Tarafa Shuraiki

TOURISM POLICY

Technological progress which is lowering the costs of international trans-

portation, and the globalization of information which is turning the earth into
a “global village” are just two of many reasons that make tourism one of the
most important industries in the world.
It is expected that in the 21st century the global economy will be driven by
three major service industries: information technology, telecommunication and
tourism.
According to the estimations of the World Travel and Tourism Council
(WTTC),1 the global travel and tourism industry (businesses producing goods
and services directly for visitors) gross domestic product (GDP) will reach
2,492.3 billion USD in year 2010, that is 4.3% of total global GDP at that time;
and, at the same year the total travel and tourism economy (goods and serv-
ices produced for visitors and other activities strongly dependent on travel
and tourism spending) GDP will reach 6,771.3 billion USD, that is 11.6% of
estimated global GDP in year 2010. The WTTC estimates that about 86.4
million people will be working in travel and tourism industry, with 253.7 million
people working in travel and tourism economy in 2010.
Those two simple examples show the importance of tourism’s impact
on the economy. Certainly, tourism also affects other areas: the socio-cultural,
environmental and political. This overall impact demonstrates the necessity
of establishing a kind of public policy to guide, direct, or even control the de-
velopment of tourism, in order to minimize its negative impact and maximize its
benefits.
Tourism Policy –Policy refers to an overall, high-level plan that includes
goals and procedures. Policies are generally found in formal statements such
as laws and official documents and statements. Tourism Policy is generally
considered to be an area of a nation’s overall economic policy. It is a “public
policy designed to achieve specific objectives relevant to tourism established
at the municipal, state or federal level”.2
More generally, tourism policy should reflect the overall development
policy of the country or region so that tourism is well integrated with it. Policy
also evolves from the survey and analysis of present tourism development
patterns and infrastructure, tourist attractions and activities, and the tourist
market.
The above-mentioned definition raises questions about:
Who formulates tourism policy?

1
WTTC, Travel and Tourism Impact, Passim.
2
Y. Chuck (Ed.), International Tourism: a Global Perspective, p. 390.
 Tarafa Shuraiki: Tourism policy 275

What are the objectives of tourism policy?

How are those objectives achieved?

1. Who Formulates Tourism Policy?

Defining tourism policy as a “public policy…” means that it is formulated

by the public sector, which comprises “ central government and local authori-
ties (general government), together with the nationalized industries or public
corporations”. 3 And although tourism is an activity sustained mainly by private
initiative, governments have traditionally played an essential role in its devel-
opment and in the promotion of their countries as a tourist destination through
the activities of National Tourism Administrations (NTAs).

1.1. National Tourism Administrations (NTAs):

Tourism is typified by its multidisciplinary nature and, hence, by the need
of interministeriality in its official organization. The economic importance of the
tourism industry would obviously justify the existence of a strong and struc-
tured administration, similar to that of transport, agriculture, foreign affairs, etc.
This structure is known as National Tourism Administration (also referred to
as National Tourism Office NTO), and can be defined as follows: 4
A central government body with administrative responsibility for tourism
at the highest level or, Central Government body with powers to intervene
directly in the tourism sector.
All administrative bodies of national government with powers to intervene
in the tourism sector.

1.2. The Need of NTAs:

The use for NTA does appear through the need to:5
Coordinate many national policies that are vital for tourism (taxation, con-
sumer protection, social and labour legislation, environmental policy, gen-
eral education policy, etc.)
Maintain a close link between tourism development policy and promotion
abroad.
Avoid the over-supply of private or public facilities (marinas, hotels, etc.)
which leads to the proliferation of competing projects and which results
in lower occupancy rates and smaller profits.
Provide backing for certain innovations (new tourism product policy) so as
to facilitate their distribution nationally and their placement on the market.

