefore conclude that on a national level, there are no specific regulations regarding environmental policy except for the general direction that policy should be formulated by (www.ambiente.gov.ec). However, all political policies created, that may impact the environment in any way, must be approved and licensed by the Ministry of the Environment. In order to obtain such a license, an environmental study must be made by a number of experts detailing the impact the given policy or project will have upon the environment, including measures that will be used to protect and monitor the environment (Ibid). In conclusion this paperwork and beaurocratic system may lead to these policies never being implemented.
Eco-Tourism Policies
These policies have the aim to minimize negative effects on the ecosystem and local cultures (Ubidia, 2005). The Ecuadorian Ecotourism Association (ASEC) works together with the Ministry of Tourism to achieve those goals by developing and implementing a legal framework to contribute to the sustainable development of ecotourism (ibid). The permanent ecotourism policies are focused on coordinating and harmonizing all stakeholders involved in ecotourism, by incorporating the different visions of local communities and involving all stakeholders (non-government organization, private sector…). It further develops administrative tools, promotes a code of ethics, establishes zonification of national tourism space, promotes certification of ecotourism operations and guarantees conservation of natural ecotourism (ibid). These ecotourism policies will be obligatory on national scope and guarded by the Ministry and the ASEC. Public planning and private execution will only be allowed to projects inside the legal framework of Ecotourism.
Ecotourism and Sustainability
Ecotourism, can be defined as “the use of natural areas in order to understand local culture and natural history with safety measures in place that minimize negative impacts on the ecosystems and on the local cultures” (Andrade, 2005). Moreover, such tourism must generate economic opportunities for the conservation of the environment that benefit local communities (ibid.). Having defined ecotourism as such, as well as looking at the framework of environmental policy we can look at the Galapagos Islands for a practical example.
Protecting its great natural wealth, the Galapagos Islands have created an environmental law that declares the Islands a natural park with the power of charging an entrance fee. The idea has been that in order to deter the masses from visiting the Islands, very high entry fees have been introduced: USD 100 for foreigners; USD 50 for members of the Andean Pact; and USD 6 for Ecuadorians. This generated between 4 and 5 million dollars in 2004 (Andrade, 2005). All tourism activities relating to this (transport, hospitality, etc) generated a total of 150 million dollars of which only between 20 and 30 million dollars stayed in the province, the rest of the money stays within the country however it goes to the capital, Quito to finance all the beaurocratical costs (El Financiero, ed 549, 2004). We therefore see that while efforts are being made towards sustainability and ecotourism, leakage is still a big problem (ibid). Perhaps the government’s approach to regulating ecotourism by the development of national parks (Inter-American Travel Congress, 1997) is not enough (ibid).
The Ecuadorian government views ecotourism as a vital part of creating and promoting sustainable development in the tourism industry (Yunis, n.d. www.vivecuador.com). While the Ecuadorian government has taken part in several conferences on the matter, such as the Worldwide Ecotourism Summit and it has signed documents such as the Quebec Declaration, there are still no clear signs of implementation. Such implementation especially implies direct government involvement on all levels to establish specific rules necessary for the supervision of ecotourism projects and products such as certification systems such as eco-labels (www.vivecuador.com). The danger of not having such systems in place may lead to what is known as “ecological washing”, or the sale of products and services labeled ecological but which adhere to no ecological regulations whatsoever.
One of the biggest problems Ecuador faces with regard to ecotourism is that there is a lack of legal framework (Andrade, 2005). To this day, although there is agreement in both the public and private sectors that ecotourism is an important economical part of the tourism industry in Ecuador, there has been no proper study done nor statistical data collected regarding the impact it has upon the economy (ibid.). Private sector include projects such as the Kapawi Project, which was co-founded by Canodros, a private enterprise together with the Federation of Achuar Indigenous People of Ecuador (FINAE). The project is essentially a lodge with a capacity of up to 50 people in the middle of the rainforest, only accessible by air (www.kapawi.com). 70% of the employees are indigenous and most products are bought from their communities (ibid). By 2011, the lodge will be fully transferred to the indigenous people (ibid). The project’s greatest success is probably that it attracted the attention of other international NGO’s who have begun setting up projects with the FINAE (ibid). Please Refer to appendix VII for a brochure on the Kapawi Project.
