Ecolodges EplerWood

Final Report A Review of International Markets, Business, Finance & Technical Assistance Models for Ecolodges in Developing Countries
for International Finance Corporation (IFC)/GEF Small and Medium Enterprise Program
prepared by
EplerWood International
Megan Epler Wood In association with Pam Wight and Associates Jeanine Corvetto
January 2003 EplerWood International 369 S. Union St. Burlington, VT 05401 802-865-3351
Copyright 2004 International Finance Corporation
Authors Megan Epler Wood founded The International Ecotourism Society (TIES) in 1990 and was its Executive Director and subsequently its President until October 2002. TIES was the first organization devoted to making ecotourism a tool for conservation and sustainable development in the world, and under Epler Woods leadership its international membership grew to a constituency of individuals and institutions from over 100 countries including research institutions, professional tourism companies, field scientists, international donor institutions, and NGOs. In the 1990s, Epler Wood oversaw the procedures by which TIES set primary standards in the field of ecotourism and published international guidelines for nature tour operators, ecolodges and marine ecotourism using international multistakeholder participation and review. The TIES publication and conference program was launched under Epler Wood to further international input, exchange, and academically sound information on key ecotourism issues. The TIES conference program held the first two conferences in the world on ecolodge development in the U.S. Virgin Islands and Costa Rica, and important regional, multistakeholder events in Kenya, Ecuador, and Malaysia. TIES published over 10 publications in the 1990s including the first leading academic texts in the field of ecotourism used by universities worldwide. Epler Wood led international workshops on ecotourism planning and management for The George Washington University from 1995-2000, using the results of the organizations conferences, publications, and expert viewpoints. In 2002, TIES organized preparatory meetings in six global geo-regions in partnership with the United Nations Environment Program (UNEP) for the UN International Year of Ecotourism (IYE) under the guidance of Epler Wood, and she wrote the UNEP book on ecotourism for IYE which was released at UN headquarters in New York in January 2002. EplerWood presently is the principal of the consulting firm EplerWood International, founded in 2003, which researches and develops businesses and markets for sustainable development worldwide. She has a B.A. from Sarah Lawrence College, an M.S. from Iowa State University, and was the recipient of a Fulbright Scholarship in the country of Colombia in 1987. She speaks fluent Spanish. Pamela Wight has been involved in consulting since 1974, developing a focus on sustainable tourism 19 years ago. She is President of Pam Wight & Associates, an international consultancy specializing in tourism and ecotourism, protected area planning and management, biodiversity conservation and community development, and market and socio-economic research. While in government, Wight managed the first international research into ecotourism markets, as well as significant studies of ecotourism accommodation demand, and contributed the chapter on markets to the Encyclopedia of Ecotourism. In consulting, her clients include private and public sector, not-for-profits such as WWF, and include all levels of government, including the World Tourism Organization, NAFTAs Commission on Environmental Cooperation, the GEF Biodiversity Planning Support Programme, and the United Nations Environment Programme. Wights work is strongly based in practical experience from the Arctic to the tropics, from sparsely to densely populated areas, and from developed areas to working with aboriginal and local populations. Besides work in most global regions, she been involved in development plans and strategies related to ecotourism and sustainable tourism in Canada, the Caribbean, the Middle East, Europe, and South and Central Asia, and her private sector work has included a number of Copyright 2004 International Finance Corporation 2
development plans for nature or ecotourism lodges. Market research has been a critical component of all her work. The focus of her practice is on providing practical applications for cutting edge theory, and providing approaches to making projects work in real-world situations. Besides this field activity, she has been involved with The International Ecotourism Society since 1992, and on its Advisory Board for 5 years. And of her more than 80 publications and presentations, most deal with ecotourism and sustainable tourism, particularly linking theory and principles with practical approaches and how-to strategies. Jeanine Corvetto has had a wide range of finance experience including corporate, public, mortgage and micro and small business finance both in the U.S. and abroad. She is co-founder of a specialty travel company focusing on cultural and sustainable eco-tourism in Latin America and other destinations in Europe and Africa. In the area of business social responsibility, she has provided consulting and project implementation services to multinational companies needing assistance in implementing socially responsible and sustainable business strategies. In addition, she has broad experience working with non-profit organizations and communities in the areas of micro finance, education finance and eco-tourism. She has used her finance and economic development skills to assist governments, nonprofit organizations and communities implement market oriented solutions and cross-sector partnerships to address development issues. In South Africa, she developed the concept of an educational social venture fund to finance public and private schools in low-income urban area. In Peru, she facilitated a community development plan and obtained World Bank funds for a private sector/community joint venture ecotourism project. Her private sector finance experience includes acting as Director of Latin American Initiatives for Mortgage Guaranty Insurance Company (MGIC), a vice-president in Smith Barneys public finance division, and as a manager with Citibanks International Corporate Finance Department in Venezuela. For over the past ten years, she has served as treasurer and board member and consultant to a micro enterprise lender, designated as a community development finance institution (CDFI) by the U.S. Treasury. Corvetto has a Master of Arts in International Affairs and Economics from The Johns Hopkins University School of Advanced International Studies and a Bachelor of Science in Finance and International Business from the University of Colorado. She is also a Kellogg National Leadership Fellow (Group XV) and speaks proficient Spanish and French with conversational abilities in Italian.
Executive Summary
This study set out to identify market demand, establish a market profile, and determine the key factors for business viability of ecolodges in Lesser Developed countries (LDCs). To achieve this goal, the authors reviewed market literature from origin markets around the world, and undertook a survey with regional market experts to discuss ecolodge development trends in destination countries. A survey of 15 ecolodges was undertaken that were known to be model facilities. In addition, a review of the legal and policy context for ecotourism development in LDCs was performed, a discussion of natural attractions that constitute business drivers was provided, and an investigation undertaken of the technical assistance needs of ecolodges. Global Travel Trends The global travel marketplace profiled in Section 2.0 has been strongly affected by security and health crises since September 2001. There was a marked decrease in long-haul travel from Europe, North America, and Pacific Asia, which has leveled the performance of most ecolodges in LDCs in the last 2 years. Nonetheless, major long-term global trends affecting ecolodge development are positive. The large baby-boomer generation (individuals born between 19451964) from Europe, North America and Japan will have more leisure time, unprecedented health and longevity, and good financial resources to travel in the next 30 years. The large majority of these highly educated, middle class travelers will seek comfortable lodging that is mid-priced. About 50% of this market will seek to travel independently and 50% will prefer to travel on special interest tours. The Internet will allow well-managed ecolodges in LDCs to deliver excellent competitive pricing, service and know-how to the special interest market, directly to Free and Independent Travelers (FITs) and tour groups, giving them a competitive edge with educated consumers who look for a high-quality educational content based on local expertise. Studies of the U.S. market reveal a distinct gap between consumer concern about environmental and social issues and their actual behavior when selecting tours or other products, indicating there is a green skew in many market surveys and that eco-social concern is not an important market driver. Ecolodge Market The ecolodge market profiled in Section 3.0 is driven by a high interest in viewing wildlife. This is the special interest that characterizes this market and makes it distinctive. Other important interests are: admiring scenery, hiking and walking, guided tours, visiting parks and protected areas, and learning about nature and culture. Destinations preferred are Asia for the UK, Latin America for Germans and North Americans, and Oceania for the Japanese. Because ecolodges have only emerged as a category of lodging in the last 10 years, it is difficult to pinpoint the precise demand for this type of accommodation. In Europe, approximately 20-30% of the ecotourism market is seeking to stay in ecolodges. In North America, about 60% of the market seeks to stay in lodges or cabins indicating that that ecolodges are an important accommodation category for this market.
The demand side constraints for this market are security issues, health threats, economic downturns, and seasonality. The supply side constraints for LDCs are the lack of rural infrastructure that limits efficient access to important wildlife viewing areas and the distance of these areas from world markets. Environmental degradation also plays a significant role in undercutting ecotourism potential. Poor government planning of tourism and ecotourism is also a constraint, causing significant ecological degradation of areas that are overbuilt and have insufficient regulations to protect the environment. Ecolodge Business and Finance The Ecolodge Business and Finance Study in Section 4.0 investigates profitable ecolodge business models, looking in-depth at a sample of 15 ecolodges in order to determine how they have succeeded in this emerging market. These pioneer businesses, which were designed using ecotourism principles for all aspects of their operations, were selected by the authors as key trend setters, because they are respected, profitable businesses that meet triple bottom line standards, and have been highly innovative in developing a marketable brand for their lodges in their regions. Thirteen of the businesses studied were established by individual entrepreneurs. The survey found that the ecolodge business is small business in terms of revenue generation (over $100,000 and less than $3 million annually). Private owners own 100% equity in 4 cases and communities hold 100% equity in 4 cases, with the remainder a mix of equity held between owners, community and investors. In terms of pricing, the ecolodges studied were mid-priced, with 11 falling between $61-$200 per night per room. The ecolodges were using some form of debt to finance their operations in 8 out of the 15 cases. The diversity of debt sources is notable; with standard market rate loans, no interest loans from private sources, a debt swap concessionary loan, and market rate loans from 3 separate green funds. Those owners who expressed interest in future debt financing, said their needs were for infrastructure improvements (walkways and towers), expansions to room capacity, and equipment such as boats, engines and generators. No ecolodge mentioned the need for short-term financing for working capital due to the fact that most clients pay in advance. In terms of start-up costs, profitability, and operating costs; the majority started with less than $500,000, while the minority started at or above $1 million. The average cost per room was approximately $58,000. Costs provided did not account for the amount of time and sweat equity invested by ecolodge owners. Community equity arrangements for construction also significantly lowered start-up costs. Ten of the businesses surveyed were profitable, with an average profitability margin of 12%. Return on equity for the 4 businesses that could provide sufficient data was 20%. A time frame of 4-5 years was the norm for reaching profitability. For the ecolodges operating in the black, an operating margin of 21% was average. Personnel expense was 22% of total operating costs on average. Average staff per room was 2.8. Community employment on average was 81%. Marketing was the area identified which required the most management attention. But marketing costs were just 6-10% of operating costs because of the low cost of Internet marketing for these businesses. Advertising and tradeshows were identified by many ecolodges as not effective. The North American market represented the overwhelming share of the ecotourism market for the study group. For these ecolodges, 10 out of 14 were successfully booking FIT travelers via Copyright 2004 International Finance Corporation 5
the Internet as their primary source of business, with tour operators representing an important secondary source of reservations. Triple bottom line strategies were variable, some integrating them into all aspects of their operations, while others using more traditional philanthropic approaches. Community participation and conservation mechanisms were innovative. All owners were committed to using both community and conservation approaches, but none could quantify an impact on the profitability of their enterprise. Ecolodge Profitability Key factors for profitability were identified as: Destination where the ecolodge is located primarily in terms of its wildlife resources, safety and accessibility. Accessibility is defined for ecolodges as being 1 hour from a local airport which has reasonable connections with an international gateway. Value which is defined by how competitively the ecolodge is priced when considering its design, facilities, location, wildlife resources, and services as compared to other similar destinations worldwide. Interpretation and Activities in terms of the unique wildlife species to be observed, the interesting activities available, and the quality guiding and interpretation offered. Management capacity is identified as key in terms of the ability to manage marketing, finances, logistics, human resources, and all systems in an efficient manner. Access to Capital is named as important, and it is noted by the authors that financing structures that allow for longer term return on investment are the most beneficial. Ecotourism Policy and Legal Framework In the Ecotourism Policy and Legal Framework review in Section 5.0, it is found that the government role in ecotourism policy development, regulations, and legal frameworks in LDCs is still largely at the planning and discussion stage. An Ecotourism Policy Gap Analysis demonstrates that national tourism ministries, tourism boards, economic development agencies, and environmental management ministries have few resources devoted to ecotourism as a separate category of business development. For ecolodges, this lack of legal or policy frameworks puts businesses at risk as there is no protection against overbuilding and boom style development; there are extra expenses due to a lack of sewage, waste, water and energy services; and critical wildlife corridors and other important biological resources often lack effective, enforced protection. Nature Based Tourism Attractions In Section 6.0, Nature Based Tourism Attractions are reviewed in terms of their contribution to business success. Surveys on what nature based attractions tourists expect do vary according to geo-region. Marine resources are most important for the Pacific region, while jungle trekking and bird and wildlife spotting are considered most important in Southeast Asia. In Africa, game viewing is the most important, while South and Central America are most known for their rain forest attractions. In general, wildlife viewing is rated as the most important activity for ecolodge
travelers. Rating the charisma of wildlife can be very subjective. But it is known that large mammals and congregations of wildlife are rated as highly charismatic by most travelers. Bird watching has very strong appeal, but to only about 10-15% of the ecolodge market. Birdwatchers on tour seek to bird watch for nearly 100% of their activity time. As a result, birdwatchers do not mix well with more general ecolodge travelers, and must be accommodated separately, or given separate activity schedules. Ecolodge Technical Assistance In Section 7.0, ecolodge owners were interviewed regarding their technical assistance needs. It was found that business assistance in the form of accounting, financial statements, business planning, assistance with finding investment capital, financial projections, new technologies for energy, waste, sewage and water; market studies, and business systems were in highest demand. While some of the basic accounting services were available locally, most found that more sophisticated advice on business planning for investment capital, market studies and advice on new technologies for waste, water, energy and sewer were lacking. The survey participants report limited NGO capacity in their regions with business development needs and suggest NGOs are best devoted to community training, development and environmental impact monitoring. The authors suggest that technical assistance be designed based on existing private sector expertise via business mentorship programs or using successful businesses to help foster junior enterprises. The climate for ecolodge development would best be supported by targeting excellent destinations and identifying entrepreneurs through ecolodge investment workshops or mentorship programs. Further study should be undertaken to identify the best destinations for ecolodge investments and a checklist of considerations is provided.
Table of Contents
1.0 INTRODUCTION ..................................................................................................... 10
10 11 11 12 12
1.1 Background 1.2 Objectives 1.3 Scope Given 1.4 Study Assumptions 1.5 Methods Summary
1.5.1 Market research ............................................................................................................................................. 12 1.5.2 Business & Finance research......................................................................................................................... 13 1.5.3 Legal & Policy review.................................................................................................................................... 14 1.5.4 Natural Attraction Assessment ....................................................................................................................... 14 1.5.5 Technical Assistance Assessment ................................................................................................................... 14
2.
TRAVEL TRENDS INFLUENCING ECOTOURISM DEMAND .......................... 14

14 16 18 23
2.1.1 Impacts of Global Security and Health Crises ............................................................................................... 15
2.1 Trends Affecting Ecotourism Destination Countries/Regions 2.2 Trends Affecting Ecotourism Origin Countries/Regions 2.3 Global Trends 2.4 Outlook Summary
3.
3.1.1 3.1.2 3.1.3 3.1.4 3.2.1 3.2.2 3.2.3 3.3.1 3.3.2 3.3.3 3.3.5 3.3.6 3.3.7
ECOTOURISM MARKET DATA ........................................................................ 24

24
Socio-demographic Characteristics.......................................................................................................... 24 Activity Preferences .................................................................................................................................. 26 Trip Motivations........................................................................................................................................ 27 Preferred Destinations by Geo-Region ..................................................................................................... 28
3.1 Market Characteristics: A Geo-regional Analysis
3.2 Ecotourism Accommodation: A Demand Side Analysis
29
Accommodation Demand by European Ecotourists.................................................................................. 29 Accommodation Demand by North American Ecotourists........................................................................ 30 Accommodation Demand by Ocean-Asia Ecotourists............................................................................... 30
3.3 Ecolodge Demand: A Supply Side Perspective
32
Market Origins.......................................................................................................................................... 32 Segments and Characteristics................................................................................................................... 33 Motivations and Preferences .................................................................................................................... 35 Facilities and Services .............................................................................................................................. 37 Global Facility Analysis............................................................................................................................ 38 Ecolodge Demand Determinants and Future Potential ............................................................................ 39
4.0 ECOLODGE BUSINESS AND FINANCE STUDY .................................................. 43

4.1 Business Model for Ecotourism Businesses
4.1.1 4.1.2
45
Framework for Classification ................................................................................................................... 45 Individual Business Model Analysis.......................................................................................................... 50
4.2 Summary of Key Business & Finance Findings
63
4.2.1 Characteristics of Ecolodge Businesses ......................................................................................................... 63 4.2.2 Key Factors for Profitability .......................................................................................................................... 64 4.2.3 Other Factors Relating to Profitability .......................................................................................................... 66 4.2.4 Barriers to financing ecolodges ..................................................................................................................... 67 4.2.5 Greatest hurdles to business viability............................................................................................................. 69
5.0 ECOTOURISM POLICY AND LEGAL FRAMEWORK REVIEW ............................ 70

5.2 International Ecotourism Policy Analysis 5.3 Ecotourism Policy and Legal Case Studies 75 78
5.3.1 Chile ............................................................................................................................................................... 78 5.3.2 Ecuador .......................................................................................................................................................... 79 5.3.3 Brazil .............................................................................................................................................................. 80 5.3.4 South Africa.................................................................................................................................................... 80
6.0 NATURE BASED TOURISM ATTRACTIONS ........................................................ 81

6.1 Charismatic Wildlife Attractions 6.2 Bird watching 6.3 Distinct Geo-regional Natural Attractions 83 84 85
7.0
TECHNICAL ASSISTANCE NEEDS ASSESSMENT ........................................ 86

87 87 88 88 89 89
7.1. Private Sector Comments on Green Loan Funds 7.2 Green Loan Fund manager reports on the ecolodge sector 7.3 Private Sector comments on NGO capacity to provide technical assistance 7.4 NGO comments on technical assistance capacity 7.5 Technical Assistance Needs Checklist 7.6 Technical Assistance Recommendations
7.6.1 Business Mentorship Program ....................................................................................................................... 89 7.6.2 Engaging the Private Sector in Ecolodge Development and Sustainability................................................... 91
7.6 Analysis of Ecolodge Business Development Climates 7.7 Checklist for Successful Technical Assistance for Ecolodge Development
91 93
8.0 CONCLUSIONS ...................................................................................................... 94

8.1. Positive Trends 8.2. Negative Trends 8.3 Ecolodge Business Essentials 8.4. Ecolodge Business Drivers 8.5. Costs Unique to Ecolodges 8.6 Ecolodge Business Performance 8.7 Debt Requirements 94 96 96 97 97 97 98
9.0
SUMMARY ......................................................................................................... 98
10.0 REFERENCES ................................................................................................... 101 APPENDIX A............................................................................................................... 104

Regional Market Experts 104
APPENDIX B............................................................................................................... 106

Ecolodge Survey Sources 106
APPENDIX C............................................................................................................... 108

Marketing Information from Regional Experts 108
APPENDIX D.............................................................................................................. 112