3
Bannock, Baxter and Davis, Penguin Dictionary of Economics, p. 339.
4
Budgets of National Tourism Administrations, WTO, p. 126.
5
Tourism Development and the Responsibility of the State, WTO, p. 21F.
276 „Polityka Gospodarcza” nr 5-6 (2001-2002), s. 274-283

Gather statistics and monitor economic activity nationally for purposes

of international comparison and domestic comparison with other sectors
and, if need be, for directing policies in the right direction.
Deal with and manage tourism crises (of either human or natural origin).
Represent its country in trade and consume shows and expositions.

1.3. The Structure of NTAs:

NTAs vary in terms of their structure and relationship to other branches
of government. The three basic forms of a NTA are:6
The state tourism secretariat, which is a high-level office either on its own
or within a ministry, with representation at, and access to, the highest ex-
ecutive levels of the government. For example, the Lebanese Ministry of
Tourism.
The government agency or bureau located within a department (such as
a department of commerce or economic development), and reporting to that
department. The Taiwan Tourism Bureau, for example, is located within
the Ministry of Transportation and Communication.
The quasi-public tourism authority or corporation, which often includes
representation of members of the private sector and receives private fund-
ing and which is run more independently of the government than the other
types of NTAs. The Canadian Tourism Commission is an example.

In addition, there is also a type of governmental entity that, while not

an NTA, fulfills a role similar to that of a NTA. This is a centralized coordinating
body which is comprised of representatives of other departments, and acts as
a forum in which the major departments involved with a nation’s tourism indus-
try can address issues that affect them.
However, the types of NTA structure must be adapted to the particular
circumstances in each country or region. The types of structures may also
be changed through time as situations change. Before deciding
on organizational structure, a basic decision to be made is determining
the respective roles of government and the private sector in the development
and management of Tourism.7

2. What are the Objectives of Tourism Policy?

Tourism affects many areas – the economic, socio-cultural and environ-

mental. This is the principal reason for governments’ involvement in tourism
development.
Various economic reasons may induce the public sector to foster tourism

6
Y. Chuck (Ed.), op. cit., p. 297.
7
National and Regional Tourism Planning, WTO, p. 39.
 Tarafa Shuraiki: Tourism policy 277

development. Among them:8

- Improved balance of payment situation.
- Regional development.
- Diversification of the economy.
- Increased income levels and state revenues.
- New employment opportunities.
- Stimulation of non-tourism investment.

Social considerations are another important reason. Governments partici-

pate in tourism development in order to maximize the socio-cultural bene-
fits of tourism (such as: cultural exchange, revival of traditional crafts and
ceremonies, rural development, etc.) The state may also have a general re-
sponsibility to protect the social well being of individuals by minimizing tour-
ism’s adverse socio-cultural effects (such as: deterioration of important his-
toric and archeological sites, social degradation, overcrowding by tourists,
loss of convenience for local residents, etc.)
Another reason is the need for controlling the environmental impact
of tourism, such as pollution and other environmental hazards and land use
problems resulting from poor planning, setting and engineering of tourist at-
tractions and facilities.
Besides the above-mentioned reasons, government may encourage
the development of tourism to further political objectives. It was suggested
that the Franco regime in Spain had encouraged tourism development among
other things in order to broaden the regime’s political acceptance.

3. How are the Objectives of Tourism Policy Achieved?

In order to achieve the policy objectives, NTAs are involved in many ac-
tivities aiming to coordinate or encourage tourism development.
Clearly, a significant number of countries around the world are still in
an early stage of tourism development, particularly in developing countries and
in countries where tourism is in a transition stage. But the European Union,
North America and significant parts of East Asia and the Pacific countries have
reached an advanced stage of tourism development. Thus, the degree
of government involvement in the tourism sector differs from country
to country, and so do the reasons of this involvement.

3.1. Planning:9
Fulfilling the requirements of tourism policy, minimizing its negative im-
pacts, and reaping the rewards, are the primary goals of Tourism Planning.
Planning is particularly important for tourism development because of two
characteristics of the tourism industry. First, tourism is a complex industry that
8
D. Pearce, Tourist Development, p. 40F.
9
See Y. Chuck (Ed.), op. cit., p. 286.
278 „Polityka Gospodarcza” nr 5-6 (2001-2002), s. 274-283

stretches across many different sectors and businesses (therefore, it affects

a wide-range of areas); second, tourism development usually requires both the
public and private sectors to undertake major capital investment projects (hotel
accommodations, public works infrastructure, transportation links). Because of
these two characteristics, a lack of planning can result in mistakes that cannot
be corrected (or are extremely costly to rectify), and which the host community
will have to endure for many years.