Challenges for Sustainability
In our opinion, the greatest challenge that Ecuador must overcome with regards to sustainability is reaching political stability. Without regulation on behalf of the government, it will be difficult to speak of sustainable development of ecotourism or of tourism as a whole. While research has shown that despite the lack of regulation, NGO’s and the private sector are trying to follow models of ecotourism to provide a sustainable development, both for Ecuador’s natural resources as well as its local communities, research has not provided us with examples of the opposite. Unfortunately, in the absence of regulation there are always those who are willing to make a “quick buck” at the expense of future generations. Research has shown that the issue at hand is not that Ecuador lacks the knowledge of how to do it properly but it lacks the stability to ensure it is done properly.
Tourism and Related Planning
Developing Countries, like Ecuador, are mainly receptor destinations (Chapter 11, old tourism textbook, we did not receive any reference for this). Tourism Development should always underlie a constant and detailed planning process. The main goal of developing Tourism in a developing country is to ensure a sustained growth. This can be achieved by matching supply closely to demand (Chapter 11, old tourism textbook). For the supply of tourism and its specific products all obstacles, like those for air transport need to be abolished. Only recently have international charter operators and cheaper airlines like Air Madrid taken interest to start routes to Ecuador. The routes to the USA are still very expensive in comparison to other neighbouring countries (Bredthauer, 2005). Yet, it is important to still filter between “good” and “bad” investments to achieve a sustainable tourism development. Human Resources for managing tourism is also essential for the successful implementation of tourism. The tourism development plan is part of the national development plan and must therefore also seek to increase the common good of society and relate it to the more equitable distribution of wealth (Cevat, Timothy, 2001).
Status of Planning Efforts/Sponsors
Planning of Tourism is executed by different departments and management areas. Please refer to appendix VIII for a detailed overview of responsibilities. The National Marketing Department, for example is responsible for establishing a central image helping to raise awareness of Ecuador at the national and international level (www.vivecuador.com). Therefore it is in charge of national and international trade fairs and works together with the private sector for promotion purpose (ibid). The Department of Tourist Resources Department, on the other hand is in charge of promoting competitiveness in the tourism sector (ibid). This achieved by seeing tourism as a strategic area of economic, social, and environmental development in Ecuador (ibid). The competitive development of the tourist activity in Ecuador is taken care of by the Department of Planning and External Cooperation (www.viveecuador.com). The objectives of this department are to promote the tourism development by cooperating between the private and public sector (ibid). It wants to further achieve sustainability by guaranteeing the rational use of tourist resources and the preservation of those natural and cultural resources (ibid). It also wants to unify the identity and image of Ecuadorian tourism on a national and international level (ibid). Further research should be encouraged to be able to consolidate, incorporate, and develop current and potential tourism areas (ibid). Rules and regulations will be established to facilitate the overall development of tourism (ibid). Different projects and areas of development can be seen in appendix IX in more detail. The ultimate aim is to improve the quality of Ecuadorian tourism products and services and lower the prices of the products and services while constantly developing the sector along the lines of sustainability (ibid).
Looking at the different sponsors for the ecotourism movement we find that, for example, the resources given to the Ecotourism Advisory (technical unit of Ecuadorian Ecotourism Association, Appendix X) are within the institutional budget of the Ministry of Tourism (Ubidia, 2005). It is further financed by the resources generated by the maintenance and disposition of information of the data base of ecotourism activities in Ecuador and by the registry and certification of sustainability of the ecotourism companies. Further resources are obtained from international cooperations (ref).