Ecotourism Policy Summaries 112
Chile...................................................................................................................................................................... 112 Ecuador ................................................................................................................................................................ 114 Brazil .................................................................................................................................................................... 116 South Africa......................................................................................................................................................... 117
1.0
Introduction
1.1 Background In the past, successful ecolodges have primarily been led by private sector pioneers that worked with energy and creativity to conserve the environment and sustain the well-being of local people while gaining a market that was attracted by their exotic locales, wildlife, birds, and wilderness qualities. No study has ever determined how this community of lodges achieved their goals. This study begins the process of analyzing and classifying successful ecolodge models worldwide to guide the success of future initiatives. The study of ecolodges began in 1995, at the First International Ecolodge Forum and Field Seminar at Maho Bay Camps, less than 10 years ago. The international definition of ecolodges, as articulated in the The International Ecotourism Society (TIES) International Ecolodge Guidelines was only recently published in 2002. The definition, which is a check list, includes three main components; the conservation of neighboring lands benefits to local communities interpretation to both local populations and guests Genuine ecolodges have been in operation for less than 10 years, and many have only been profitable for several years. Until now, studies on ecolodges have been unable to look at business models or success parameters, because many lodges were too informal to provide sufficient business background or had not been in business long enough to
10
become profitable. In addition, there was insufficient understanding of ecolodge standards to evaluate how well ecolodges were meeting triple bottom line standards. This will be the first study in the world that investigates in-depth the practices of profitable ecolodges in developing countries that meet international ecolodge standards. The results provide a unique glimpse into an emerging industry that is defining its own unique business models; including the market niche it is serving, methods of operation, finance, ownership, and partnerships as well as how these companies meet triple bottom line standards. 1.2 Objectives This study sought to investigate the: 1) highest quality available sources on the market for ecolodges in order to: a) map the characteristics of source markets b) define the product mix each regional destination is developing to meet market needs c) understand key regional and global market challenges and trends 2) business and finance models for ecolodges in order to: a) define the type of finance terms that will help this industry expand & prosper b) better understand business strategies and best practices that have led to success and sustainability c) review business methods for meeting triple bottom line standards and the related costs and benefits 3) review government policies that presently exist for ecotourism in key destination regions in developing countries 4) discuss what natural attractions distinguish an ecolodge and to what degree these attractions are a part of a profitable ecolodges business success formula 5) investigate the technical assistance needs for ecolodges in developing countries 1.3 Scope Given The scope given was to 1)identify market demand, 2) develop a market profile that describes key factors for determining business viability, 3) perform a legal and policy review, 4) develop a business model and 5) define ecolodges by type, market segment, investment climate, success factors, finance structure, etc. 6) present case studies, and 7) identify regions for potential investments. The Study Objectives as defined in section 1.2 will provide all the information requested in the scope and in addition review key issues about how this information can be used by the development banking and finance community to develop a strategy that will provide a knowledgeable climate of support for the ecolodge business. Copyright 2004 International Finance Corporation 11
1.4 Study Assumptions As stated in the Terms of Reference for the project, the SME Program is designing an Environmental Business Finance Program to engage financial intermediaries such as banks, leasing companies and microfinance institutions in the financing of SMEs that contribute to the improvement of the global environment and meet GEF operational objectives. This studys authors are operating under the assumption that the next phase of the IFC/GEF project will encourage private business to take the lead in developing a broader more ambitious plan for ecolodge development in key developing country markets by developing a plan that will; Leverage local and foreign investment in ecolodges Develop a technical assistance plan that helps develop more successful ecolodge businesses with majority ownership in developing countries and advise on pilot structure for technical support Foster a supportive local, commercial banking community that has the expertise to safely support ecolodge industry growth needs Define a general scope of need for NGOs and academia that will foster their ability to provide key strategic assistance. These assumptions are made in order to better define through this report to IFC/GEF how such a responsive development climate for the industry can be developed and designed. 1.5 Methods Summary 1.5.1 Market research The market research components of this project involved primary and secondary data sources. These included: Literature reviews: a range of survey sources of ecotourist market information were used at both the countries of origin and at the destination, as well as targeting ecolodge visitor surveys. In addition, reviews of the general tourism literature for consumer and global travel and tourism trends were conducted, and an examination of global tourism flows. It was discovered that while systematic data for tourism markets is sparse, it is most available from developed countries, whether inbound or outbound. Fortunately, these are the main sources (generating countries) of ecotourists. It would have been desirable to have information on inbound ecotourists to the developing geo-regions which receive ecotourists. However, even general tourism arrival data available are not recorded systematically, do not necessarily use the same measures, and may not even be available.
12
Primary research: two principal sources of primary information were used: an Ecotourism Market Expert Panel (See Appendix A), and actual ecolodge operators. The purpose of this was to provide a two-pronged approach to obtaining information on inbound markets in the absence of hard ecotourism inbound data. In addition, this enabled us to obtain the kinds of qualitative information that visitor statistics do not supply, and which is a central focus of this study. The ecotourism expert panel was struck with members representing every destination geo-region, to obtain more precise information and observations on destination supply, market segments and demand determinants. (See Appendix A for list of experts) Experts provided information in two ways: responding in writing to a systematic series of framed questions; and participating in a structured telephone discussion, with email follow-up. The ecolodge operator input was obtained in much the same way: through input via written questions, and with telephone follow-up. The experts were selected from a list of possible individuals compiled by the team (who themselves have contacts in every geo-region) the availability of experts for email and telephone interviews during the time frame of this study was also considered. The experts are individuals who either have a history of consulting and market research in the geo-region, or are affiliated with organizations which do this. Ecolodge operators, who were interviewed in detail regarding business and financial matters, were also asked a series of questions about their markets and marketing. The combination of expert and operator sources provided both geo-region-level market information, and lodge-level market information. Integration of primary and secondary research: once the primary and secondary data were obtained, the information was tabulated and collated, and organized to include most of the detail intended to assist ecolodge enterprises showing both the demand side and supply side perspectives, and with sectional summaries of findings. 1.5.2 Business & Finance research The team in consultation with the IFC selected a group of internationally recognized ecotourism businesses that agreed to provide specific data on the factors that have contributed to their success as businesses. (See Appendix B for list of ecotourism businesses) The criteria1 used to select the group of ecotourism businesses was based on the field experience of the consultants and industry standards including: 1) if the lodges are meeting ecolodge the primary standards articulated by the International Ecolodge Guidelines; 2) if the ecolodges are well managed from the viewpoint of international industry leaders such as tour operators which may seek to book such lodges; and 3) to what extent these businesses are reaching a substantial market via tour operators or via direct marketing, and successfully running viable businesses over at least a 3-5 year period.
An exception to these criteria was made for one ecolodge not yet in operation. It was included in the study group due to its interesting start-up and finance experience.
1
13
1.5.3 Legal & Policy review The Legal and Policy Review section was carried out through secondary research from the following sources: 1) the 2002 results of the TIES UNEP regional meetings for the International Year of Ecotourism in Southeast Asia, South Asia, Central America, and Andean South America, 2) The 2002 Summary of Regional Preparatory Conferences for the World Ecotourism Summit by Pam Wight on Ecotourism Policy and Planning, 3) the 2002 World Ecotourism Summit Final Report section on Policy and Planning from the World Tourism Organization and UNEP, 4) Ecotourism Policy Case Studies from Chile, Ecuador, Brazil, and South Africa from national government, donor, and NGO sources written in 2001 and 2002. (See Appendix D for Policy Summaries) 1.5.4 Natural Attraction Assessment The Natural Attraction Assessment was derived from previous studies of activity preferences of ecotourists in developing countries, comments from business owners of profitable ecotourism businesses, comments from several well-known ecotour leaders, and the general experience of the authors based on visits to successful and unsuccessful projects worldwide. 1.5.5 Technical Assistance Assessment The Technical Assistance Assessment was derived from interviews with international ecotourism project managers (with international management positions) and Green Loan Fund managers at The Nature Conservancy and Conservation International. Comments on the expertise of NGOs to provide local technical assistance were also requested from the ecolodge owners interviewed for the project.
2.
Travel Trends Influencing Ecotourism Demand
This chapter deals with trends of many different types, all of which will influence or impact ecotourism markets: trends in the destination geo-regions; trends at market origin countries; and global trends related to consumer niches, trends, and preferred travel destinations. 2.1 Trends Affecting Ecotourism Destination Countries/Regions
Until September 2001, global travel trends had been on the rise for years, with a 9% annual growth rate recorded by the World Tourism Organization from 1988-1997. At that time 10% of the total global population was traveling with over 1.6 billion trips per year. Nature destinations were faring particularly well. Many important ecotourism destinations were experiencing double digit average annual growth between 1986 and 1998 (e.g., Ecuador 17%, Costa Rica 32%, Belize 25%, Botswana 19%, and South Africa 108%).
14
Countries that were known to be stable, with well-developed wildlife parks and destinations, and only modest infrastructure were prospering and attracting significant foreign exchange through nature-based tourism in the 1990s. South Africas entry into the tourism market in 1994 had stunning success, largely because of the countrys highly respected and well managed wildlife parks. This case example of a country without significant tourism until 1994, demonstrates without doubt that well managed, accessible, wildlife parks are a highly valuable asset for significant national economic development and the attraction of foreign exchange for national, provincial and community purses. In 1997, SATOUR, the tourism board of S. Africa reported that 60% of its incoming tourists were visiting wildlife parks -- 20% more visitors than any other destination category in the country. 2.1.1 Impacts of Global Security and Health Crises The global travel world was significantly affected (possibly more than any other industry) by the terrorism attacks on the United States in September 2001, and by subsequent security problems throughout the world. U.S. overseas travelers, who are a significant portion of the ecotourism market, were the most heavily influenced by the events of 9/11. They tended to cancel overseas travel plans and many chose destinations within the U.S. or very close to home. U.S. air travel statistics show there was a 6% decline in U.S. travel abroad in 2001, and a further 7% decline in 2002, for a total 13% decline in U.S. travel overseas in the 2 years after the attacks. In key ecotourism markets, declines were inconsistent. Africa was the hardest hit. Central and South America saw no change in 2001, but in 2002, Central America declined 2% while South America declined 11%. Asian markets were not down in 2002, because the red hot business travel market to China and Southeast Asia was not deterred by 9/11. The following chart summarizes U.S. outbound travel results to developing country regions, except Asia.
Declines in Regional Markets Since 9/11

25% 20% 15% 10% 5% 0% 23% 11% 5% 2% Caribbean 2% 0% Central America 0% South America 1% Africa 2001 2002
Source: U.S. Office of Travel and Tourism Industries, Monthly Tourism Statistics, 2001, 2002
In 2003, the picture has changed. With the SARS outbreak and Bali bombings in Asia and the Iraq war in the Middle East, travel declined drastically in Asia and Southeast Asia-- with Indonesia and Malaysia down 20% and 30%, and both countries have emerging ecotourism markets. Africa remains hard hit, particularly East Africa, which has suffered declines over the past decade due the U.S. embassy bombing, political instability, and competition from South Africa. South Africa was up in both 2002 and the first half of 2003. Copyright 2004 International Finance Corporation 15
Central and South America were significantly up with good momentum in 2003 according to WTO, due to perceived political and economic stability in the region. Key ecotourism countries were all reporting market increases. In 2003, Ecuador was up 15%, Peru 3%, and in Central America, Belize was up 10% (Costa Rica did not report). Travel increases are primarily driven by economic growth, when security and health crises are not a key issue, and most global regions report that recovery from these crises can be less than one year, if economic drivers are in place. Major ecotourism outbound markets (US, Japan, Germany) have suffered from depressed economies, which slows travel demand no matter what the security and health environment. For example, the weak US dollar benefits most Caribbean, Central and South America destinations (WTO) as the destinations become cheaper for European and Canadian consumers. Developed country economics and exchange rates are therefore the primary factor in how quickly destination markets will recover from 9/11, SARS and international security incidents. However, things may never be the same as before 9/11, and concerns over safety and security continue, particularly at specific destinations. Political instability is a disincentive to visiting, even for the more adventurous ecotourism markets, as both our expert panel and surveys indicate. Of US active travelers surveyed in 2002, 15-20% were less likely to go to Latin America, and 40% less likely to go to Africa or Asia. And European holidays have been affected by security problems in Europe and the Middle East, resulting in outbound travel being down substantially for the first half of 2003. The distance from home seems to be the critical factor during security adverse periods for Europe and the U.S. 2.2 Trends Affecting Ecotourism Origin Countries/Regions
Europe Regional Macro Trend: Long haul travel decreased in double digits in 2003 (especially Germany and France. U.K remains more stable). Primary Cause: Slow recovery of the world economy Secondary Causes: Global security and health issues United Kingdom Macro Trend: Continued interest in nature/ecotourism expected among tour operators; with nature tourism growing slightly less than business overall. Secondary Trend: Tour Operator ethics are important to 27% of consumers, but not of highest priority for the remainder. Germany Macro Trend: German habit of regular travel is likely to be maintained. However, long-haul travel is substantially down. Secondary Trends:
16
1. Travel accommodation expectations will increase, with more quality, comfort and individuality demanded 2. Interest in wellness/spas, study trips, health and fitness holidays expanding rapidly North America Regional Macro Trend: There is a marked decrease in U.S. and Canadian outbound travel to overseas destinations in 2001-2002. Primary Cause: The United States had the greatest and longest lasting impact from 9/11 attacks and the subsequent War on Terror. Travelers have altered their behavior and traditional travel patterns, and have gone back to the basics, with travel closer to home, and with family. Forecast: Outbound travel is not expected to rebound until 2006. North America Market Segment Trends: 1. Growth in domestic and international trips by seniors has outpaced most age groups, particularly international trips. Seniors are more likely to travel alone, take longer trips (especially in off-season) and senior females predominate in international travel 2. The key age group traveling overseas is 55-64, followed by 65+ 3. Europe was the most popular destination for senior travelers 4. Interest in parks becomes higher, the further North Americans travel from home. 5. Group tours related to ecotourism are growing 6. Soft adventure is growing, especially for generalist markets. This requires: more amenities; higher service levels; activities requiring lower specialist skills; and more responsibility/care by the operators 7. Growth of women-only tours - 230% in last 6 years 8. Growth in special interest trips 9. Growth of specific outdoor activities (e.g., hiking, cycling, boating, kayaking, watersports) 10. Increased interest in educational trips (or ed-ventures) with learning through thematic tours, educational tours, learning travel programs, or general interest learning, all requiring quality interpretation 11. More creation of customer-unique customized tours for markets as small as one individual. 12. Ecotourists increasingly feel the need to be uniquely catered to, and are less and less interested in roughing it Pacific Asia Regional Macro Trends: While SARS had a huge negative impact for much of the region in the first half of 2003, the region is doing well. Australia is the leading Asia-Pacific ecotourism market, followed by New Zealand and Japan. India and China are strongest as general tourism markets, and will turn to more interest in ecotourism in the future. Japan Macro Trend: Japanese will spend a great deal of money on "Special Interest Tours," but economize on normal travel Secondary Trends: The preferred overseas activities by future seniors: Copyright 2004 International Finance Corporation 17
1. travel to enjoy natural scenery (83.7%) 2. travel to learn history or culture (74.4%) 3. green tourism or ecotourism (60.5%) Forecast: It is likely that the Japanese will define ecotourism differently than other ecotourism markets, both in their understanding of a nature experience, and in their choice of activities. They will likely to continue to use structured tours with language interpretation, but show a greater orientation towards nature destinations if a Japanese speaking trusted leader guides them. Free and Independent Travel (FIT) ecotravel will remain rare in Japan. Australia Macro Trend: Australians travel more per capita than any other country. However, current outbound travel is focusing on shorter-haul Asian destinations. Australians are strongly interested in ecotourism both domestic and overseas, traveling alone (FITs) or in small groups, and roughing it. They seek authenticity and genuine interaction with local communities, and are less interested in upscale experiences than other ecotourism markets. New Zealand Macro Trend: By September 2003, overseas travel increased 10% over the previous September, with holiday travel gaining 13%. Major destinations were: North America (23%), Fiji (27%), Australia (18%), the other South Pacific Islands (21%), and South and Central America (49%). However, there was decline in holiday travel to Asia, Europe, and Africa and the Middle East. These figures show a relationship with world events (such as wars, terrorist attacks and SARS). 2.3 Global Trends
Overall Trends The European Travel Commission has comprehensively examined global trends and consequences, and these are summarized below (ETC 2003). These trends particularly affect ecotourism origin marketplaces (market generating countries). Demographics: The proportion of older people will increase rapidly. These seniors will be healthier, have higher disposable incomes, and most will enjoy early retirement. So the number of more experienced traveling seniors will increase faster than those in tourism in general. The implications for ecolodges are that:
travelers will expect increased quality, convenience, security, easy transportation, and
potentially, one-person products more shoulder season product may be offered marketing to seniors should emphasize comfort (versus age) Health: Health-consciousness will continue to increase, and destination selection may be influenced, as well as vacation activities and behavior. The consequences are that:
destinations that are perceived as less healthy will be more quickly avoided than previously demand for sun/sea/sand will not grow
18
demand for active or activity holidays, and facilities that offer this type of holiday will grow demand for wellness products will increase, including spas, ayurvedic and alternative
medicine and fitness centers, with yoga, herbal and other treatments and regimes Education Levels: The average level of education is increasing, which will influence vacation choices, with an emphasis more on special interests, such as arts, culture, history, educational, and spiritual holidays. The consequences will be:
increasing demand for special interest tours more tours and customized travel featuring arts, culture and history
Information Technologies: The internet and its use for information, research, and purchase of tourism products/services will continue to increase. The consequences are:
readily available information on destinations and products, and increasingly sophisticated
search engines to analyze information, which will enable more comparison shopping.
experienced tourists will increasingly customize their vacations through direct bookings the role of travel agents will decrease, as full package tours are increasingly bought directly
via the net, and as lodges sell direct to the client destination marketing will increase in importance as the source to stimulate website visits, for example, through better branding with public support a basic precondition for success will be in-depth information on ecolodges and related products (found either on the overall destination website, or accessible through links) the trend to later bookings will increase online reservations must be secure
Transportation: Increasingly available low-cost carriers will influence travel flows. Environmental Sustainability: Environmental consciousness will continue to increase, resulting in more demand for sustainable destinations, where nature and local peoples will play an increasingly prominent role. The consequences will be:
Destination management policies need to be improved through more coherent and consistent
planning
Regions which have been overbuilt (particularly where inappropriate to the natural landscape)
will increasingly be rejected Safety and Security: Acts of terrorism, regional wars, pollution and other crises have become increasingly common, resulting in tourists avoiding destinations perceived as unsafe, and increasing the need for safety and security. The consequences are:
Costs for guaranteeing safety and security will increase rapidly The tourism industry should prepare to more flexibly meet tourism demands in crisis
situations Leisure Time: People have increasing pressures in their daily life, and the number of days of paid vacation leave is declining. The consequences are:
A shortening of the longer main vacation, and emphasis on more short vacations
19
Travel Experience: More sophisticated consumers are increasingly self-assured about their needs and rights. In tourism, there is an increasingly critical attitude to quality, and about pricequality ratio. The consequences are:
Destinations that dont meet acceptable standards will feel negative effects more, and for
longer
More experienced tourists will be more critical about artificially staged experiences,
particularly regarding emotional satisfaction and their need to personalize experiences. Lifestyles: Lifestyles in Western society are changing gradually. This influences the tourists perception of their personal needs and behavior. The consequences are:
Public displays of Status are less important, and lifestyles are more informal worldwide.
Demand for five star accommodation will decrease, since this typifies the World War Two generation. Leisure behavior is becoming more personalized, leading to increased demand for smaller sized accommodation units. The super wealthy will pay for highly customized, very private, remote accommodations in preserved areas, such as entire islands with few accommodations. Suppliers will benefit more if they can create completely new products, concepts and services that are distinguished by their added value. Growth markets (e.g., Southern Africa) will see greatest benefit from demand for customized new products, since cost of product development is high and profit margins are low in mass markets. Product development in Latin America was high in the 1990s, but has come to a halt since 2000. Retooling and expanding existing product in Latin America may be highly fruitful. Increasing supplier specialization (responding to specific hobbies and interests) will become more important, and will more often be combined with vacations. Ability to serve niches will depend on size of hobby group, and how well special interest organizations organize travel.
Consumer Trends and Niches Other consumer trends led by origin markets, relevant to ecotourism are:

Shorter and more frequent holidays, and more intra-regional travel Increased demand for partly packaged, or customized/independently tailored holidays at expense of traditional inclusive tour packages Preference for ethical consumer purchase alternatives. Ethical consumer purchases have increased 18% between 1999 and 2000, compared with total market growth in the same sectors (3%). Ethical investment and banking is also growing (20%) Increased demand for organic food. Agritourism, exploring roots, and farm stays are often linked with the organic growth movement
In addition, a new marketing segment is growing LOHAS (Lifestyles of Health and Sustainability). This is an integrated, rapidly growing market for goods and services that appeal to consumers who have a meaningful sense of environmental and social responsibility, and incorporate those values into their purchase decisions. Key segments of interest include: healthy lifestyles, personal development, alternative healthcare, ecological lifestyles, and sustainable economy.
20
Green Market Trends and Issues Much literature and surveys on green markets and ecotourists in the 1990s indicated a rapidly expanding market and a consumer base that was increasingly interested in products that explicitly met triple bottom line standards. Within the ecotourism industry, however, tour operators and lodge owners worldwide consistently reported that that consumers were not mentioning their desire for green standards when booking. A green skew has been increasingly evident in ecotourism and green market survey research. Subsequent analyses of the green market have increasingly been able to identify this green skew. Apparently, consumers have a tendency to rate their concerns for environmental and social causes very highly, but fail to act upon them in the travel selection process. This issue is highly important to ecolodges, because numerous projects throughout the world have predicated their business plans on surveys that have shown high consumer concern. But these surveys have not been shown to be accurate in the marketplace. The current study has investigated this issue and found a number of interesting results that help to explain the green skew. Large psychographic studies on the environmental purchasing habits of Americans, by the Roper Organization (1990 and 1997) show that 11% - 12% of the American public are Active Greens. They avoid buying products from companies they perceive as not environmentally responsible, and support environmental groups and organizations. Greenback Greens are willing to pay more for environmental products, but tend to be less actively involved in environmental causes and have less interest in making any adjustments in their lifestyle, however they are willing to pay 20% more for environmentally sound products. This group shrank dramatically from 11% in 1990 to only 6% in 1997. Low Cost Greens have decided they want environmental performance at minimal personal effort and at low cost and this group grew in the 1990s to 37% of the U.S. population. The Browns have little or no interest in environmental issues or purchases, and grew to 45% of the U.S. population by 1997.
U.S. Green Consumers 1997

Active Greens Greenback Greens Low Cost Greens Browns 12% 45%
6%
37%
Labels are changed/adapted from Roper for this report
21
This research shows that the general market for green products did not expand in the 1990s, despite the dramatic growth of the U.S. economy. Many observers of U.S. consumer behavior during this period can intuitively confirm such studies considering the dramatic growth in purchases of SUVs, large trophy homes, and other environmentally un-sound products. A 2003 EplerWood International survey for USAID Proyecto Caiman examined reputable U.S.based ecotour operators experiences with consumer demand for eco-social concern vs. ecosocial selection. Eco-social concern was defined as clients concerned about environmental and social impacts, and interested in a contribution to sustainable development. The following chart reveals that while 42% of tour operators clients are very eco-socially concerned, 50% exhibit a low concern for environmental and social impacts.
Eco-social concern
Low 50%
High 42% Medium 8%
The numbers decrease further, regarding the influence these concerns have on client product selection. Nearly 70% of tour operator clients express no concern or interest in eco-social issues when selecting their products, and only 8% expressed a specific interest when selecting their tour.
Eco-social selection
High 8% Medium 25% Low 67% High Medium Low
These results show that while there is a genuine concern for environmental and social values in the ecotourism marketplace, less than 10% of the market booking ecotours with highly reputable ecotourism operators is requesting information from their operators on eco-social standards.
22
In summary, survey results are highly inconsistent relative to demand for eco-social components of a vacation, as well as conversion of that stated concern to purchase, making it difficult to predict future consumer actions on this matter:

Market demand surveys consistently show a desire for more environmental products, and a likely rejection of poorly managed destinations Suppliers report that requests for information on the ecological or social management of tours are rare Ecolodges report that less than 10% of their consumers request information on their environmental or social practices Lodge survey information shows that consumers still rely on conventional accommodations for much of their ecotravel experience, and will seek out budget accommodations in rural locations to save on travel costs in many instances. A lack of medium priced ecolodge product throughout the developing world contributes to this tendency.
Information from market demand surveys do not coincide with supply side reports. This suggests that consumer demand reports may not be reliable on the question of consumer behavior when it comes to selecting for green travel products. There is little doubt that there is a large gap between consumer concern and behavior at present, and the Roper market demand studies demonstrate the demand for all green products declined in the U.S. market in the booming 1990s. Companies entering the ecolodge market should be highly conservative with their use of market demand surveys at the point of origin, and it is recommended that they take the green skew into close consideration. 2.4 Outlook Summary
Over the last 3 years, wars, health, and security crises have changed the behavior of key outbound markets US, Europe, Australia and Japan. These crises have caused travelers from the developed world to stay closer to home, which has caused outbound travel to decline up to 1020% per year. Some destinations in the developing world have consequently suffered greatly (e.g., Africa down over 20%, and parts of Southeast Asia down over 20% during the SARS crisis). Small businesses find such double digit declines particularly difficult to survive, and they can last 6 months to 2 years, depending on the severity of the crisis. Additionally, the global economy has been down, causing travelers throughout the world to seek more economical vacations closer to home. But most experts report that travel markets are quick to recover. For example, South Africa has also remained very popular within Africa, despite the downturn for much of the continent, and early 2003 results indicate that Latin America is seeing a dramatic recovery (being perceived as one of the safest regions of the developing world which also offers good value for the dollar or euro). However, Asian eco-destinations suffered greatly in 2003, due to the SARS and security crises. General travel trends are favoring continued growth of special interest travel. The aging, educated populations in Europe, Japan, the U.S. and Australia will take an increasing interest in customized tours that cater to their lifelong hobbies and interests. They will travel more in the
23
55-75 year old range, and become more sophisticated in shopping for their destinations using the Internet. Ecolodges will attract a growing segment of independent travelers and ecotours. They will benefit greatly from the Internet shopping trend and be able to directly appeal to consumers in developed world markets by using low-cost internet marketing tools. At the same time, ecolodges will appeal to the population that prefers to travel with a tour operator, by working with specialized operators that increasingly seek comfortable, well-designed lodges in natural areas. This gives ecolodges a broad market opportunity over the next 30 or more years, to develop products that will appeal to aging, special interest travelers. Well-known wildlife destinations with significant name recognition and brand reputations will see the greatest increase in visitor traffic. On the other hand, increasing populations and less wilderness means there should be many opportunities to provide ecotourism experiences in currently under-appreciated areas, as well as new and unusual locations. Consumer trends have an important impact on the product offerings at the destination. What the markets are looking for, which tie in well with ecotourism, are authentic experiential types of opportunities, which may mean repositioning or modifying current ecotourism product. Various ecolodges surveyed have indicated that incorporating aspects of the consumer trends noted above can dramatically improve their marketing success, as well as their products attractiveness.
3.
3.1
Ecotourism Market Data

Market Characteristics: A Geo-regional Analysis
It is widely recognized in the literature and by ecotourism experts and operators that the key global ecotourism markets are North America, Western Europe, and Australia/New Zealand in the Ocean-Asia region, although other markets have emerged with considerable interest in ecotourism, such as Japan. The following Sections will describe a range of ecotourist market characteristics, broken down by each of the 3 geo-regional market origins where relevant. Each regional description provides an integration of a number of reliable survey sources2, with any outstanding intra-regional differences highlighted.
3.1.1 Socio-demographic Characteristics
The socio-demographic characteristics of ecotourists are:

Gender Age All Europe slightly more women than men, ~ 55% female: 45% male varies by activity there are differences in age groupings mainly related to different country characteristics: French: in mid life cycle (~ are 35-50, while a relatively large portion ( to ) are
HLA/ARA 1994, Blamey & Hatch, 1998, Diamantis 1998, 1999, The Nature Conservancy 2000, Sanders 2001, Blangy and SECA 2001, Feige et al 2001, Torres Riesco 2001, TIAA 2002, JATA1999, 2001, 2002, Pam Wight & Associates 2002,Weaver & Lawton 2002, QTTC 2003a & b.
24
50-65 Spanish: younger (~60% are 20-39, and the average is 35+) Germans: mainly older, with the largest group (24%) aged 40-49. There are almost no German ecotourists under the age of 30 (1%) UK: older, if frequent ecotourists (51% are 35-54 and 18% are over 55). UK: younger, if infrequent ecotourists, (56% are aged 17-34, and 1/3 aged 35-54. Only 11% are 55+) North America Canadians: middle aged (1/4 are 45-54) and older (1/3 are 55+) US: Edu-travellers span all ages, with aged 35-44 and >1/3 aged 55+ US Geo-Savvy travelers are 50% baby boomers, 1/3 are older parents/working older couples US ecotravellers are older (40% are 50-61, and 1/3 are 62+) Australians: young to middle-ages: 25-34; 35-44, 20% 45-54, but possibly younger being a domestic ecotourism sample Japanese: middle aged & seniors, especially 55-64 year olds ~ of the frequent ecotourists are couples, with about 1/3 single ~ of the occasional ecotourists tend to be single, with about 1/3 married ~ 45%are married couples, with about 1/3 being single often 1/3 families to 1/3 are couples, 15% are single, >1/3 are families High levels of education are found in all ecotourists (2/3 have 1 or 2 degrees) High levels of education in all ecotourists and Geo-savvies (~80% are graduates) Edu-travellers slightly less educated (~60% are graduates) Tend to be more highly educated ( ~ 50% are graduates) ~ 50% professionals, 20% retired, 20% retail/crafts/CEOs 1/3 professionals, many still in school ~50% professional/managerial, ~ clerical/service workers, 10%-20% retired moderate to high, e.g., UK ~20% of all ecotourists >30,000, but a significant lower income group also, with 1/3 of occasional ecotourists <10,000 quite affluent, although substantial proportion with lower incomes Edu-travellers 1/3 <US$50,000 Ecotravllers >1/2 US$38,500-$62,000 Some very high income travelers (28% edu-travellers >US$100,000; US geo-savvies 38% >US$75,000; Canadians: 36% >Cbd$70,000
OceanAsia Household Europe North America OceanAsia Education Europe North America OceanAsia Occupation Europe North America OceanAsia Household Income Europe
North America
OceanAsia
Higher incomes
25
Travel Party
Europe U.K. North America
Over 60% travel alone, <20% travel as couples ~50% Ecotravellers and ecotourists are couples (on tour), -20% single 70% of Edu-travellers prefer to travel FIT, 30% prefer groups the percentage traveling with children is increasing (33% in 1991, 45% in 1999) Australians: varies wildly with different studies: 30%- 60% couples; 8%-45% alone
OceanAsia
3.1.2
Activity Preferences
Activity preferences have been well documented in all the geo-regions, which reveal a huge variety and range of activities, from terrestrial to marine, from culture-focused to adventurefocused, from general to specialized interest in nature. Macro Trends: Common denominators across all geo-regions are that there is a strong interest in the natural environment, experiential vacation, and learning. There is a particularly high interest in: Admiring and viewing natural scenery (~70-85%) Wildlife viewing (~40%-70%+) Hiking/walking (~20%-60%, usually on the higher end) Guided interpretive tours (50%-60%+) Visiting parks and protected areas (e.g., rated 1st or very highly by all international vacationers) Learning about nature or culture (70%+)

Secondary Trends: 1. There is a strong adventure component in many marketplace responses 2. There is also a strong cultural component in all the geo-regions: 3. There is a strong learning component in most geo-regional markets Special Interests: 1. Bird watching is interesting, in that birding tourists tend to be quite dedicated travelers that are first arrivals in new markets. Frequently, birders help create a market for new ecotourism destinations. Interest ranges considerably: a. Europe: Birding is just emerging for French travelers (1%); UK (25%-35% interest, depending on whether occasional or frequent ecotourists) b. US: Birding was the 6th most popular activity listed in in-flight surveys of ecotourists (those who went on environmental excursion) c. Oceania: Australians apparently varied, from 40% (these were nature-based travelers, who said they preferred this activity on vacation) to 85% (this was the same group who actually undertook birding on the vacation).
26
2. North American ecotourists show an interest in adventure activities on an ecotourism trip. Outbound surveys show a stronger interest in wildlife viewing, wilderness, and cultural aspects. Domestically, special interests in adventure outdoor activities have powered a huge market for magazines, outdoor gear, and travel in the back country of Canada and the U.S... This market cannot be compared accurately with the overseas travel market (and often is). However, adventure travel has been an important component of the North American international tour operator business for 25 years, well before the ecotourism concept existed. Adventure tourism companies, specializing in rafting, climbing, trekking, and other outdoor activities, have softened their product and adopted ecotourism for overseas travel in the last 10 years to some degree. 3. North Americans, overall, have a range of interests, with a huge market for educational experiences. This market has been particularly successful in the non-profit travel arena, where the U.S. non-profit organization community is large, well-funded, and has sought to offer benefits to its members through a wide variety of special interest tours. This has attracted a growing number of travelers that read about special interest tours, through their non-profit publications and seek to travel with their peers who have the same special interests, by traveling with these non-profit organizations. At present, this trend is confined to the U.S. market. (It is small, but not vibrant in Canada, growing in the U.K, and does not exist as a trend in continental Europe or Asia/Pacific.) 4. Japanese ecotourists are interested in enjoyment and learning about nature, history, culture, and customs. However, they also indicate a significant interest in staying at resorts (47%) visiting cities/regions 42%), and relaxation excursions (33%). At this stage Japanese are softer ecotourists. 5. Australians tend to be interested in activities with a strong physical activity and adventure component, like camping, bushwalking, diving/snorkeling, adventure activities and related. They may focus on a variety of types of birds and animals, or on the actual recreational activities themselves, with less of a cultural and educational component.
3.1.3 Trip Motivations
Macro Trends: The motivations of ecotourists strongly relate to the activities they prefer, with the most important, globally, relating to:
Nature: Seeing/enjoying/experiencing/learning about: the natural environment, or specific
components of it such as national parks, or fossil beds. Nature-based responses come first in 8 of 14 major survey sources. The first mention of nature in survey motivation responses, ranges from 45% to 93% of respondents, depending on the country/target group of survey
Culture: Seeing/experiencing/learning about: cultures/indigenous populations/traditional
lifestyles/cultural sites or attractions Secondary Trends:

1.
learning aspects of the vacation, either as a primary trip motivator or as part of the experience
27
2. 3.
socialization with partner/family or new people with similar interests recreational activities within a natural setting
Preferred Destinations by Geo-Region
3.1.4
In Europe, the following destinations were mentioned:
Markets UK: Germans:
Developing Country Destinations Preferred