3.2.Legislation and Regulation:

Legislation, stipulating regulations and terms under which activities related
to tourism take place, is a state responsibility. Tourism legislation includes
the basic tourism law. This law typically sets forth the policy for developing
tourism and establishes the functions, structure and sources of funding of
the national tourism organizations (or regional tourism office).
Various specific regulations are necessary for the protection and preser-
vation of tourist facilities and the natural, historical, and cultural, resources
of the country. These regulations can take many forms, including:10
Consumer protection laws and rules that require travel agencies to place
their customers, advance booking deposits in a trust account, to ensure that
the money will be used for the purpose of securing their reservations.
Fire safety laws that mandate the minimum number of exit and emergency
lights on each floor of a hotel, in case of fire.
Health and food safety regulations that require catering establishments
to maintain minimum standards of safety and sanitation.
Air regulations (air regulations and air services,) in general, are dependent
upon the bilateral agreement between countries that govern all aspects
of air transportation between them.
In general, regulatory actions arise from a concern for a tourist destina-
tion’s environmental and cultural resources. For example, certain protective
regulations restrict activities on or, access to vulnerable environmental areas.
Another type of law might limit the serving of alcohol or the performance
of certain cultural displays to certain days to minimize negative effects upon
local customs.
However, the most important aspect is the enforcement of regulations-
The State, through public mechanisms, has the duty to ascertain that all regu-
lations which deal with tourism and tourist services offered to the consumer
whether he is a foreign citizen or a national of the country are followed, and
to impose the appropriate sanctions in case of breach of the regulations in
order to ensure proper protection of consumers.11

3.3. Facilitation of Tourism Development:

Where national and regional authorities offer a policy of supporting

10
Y. Chuck (Ed.), op. cit., p. 290F.
11
Tourism Development and the Responsibility…, op. cit., p. 51.
 Tarafa Shuraiki: Tourism policy 279

the development of tourism as an income-contributing sector of the economy,

this normally entails some form of government expenditure to help with the
commercial provision of services. This is especially important in tourism desti-
nations that are in a development stage. Not only may government provide
the funds required to ensure the viability of marginal projects, but overt political
support can be an element which psychologically reinforces decisions
to invest.12
Table (1) lists the main methods by which governments use their
spending to facilitate development:

Tab. 1. Public Spending Methods in Tourism Development

Direct expenditure:
Grants and subsides
Long-term low-interest loans
State participation in equity
Interest rebates
Financing research assistance
Financing vocational training.
Reduction of commercial liability:
Tax exemption or reduction
Duty-free importation of materials
Preferential terms for sale or concession of state land
Guarantees:
Surety bonds on commercial borrowing
Guaranteed work permits to foreign workers
Source: adopted from: A. Bull, The Economics of Travel and Tourism, Longman
nd
Addison Wesley Australia, 2 edition, S. Melbourne 1997, p. 216.

Governments also facilitate tourism development by providing the neces-

sary infrastructure. In relation to travel and tourism, infrastructure involves fixed
passenger transportation investment, destination services such as power,
water, sewerage, hygiene and health, fixed communication investment, and so
on. (It is important to notice that very little infrastructure is used solely for tour-
ism unless it is part of an enclave development. Roads, airports and terminals
are likely to have multiple users in most places, and services generally support
residents as well as visitors).