Scope and Level of Plans and Level
The planning of the development of tourism starts from a national level as mentioned above, going over to the regional level and to the local level, like a national park or a beach resort area (www.vivecuador.com). The Ministry of Tourism has established national policies and general regulations, created norms and rules that should be followed by all the service contractors, promoted the country at an international level, and made the area planning at a national level, creating 6 regional organisations (ibid). Further on a local level, like the Galapagos National Park (GNP) a tourism plan is established for controlling the further development (MacFairland, n.d). These offices are responsible for local promotion, cultural and tourist patrimony, control of tourist establishments, maintenance and updating of inventories and directories and the ability to create laws to reinforce the quality of tourism in each region (ibid). Decentralization is a result of demands of local governments to merge the competitiveness from the base (ibid). Each canton must create a “Tourist Management Unity” to direct the process with the communities and the private sector (ibid). The Decentralization Model in Ecuador makes the tourism more dynamic through involvement of the local Governments, the private sector and the local communities, however we fear that this may increase beaurocracy and corruption. Furthermore, it makes tourism development easier to implement as it improves leadership of local tourism (ibid).
Impacts of Planning
Generally, the size, extent, and nature of tourism impacts depend on: volume of tourist activity, length and nature of tourist contacts with community, degree of concentration of tourist activity in the area, stability amd sensitivity of local economy, tourism is plans, control, and managment (web1.msue.msu.edu). Tourism development provides an increase in income, revenues, and employment, and also involves different kind of costs (ibid). Appendix XI contains an overview of typical impacts of tourism on a country. In fact, ecotourism has not only an enormous importance on the national economy but also on the conservation and management of natural sources (Ubidia, 2005).
Supply Quality & Physical Distribution (Location)
The 2001 official records show 10,703 businesses offering tourism services, including 2,449 hospitality industry companies, 6,102 food service companies, 669 outbound travel agencies, 650 inbound tour operators, 883 companies offering other services, such as air and ground transportation, and recreation (Soler et al, n.d) . Ecuador has a number of different hotels including ten international chains such as Radisson, Marriot and Hilton wich meet expected international standards of quality (www.internationalreports.net). According to Marsh, (2000) a high quality tourism product protects its products in the long-run. There are also some national chain hotels like Alameda and Oro. Furthermore, the newly-built airports in Quito and Guayaquil are better accommodating visitors to Ecuador (ibid). However an issue is the growing supply in Ecuador. When looking at Galapagos we see that even though tourism has been growing in the area since 30 years the supply growth has been mainly driven by economic interests and no attention has been paid to sustainability (www.darwinfoundation.org). There was never a plan behind the supply expansion concerning natural resource or market studies (ibid). The distribution o hotels and touristic establishments are focused on the country’s main touristic areas, such as the Galapagos Islands, Quito and Guayaquill (Ministry of Tourism, 2001). There are several areas such as for example the thermal baths where no real tourism development efforts have been made (Rojal, 2005).
Problems, Issues and Strategies
Some problems and issues can be easily identified by the case of the Galapagos Islands, one of the most tourism intense areas. The population is increasing mainly due to immigration resulting in increased demand for resources. Galapagos has a problem of unplanned growth. This area needs to adjust zoning to offer more recreational and educational opportunities to ensure protection of biodiversity and natural resources to meet the desired visitor’s experience (MacFairland, n.d). Furthermore, tourists need to be better distributed to prevent congestions (ibid). It is important that National Park (GNP) controls the entire planning process. Currently the government’s control is weak, and there is a lack of direct control by the National Park (MacFairland, n.d). The industry is way ahead of management leaving the Park without a plan or control (ibid). Further the partnership between the Government and the Nature Tourism industry is underdeveloped. Changes in the Concession system as well as direct control over it needs to be achieved (MacFairland). Management capacity must exist before any increases in tourism are permitted, and only be allowed when pre-established indicators and standards demonstrate its acceptability (ibid).