Frequent ecotourists: 50% to Asia, 36% to the Americas, 32% to Africa Occasional ecotourists: 24% Asia, 23% Americas, 12% Africa 44 Tour operators mentioned the following number of trips offered : 1. Costa Rica (20) Ecuador 16, Mexico, Argentina & Brazil (15 each), Chile
(14) Venezuela (13) = 78 trips in Latin America 2. China (21) India (19) Nepal (16) Tibet (14) Vietnam (12) = 82 trips in Asia 3. Morocco (21) S. Africa & Egypt (20 each) Namibia (15) Tunisia (12) = 68 trips in Africa The destinations of interest to North Americans include the following: Markets Canadians Developing Country Destinations Preferred For future ecotourism trips, international destinations were: 3% South/Central America 2% Caribbean 2% Mexico 7% other destinations
Outbound travelers (in-flight survey of those participating in environmental or
United States
ecological excursions) - 31% C. America - 12% S. America - 12% Caribbean - 10% Oceania - 10% Asia - 5% Africa - 3% Middle East
The Nature Conservancy members to South or Central America preferred: 1. Costa Rica 2. Mexico 3. Belize 4. Ecuador
28
5. 6. 7.
Peru & Guatemala Honduras Brazil
In Ocean-Asia, only the destinations of Japanese ecotourists are known. However, there is some associated useful information about the reason for going these destinations: Markets Japanese aged 60+ Japanese baby boomers Developing Country Destinations Preferred 18% China 13% Singapore/Malaysia 1. 2. 3. 4. Oceania (for ecotourism and green tourism) Micronesia Asia (to relax in close foreign resorts) China (for learning about foreign history/culture)
3.2
Ecotourism Accommodation: A Demand Side Analysis
Ecotourist accommodation demand can in many cases be similar to ecolodge demand, but not always. In this section, the demand, by markets, for various types of accommodation is presented, by geo-region, mainly from country surveys.
3.2.1 Accommodation Demand by European Ecotourists
the French accept rustic accommodation
France 24% varied types of accommodation in choosing a destinations, tour operators rate lodging in nature (e.g., lodge, forest hotel, campingbivouac outdoors) as the 4th most important element in the choice of destination (71% of operators) UK Frequent Ecotourists prefer: 29% ecolodges Occasional ecotourists prefer: 19% ecolodges Luxury level preferred: 48% midrange 47% basic/budget 5% luxury
when going overseas with a tour operator, but only for a short time
In an survey, ecotourists most
important requirements for the destination are: 1st high levels of hygiene, safety & security (74%) nd 2 high quality accommodation, with excellent facilities (58%) th 5 small scale accommodation run by locals (29%) Ecotour operators desire: ecotourism accommodation to be small
29
locally owned & have local character (10%) mentioned ecolodge is a term used more in destinations Related expectations are: Germany Of the ecotourism group at a travel show, the most important 46% expect to hike alone with good requirements for their information (whereas 15% want nature/ecotourism trip, of 12 features, guided excursions) are: 41% expect local cuisine with local 1st small accommodations run by ingredients locals (the most important expectation in terms of nature vacation destination requirement) (50%)
3.2.2 Accommodation Demand by North American Ecotourists
Market US tourist
Accommodation Characteristics and Preferences Ecotourists prefer: 66% cabins 60% lodges 41% hotels & motels General Tourists prefer: 14% cabins 14% lodges 56% hotels & motels % of tour operators who say clients prefer: 45% hotel, lodge, inn 22% luxury-semi-luxury hotel/motel
Canada Ecotourists surveyed prefer: 43% hotel/motel 27% tent/camping
U.S. ecotourists clearly prefer cabins and lodges, much more than general tourists. However, many North Americans still prefer conventional hotel/motel types of accommodation. (41%45%). However, they are familiar with the term ecolodge, but this concept is relatively new in the marketplace and many surveys have not identified ecolodges as an accommodation option.
3.2.3 Accommodation Demand by Ocean-Asia Ecotourists
Market
Accommodation Characteristics and Preferences Baby boomers responses
Japan 91% prefer staying at inns or hotels surrounded by natural beauty Australia 58% of visitors were interested in Domestic camping (the most popular of all ecotourists activities) 75% actually camped Ecolodge 58.4% hotel/motel Copyright 2004 International Finance Corporation
Usual preferences of actual ecolodge
30
visitors 52.8% ecolodge
visitors when traveling for ecotourism purposes
The accommodation information for Japan and Australian markets is fairly sparse. The Japanese are clearly oriented to the beauty of nature, and being accommodated in that setting, whether at an ecolodge or hotel. This corresponds with the soft and structured types of characteristics which Japanese market data has already revealed. Australian ecotourists were much more hardy, with over being interested in camping, while actually participated in camping quite a high percentage. Some of the survey results may speak to the importance of where surveys were administered (at a lodge, at a natural attraction, or at point of origin) see section 3.4 for detailed market information of visitors to 2 Australian ecolodges.
31
3.3
Ecolodge Demand: A Supply Side Perspective
The information in this section looks at market demand from the viewpoint of the various receptive destination geo-regions, and from actual lodges in the geo-regions. It does this via the Market Expert Panel (see Appendix A), who responded with written and verbal input, as well as with market-related data from the model lodges. Appendices enumerate those experts and operators contributing to this project.
3.3.1 Market Origins
Respondent lodges indicated, in the main, that North Americans (especially the US) were the primary markets. This is especially so for lodges in Central, South America and the Caribbean. Europe was found to be a far second. For example, one lodge found 50% of markets from US and Canada, and 20% Europeans. European markets mentioned were UK, Germany and Holland. Australians are a small market for some of the lodges in the Americas. Geo-Regional Market Origins Destination Asia Pacific Pacific Australia and New Zealand are key markets in the Pacific, as well as the US, and the Pacific Islands themselves Japan, France, UK< German are also visitors Ecolodge visitors are mainly from the US, Europe, Australia and New Zealand, and have a higher pre-booked portion S.E. Asia US, Europe and Australia Future potential in Australia. The strong Australian awareness and demand will help promote interest in wider geo-regional product US remains growing market overall to Asia Europe with increasing eco-awareness shows more interest, but the package tour remains the staple holiday in Europe. So until packages offer ecotourism options, the European visitors will remain largely Free and Independent Travelers (FITs) One lodge is getting more Japanese because of marketing program. Their market overall is shifting to Asia. South Asia India is a VIP geo-regional market Trekkers represent 1/3 of all non-Indian arrivals in Nepal. Trekkers are: 16% UK, 13% US, 10% German, 9% French, 9% Japanese, 6% Australian Central Asia Typical ecotourism products are not attractive to Japanese and Koreans, although they visit the country. Main markets are from Europe, followed by N. America, but the French are a growing market Africa
International tourism growing; domestic tourism declining (due to
weakening economy & fears of malaria, personal safety & travel)

In South Africa, non-African arrival market origins in 2002 were,:19%
from UK, 10% Germany, 4% Holland, 4% France, 15% other Europe, 9% Copyright 2004 International Finance Corporation 32
Geo-Regional Destination
Market Origins N. America, 8 % NE Asia, and 4% Middle East.
Americas South America 80% US, 15% Europe, 5% Australia for one ecolodge in Amazonian Peru 45% Europe, 22% U.S., 12% Canada, 7% Latin America, 5% Australia and New Zealand, 5% Asia, 2% Israel, 1% Russia, 1% Africa for FIT travelers in wide variety of accommodations, backcountry Ecuador Central One lodge finds North Americans are primary client, Europeans a far America second Another lodge has 50% North America, 20% Europe A third lodge focuses on birdwatchers, and find the vast majority come from the US, with very few from Europe, except UK (and says Europeans do not have bird watching as one of their interests) Caribbean One lodge finds 80% of clients come from the US (Eastern Seaboard) In mainstream tourism, lodges are not selected as the primary destination. Usually, the destination is selected first and the lodge second. However, successful ecolodges, many of which are covered in this studys survey of finance and business, are emerging as a primary reason to travel to a destination. For example, Tiamo, in the Bahamas has drawn great attention to Andros Island as an ecotourism destination, while in the past the Bahamas were strictly known as a mass tourism resort, cruise and gambling destination. Lapa Rios in Costa Rica, brought ecotourism to the Osa Peninsula, which had been known primarily as an outpost for illegal gold mining. Panamas Canopy Tower drew attention to the first class bird watching just minutes from Panama City, known previously for international banking, the U.S, invasion, and a corrupt dictator. In these three examples all among the ecolodges surveyed (Appendix B), and others, ecolodges have become a reason to travel to certain destinations, and they have helped to transform the entire image of destination previously thought of as unattractive or not suitable for nature lovers.
3.3.2 Segments and Characteristics
Geo-Regional Market Segments and Characteristics Destination Asia Pacific Pacific Typically 50% are Free and Independent Travelers (FITs) (with a range of types) and 50% prebooked (also with a range of types, but generally higher yield) Ecolodges have a higher percentage prebooked 75% couples/groups S.E. Asia FIT mainly A small number of agents and operators are offering small group
33
Geo-Regional Destination
Market Segments and Characteristics ecotourism options. Several independent operators sell packages direct to the public. There are also academic/not-for-profit domestic markets using ecotourism types of accommodation and services in Thailand, and home stays are increasing as an option, often in remote locations
Central Asia Find that 2/3 of clients are from the Trans Siberian Express and come for a stop over, in large numbers of FITs. They only provide 1/3 of income 1/3 of visitors are pre-booked, who generate 2/3 of the income) South Asia Trekkers to Nepal. Ecolodge visitors are foreign visitors to wildlife parks, not Indian and Nepali tourists 50% FIT (ranging from the budget backpackers, to more experienced FITs) 50% pre-booked groups (these also range in type, but are higher yield) Highly experienced markets with a strong interest in environmental and community development, especially the higher yield segments Of all visitors, 52% = holiday & pleasure, 28% trekking & mountaineering, 5% business Ecolodge visitors a higher percentage are prebooked FITs and groups ~ 70% Africa
Seasonality of winter safari tourism (June-Oct) when safari is best. National parks and World Heritage Sites are most in demand South Africa attracts an ecolodge market, since it is strong in supply
Americas South America One company has 60% FITs and 40% groups, with FITs growing stronger. Bookings are 30% direct vs. 70% travel agency booking. Direct booking is tending to increase. Also they have 5-10% academic or notfor-profit visitors. Central Ecolodges attract FITs, families, and educational groups America One lodge does not do groups. They did prior business with agencies prior to 9/11 but now find they are more effective with their web site and FITs. 80% of their clients have incomes >$100,000 and the internet is the biggest source for them. Much is dependent on the US economy, however. Europe is difficult because air connections are more difficult. conscious, and concerned about affecting fish environmental ethics FITs are an important market segment and growing. It is likely that the tour operator market is less than 50% of the market for ecolodges, as the above table demonstrates for every region of the world documented in this study. FIT tourists are more difficult to study, because they can
34
only be accurately surveyed at an ecotourism destination. The study of FIT tourists traveling in Ecuador, one of the first to study independent travelers at a destination, showed that 45% of the market was European, the largest segment of the independent traveling market in the country more than the double the size of the U.S. FIT market. It is well known in the ecotourism industry, that few of Europes tour operators advertise ecotourism, because ecotourism is not an accepted term within the European travel market. Europes tour operators have been vertically integrated for more than a decade and have only begun to offer more customized special interest travel options. European ecotravelers are therefore almost all independent travelers. While U.S. travelers are more likely to travel with ecotour operators, Europeans are much more likely to travel independently, because they have the vacation time, language skills, and willingness to explore without guides. However, U.S. travelers are increasingly traveling independently, because of the amount of information obtainable on destinations on the internet. Statistics show that U.S. independent travel is growing in developing countries, particularly in destinations closer to home, such as Mexico, Belize, and Costa Rica. By studying incoming markets, it is more possible to see that the independent traveler is booking directly with ecolodges and increasingly arriving without the help of travel agents or tour operators. This trend is benefiting ecolodges and will have long-term benefits for the ecolodge industry.
3.3.3 Motivations and Preferences
Preferred Accommodation Type There are few publicly available destination studies which ask about the lodging preferences of ecotourists. However, there is information from some proprietary surveys to protected areas. These are presented here: Geo-Regional Destination Central America (survey) Ecotourism Accommodation Preference 75% hotel/resort 22% preferred a house or ecolodge In terms of future interest, 64% were interested in an ecolodge or guest house, an almost trebling of interest. South Asia Survey of visitors to national parks in Sri Lanka 77% hotel/motel 12% lodge Accommodation preferences in Nepal range from the top end in National Parks, right to village teashops along trek routes. Volume favors the budget end traveler. Most visitors use tea houses along trek routes, community/family opportunities in other locations, and while visiting national parks. There is a need to get the budget markets to pay more to assist in environmental conservation, but consumers are more bottom line driven than they admit in surveys.
35
Geo-Regional Destination Central Asia visitors to Chinese nature reserve Africa game reserve lodge visitors
Ecotourism Accommodation Preference 61% hotel 36% yurt 4% other (tent, wood house close to the lake) ~ 40% of lodge guests are from Europe ~25% are African o South Africa has a very good accommodation sector and strong relationships with the local community, and probably has the most emphasis on ecolodges and is likely the best documented. Lodges are often run by the NGO sector, such as in Namibia, which is part of an effort to develop local capacity. Relationships with lodge operators are developed to provide equity for communities.
Surveys at destinations reflect earlier findings that there is a strong market for conventional accommodations, even by ecotourists, although ecolodges are also desired. The use of conventional accommodations must be interpreted in part as the travelers desire to have a variety of accommodation classes when traveling, from luxury to budget. In rural areas, ecotravelers frequently will not find ecolodges, and so instead look for budget accommodation owned by local people. These budget facilities are not always environmentally sound, and frequently have not solved the problems associated with the lack of infrastructure in rural areas. It is therefore not uncommon at all, for an ecotraveler to stay at a budget accommodation in Africa, Nepal or Southeast Asia, that has no sewage treatment facility at all, is using firewood excessively for fuel, and has not assisted with conservation initiatives. This contradiction is caused by the fact that consumers, want value for their money, want to stay in local, more traditional accommodations, and are willing to ignore environmental and social issues when traveling if there are no facilities that offer a good alternative. In many cases, travelers would likely embrace a more ecological alternative if it was available. In most cases, a lack of rural economic development funds and weak policies to develop ecotourism with appropriate controls is the problem. The development of more rural ecological accommodation facilities will depend in many cases on the political support of more appropriate infrastructure for rural areas, good planning for tourism that does not invite unregulated overdevelopment, the support of local decision makers ability to zone and plan their tourism development, and a flush of responsible capital investment that supports triple bottom line strategies (see Section 5.0 Legal and Policy Frameworks for Ecotourism)
36
Preferred Activities Macro Trends: Core ecotourism activities remain large mammal viewing and experiences, as well as birds and other nature related experiences within attractive environments. (More to be discussed in Section 6.0) Motivations Macro Trends: Operators agreed that the primary motivations were wildlife and culture. Secondary Trends: After deciding on where to find their primary special interest, visitors select the specific accommodation/destination. Access in the destination is important. For example, visitors may sacrifice one or two travel hours in order to improve the quality of nature they experience, but few are willing to sacrifice 5 hours of travel to a remote area. It is the same with comfort, although luxury is not needed. Quality interpretive guides and small group sizes are important too. Tertiary Trends: Visitors only consider the issue of environmentally sensitive practices or architecture when all other considerations are taken care of, e.g. special interests of nature and culture; access of the accommodation, comfort level, activities available, and guides. Then they may begin to look at such features.
3.3.5 Facilities and Services
Geo-Region Pacific
Accommodation, Amenities and Services in the Geo-Region

A full range of types of ecolodge exist, from top-end to budget
accommodation, although it is mostly community home stays and lodges in the Pacific Islands. In this respect they differ, from, say Australia and New Zealand, which have high standards of luxury, a focus on activities, high quality cuisine, and spas for the soft segments who want pampering S.E. Asia
SE Asian alternative accommodation is not well developed compared with
international options. SE Asia has few ecolodges which fall into even the broader definition. It has always offered bungalow style accommodation in remote areas (simple palm/bamboo huts with very basic toilet facilities, to 5* bungalows using vernacular design on stilts in the sea). Those up-market resorts that exist have little to do with conservation/ locale/ education. The few ecolodges that exist are relatively basic, focus on local/tribal communities and offer some local activities with accommodation. Conservation and recycling, etc., gets lip service. There are no up-market SE Asian ecoresorts (other than in Australia/New Zealand). Currently there are only a few hundred rooms in SE Asia One lodge finds markets are very price sensitive rather than value oriented
37
Geo-Region Africa
Accommodation, Amenities and Services in the Geo-Region

Accommodation used by foreign tourists tends to be game or country hotels
(10%) and luxury hotels (30%). There is also an increasing interest in farm stays. There are many community-run alternative accommodations in Africa, often run by the NGO sector. Some work well and distribute benefits, ensuring there is equity in the company for local communities. Others are poor with workers earning a pittance and with no control Parks concessionaires in South Africa are required, by contract, to benefit communities and the environment. The revenue generated from Kruger National Park commercialization has enabled the financing of all other national parks in South Africa, which has benefited the parks system. There are lodges in the parks with relationships with local communities employing local residents, and these operators are given land contracts to manage wildlife and reserves. South America the higher end market is now demanding 24-hour power, hot water, good clean food, comfortable beds, and clean facilities. Feels the supply of ecolodges is low in South America, because the industry is in its infancy. Clients are looking for more comfort in lodges, more amenities, and bigger rooms, more solidly built, overhead fans, good beds, space for gear, and clean. Central America
Many products on the ground are SME, community-based NGO run or
private-sector operated establishments especially in northern MesoAmerica. There are also higher end ecolodges, usually private sector run, which have a more affluent profile of market. Ecolodges are expected to have onsite local guides Older more affluent markets want service and comfort, while younger visitors want cheaper places so will accept more basic conditions. Most markets prefer comfortable accommodation a clean bed, and screened in room with clean but basic bathroom, and good food. Markets do not mind having a rough day, but want to come home to comfort, not rustic facilities Ecolodges can be designed to work (in design) for both types of markets, if there is good management Markets look for authenticity and context in building design, and high interaction with local people
3.3.6
Global Facility Analysis
Observations from operators and regional experts show the full range of ecolodges exists, from basic to luxury. However, there seems to be a gap between community-run, basic facilities, and high-end lodges. Thus the emphasis is on the two extreme ends of the supply spectrum, Copyright 2004 International Finance Corporation 38
particularly the rustic end of the spectrum in Asia and in Northern Meso-America. Whereas the demand discussed earlier, is in the middle, more conventional, comfortable part of the spectrum. This is supported by destination experts and operators, who say markets appear to be demanding comfort. Another important note is that the growing Asian markets demand a much higher standard of comfort that the US or even Europeans. The need for more comfortable accommodation will only increase as markets age and seek added comfort. Thus the supply and demand seem to be mismatched, and is simplified as follows: Current Mismatch of Ecolodge Supply and Demand Rustic Accommodation Ecotourist Demand Luxurious Accommodation
Ecolodge Supply Our expert panel indicated that in some geo-regions, such as Central America, most communityrun, basic facilities were simply not financially feasible for a range of reasons, from being extremely remote, to being run by NGOs, or attracting lower-paying backpacker markets. Also, many of the governments in such destinations are cash-strapped, and cannot afford to adequately promote or develop such smaller entities, which in turn are not able to adequately market themselves. In addition, clients are looking for an experience, and these smaller operations may not have the experience or knowledge about how to provide the range of elements ecotourists desire on their vacation. Also, while experts and operators indicated that the travel trade were an important tool for marketing, such lodges are so small they cannot establish the kind of relationship with the travel trade required, and such lodges/community accommodation become marginalized from the conventional marketing system. For example, in South Asia, smaller trekkers lodges or home stays essentially wait for trekkers to show up. There is effectively a gap or disconnect between these suppliers and the markets. This is just one of many linkage gaps which exist.
3.3.7 Ecolodge Demand Determinants and Future Potential
The opinions of the experts and operators about future demand and growth varied, although all were in agreement that ecotourism markets will increase. Common areas of agreement included:
Demand determinants: key determinants are the budget of visitors, preferences and likelihood of seeing their motivating feature (such as the big 5 in Africa), marketing impact, the degree of political stability/volatility, safety and security, international airline routes/connections/access, access once at the destination, speed of booking times, internet information, destination image, and the economic situation in source markets. The supply of ecolodges is also a determinant, particularly those lodges which match the consumer budget/expectations.
39
More specific and fine tuning types of determinants may include the environmental practices of the lodge, or the type of architecture, or similar features. However, one expert felt that having the accommodation in a natural area was more important than the design or its greenness, and that ethical accommodation demand will vary by marketplace. Thus although environmental design may not be a deterrent, it is critically important that lodges not make a fixed-in-stone design mistake. One operator indicates managers should survey the customers from day 1 and be prepared to change things all the time, in the room and elsewhere, based on customer feedback.
Market Origins: the US, Europe (especially Germany, UK, France, Holland), and to a lesser extent Australasia, especially Australia, New Zealand and Japan. However, the US is the key global market identified for virtually all geo-regions. It is felt that domestic and georegional markets should not be ignored, not only because of some potential, but because they form a hedge in difficult times.
Growth predictions varied among the regions. Expert and operator opinions on growth included the following: Pacific
the Pacific is poised for growth in 5 years, at 10-20%, if there is continued
security and marketing. 10% of ecotourists would be keen on ecolodges, but there are not that many ecotourists in the Pacific! Ecotourists are 10% of the total market others say growth could be 10% to 20% of Pacific visitors, if some divers were included (however most visitors still want sun, sand, sea and local food) having the image of relaxation rather than eco-adventure growth will require a sexy product, and an image that ecolodges blend nature with luxury SE Asia
The market is said to be growing about 10% p.a., which related to the general
growth and greener travel trends Expectation of future domestic/regional interest in nature tourism in the region (Thailand, Philippines, Malaysia, and Indonesia, and Vietnam to a lesser extent. However the domestic market is very low revenue). There is increasing interest in Cambodia, Laos, and Burma, for tourism in general. These provide perfect opportunities for new ecolodge investment, since the destinations have not yet become sand, sea, and sun destinations. One lodge is expecting future growth because of their referrals and a good reputation (their growth was 30%-40% until 9/11) Central Asia One Central Asian lodge is growing around 20% per year, and has been for virtually the last decade (except for 2003). Markets are European, then North American, with growing French markets. Demand is said to be growing because of the increased interest in local peoples
40
South Asia
About half of all visitors to Nepal are on vacation, with 28% trekking and
mountaineering.
Ecolodge visitors are around 17% of overall tourists in Nepal It is felt that demand can improve quickly (this was seen recently in Nepal
when the 2002 ceasefire was announced) and because of global trends in reduced booking time, as well as internet use Ecolodge growth is likely, as there is a 336% repeat visit rate, with markets upgrading to higher yield visitors as they repeat Africa
Growth to Africa will vary with the price of international flights, price
increases in National Parks, employment improvements among domestic/georegional residents, and increasing public awareness Europe does not seem to be increasing in demand Europes up-and-coming markets are going to Asia for cultural experiences. Growth may not occur significantly, until Africa is associated with more than wildlife. There needs to be more proud marketing of African culture (in association with wildlife) for growth to occur to potential. South America
One operator thinks there are enormous potential ecotourism markets to South
America, and demand will continue to rise (perhaps double) in the next 5 years Feels the higher end market is growing about 10%-20% One successful lodge operation has over 20% growth rates, but cant accommodate the demand
Finding that there is no discernable demand for a value-driven product One wholesaler thinks growth could be exponential Thinks by 2020 there will be significant markets for packaged tours as the
Central America
bulge of baby boomers retire