3.4. Tourism Taxation:

In recent years, governments around the world have become increas-
ingly sophisticated in the invention and the imposition of taxation instruments.
Forty years ago international tourism was effectively free of taxation, but taxes

12
See A. Bull, The Economics of Travel and Tourism, p. 4-10.
280 „Polityka Gospodarcza” nr 5-6 (2001-2002), s. 274-283

on the tourism industry are now increasing in number and impact. This trend in
tourism taxation has resulted largely from the growth in tourism, which gov-
ernments are increasingly recognizing as a potential source of additional tax
revenue, sometimes to fund expenditures within the sector and sometimes as
a contribution to general revenue. Furthermore, tourism taxes are often seen
as easy to collect as they generally affect travelers rather than those who might
otherwise complain, namely voters of the country concerned.13
There are a large number of taxes. As for tourism, the most important
types of taxes are:14
Taxes on commercial tourism products.
Taxes imposed on consumers in the act of being tourists.
Taxes on commercial tourism products are a simple example of con-
sumption (sales, value-added or purchase) taxes. They are normally levied on
producers, who must then decide if it is possible to pass the incident of taxation
on the consuming tourist. This depends on the price elasticity of demand facing
each producer. Favorite targets of this type of taxation are accommodation,
meals, car rentals and fuel.
However, to avoid the undesirable effect of the above-mentioned type
of taxing on residents, many governments impose specific taxes directly on
tourists regardless the type of goods and services purchased. These are gen-
erally levied on international tourists and collected at gateways (such as arrival
taxes or departure taxes).
Some writers (such as BULL 1997) put ‘user pays charges’ as taxes.
BULL argues that “ there is no clear distinction between these charges as the
price of a tourism facility purchased and as a tax on the use of the facility.”
Obviously, the distinction is a narrow one. For example, exit and entry visa
charges are likely to be part of central revenue funds, yet might be said
to include a small user charge element, covering the cost of immigration
and security. Nevertheless, this doesn’t mean that there are no differences. “
Tax is a compulsory transfer of money from private individuals, institutions or
groups to the government, but user charges are a legitimate payment for
a particular good or service which the payer enjoys.”15 However, the user pays
charges element is usually small, and international organizations such as
the World Tourism Organization (WTO) exclude users pays charges while
studying tourism taxation.
However, it is important to take into consideration that various organiza-
tions oppose the increasing number of taxes imposed on the tourism industry.
Their opposition concern:16
The increased cost of tourism operations because of the addition of taxes;
Distortion in the competitive situation between one destination and another;
The inefficient nature of tourism taxation, which because tourism is a highly

13
Tourism Taxation: Striking a Fair Deal, WTO Business Council, p. 1.
14
A. Bull, op. cit., p. 213F.
15
Tourism Taxation…, op. cit., p.16.
16
Ibidem.
 Tarafa Shuraiki: Tourism policy 281

price sensitive activity, can result in an overall loss of tax take rather than
a gain in total tax revenue.
Finally, taxation is an essential element of the government role in tourism
development. In addition, despite criticism, tourism industry practitioners wel-
come a taxation regime that supports the ongoing growth of tourism.

3.5.Education and Training:

Appropriate and thorough education and training for persons working
in tourism are essential for the successful development and management
of this sector. Government tourism officials need to understand tourism policy
formulation, planning and marketing techniques, tourism statistics
and management of tourism information system, tourism impact analysis,
tourist information services, and other matters. Tourism industry employees
need to be skilled in hotel and catering operations, tour and travel agency
services, guiding tours, etc. Therefore, education and training are assuming
growing importance for governments.
Despite the fact that educational institutions are increasingly in the hand
of the private sector, or operate as a public-private sector partnership, govern-
ments still play a significant role either through establishing tourism training
and education institutions, or by providing incentives (granting tax exemptions,
for example) to companies who use the courses, and the curricula which are
supervised by the national tourism administration (or the ministry of educa-
tion).17