Developmental plans must take the necessities and priorities of local communities into consideration in order to implement socially and ecologically responsible policies (Marsh, 2000). The first stage of planning is toanalyze the benefits of the local communities and result in their approval of the plan (ibid). Furthermore tour operators must promote socially responsible projects that help locals to adapt to the changing economic conditions while preserving their culture and nature (Marsh, 2000). The general objective of the program is to promote higher quality tourism-sector products and services, in order to make Ecuador more competitive as a world class tourist destination (Soler at al, n.d.).
Tourism Economic Impacts
Perhaps the best indicator to view the impact of the tourism industry in Ecuador’s economy is that it represented 2,6% (USD 680,7 million) of the gross domestic product (WTTC, 2004). Oil is the biggest contributor followed by agriculture (bananas) (www.economist.com). The tourism industry’s contribution to the GDP is expected to rise to $1,403.8 million by 2014 or 2,9% of the GDP (World Travel and Tourism Council). It is important to note that this figure (in %) is considerably lower than the Latin American average which lies around 7, 3% (ibid.).
Balance of tourism trade and payments
Tourism is one of the main sources of income for the Ecuadorian economy (World Travel & Tourism Council 2004) . It represented a total of 402 million US$ wich is 7% of the total exports in 2000 and increaded to 8% in 2001 (Central bank of Ecuador, 2000/2001). Moreover tourism exports increased 17% between 1999 and 2001. Hotels, bars and restaurants represented 1.6% of Ecuador’s total GDP in 2000 (ibid). Looking at the 2004 figure, tourism imports come to a total of 970 million dollars, however where Ecuadorians travel to was not found (World Travel & Tourism Council, 2004). Currently, tourism exports account for (980 million dollars) 13,4% of total exports (ibid). Ecuador currently has a positive trade balance of 1,1%. However by 2014, through increasing tourism imports at a faster rate, the tourism trade balance is expected to turn negative (WTTC, 2004).
Tourism benefits
One of the main benefits of tourism that Ecuador is banking on is employment, especially for remote communities with little economic activity (Maldonado, n.d.). Employment in the tourism industry in Ecuador is estimated to be at 397,434 jobs or 7,7% of the total employment figures. This is expected to reach a little over half a million jobs by 2014 (WTTC, 2004). The main sources of employment for the tourism industry are restaurants and bars, 52% and 30% respectively in 2000 (Central bank of Ecuador, 2000/2001). Furthermore another benefit the tourism sector brings to undeveloped countries is education (Soler, n.d.). Ecuador has already seen this benefit by the National Vocational Training and Educational Council (CNCF), who finances up to 80% the tuition costs of students of the hospitality industry, thereby increasing the amount of professionals and human resource potential for further development of the industry in the country (ibid)
Measurement of Tourism
Expenditures
Ecuador government tourism (individual) expenditures meaning expenditures by agencies and departments which provide visitors services such as cultural (art museums), national parks and immigration/ customs totalled $27.9 millions in 2004. Furthermore government (collective) expenditures made by agencies and departments which are associated with Travel and Tourism but which are generally made on behalf of the country such as promotion of tourism and security services total $64.2 millions in the same year. (World Travel & Tourism Council 2004). However, while these numbers may seem high, the “Fondo Mixto de Promocion Turistica” (Mixed Tourism Promotional Fund), which actually ditributes funds for planning and projects, complained of the lack of government support, explaining that in 2004, 96% of the funds received came from the private sector (www.ecuadorvirtual.com).
Costs
Environmental costs of tourism in the country have already been discussed. An additional cost would be to exceed carrying capacity of touristic areas. An example of this id the Galapagos Islands where the deman is much higher than the capacity of the islands depite having laws that limit the amount of incoming tourists these are not being repected (Rojal, 2005). Furthermore the excees in tourists and the no planned development causes excees of street vendors and souvenir shops (ibid).