One lodge finds its FIT markets are growing Future demand is seen to come from the US, with some European visitors
All experts and operators agree that growth in ecotourism was set to continue. The nature of growth varied by geo-region, but varied from 5% to 20%, and could be said to rest on average at about 10%. While this might at fist glance seem relatively high, when one considers that Section 2.1 discusses WTO statistics, which show that global travel trends have been on the rise for years, with a 9% annual growth rate recorded from 1988-1997, it is a reasonable average. The dependent variables mentioned earlier, of course, are understood to be constraints or enablers of that growth. Barriers and Constraints Operators and experts identified a range of barriers and constraints to development of ecolodges and to the growth of ecolodge markets. Regional comments on barriers and constraints were: Geo-Region Pacific Barrier or Constraint Reliance on long-haul markets makes the Pacific vulnerable to the world energy crisis 41
There is sometimes a mismatch between the image sold and the product that
can be delivered in the Pacific

There is an overestimation by many in the industry that nature and eco
products are in huge demand. The reality does not always seem to support this S.E. Asia South Asia Central Asia
Rollercoaster demand in the region due to SARS, terrorism, and overall tourist
demand
Regional and world trends (e.g., 9/11, SARS, Iraqi conflict) The biggest problems are in the public sector. Consultants are needed to
explain to government how ecotourism operations work; also, to explain to the private sector why they should pay taxes e.g., to prevent future environmental damage South America
The biggest threat for ANY ecolodge would be a terrorism incident in the geo-
region or even closer The biggest impediment, in one operators opinion, is the proliferation of poor quality lodges and tours, leading to poor experiences
Meeting the needs of aging markets, and accessibility Human resources challenges, e.g., guides awareness by the global markets and by the geo-region
Central America
In addition, respondents and experts in most of the geo-regions agreed on key barriers and constraints. These were: Demand side constraints: world economic trends, security and health issues, seasonality. Supply side constraints: Lack of rural infrastructure limiting efficient access and accessibility; distance from world markets; seasonality; financing for building, operating and marketing; public sector lack of understanding of how ecotourism operations work; poor ecotourism policies; and lack of appropriate government regulations to protect communities and environment. It is also worth exploring briefly the problem of negative development patterns for tourism that undercut the potential for ecolodge development. In many popular and beautiful destinations around the world, there has been severe environmental degradation of locations with world class attractions. The pattern can begin with the building of too many low-budget, poorly run lodges that flood the market resulting in a poor reputation for the destination, such as many of the tea houses in Nepal which were burning too much wood and causing severe local erosion. Or conversely, there can also be an insider political auction of the best properties to the most connected individuals who are able to develop high-end properties with no environmental controls (such as Thailand and Venezuela), a phenomenon well-described by author James Fahn (2003). Negative media reports begin. Local environmental activists demonstrate and develop global campaigns on the environmental devastation that results from large scale infrastructure
42
built without zoning, land-use planning, waste treatment facilities, and decent housing for workers (such as Cancun). In the end, inappropriate tourism development destroys the destination for ecotourism. Another negative pattern worth mentioning is the development of an ecolodge without adequate environmental protection, visitor management, and other tools to protect the area from overdevelopment. Ecolodges that once appeared to have few impacts, low visitor numbers, and positive contributions to local economic development can become enveloped by massive tourism influxes that result in many additional lodges, too close to one another, and a lack of proper protection for local environment and wildlife. This phenomenon has been observed in the wildlife parks of Kenya, the coast of Belize and Costa Rica, the coast of Thailand, and other destinations that saw a sudden boom of visitors before environmental protection and land-use plans were in place to protect the region. Tourism booms can be followed by subsequent busts in visitor numbers. This transpired in Kenya, where wildlife parks were so overrun with visitors Kenyas reputation for ecotourism declined and has not recovered to date. While Kenyas tourism decline was caused by a variety of other factors, the irresponsible development and management of lodges in Kenyas parks did contribute to the problem.
4.0 Ecolodge Business and Finance Study

Fifteen internationally recognized ecotourism enterprises (Table A) provided data to the consulting team to evaluate their business and finance models. The ecotourism businesses geographic distribution included Central America, the Caribbean, South America, Malaysia, Mongolia, Micronesia, Fiji and southern Africa, with a weighting towards Latin America. The study groups weighting towards Latin America is the result of the high response rate for ecotourism businesses in Latin American and the fact that the ecolodge market in Latin America has a greater share of ecolodges relative to the rest of the world. These pioneer businesses, which were designed using ecotourism principles for all aspects of their operations, were selected by the authors as key trend setters, because they are respected, profitable businesses that meet triple bottom line standards, and have been highly innovative in developing a marketable brand for their lodges in their regions. The study group included both stand-alone ecolodge businesses as well as more integrated ecotourism businesses. Stand alone ecolodge businesses are defined as those enterprises where revenues are derived only from the operation of one lodge. While a more integrated ecotourism business is defined as those enterprises that derive their revenue from more than one source which could include other lodges and/or tourism operations outside the physical location of the ecolodge/s. The 15 ecotourism businesses included in this study managed and operated a total of 73 ecolodge enterprises. One ecotourism business for example, operated 44 ecolodges located in several countries. For the purposes of this study we have not analyzed the individual financing and business structure of all 73 ecolodges but rather we have extracted best practices and industry knowledge from the 15 ecotourism businesses. In an effort to better understand the business model for ecolodges, the authors felt that it would be difficult and less useful to isolate an ecolodge enterprise from the larger ecotourism business Copyright 2004 International Finance Corporation 43
model. We therefore have attempted to understand the success factors for both a stand alone ecolodge and those for a larger ecotourism business. Also, it is important to note that this study only included ecotourism businesses that had at least one ecolodge associated with it. It is the opinion of the consultants that this studys insights into best practices and conclusions regarding profitability are representative of successful small ecotourism and ecolodge businesses. Based on their experience in this sector, the consultants believe that the study group is sufficiently diverse in terms of business type, geography, size, and target market and product offerings to provide a good basis for making conclusions regarding small business viability in the ecotourism sector. Conclusions regarding profitability are supported by information provided in interviews from ecotourism business owners and from a limited amount of financial data collected. These individuals provided invaluable information that can only be obtained through years of concrete experience. In addition, the teams considerable knowledge of the ecotourism market and ecolodge businesses have enhanced the information and data collected. The limited size of the study group means that the numerical analysis and statistical tables provided in this document cannot be regarded as statistically representative. Further data collection is necessary in order to establish statistical relationships and relevant benchmarks for this sector, but it is the judgment of the authors that it would be premature to seek out more statistical data at present. As will be shown below, ecolodges meeting international ecolodge standards are presently just emerging into profitability after a 4-5 year start up period, and the lessons to be learned at present will not be found by pursuing more statistically sound data. For some ecotourism businesses participating in the study, complete financial data was not available because of: 1) limitations in accounting and finance systems, or 2) unwillingness to share certain confidential financial information with the consultants. Nevertheless it is the opinion of the consultants that additional financial data would not have changed the conclusions. Important business information was acquired from each company during an extensive phone interview.
44
Table A Ecotourism Business Study Group

Name of Company
Belize Lodge and Excursions Borneo Tours Canopy Tower Chalalan Cooprena Nomadic Journeys
Ecolodges
Indian Creek, Jungle Camp and Island Lodge Sukau Rainforest Lodge Canopy Tower Chalalan 9 ecolodges 4 Yurt Camps (12 yurts each) Kosrae Village Ecolodge Kapawi Lapa Rios Mamiraua Pico Bonito Posadas Amazonas Tambopata Research Center Tiamo Oarsmans Bay Lodge Safe Landing 44 ecolodges
Location
Belize Malaysia Panama Bolivia Costa Rica Mongolia
Ownership
Private Private Private Community Community Cooperative Private/ Community Private Private/ Community Private NGO Private Community/ Private Private Community
Business Type
Chain of Ecolodges and Tour Operator Ecolodge and Tour Operator Ecolodge Ecolodge Cooperative of Ecolodges and Tour Operator Chain of Associated Ecolodges and Tour Operator Ecolodge Ecolodge and Tour Operator Ecolodge Ecolodge Ecolodge Chain of Ecolodges and Tour Operator Ecolodge Ecolodge Supporting Community Lodges Chain of Ecolodges
Kosrae Village Ecolodge Canodros Lapa Rios Mamiraua Pico Bonito Rainforest Expeditions Tiamo Resorts Turtle Island Fiji Wilderness Safaris
Micronesia Ecuador Costa Rica Brazil Honduras Peru Bahamas Fiji
South Africa, Botswana, Zimbabwe, Namibia
Private
Total Businesses = 15
Total Ecolodges = 73
4.1 Business Model for Ecotourism Businesses The first section attempts to provide a framework for classifying ecotourism businesses into categories which include: business type, size, ownership, management, market segment, target markets, market niches and source of financing. This section summarizes the relevant information collected from individual ecotourism businesses in order to better understand their business models, financing strategy and profitability. 4.1.1 Framework for Classification
Business Type As discussed above, the consultants found that some ecolodges had larger or more integrated businesses associated with it. Of the 15 ecotourism businesses analyzed in this study, nine had a larger or more integrated business model where revenues came from more than
45
one ecolodge or from other tourism related operations. It is possible to categorize the different types of businesses found in the study group as follows: 1) Ecolodge the ecolodge was the only source of income for the business 2) Ecolodge with tour operations the ecolodge business is complemented with revenues from tour operations business which works outside the area of operation of the ecolodge. 3) Chain of Ecolodges - the business model includes revenues from more than one ecolodge. 4) Chain of Ecolodges with Tour Operations the business model consists of a chain of ecolodges plus a tour operations business. 5) Cooperative of Ecolodges and Tour Operator cooperative acts as marketing agent and technical assistance provider. Business Size - The size of an ecotourism business can be classified in several ways; by the amount of revenues and employees, by the number of rooms or by the number of clients. The data provided below is for ecotourism businesses which may include more than one ecolodge. As shown in the charts below, when using all three classification methods the majority of the study group falls into the small category.
Size of Business (employees and revenues)
Micro
0-10 employees Up to $100,000 annual revenues
Small
Up to 50 employees Up to $3 million annual revenues
Medium
Up to 300 employees Up to $50 million annual revenues
14
Of particular note is the fact that all of micro ecotourism businesses (in terms of size and clients) generated sufficient revenues to be categorized as small. Also one business had a considerably higher number of clients (well over 3,000) but also fell into the small category in terms of revenues.
------------ Number of rooms --------------- ----------- Number of clients-----------Micro
Up to 10 rooms
Small
11-35 rooms
Medium
Greater than 35 rooms
Micro
Up to 500 clients
Small
501 2,000 clients
Medium
Greater than 2,000 clients
Legal Status, Management, and Ownership - Fourteen ecotourism businesses had the legal status of a corporation or autonomous legal entity and all were incorporated within the country of business. The remaining two businesses were owned by an NGO or a cooperative. For the study group 43% had some form of foreign ownership.
46
Legal Status of Businesses

Corporation or Autonomous legal entity 13 Cooperative 1 NGO 1
The management of ecotourism businesses is difficult to categorize since there are many models ranging from owner/entrepreneur managed (usually mom and pop business) to professional management with no ownership in the business. As illustrated in the chart below, a large percentage of these businesses had some form of mixed management arrangements where owners and non-owners were involved in management. To complicate matters more, there were also situations where individual ecolodges had different ownership and management structures than the ecotourism businesses. For example in four cases, private companies have entered into management and ownership relationships with communities for some ecolodges.
Management Owner Managed 6
Management Arrangement 5
Outside Professional Manager 1
Community Management 1
NGO or Cooperative 2
Owner managed businesses made up less than half of the study group. For the purposes of this study we have limited the definition of owner managed as those businesses that do not have professional management and are solely managed by the entrepreneur. These businesses tend to fall into the category of mom and pop. Management Arrangements is a broad category for all the different types of management arrangements that fell outside more defined categories presented above. Ecotourism businesses that employed professional management staff would fall into this category. For example, this category includes businesses that have grown to the extent where owners have hired professional staff to oversee certain aspects of the business such as marketing, sales, and operations. Different than the professional manager category below, owners still play an important day-to-day management role and tend to hold positions such as General Manager or Director. A professional manager arrangement is where the owners relinquish all day-to-day management such as marketing, sales, accounting and operations to a professional manager. The owners retain their ownership interest but remain involved in only the strategic decisions rather than the day-today management. Communities managed only one ecotourism business while six ecolodge businesses had some type of community ownership. A NGO and a cooperative managed one ecotourism business respectively. Copyright 2004 International Finance Corporation 47
Ownership - Most owners did hold a greater percentage of equity in the ecotourism businesses, but there are exceptions also. In addition, ownership for the company and the ecolodge could be different. For example, one ecotourism company took on all the characteristics of an owner but 100% ownership in the ecolodge asset was held by the community partner. For this case, after tax revenues were divided between the company and the community based upon an agreement. The equity ownership percentage of owners and outside investors did not always mirror their respective capital contribution in the initial investment. For example, one lodge that received considerable foreign capital (83% of the start up cost) had an ownership structure where the owner/manager had an equity stake of (52%). It was agreed that the foreign investors would receive a higher payout of profits for a period of time to compensate for the larger original investment. As a result, ownership of assets and rights to business cash flow were different for some ecotourism businesses. Community ownership structures presented more innovative legal arrangements which included joint ventures, corporate trusts, and revenue participation agreements etc. For example, one ecolodge had a corporate trust structure where individuals from the local community had participation in that trust. This structure provided tax benefits to the community which a traditional corporate structure could not. For those ecolodges that received grant financing, these grants in effect converted into community equity once the lodge was built.
Ownership Structure of Ecotourism Businesses
Ecotourism Business A B C D E F G H I J K L M N O Owners/ Managers 100% 100% 66% 26% Local Investors Foreign Investors NGO 100% 34% 74% 100% 100% 100% 30% 48% 100% 100% 100% 100% Community
70% 52% 100%
Pricing - The average daily rate for the ecolodges ranged from as low as $40 to as high as $500 per day. Most ecolodges fell into the mid-range category from $61 to $200. Generally, the pricing of the product is a good indicator of the income segment being targeted. This is probably true for the economical and luxury categories. Interviews with ecotourism managers indicated that many high income individuals were choosing ecolodges in the mid-range pricing category.
48
It appears that mid-range priced ecolodges are attracting affluent clients who are looking for comfortable lodging but not necessarily luxury amenities.
Product Pricing (Avg. Daily Rate)
Economic Up to $60 per day 2 Mid-Range From $61 - $200 11 Luxury Greater than $200 2
Geographic markets - US/Canada and European G e o gra phic O rigin o f C lie nt s markets represented the overwhelming share of the ecotourism market for the study group. However, there was a clear relationship between the physical location of the ecolodge and the geographic markets it served. For example, those ecolodges in Latin America received on average more of their clients from the US/Canada market with Europe being the second source. Seven ecotourism businesses were heavily dependent on the US/Canada market receiving over 50% of their business coming from these markets. Of these seven ecotourism businesses all were located in Latin America but for one in Asia. Ecotourism businesses located in Fiji, Mongolia, and Malaysia received a larger proportion of their clients from Europe. In terms of the European markets, five ecotourism businesses were highly reliant on this market (over 50%). Of these five, four of these operators were located in Asia while one was in Latin America.
120% 100% 80% 60% 40% 20% - Asia -Europe - US/ Canada 0% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Ec o t o u r i sm B u si n e sse s
- New Zealand/ Aust .
Reservation Source As illustrated in the graph, the reservation source for ecotourism businesses varied among the study group. For 10 out of 14 businesses, individual travelers (FIT) booking their trip directly through the internet, email or travel agencies represented 50% or more of their reservations. International tour operators are a second important source of reservations. Interestingly there were four ecotourism businesses that received reservations only from individual travelers and local operators.
Reservation Source
1 20% 1 00% 80% - Ground Oper 60% 40% 20% 0% 1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3 1 4 - Intl Tour Oper - Individual Travel
Source of Initial Financing - The table below illustrates the diversity and heterogeneity of ecolodges initial financing structures and also demonstrates the difficulty of finding meaningful ways to categorize them. Interestingly, eight of 15 ecolodges were financed with some sort of debt and only two ecolodges were financed solely with owners equity. Four ecolodges received some or a substantial part of its financing from operating revenues of an ecotourism business. Communities also contributed labor and other resources for two ecolodges and grants financed a large portion of the costs for three ecolodges. The diversity in the sources of debt was notable and includes: a) three ecolodges with market rate loans from national government development banks; b) two ecolodges with no interest loans Copyright 2004 International Finance Corporation 49
from a private tourism operator; c) one ecolodge with a loan from the IFC; d) one ecolodge with a concessionary dollar loan from a national debt swap fund and; e) one ecolodge with three market rate dollar loans from 3 separate green funds (see debt section below). Grant financing was an important source of funding for three lodges all of which have some sort of community participation (profit sharing or ownership). When foreign equity capital was involved, it financed over 80% of the projects start-up costs leaving only a small amount to be financed with owners equity or debt. It is interesting to note that the three lodges which were almost entirely financed with foreign equity capital were also the most costly lodges to build.
Source of Initial Financing for Ecolodge Projects
Ecolodge Project Owners Equity Debt (foundation, government, business loan, social responsible business loan) 34% 21% 34% 83% 70% 15% 100% 100% 3% 5% 85% 30% (?) Foreign Equity (financing structure includes foreign equity investment) Grant (financing structure includes grants) Community (financing structure includes community labor, land etc.) 10% Business equity from operator
A B C D E F G H I J K L M N O
100% 66% 32% 17% 100%
62%
7% 34%
(?)
97% 95% 100% 100%
4.1.2
Individual Business Model Analysis