3.6.Marketing:
Marketing of tourism for a country or region is essential. Marketing in-
forms prospective tourists about what the area has to offer and tries to induce
them to visit it. Governments become involved in marketing first because
the individual suppliers of inbound and domestic tourism products are unlikely
to be able completely to subordinate competition to co-operative marketing
programs and they have a range off different interests. Secondly, a govern-
ment may see a potential national economic benefit nationally from tourism
which transcends those of private market suppliers. Thirdly, a centralized
marketing authority can gain economies of scale in operation.
However, the role of governments in marketing includes several activi-
ties:18
Establishing the marketing objectives, These objectives are expressed
in terms of approximate numbers of tourist arrivals by type, average length
of stay, countries or country regions of origin, and other characteristics. In
already developed tourist destinations, the marketing objectives may also
relate to changing the types of markets (such as aiming for higher quality
or special interests markets).
Formulating the marketing strategy, which may include, for example:
17
N. Cockernell, Towards New Forms of Public-Private Partnership, p. 23.
18
National and Regional…, op. cit., p. 45-48.
282 „Polityka Gospodarcza” nr 5-6 (2001-2002), s. 274-283

the general types of promotional techniques to be used, any particular ob-

stacles to overcome, whether the marketing will be general or be selective
and directed to specific types of tourists markets, etc…
Preparing the promotion program, i.e.: the various methods used to sell
tourism products and services, this include paid advertising in the media,
brochures and other printed materials disseminated through travel profes-
sionals and information centers, presentations at trade and consumer
shows, familiarization trips for writers, travel agents, and tour operators,
etc…
Providing tourist information services, such as general geographical, histori-
cal, and cultural background of the area; the attractions, facilities and serv-
ices and their costs; location of embassies, and other specific information.
It is also important to inform tourists about local customs, dress and behav-
ior codes, security problems the should be aware of, etc…

Final Remarks:

Governments are drawn into tourism because of the importance of the

industry, because of its problems, and its at times controversial impact.
Therefore, governments have to take into consideration many issues and
principles in the formulation of tourism policy:19
Effectiveness, the issue of effectiveness concerns the degree to which
a specific policy undertaken by NTA is likely to meet the objectives of a de-
veloping tourism sector. Among related considerations are the certainty and
relative speed that the policy will meet objectives, and its flexibility of re-
sponse to changing circumstances.
Analysis of the economic efficiency of different policy options. This involves
comparing the cost involved with each option which is similarly effective
in meeting policy objectives.
Consideration needs to be given to whether a specific policy provides
a continuing incentive to tourism businesses, visitors and host communities
to behave in more sustainable ways.
It is important to insure that a chosen policy is socially, politically and ad-
ministratively acceptable. This requires respect for cultural differences,
adopting the chosen policy by the appropriate authorities and ensuring the
administrative workability of such a policy.

Bibliography:

1. Bannock G., Baxter R. E & Davis E, Penguin Dictionary of Economics,

Penguin Books, 6th edition, London 1998.

19
See: William F. Theobald (Ed.), Global Tourism, p. 361-379.
 Tarafa Shuraiki: Tourism policy 283

2. Bull A, The Economics of Travel and Tourism, Longman Addison Wesley

Australia, 2nd edition, S. Melbourne 1997.
3. Chuck Y. (Ed.), International Tourism: a Global Perspective, World Tourism
Organization (WTO) Publications, Madrid 1997.
4. Cockernell N., Towards New Forms of Public-Private Partnership:
The Changing Role, Structure and Activities of NTAs, WTO Publications,
Madrid 1996.
5. Pearce D., Tourist Development, Addison Wesley Longman U.K, 2nd edi-
tion, London 1996.
6. Theobald William F. (Ed.), Global Tourism, Butterworth-Heinemann,
2nd edition, Oxford 1999.
7. World Tourism Organization Business Council: Tourism Taxation, Striking
a Fair Deal, WTO Publications, Madrid 1998.
8. World Tourism Organization: Budgets of National Tourism Administrations,
WTO Publications, Madrid 1996.
9. World Tourism Organization: National and Regional Tourism Planning:
Methodology and Case Studies, International Thomson Business Press,
London 1997.
10. World Tourism Organization: Tourism Development and the Responsibility
of the State, WTO Publications, Madrid 1993.
11. World Travel and Tourism Council: Travel and Tourism Economic Impact,
WTTC Publications, London 1999.