Investments
Capital investments by travel and tourism providers (private sector) and government agencies (public sector) that provide facilities, equipment and infrastructure to visitors are of $ 781.3 mn or 14.5% of total investment in year 2004 (World Travel & Tourism Council 2004). Research has shown that by 2014 investment should reach $1,484.8mn or 14.5% of total investment in the country (ibid). The trend since 1999 in government investment in the tourism sector in Ecuador has been an increase and in 2000 it reached 16% of the total investment in the country (ibid) From this information we can deduct that the past governments have placed a high importance on the development of tourism, however this may change with the change of presidents and government oficials.
Tourism Multipliers, Assesments and Satelite Accounts
The aim of collecting data and to establish the tourism satellite accounts is to gather relevant information that can help the government and the industry make intelligent and informed business decisions (WTTC, 2004). Among the most important information that can be gathered from TSA’s is the economic impact that tourism has upon the economy (ibid). This is because tourism investment and activity will not only have an effect on the tourism industry itself, but will have a multiplier effect on the economy as a whole (ibid). The country’s tourism multiplier does not exist in this case however. Furthermore, economic tourism indicators and toursim satellite accounts can prove to be of vital importance for policy making and planning, however no evidence was found on policies that were formulated based on these indicators. At most, they are used to compare the state of Ecuador’s toursim industry with other countries. Ecuador’s Ministry of tourism started the construction of a satellite account in 2001 in accordance with the World Travel and Tourism Council in order to increase the conbtribution to the GDP by the tourism industry to 4.1% by collecting more reliable numbers (ibid), please refer to appendix XII for more detailed information on the country’s satelite accounts.
Linkage and leakage
Sustainablity principles would ensure economic benefits remain within the local community or region producing the product or service (Velas and Becherel, 1998), much of the profits generated throughout the country are pooled back to the major cities offsetting the balance of development (ibid). This is true when looking at the example of the Galapagos islands, where from $150 milllions generated only $20 to $30 millions stay in the islands (El Financiero, 2004). Furthermore according to a conference of the United Nations for the commerce and development (CNUCED) leakeage of revenues to the exterior generated in tourism industries can reach 50% in undeveloped countries (Rojal, 2005).
NTO Recommendations & Review of Learning Experiences
Recommendations
Government policies provide a framework for tourism development planning and these should be linked with the whole tourism planning and development process of the country. Research has shown that sometimes when planning objectives of laws and policies, these are impracticable, meaning that policies should be flexible and the possibility to modify them should exist (Jenkins, 2000). In order for legislations and policies to work, the government’s job should be to involve the whole country, communities, and it must find a balance between economic and environmental concerns (ibid). Without government’s participation in tourism planning and development the industry will lack consistency, direction, and short-term decisions and plans might endanger the long term development of the tourism in a country (Hall, 1994). The results of not having correct implementation of tourism laws and policies in Ecuador will result in the offering of a lower quality of service and this lack of commitment and re-enforcement of policies will send a negative impression to potential investors for the country, which will end up discouraging potential investors (ibid). The implication of not having collaboration and coordination between the government and the private sector will eventually lead to a lack of coordination of efforts in the tourism development and the inefficient use of resources which will lead to a low quality of tourism services and products. For the country to be able to develop the tourism industry, a full coordination of these two sectors should be created. Furthermore the government should impose the enforcement of the laws and policies present. Since 1996 Ecuador has been going through a change in presidents and thus change in cabinet members, a plan that will be implemented by any following government should be created in order to be able for the country to have a consistent development which directs the tourism sector in one direction.
Learning experience
What was most interesting in doing this project was the gap between theory and application. While we learn about theory, the question always comes to mind if all that we learn is actually acknowledged and applied. Moreover, does it make a difference? Interestingly enough, when researching Ecuador, we were confronted with much of the same feeling we get in class sometimes – there is a lot of policy backed by theory, but there is no real implementation of the policy. Policy that preaches proper practice seems to be used as a marketing tool. One is left with the impression that Ecuador, as it presents itself, is a country making a serious effort to develop ecotourism in a sustainable way. And while examples of good practice are given and numerous, one is left with the question – what about the rest? But examples of poor practice are not found. Moreover, objective and in depth studies are not available. So w |