Ecotourism Business Years in Operation 12.0 10.0 8.0 6.0 4.0 2.0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Ecotourism Business
Years in Business - Ecotourism businesses in the study group have been in operations from three to 11 years, with an average of almost seven years for the entire group. As mentioned previously one ecotourism business not yet in operation was included in the study due to its interesting financing structure and business model.
Ecolodge Accommodations The majority of the study groups accommodations would fall into the comfortable category as defined by The Nature Conservancy (TNC). Only two respondents described their accommodations as luxury while most emphasized that their facilities were designed to be comfortable and complement the natural surroundings which was main focus of the experience. No ecolodges met the luxury definition.
TNC Definition of Quality of Accommodations Rustic = shared bath & sleeping facilities, no electricity Corporation Simple = double rooms, electricity, made beds Comfortable = private bath, hot water Luxury= AC/TV
Copyright 2004 International Finance
Years
50
Land Owned and Proximity to Nature Reserve The heterogeneity of ecolodges was demonstrated by the wide range of land ownership with some ecolodges having no or very little land (a few hectares) while six ecolodges had substantial land holdings, one in particular having 200,000 hectares of rainforest. Those ecolodges with large properties were associated with indigenous communities possessing sizeable community land holdings. Several ecolodges leased land or were adjacent to reserves or national parks. Eight ecolodges were located in a reserve zone, park or community reserve and all the remaining ecolodges were in close proximity. Accessibility- The majority of ecolodges were easily accessible from a local airport averaging less than one hour in transportation time. However for the most part, ecolodges were not directly accessible from an international airport and required at least one local connecting flight. Five ecolodges required considerable travel time (plane, boat, land transportation) and an overnight stay in another location in order to reach the lodge. Accessibility was identified frequently as an important factor that impacted an ecolodges competitive position relative to the competition. (See Section 4.2 for more information) Attractions Respondents were asked to identify the number of attractions which they offer from a list of 10 attractions (see chart). Only one lodge had all ten attractions while on average the ecolodges had five of the ten attractions. Natural Attractions will be addressed further in Section 6.0.
Attractions
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Biodiversity Congregations of species (i.e. waterholes, licks) Viewable charismatic mega fauna Birds Highly Scenic Points (i.e. waterfalls) Lodge comfort and architectural design View stations/towers Unique endemic species General culture Indigenous culture
Start-up The group of study participants were asked to describe their experience regarding the start up of the ecolodges including the planning, financing, building, and start of business operations. Sweat equity and scrappiness were identified as important elements to success particularly in the start-up phase of their business. The planning stage for ecolodge construction varied widely among participants from as long as 10 years to as short as one year. Once financing was in place, six businesses built their infrastructure in one year or less while others took two to three years. One however took five years to build. Some mentioned that the construction timeframe could have been shortened but due to some external issue (government approvals, sickness, weather) the building completion was delayed. Planning and Building Time In all cases the initial infrastructure was sufficient to Years 16.0 begin operations but since this time several 14.0 ecolodges have made improvements (platforms, 12.0 10.0 building walkways, dining space) and expansions to enhance 8.0 planning 6.0 capacity and quality of their services. 4.0
2.0
Start-up Cost Respondents were asked to provide the start-up cost and to breakdown costs into the following categories: infrastructure, equipment, labor and training. Many ecolodges owners were unable to provide a breakdown of all categories but they did have a general idea of where funds were invested. Most could not quantify the amount of funding required for initial training since some ecolodge owners invested considerable sweat equity in training staff and guides. One
1 2 3 4 5 6 7 8 9 10 11 12 Individual Ecolodge
51
business owner did not know how much was originally invested in the business since he did not have a system to account for it. Of the ecotourism businesses that provided data, eight ecolodges had an initial start-up cost of $500,000 or less, while six had a cost at or above $1 million. For the study group, the average cost per room was approximately $58,000.
Start-up Cost of Ecolodges
1 80,000 1 60,000 1 40,000 1 20,000
Cost Per Room
$5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $1 2 3 4 5 6 7 8 9 10 11 12 13 14
1 00,000 80,000 60,000 40,000 20,000 1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3
Costs provided did not account for the amount of time and sweat equity invested by ecolodges owners. Start-up costs were not limited to the construction of accommodations but also included other types of investments such as vehicles, boats and infrastructure such as dining areas and kitchens. Although when communities were involved there appeared to be better accounting of labor costs since the community was either paid for the services or considered labor as a part of initial investment in the ecolodges. It was also mentioned that the start-up costs could be reduced substantially by a high level of owner/community involvement in the construction phase. These owners that did it themselves often avoided higher start-up costs by eliminating the need for general contractors and other professional services (design, building, installation of composting toilets and solar energy etc.). It does appear that sweat equity represented an additional cost for most ecolodges that was not accounted for in the start-up cost. Profitability - In 2002, ten ecotourism businesses were profitable although the degree of profitability varied among the group and exact data is missing for three businesses. For the purposes of this study, the profitability margin was used to measure profitability. This indicator measures the degree of profitability as a percent of sales that goes to bottom line profits (profits/sales). The profitability margin for those ecotourism businesses (8 businesses) that provided financial information ranged from -3% to 26%. For these eight businesses that provided data the average profitability margin was 12%. Taxes, depreciation, and finance charges are the expenditures that produce the difference between operating and profit margins.
P ro f it a bilit y m a rgin ( pro f it o n s a le s ) 30% 25% 20% 1 5% 1 0% 5% 0% -5% 1 2 3 4 5 6 7 8
E c o t o uris m B us ine s s e s
Comparing the degree of profitability among different size businesses poses several issues in terms of defining which business is more profitable and what factors influenced this profitability. Profitability can be measured in terms of percentages or by comparing gross dollar amounts. Also, one particular year may not be a good indicator of the businesses past performance nor might it be a good predictor of future profitability. Using the profitability margin alone does present 52
issues and potential distortions. For example, one ecotourism business could realize net profits of $10,000 and another $1 million, but the former could have a higher profitability margin than the latter.
Ecotourism Businesses Return on Equity
35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 1 2 3 4
Return on equity (ROE) is also a good indicator of profitability but unfortunately lack of data has limited the usefulness of this indicator. For those four businesses that provided sufficient financial data, average ROE was 20%. The period of time it took an ecolodge to become profitable varied among ecotourism businesses, but a timeframe of 4 to 5 years from start-up seemed to be the norm. All ecotourism businesses mentioned the importance of a long-term perspective in terms of
profitability and return on investment. The graph below categorizes the ecotourism businesses in terms of how sustainable its profitability may be. The degree of sustainability has both objective and subjective elements and was evaluated by the consultants based upon their knowledge of the individual business. When evaluating ecotourism business viability today, it is important to take into consideration the external shocks experienced by the industry over the past two years. Several businesses in the precarious category would have been categorized as emerging before the events of September 11th. Based upon information available it was possible to Ecotourism Business Sustainability classify the study group into the following broad categories: Dynamic These ecolodges have shown to be profitable over that last 2 years or more and demonstrate a strong probability that profitability will continue into the future. Although somewhat affected by the events of 9/11 this Emerging 33% group of lodges showed great resiliency and adaptability such that their sales never decreased during these turbulent times. These ecolodges also viewed the future more positively, some mentioning that demand for their product was inelastic and that their only restraint was capacity.
Dynamic 40% Precarious 27%
Emerging - Ecolodges that have just reached profitability or are expected to reach profitability in the near future. Some are recent start-ups or others have faced certain events that have complicated their results, but most have strong enough business models to be profitable within the next couple of years. Precarious - These ecolodges are struggling to reach profitability and may have issues relating to the viability of their business model. They may have had difficulty distinguishing themselves from the competition, have limited marketing capabilities or are in geographic markets that have suffered significant declines in recent years.
53
In Section 4.2.2 we examine the different factors that are related to an ecotourism business profitability and long term sustainability. Marketing Marketing was identified as the area requiring the most management attention but it was often neglected due to the need to focus on day-to-day demands. Very few of the ecotourism businesses mentioned that they had some sort of marketing plan although most felt that they did have a strategy even though it may not have been written down. There were uncertainties as to whether most businesses had a clearly defined marketing plan with specific action steps and targets or whether more reacted to opportunities that presented themselves. With the exception of one ecotourism business, marketing costs for the group represented a very small part of their business operating costs (6-10% of all operating costs). Internet costs were minimal for most businesses while the return on this marketing tool was identified as high. Many did mention that an increased budget would be useful but most worked on the philosophy of getting a very high return on their marketing dollar spent. One ecolodge manager said marketing budget is always a barrier but we get a lot of client for money. Advertising and tradeshows were identified by many ecolodges as expensive and not effective. The internet, articles in well known travel magazines, mention in travel guides, prestigious awards and wordof-mouth stand out as the main marketing strategies for most ecolodge operators. Only one business mentioned repeat business as an important aspect of their market. Marketing strategies focused on building momentum through a variety of information channels. Often clients would hear about the ecolodge from several sources such as magazines, books, articles and word-of-mouth. A majority mentioned that their websites served as a marketing tool for providing more detailed information but it was not the most important channel for reaching their clients. Clients tended to be savvy and have done the research before they decided to book their trip. Individuals would either book directly (internet or phone) or through agencies. There is an increasing trend toward ecolodges receiving direct bookings from individual travelers as compared to bookings from international and local agencies. Local agencies and international operators remain an important source of individual and group travelers but for many ecolodges direct bookings is a growing share of total bookings. The internet has significantly improved the ability for ecolodges to reach the individual traveler directly. One ecolodge attributed its marketing success to its strategy of directly marketing to all market segments (internet, international operators, non profits, and local agencies). Interestingly, some of the most profitable ecolodge operators worked only through international operators and travel agencies. Their internet site served as a marketing tool but they did not interact directly with individual travelers. Soft marketing to prospective individual travelers created demand for their ecolodge product but they worked exclusively though international operators and agencies in terms of bookings. Their strategy was to create demand for their product from individual travelers and to focus on developing strong relationships and customized products for well-known international operators. The following comments by ecolodge operators well illustrate how many ecolodges are approaching the marketing of their product.
54
The internet is the only place I spend money. I have dropped print advertising and I now focus on getting high rankings on search engines. My only brochure is downloadable on the internet. I even found 9 of my 10 angel investors on the internet. Articles on our ecolodge have been published in magazine such as National Geographic Traveler and we have received awards from high profile conservation organizations. Until 9/11 our only marketing tool was word of mouth and this strategy was extremely successful. Now after 9/11 we have to work harder but we do not advertise. We take a soft marketing approach through a public relations strategy which includes articles over the past years. Our website is also a good tool which provides complete information and prepares clients for the experience. We have a database of 8,000 past guest addresses but have never used it to market. Most of our clients go through agencies where we provide them commissions. Our marketing strategy is still incipient. We use mainly the internet, folders, correspondence, mail merge, and participation in conferences, etc. We do not have a specific budget for it. We try to seize marketing opportunities in the media supporting film crews, magazine and newspaper representatives in the Reserve. More word of mouth and our name in National Geographic, Discovery, and Lonely Planet all have helped considerably. We have 700 contacts in database which we contact every 2-3 months. It is more of a personal relationship. Further comments on marketing from each geo-region can be found in Appendix C. Operating Margin - The operating margin represents the percentage of revenues left over after paying the direct costs of operating the business. Direct costs include personnel, fuel, maintenance, transportation and food. Indirect costs such as interest cost, and taxes are not included in the operating margin. The size of the margin is affected by several factors including the pricing of the product; size of ecolodge; country specific costs for food, fuel and labor; its remoteness and means of transportation; facility maintenance; and the type of activities offered. For those ecolodges that provided data, there was a wide range in their operating margins from -3% to 45%. The average operating profit margin was 21.4%.
Operating Profit Margin
50.0% 40.0% 30.0% 20.0% 1 0.0% 0.0% 1 2 3 4 5 6 7 8 -1 0.0% Ecotourism Businesses
One manager with considerable experience starting-up and managing numerous ecolodges stated that every ecolodge is different and it must be evaluated separately in terms of cost structure, operating margin and profitability. His experience indicated that ecolodges operating margin increased over time as the ecolodge became more well-known and efficiencies were realized. For this company, new lodges entered the market priced at lower levels to encourage demand and over time as recognition and interest increased prices were adjusted upwards. In terms of operating costs, some ecolodge managers mentioned that there were often discrepancies between projected costs in the start-up stage and what proved to be true on the Copyright 2004 International Finance Corporation 55
ground. The surprises tended to be in the area of food, fuel, maintenance costs and the difficulty of implementing efficient systems. The majority of respondents identified food and fuel costs as the most difficult to manage and those that tended to be higher depending on the location. As would be expected, the more remote locations tended to have greater food and fuel costs. All mentioned the importance of creating efficient systems to procure these goods. Staffing Personnel expense on average made up Staff to Room approximately 22% of total operating costs. Most business managers said that personnel costs in the developing world are lower than for tourism businesses in the developed world. A minority of ecolodge operators mentioned that salaries were in fact high when productivity was taken into account. Another operator mentioned that government employment laws imposed rigidity in work hours and the required benefits increased labor costs. During the planning stages, the number of personnel needed was sometimes underestimated since high quality customer service required more staff and on-going maintenance of infrastructure proved to be demanding in terms of labor. As depicted in the graph, the number of staff to the number of rooms varied considerably among ecolodges ranging from .6 staff per room to 2.8. On average ecolodge businesses had 1.89 staff per room. Nearly all ecolodge businesses indicated that they place a high priority on employing members of the local communities located in the areas where these ecolodges operate. Community employment was very high average 81% for all ecolodges. Only one ecolodge owner expressed concern about the inability to find qualified locals and that the owner was considering going outside the area to find more qualified help. Although almost none of the ecolodges could identify the amount of funds invested in training, most mentioned that they had invested considerable time and resources in training local staff. For those ecolodges working in more traditional communities, training costs were higher for them than their competition which was not involved with local communities.
3.0 2.5 2.0 1 .5 1 .0 0.5 1 2 3 4 5 6 7 8 9 1 0 1 1 1 2 1 3
Management Capacity - It is important to mention that among the study group, 13 ecotourism businesses were established by individual entrepreneurs who provided the vision, personal capital and sweat equity necessary to plan, build and start-up the business. They were all entrepreneurs with a strong vision and the foundation of their success was built from a passion for their business. They had all taken considerable risks and made personal sacrifices and were not motivated by strictly monetary rewards. All ecolodge business owners and managers in the study group expressed a high level of passion for their businesses ability to make a positive impact (environmental and social) and saw this as an important element that kept them engaged. It was not enough to just make a profit, although that was part of it -- since financial sustainability was what allowed them to do the other work. Many of the entrepreneurs had no experience in managing an ecotourism enterprise and learned most of their skills on the job. Several mentioned this lack of training in the field as an important short coming and some found themselves still learning basic things that were taught in hotel management schools. Managers mentioned financial management, accounting and business planning as their greatest weakness. On the other hand, their capacities included the ability to innovate, to think big and play small, to be scrappy, and to operate creatively in a young market without rules. Copyright 2004 International Finance Corporation 56
Debt - Eight ecolodge businesses used some form of debt in the start-up phase. For those in the study group that received loans for start-up, the average loan size was approximately $220,000. Expansion and improvement loans were smaller averaging approximately $81,000. Interest rates varied widely from 0% to 12% and maturities ranged from 5 to 15 years. The following table provides information regarding the loan profiles of the ecolodges in the study group. With the exception of a small loan, all loans have either been paid off or are current in terms of payments. Also three of these businesses have acquired additional loans to make improvements and upgrades.
57
Indebtedness of Ecotourism Businesses

----------------- Loans provided for Project Start-up ---------Ecotourism Business A $190,000 B Start-up Loan Amount $ 95,000 Purpose Infrastruc ture Infrastruc ture Terms 10% Source of Loan country sponsored debt swap loan fund local developm ent bank IFC loan 12% Three loans from separate green funds Private tourism operator Private tourism operator Commerc ial bank govt ecotouris m loan country sponsored debt swap loan fund $450,000 Outstanding Balance $0
------------ New Loans ------------Additional Loan Negotiating $110,000 loan $50,000 Purpose improvem ents renovatio n and upgrades of public areas 9% 15year term Terms Source Green fund local develop ment bank
7% with 15-year maturity
$180,000
C D
? $450,000
Start-up costs? Infrastruc ture
$350,000 E $300,000 F $139,000 G
Infrastruc ture Infrastruc ture Infrastruc ture
0% 5 year 0% 5 year 5% 5 year
$ 50,000 $150,000 $0 $85,000 Improve ments 6.5% 7 years Comme rcial bank govt ecotouri sm loan
Cooperati ve members received $35,000 loan (3 ecolodges)
Infrastruc ture
10 years
All but two ecolodges would consider utilizing some sort of debt in the future if it met their criteria. Most study participants were concerned about borrowing during the start-up phase since reaching profitability tended to take approximately (3-5 years) and servicing the debt would place substantial pressure on the cash flow. The managers of several ecotourism businesses that have reached profitability felt they were now bankable and had either enough collateral or personal resources sufficient to meet local banks credit and lending criteria. On the other hand, another profitable and well respected lodge found that obtaining credit from local banks was impossible and was forced to use informal loans and green fund loans to finance its improvements and office space. Most mentioned that local dollar interest rates were too high (10-12%) and were unaffordable.
58
Among the ecolodges interviewed, those that would consider some form of debt financing expressed the need for longer term credit (greater than 5 years) since their financing needs are typically for larger investments such as infrastructure improvements (walkways, towers), expansions (phased approach to room capacity), equipment (boats, engines, generators etc). No ecolodge mentioned the need for short-term funding for working capital. This is due to the fact that these businesses carry almost no accounts receivables since most clients pay in advance. Individual travelers typically pay in advance however some large operators have been known to pay very close to the travel date or shortly afterwards causing some cash flow problems. This did not seem to be a significant issue. Several ecolodge managers mentioned that they are reinvesting a percentage of their revenues into improvements and that it would be more efficient from their perspective to debt finance certain larger improvements and use the funds instead to pay debt service. The following are comments from some ecolodge operators. The business could easily support debt from its current cash flow but we dont have any borrowing needs and we have no plans to expand. Also the owners are very adverse to debt. Yes I would want to have more debt. Right now I could use a $300,000 loan for non essential infrastructure like hot water services, bridges, waste management, guide rooms and storage. Our current cash flow could handle $35,000 debt service per year. I am not sure I totally understand debt and its implications. Right now I am glad that I do not have that burden right now given the fluctuation in the market. However, I am not afraid to take on debt to finance another facility that is properly planned. Average Occupancy Rates Average occupancy rates ranged from as low as 30% to averages as high as 67%. Since these were average rates for the season, peak season occupancy rates could be in the high 80% or more depending upon the lodge. The chart below provides the average occupancy rate for the study group. Return on Equity Most study participants were unable to provide a return on equity history over a continuous period of years. It appeared that ecolodges businesses with foreign investors were more focused on this indicator since they could better respond to questions in this area. Although actual numbers for this study group are lacking, it may be reasonable to assume that return on equity could range from 10%-30% for profitable ecotourism businesses. These types of returns however assume a start-up period of up to 5 years. Those ecolodges that have received foreign investor capital emphasized the importance of having investors that had a realistic perspective regarding the realities of ecotourism and ecolodge performance. The ideal investor was an angel investor who was willing to invest patient capital with investment return objectives which included financial, social and environmental considerations. One ecolodge manager that attracted equity capital in the mid 1990s before the decline of the dotcom investing environment, stated that his investors had unrealistic expectations from the onset and that the projects return on equity would never reach the initial projections. Copyright 2004 International Finance Corporation 59
Study Group Indicators*

Average Marketing Cost/Operating Costs Payroll Cost/Operating Costs Management & Administration Cost/Operating Costs Training Cost/Operating Costs Operating Profit Margin Break even sales (%) EBITDA** as % of sales Profitability margin (profit on sales) Equity/Assets ROE - Return on Equity (Net Income/Equity) Average Occupancy Rate 6.0% 22.5% not enough data not enough data 21.4% 78.5% 18.8% 11.9% 38.5% 20.3% 43.2% Median 5.2% 24.7% not enough data not enough data 22.9% 74.9% 22.9% 11.3% 37.0% 19.1% 38.5% Standard Deviation 0.03 0.11 not enough data not enough data 0.16 0.17 0.13 0.09 0.32 0.10 0.15
Staff/room 1.89 2.00 0.75 * Financial data provided by study participants is incomplete and indicators do not include entire study group. ** EBITDA = Earnings before interest, taxes and depreciation
Triple Bottom Line Business Model All ecolodges interviewed said they were committed to environmental conservation and to promoting social well being in the communities where they worked. However, there were notable differences in approaches. Some interviewees had a clear strategy of how to integrate conservation and social responsibility into their business models, while others took a more traditional approach to business responsibility which included providing donations to schools and board involvement in environmental organizations. The following sections describe how certain study participants were clearly on the cutting edge in terms of applying triple bottom line principles to their businesses. We define triple bottom line business as those enterprises that have moved beyond traditional business philanthropy. It is those businesses that make environmental and social investments as part of their business philosophy and see these investments as providing a return which enhances their sustainability and economic success. Social Responsibility - Although providing jobs for local communities was an important aspect of their business sustainability philosophy, there was a clear commitment of some ecolodges to go beyond just providing employment for local communities. Their business strategies also focused on creating community ownership, technical skills (guiding, language, birding etc) in community members and capacity to manage a business. For those profitable projects where communities invested labor, return on investment for communities tended to be very high. In most cases it was difficult to quantify exactly the amount of community investment, but in one case in particular, the annual participation in revenues was equal or greater than the original investment, thus, resulting in a 100% annual return on the communitys initial investment. Copyright 2004 International Finance Corporation 60
One respondent said The economic influence within the local communities has also been significant. Before the Project most of the people based their external economy on cattle ranching. Today, 16 out of 52 communities that are members of the Federation, receive a significant percentage of their economy from ecotourism and they are discussing how to limit and then eliminate cattle ranching entirely. In these communities, up to 45% of their total income comes from direct employment (22 community employees work in lodge and women in neighboring communities work doing the laundry), and supplying products to the ecotourism project. In addition, sales of handicrafts represent 21% of an average family income in the communities There are numerous ways in which a community can participate in an ecolodge business. The examples below are just a few. Ownership of lodge When a community is the owner of the lodge it can choose to manage and operate the lodge itself or to enter into a management agreement where a private sector partner manages and operates the lodge while the community participates in the revenues. There are several examples where the community contributed land and labor and then participates in the revenues generated by the ecolodge. Fees - A community may charge fees to an ecotourism operator for the use of its land and access to certain people or sites on the property. Build operate and transfer (BOT) - A community agrees to allow a private sector ecotourism operator, build and operate a lodge on community land. In addition to annual fees, the community will receive the property at some established date in the future. Generally these agreements also include employment and training as another benefit to the community. It is important to note that there are other types of economic and social benefits resulting from their association with an ecolodge. Some examples of how communities benefit include: Benefits associated with direct hiring of community members. For the study group, the percentage of the local community employment was high (above 80%). Increased leadership skills as a result of decision making responsibilities. Some ecolodges have incorporated community leaders into management committees and are training community members to manage and operate the ecolodge. Reinvestment of profits into social projects most communities have chosen to use a portion of the profits to invest in social infrastructure such as schools and clinics. Ancillary income generating activities Communities have benefited from other types of economic activities associated with the lodge including selling consumable goods (fish, poultry, vegetables, etc.) and artisan crafts. Grants and donations Greater notoriety and increased interaction with tourists bring with it greater access to donations and other types of financial assistance. Environmental Benefits Ecotourism businesses in the study group undertook a variety of measures to protect and conserve the environment. Some businesses subscribed to eco-efficiency principles that reduced energy and construction costs while others claimed that their green business approach was more expensive and actually negatively impacted the bottom line. Some Copyright 2004 International Finance Corporation 61
examples of green business approaches included less costly natural construction materials, environmentally friendly insecticide, composting toilets, solar energy, efficient and low polluting boat engines. What distinguish these ecolodges from green hotels is that many have gone a step further in terms of their investment in conservation. Their investments are not limited to ecoefficiency which generate bottom line savings in energy or other costs. Several ecotourism businesses have made proactive conservation investments in land and research projects. They have also developed creative partnerships with local communities to pay for conservation of endangered species. Conservation efforts included financing the costs of important research projects, purchasing land and investing company funds for its preservation, and incorporating fees and charges to finance conservation projects. There were two ecotourism businesses in particular that were convinced their efforts brought tangible financial benefits in terms of increased sales or reduced operating costs. Others felt that there was no other way to operate but that it was difficult to quantify the bottom line impact. The following are quotes from ecotourism business managers: A sustainability approach would not matter for profitability in the short term. Working with locals makes the companys operations more sustainable and local sourcing is an integrated part of product. In order to have a good deliver of experiences we must have good relationships with the locals. I am very dependent on local people because of limited infrastructure. Our company does better environmental conservation work outside of government protected areas since national parks are very difficult to work with. Park managers just want to pocket money. We work with local communities outside of the protected area to protect big game in the region. The company allocates $20 per client to reimburse local people who report poaching to police and to fund small rewards to protect endangered animals. First a company needs to have a hard core business plan that works financially and then sustainability will make it a better business. You can make money by doing things differently. I have been able to take advantage of the reduced costs and efficiencies I get from using sustainability principles in construction and in operating the lodge. To not preserve the environment would be suicide it has to be part of the business objective. On the other hand, I never received a reservation that asked the question about triple bottom line. A successful business cannot work in failed communities. This is the premise on which we operate. We have adopted the standards for business social responsibility and it is part of our values. We believe the best possible method of success for indigenous owned projects is to partner with an entrepreneur that understands sustainable business principles. Copyright 2004 International Finance Corporation 62
There is a clear product improvement benefit associated with conservation and social responsibility. Every passenger that goes to our ecolodge gets exposed to the research project we finance and this definitely improves their satisfaction. Providing this service from a business perspective makes total sense. The truth is that numbers go way beyond what I can quantify and I believe it is why we get selected over other lodges. 4.2 Summary of Key Business & Finance Findings 4.2.1 Characteristics of Ecolodge Businesses One could conclude that ecotourism enterprises have many of the same characteristics of small businesses and thus have many of the same technical assistance and financing requirements. This is certainly so in areas such of business planning, financial systems and access to capital, where ecotourism businesses often lack these capacities. On the other hand, there are other areas where differences stand out and perhaps differentiate ecotourism businesses from a typical small business. It is possible to make a general conclusion that ecotourism enterprises operate in a more complex business environment and their businesses tend to be more vulnerable to externalities out of their control. With the introduction of the internet and with the end consumer having substantial access to information, successful ecotourism companies have had to find ways to compete, develop products and distinguish themselves not just within their micro region but also internationally. For example, ecolodge pricing, products and client amenities in Bahamas are now compared with those in Central America, Brazil and other destinations. In addition, ecolodges must meet increasingly more demanding international standards for services and experiences, cater to foreign tastes, and meet ecotourism standards all while operating in a remote and logistically complicated location. Externalities such as 9/11, SARS, the Iraq War and terrorism acts in countries such as Bali have demonstrated the vulnerability of ecotourism business to events outside the business control. Weather and environmental factors can also impact the bottom line of ecolodge operators if they are unable to provide certain experiences due to drought, flooding etc. As mentioned earlier, lag time from product development to actual client visits is long, with two years being the norm. Also most lodges earn in US dollars while their expenses are in local currency, presenting both advantages and disadvantages. The recent devaluation of the dollar against certain currencies has negatively impacted some ecolodge operators since they have been unable to increase their rates to make up for high operating costs. Financing needs tend to be for long term capital to finance infrastructure, improvements and expensive equipment. Need for working capital loans appears to be less since most businesses are paid in advance for their services. Most businesses capital needs tend to be greater than $100,000 and equity investors have limited exit strategies for their investment. For reasons discussed in more detail below (Section 4.2.4) banks perceive ecotourism businesses as more risky. Copyright 2004 International Finance Corporation 63
Profitable ecotourism businesses normally have attained a level of international recognition and notoriety which provides certain access not common for other types of small businesses. This access can translate into more funding sources, institutional relationships and other synergies that increase product recognition. 4.2.2 Key Factors for Profitability The diversity of marketing approaches, product offerings and financial structures among successful ecolodges clearly demonstrates that there is no one business model or recipe for success. There are numerous factors that influence ecolodge profitability including the amount of time in business; externalities such as the attacks of September 11th, SARS and US government policies; notoriety of destination; cost and financing structure, management and marketing capabilities; and partnerships and synergies. As one very experienced ecolodge manager said every lodge must be evaluated individually since there is no standard formula for what makes an ecolodge profitable. The following are key factors the authors identify as having a clear relationship with profitability. It appears that all factors identified below must exist to some extent and they are dynamically interconnected and linked to one another. It is the opinion of the authors that ecolodges without all these characteristics have a lower probability of becoming sustainable over the long run. However, it is also important to remain mindful that successful ecolodges may be stronger in some areas than others and that some ecolodges could fulfill nearly all criteria and still be unprofitable. 1) Destination The destination where the ecolodge is located must be perceived by the market as attractive in terms of providing the desired experience within a safe context. What makes a destination attractive often relates to the charisma of the natural or wildlife attraction, good government policies that foster local businesses, promote ecotourism, and cover some of the costs for preserving the environment and providing local infrastructure, and the international medias interest in the area as expressed through magazine, television and newspaper coverage. (See Government Policies & Nature Based Attractions) New locations that are not part of these destinations often have a long road to profitability since they alone have little chance of developing a rapport with this highly demanding developed world market. Ironically, destination is perhaps the most important factor in terms of profitability but it is the aspect of the business over which ecolodge operators have the least control. 2) Value - As discussed above, successful ecolodges often exist in a geographic area which is generally recognized as a destination. In this geographic area frequently there are several competing lodges offering ecotourism products. The successful ecolodges are those capable of distinguishing themselves from the competition in ways that make their product more attractive in a manner where clients perceive they are receiving more value for their ecotourism dollar. Successful ecolodge managers are aware of where their ecolodge pricing falls versus the competition but their strategy is not to compete on price but rather on value. Instead of focusing on their competitors pricing they test the markets elasticity of demand for their product in an effort to find the optimal price for Copyright 2004 International Finance Corporation 64
their product. The ecolodges in this study have nearly all fallen into the mid-range price category, indicating that a mid-price value is presently in high demand in the marketplace -- as was reviewed in Section 3.3.6. 3) Interpretation and Other Activities- Being located in a recognized destination is not sufficient for success. It is the ability of the management to translate available attractions into distinctive experiences. Attractions such as unique species, congregations of mega fauna, and unique cultural experiences were all important elements in making the destination attractive but it was the interesting activities, high quality interpretation and other perceived benefits which defined success. One ecolodge manager stated we want to surprise our clients by far exceeding their expectations and we want them to leave more satisfied than they originally expected. Educating the client during their stay about environmental and social responsibility projects and their benefits was identified as an important element to increasing client satisfaction. Also creating an emotional relationship between the client, the ecolodge and their projects was a strategy to improving satisfaction and client loyalty. Other unexpected benefits that enhanced the experience included high quality food, knowledgeable and personable guides and comfortable accommodations. 4) Accessibility Although there are exceptions, the accessibility of the lodge generally impacts the cost of the product and determines the size of the client market. Ecolodges with difficult access usually require that clients spend additional time and money to visit their lodge. Because travelers from the US tend to have shorter vacation times when compared to Europeans, US travelers may opt for ecolodges which are more accessible. Ecolodge operators that are on daily commercial flight schedules with easy connections to the international flights had a clear advantage over others that had less reliable air service. Also the ecolodges geographic location and accessibility relative to other country attractions influenced traveler decisions. One ecolodge manager mentioned the need to be located in an important market cluster for the airlines. 5) Management Good management is a very broad category and encompasses areas such as marketing, financial management, logistics, human resource management and systems implementations. Ecolodges are no different than any other business in terms of requirements for competent management. Successful ecolodge businesses appear to have a healthy balance of passion for the business combined with the right mix of technical skills and vision. The ability to market the product and diversify the client base stands out as one of the core competencies required for success. Successful ecolodges in this study spent very little of their operating budget on marketing. Therefore, a large marketing budget is not necessarily a requirement for success although larger budgets could improve most lodges sales results and sustainability. Marketing success requires clear vision of how to position oneself in the market with pricing, services and strategic marketing. This is complemented by a strategy on how to access the market through contacts, strategic alliances, word of mouth, articles, research projects, awards in ecotourism etc. Diversification of the client base also reduces the reliance on one business source and limits the business exposure to a decline in demand in one market segment. Copyright 2004 International Finance Corporation 65
Ecotourism businesses that have matured from an entrepreneurial start-up mentality to a business with a more professional management focus are better prepared to grow the business to sustainable levels. The professionalization of management which brings more professional financial, marketing and operating systems should be balanced with the creativity, enthusiasm and innovation that characterized these businesses in the start-up phase. 6) Access to Capital As noted above, multiple sources of capital and the creative combination of these resources have enabled these businesses to finance their ecolodge start-ups. Only two ecolodges were financed with 100% owners equity. A certain level of management sophistication and tenacity was required to piece together their financing structures. Financing structures that allow for longer term return on investment perspectives and have a low amount of leverage (debt) appear to be a common characteristic of profitable ecolodges. Patient investor capital with realistic expectations for their return horizon and relatively small debt service payments to total cash flow both contribute to a more sustainable financial structure when equity or debt financing is involved. 4.2.3 Other Factors Relating to Profitability Below we examine other factors and their relationship to profitability. It is important to keep in mind that the data available is rather small and that a much larger sample group is required to make definite conclusions regarding relationships. Linkage with other Businesses There was evidence that an ecolodge associated with a larger ecotourism business had a greater likelihood of being sustainable when compared to ecolodges that operate in isolation. Those ecolodges that were part of a larger business model (tourism operator or other associated ecolodge) tended to have the advantage of synergies, economies of scale and linkages to markets that were greater than those for an isolated ecolodge. As expected, our findings also show that individual ecolodges can be profitable and that profitability is not dependent upon an integrated business model. This is well demonstrated by the fact that one of the most profitable ecolodges in the group was a stand alone ecolodge business. The consultants believe that a larger integrated ecotourism model should be considered in the IFCs approach to providing financing and technical assistance to this sector. Those ecolodge businesses which were part of a larger business enjoyed the following benefits: cross subsidies, capital investment and sharing of resources Being part of a larger ecotourism business provided substantial benefits including important sources of financing particularly at the start-up phase. economies of scale Ecolodges were able to share marketing, operations, logistical, and management costs across other businesses benefited from these economies of scale. linkages with local and international markets
66
know how transfer Once an ecotourism business has reached the top of the learning curve, this know-how can be transferred into reduced costs and greater efficiency for other start-ups. greater product offerings and full service to clients A diversified business offers products and services outside the ecolodge operating area allowing it to capture more client business. diversification of risk and increased cash flow a larger and more diversified business is a better credit risk for banks than a smaller specialized business. The association with a larger business increases the possibility of finding other types of financing sources.
In our conversations with ecolodge owners several expressed their interest in expanding their business model to include other lodges and services. Many felt that they could leverage their experience and increase their sales and business profitability. Size of Ecolodge In evaluating the data, there was no clear relationships between the size of the ecolodge in terms of rooms and profitability (profitability as a % of sales). Room Rate - In evaluating the data, there was no clear relationships between the room rate and profitability (profitability as a % of sales). Occupancy rate - In evaluating the data, there was no clear relationships between the occupancy and profitability (profitability as a % of sales). Design There appears to be a positive correlation between design and profitability. This does not mean that facilities need to be luxury and to the contrary there may be a negative correlation between high cost luxury facilities and profitability. The market appears to be rewarding those ecolodges with aesthetic and practical accommodations that complement and enhance the natural experience. This might indicate that using an architect who understands the local environment sustainable design principles, and customer needs is a very worthwhile expense. Building Time - For this group of ecolodges there appeared to be a strong correlation between the amount of time to build the lodge and its economic success. The efficiency in the construction process might be an indicator for business viability. Involvement of Owner/Entrepreneur - A business model lacking the active involvement of an owner/entrepreneur at the start-up had less probability of success. A strictly investor/business model although rare may lack the sweat equity required to make the business start-up successful. Triple Bottom Line - Those lodges that took an integrated and focused approach to environmental and social sustainability were convinced that they benefited economically from a triple bottom line business approach. Although it was beyond the scope of this study, the consulting team believes that further research into the linkages between long term sustainability and triple bottom line business approach is merited. 4.2.4 Barriers to financing ecolodges
67
Most respondents agreed that traditional banks in their countries did not understand the tourism industry in general and certainly did not understand the business models of ecolodges located in remote and less accessible areas of their country. Often banks did not have operations in these areas and were unwilling to expand their business in the territory. Other comments include local banks inability to think outside traditional banking loan structures which relied on collateral rather than cash flow and business viability. Study participants identified high interest rates (10% and above on US dollar loans) and the short term nature (less than 5 years) of loans as an important finance barrier. Also banks were unable to measure or understand the value of a triple bottom line business philosophy to enhancing the financial viability of an ecotourism business. Of course there were exceptions where some ecotourism businesses thought that their reputation as a recognized sustainable business would help them in acquiring a loan. It is significant that no ecotourism business in this study group has received a longer term loan from any commercial bank. The lack of patient equity capital for ecotourism businesses reflects investors perception of issues relating to risk, return and the ability of investors to find viable exit strategies to realize gains. One ecolodge in particular was able to adequately address these concerns and has attracted patient angle investors. Although it is beyond the scope of this paper to evaluate equity investor requirements, it does appear that more investors could be interested in these types of investments if ecotourism businesses were able to present their business case more effectively. From a traditional banking and investment perspective the relevant risks associated with ecolodges include: 1. Vulnerability to externalities out of the control of the business which include terrorism, political upheaval, natural disasters, health concerns (SARS, AIDS) and US government polities and economic downturns. Unlike ecotourism, for many export products the end consumer is not required to consume the product in the country of origin. So for example, an exporter in a particular country may be experiencing political turmoil but that could have little or no effect on the attitudes of the consumer in another country. Making matters worse, consumers often associate problems in one country to the entire region. There is a list of countries that have been negatively affected by terrorism or domestic strife including Kenya (bombings of embassy), Rwanda (civil war), Nepal (limited civil war), Sri Lanka (civil war, but limited to the north), and Indonesia (Bali bombing). 2. Lack of good collateral in the traditional sense. Ecotourism assets are viewed by commercial banks as having little value in the event of a foreclosure since they are usually located in remote areas and are made of non-traditional materials such as wood, palm leaves and bamboo. Also since the facilities use is very specific this limits the number of potential buyers in the event of foreclosure. 3. The high degree of heterogeneity among ecotourism businesses and their dispersion away from central economic centers makes them more expensive to serve than other types of businesses. 4. Business and finance inexperience of most ecolodge owners/operators means that financials are often inadequate and there is limited business planning and cash flow forecasting. Most
68
ecolodge operators have limited experience with financing their business through loans and equity and may not understand the requirements and risks involved in borrowing. 5. On average an ecolodge would require a 5-year timeframe to reach profitability. This long lag time does not bode well for start-up structures using debt. It also means that equity investors must take a long-term perspective on their return requirements. 6. Complexity of the business which is dependent upon changing tastes and greater sophistication of international clients. Since the industry requires a high level of sophistication banks do not have the expertise to evaluate the business viability. 7. The fact that most ecolodge businesses earn in dollars presents its advantages and disadvantages. Ecolodge operators would be good candidates for dollar denominated loans since there would be no foreign exchange risk. On the other hand, some operators have recently suffered from the devaluation of the US dollar relative to local currencies. International pricing has not allowed for increasing of US dollar prices but their local expenses have increased having negative implications for their bottom lines. 8. The complexity of non traditional ownership structures increases the risk and uncertainty regarding ownership rights. Community involvement in particular adds additional complexity to ownership structures and makes it difficult for banks and investors to manage this risk. 9. For equity investors there are no real exit strategy options since these businesses do not have access to capital markets (IPOs). Also returns are such that investors need a longer term patient capital perspective. 4.2.5 Greatest hurdles to business viability One could argue that certain ecolodge businesses are unprofitable because they did not have feasible business models and are missing one or more of the factors discussed above. However, an important question should be answered before coming to this conclusion. How many were close to having viable business models but failed because they lacked one critical element? It is therefore worthwhile to examine those critical hurdles since it could be very instructive for a future IFC program. Ability to finance operations during start-up phase - An important factor impacting profitability is the nature of demand for ecotourism products. There tends to be a long lag time from the time the product is offered and when clients actually travel. Also product recognition and reputation takes time to develop and tends to have a cumulative effect that increases over time through word of mouth, articles, travel journals etc. Financial Statements and Business Planning - The majority of ecolodges responded that they could benefit from some type of technical assistance. Many have already received technical assistance in some form and most have paid for this service rather than receiving it from donors or other sources. The types of technical assistance needs varied widely; however, accounting, finance and business planning were mentioned most often as a weakness. For this study, it was observed that producing financial statements was often difficult for participants and only a few had financial statements in a consistent form where results could be compared across more than 2 Copyright 2004 International Finance Corporation 69
years. Some form of profit and loss statement usually could be produced while balance sheets were less available or had significant deficiencies. Financial projections and business plans were even scarcer. Several mentioned that their business plan was in their heads and that a business plan was an important next step in order to grow the business further. Those that did have some sort of business plan and projections were those ecolodges that had an outside management company, foreign investors or were in the process of looking for foreign equity investments or loans. Most ecolodge participants were experts in logistics and none had mentioned the need for technical assistance in logistical areas, however some mentioned the difficulty of instilling the importance of systems with the local staff. Marketing Assistance Overall the study group believed that they were the most capable experts in understanding their market niche but that international market studies would be useful. Sustainability - Assistance with solar energy, composting toilets, solid waste disposal and other sustainability consulting services was also mentioned, although few thought these services could be found locally. Staff Training Business managers invested considerable resources training their staff and it appeared that needs often outweighed resources.
5.0 Ecotourism Policy and Legal Framework Review

The government role in ecotourism policy development, regulations, and legal frameworks is still largely at the planning and discussion stage worldwide. National ecotourism planning has taken place in numerous lesser developed countries (LDCs), such as Mexico and Malaysia; but the implementation of ecotourism plans has been sporadic at best with almost no national fiscal commitment. Without fiscal support for the objectives set by national plans, planning documents are quickly shelved for future administration consideration at best. While government decision makers are becoming increasingly aware of the need for support of the ecotourism sector, to date there has been a frontier-style development environment for ecolodges in most developing countries, where government services and support are on the whole not available. Ecotourism ventures can rarely count on government infrastructure services for sewage, waste or energy. And all business owners surveyed for Section 4.0 report that there is an absence of government incentives to create systems that are more environmentally friendly. Frequently there are additional tariffs for imported technologies, such as solar panels. And there are numerous cases where creating projects that use innovative technologies are actually much more difficult to get permitted. The responsible ecolodge business community has found inventive ways to manage their own waste, water, energy, and sewage systems through the advancement of alternative technology designs and projects. But on the whole, they do not have government support programs for new technologies to assist them. Frequently lodge owners assist with establishing local municipal programs, particularly recycling initiatives.
70
Needless to say, there are extra costs and labor involved with solving municipal or regional development issues. But to date, most ecolodges have paid for the development of their own energy, waste, sewage and water services and have frequently contributed to the initiation of new or more efficient municipal services. 5.1 Ministries Responsible for Ecotourism The International Year of Ecotourism in 2002 was a rich source of information on the status of government policy and planning initiatives for ecotourism. There were over 20 regional meetings on ecotourism, 6 held by The International Ecotourism Society (TIES) in cooperation with UNEP. Each of these six TIES UNEP meetings reviewed the status of government policy and planning from the point of view of regional stakeholders in the private sector, NGOs, and communities including indigenous people. The reports from these meetings were collated by rapporteurs from the region and written up by locally elected representatives who reported on the results of their regional meetings at the World Ecotourism Summit in Quebec and are all located on the World Tourism Organization website (2002). Because the TIES UNEP IYE meeting in East Africa did not provide substantive reporting, policy information from the S. Africa provided by Anna Spenceley (2001) was substituted in the Table B and used for comparison with the other cases. The Ecotourism Policy Gap Analysis in Table B, derived from Regional Meeting reports from IYE, provides strong evidence that there are few government specialists in ecotourism, little market intelligence, almost no land-use planning or zoning, and insufficient funds for implementation of tourism laws. The two key ministries responsible for ecotourism policies are tourism and environment. In South Africa, the Ministry of Environmental Affairs and Tourism (DEA&T) received 1-2% of government expenditures between 1994-1998. Of this budget, 2% was allocated to ecotourism (see case study below). But this is the most optimal budget and policy environment found in the world during this survey.
71
Table B Ecotourism Policy Gap Analysis
Government Level Policies absent

National Tourism Ministry No government specialists in ecotourism planning to set standards Mass Tourism Policies Only Tourism Board Business Licensing Inefficient No Ecotourism Market Intelligence No Ecotourism Marketing Economic Development No Ecolodge Investment Promotion or Incentives No Specialized Loans Environmental Management & Natural Resources No Monitoring of Tourism Impacts Poor Links between Biodiversity Conservation & Tourism policies No Land-use planning for tourism Provincial or Municipal Land Rights not in Place
S.E. South Mesoamerica S. Andean S. Asia Asia Africa America

xx xx xx xx Costa Rica one exception Ecuador one exception Ecuador one exception xx xx xx xx xx
xx xx xx xx xx xx xx
xx xx xx xx xx xx xx
xx
xx
xx
xx
xx
A problem in Amazonian Peru and Bolivia xx xx xx xx Ecuador & Peru exceptions limited xx
No Participative Planning No Zoning for Ecotourism Interministry Leadership No Interministerial cooperation Legislative and Executive Branch No government funds for tourism law implementation
xx xx xx
xx xx
xx
xx
xx
72
Southeast Asia and South Asia One of the key conclusions of this gap analysis is that Southeast Asia and South Asia reported almost no government policies at any level for the specialized management of tourism at the national ministry level, in terms of economic development, environmental or natural resource planning, at the provincial or municipal level or in terms of Interministerial task forces. This vacuum of legal and policy framework for ecotourism leaves the region highly vulnerable to tourism development that is destructive to the environment and local people. Persistent negative reports on the damaging nature of mass tourism development have come from activist NGOs in Southeast Asia. A very well substantiated environment report on this region by James Fahn (2003) concludes that the lax policy environment for tourism development has encouraged the flouting of existing environmental laws to protect fragile ecosystems both inside and outside protected areas. Under the table buy-outs of land by wealthy developers from local people via legal loopholes has led to unruly tourism development that undermines community values and control of development to an extreme degree. This has led to an environmental justice NGO movement in Southeast Asia, particularly Thailand, which seeks to ascertain that community ownership is secured before tourism development proceeds. The environmental justice movement in Southeast Asia can be perilous to work with for SMEs, because unless they are community-based enterprises, they are lumped together with less responsible business and at times condemned for having basic profit motives. In addition, SMEs are highly vulnerable to copy-cat businesses that show no concern for preserving the scenic area or resource. If a successful ecotourism business is launched, there are few if any effective government systems in place both within protected areas and outside to zone or license businesses according to management standards, or controlling the number of visitors to the area. There are few if any ecosystem monitoring programs to protect fragile areas from over exploitation from tourism development. And in countries such as Malaysia and Indonesia, with rapacious logging and palm plantation initiatives, natural areas can be surrounded and wildlife corridors eliminated without consideration of not only the natural habitat but existing or potential SME development that might be dependent on such habitat. This frequently precludes looking at the potential for small scale SME tourism development, and the risks for SMEs in this region are numerous. Mesoamerica Mesoamerica has a policy and regulatory environment that is ambitious but inconsistent. Protected area programs are highly advanced, and significant international funds have created biological corridors that support biodiversity. These programs are paired with programs for ecotourism and sustainable development led primarily by NGOs. Few of these programs have targeted government policy frameworks for tourism development. One program for certifying private business exists at the national governmental level in Costa Rica, which presently has just over 50 businesses certified. Mesoamerican governments in the region have signed an agreement to implement similar certification programs without progress to date, and a recent Inter-American Development Bank project (MIF 2003) will support efforts to unify NGO certification initiatives. The municipal and national government sectors of government have not employed land-use controls or zoning outside parks in the Mesoamerican region. This has left Costa Rica and Belize, the two leading ecotourism destinations, highly vulnerable to unplanned tourism boom Copyright 2004 International Finance Corporation 73
growth. As a result, conflicts between mass tourism and ecotourism development have developed in important ecological zones, leaving SMEs highly vulnerable in these boom zones. Haphazard unregulated development has undermined important ecotourism development potential by causing crowding and inappropriate land-use in such famous ecologically important destinations as Manuel Antonio in Costa Rica and San Pedro Island in Belize. In both locations, significant overdevelopment has already occurred with inadequate health and sanitation standards that are causing ecological damage. Efforts by Mesoamerican nationals to develop new privately owned ecolodges have been hampered by the boom prices that have evolved in coastal areas and a lack of affordable capital. It is therefore rare to find locally owned ecolodges in Central America, and this trend is becoming more not less acute. Government policies do not favor local ownership or small business development, thereby making it difficult for local private enterprises to succeed. Microecolodges and ecotourism businesses run by local communities are common in Mesoamerica. Sources of support for these ventures have come from U.S., European, and international donors. The many micro community-level projects that were developed in the last 10 years are not always economically sustainable (see section 7.4 -- NGO comments on technical assistance needs). One Central American model for support of community-based ecotourism was included in Section 4.0, Cooprena, which provides effective market and business support to dozens of small community based tourism enterprises in Costa Rica. Mesoamerica therefore lacks adequate legal and policy framework to encourage locally owned SMEs or regulatory means of resolving land-use conflicts and environmental management issues resulting from unplanned tourism growth -- except in protected areas. The well-funded NGO community in the region is strong, but has not made government policy a priority except for the certification of business an approach which has not been shown to improve business competitiveness or marketability anywhere in the world. The region therefore lacks strategic investment in SMEs or the government policies and incentives that might help them to compete and protect local ecosystems. Andean South America Andean South America (including Colombia, Venezuela, Ecuador, Peru and Bolivia) suffers from a lack of policy and legal frameworks for ecotourism development except for the notable exception of Ecuador. Government policies throughout the region are largely focused on the development of mass tourism and tourism boards do not provide market intelligence or marketing for ecotourism businesses. Land-use planning is also unused as a development regulatory tool, causing serious problems in areas such as the reserve around Machu Picchu in Peru, which is threatened by unplanned overdevelopment and contamination of natural resources by the village at its base. Efforts at Interministerial cooperation have been made in Ecuador and Peru to begin the process of setting standards for tourism development in protected areas, but this process was only initiated in 2002 and results are still not tangible. A recent report notes that the need to curb tourism damage in Machu Picchu has prompted the Peruvian Institute of Culture to consider limiting daily numbers to half their current levels. Indigenous peoples, a major part of the population of these countries, and their organizations have worked to prevent inappropriate ecotourism development on indigenous lands. For Copyright 2004 International Finance Corporation 74
example, they have cooperated with the International Labor Organization to establish guidelines (Maldonado 2002) for ecotourism development. But, especially in Amazonian Peru and Bolivia, there are still struggles to ensure land rights are respected. During the IYE meetings, there were confirmed reports of lands being zoned and appropriated by government for tourism development in Amazonian regions without consultation with indigenous residents. However, there are also well documented outstanding cases in this region where indigenous federations and communities either run or co-manage model ecotourism projects. Linkages between biodiversity conservation and ecotourism are being actively made in the Andean region, largely by NGOs that are active such as Conservation International and The Nature Conservancy. Outside of Ecuador, government planning has taken place, but not implemented; though dialogue, stakeholder meetings, and national studies have sought to cement the link between conservation and tourism. Regulatory powers to protect fragile environments from destructive development of any kind, including oil and mining, are often waived by government or ignored, due to pressures to produce foreign exchange. Some of these battles are played out in ecotourism development zones, such as the Ecuadorian Oriente, where indigenous residents have sought to fight for ecotourism as an autochthonous development option, preferable to oil. Overall, the stability of the region has been impacted by numerous government changes in Peru, Bolivia and Ecuador in the last 10 years, caused by conflict between governments and their indigenous citizens. SMEs in this region have been extremely active and innovative. Ecolodges are much more likely to be locally owned than in Mesoamerica. There is active collaboration between NGOs, the private sector, communities, and at times government. The protected areas are vast creating an environment where investments can still be made without fear of encroachment by other types of development. The active involvement of indigenous people, who have successfully negotiated businesses and non-traditional partnerships with private business, such as Kapawi in Ecuador and Posada Amazonas in Peru, has created highly a beneficial business environment for communities and private business, with such outstanding and well-regarded products that international tour operators are not only rating them highly but seeking more such lodges, according to the EplerWood International Proyecto Caiman 2003 USAID study. The Andean region of South America is vast and its resources are under much less threat than Mesoamerica, and ecotourism growth is slower due to its greater relative distance from the United States. This leaves more time for the region to develop a more mature policy environment with functioning legal and regulatory framework, but at present legal and policy frameworks for ecotourism development are presently largely not in place. South Africa South Africa provides a well structured case study to be presented below of a LDCs progress in developing all of the elements of a model legal and policy framework for ecotourism at the national and provincial level, in terms of economic development for communities and the environmental management of the industry both within protected areas and outside. Interministerial cooperation is also well developed. What is clearly lacking is greater fiscal commitment, but the framework is in place and developing nicely. 5.2 International Ecotourism Policy Analysis Copyright 2004 International Finance Corporation 75
At the World Ecotourism Summit (WES) in May 2002 in Quebec, there was an effort to collate and synthesize all preparatory meetings and presentations made during the event into written reports. A discussion paper that summarized all the IYE Ecotourism Policy and Planning preparatory meetings was written by project team member Pam Wight. A final report from the World Ecotourism Summit was prepared by UNEP and WTO which summarized all presentations on Ecotourism Policy and Planning (WTO 2002). This data is significant because of its international scope and the wide range of expertise brought together on this topic, including government ministers, NGO leaders, leading policy analysts, and community representatives. Table C provides a breakdown prepared by the authors of the recommendations made at WES according to the Policy Type needed and the Policy Making Body responsible, Policy Tools recommended, and Policy Actions required. At the international level, it is clear from the results at WES that legislative and legal frameworks for ecotourism are still lacking. There will need to be a long-term effort to integrate the needs of ecotourism businesses into legal policies for tourism at the national, provincial and local level. There will also need to be the incorporation of creating these legal frameworks into the budget at all levels of government. Until fiscal commitment is achieved, planning will not result in action. Table C International Ecotourism Policy Analysis Policy Type & Policy Policy Tool Making Body Legislative Body and Executive Branch Legal Frameworks Legal Review of tourism policies Legislative Frameworks Review of relevant legislations Budget review
Policy Action
Fiscal Commitment
Integrate needs of ecotourism businesses in legal policies for tourism Integrate needs of ecotourism businesses in municipal and local legislation Incorporation of ecotourism legislative, legal, and policy frameworks into budget for economic development Incorporate ecotourism information in national travel market campaigns Quality research of ecotourism market sector for nation Financial and logistical support for marketing
Tourism Board National Marketing Market Intelligence Regional Marketing
Internet and Trade Fairs Market Research Regional ecotourism networks
76
networks Interministerial Cooperation Transboundary Initiatives Interministerial Planning Tourism Ministry Policy Frameworks Transnational policies Integrated planning National Ecotourism plans and policies Inspections and Monitoring Meetings between countries to establish cooperation Interministerial working groups Policy integration with other national development and environmental conservation goals Ensure all new facilities are meeting health standards Zones limiting scale of tourism development according to site Funds are needed to enforce development regulations Funds to establish baseline data and manage impacts Incorporate community and indigenous populations in planning for ecotourism development Review of land titling issues in ecotourism development zones Develop Ecotourism Development Zones Review needs in ecotourism zones, target development as appropriate Develop Advisory Board Development of economic indicators for tourism development in different zones. Review of incentives for development 77
Health Standards Environment and Natural Resources Development Planning Monitoring Protected Areas Provincial or Municipal Government Participative Planning
Zoning, Land use planning Enforcement Visitor Management
Participative Policy Planning Reform of land titling Zoning, Land use planning Signage, Roads, telecommunication, electricity, water, solid waste, sewage treatment Private Sector Advisory Board National Tourism Accounting System Reform
Land Tenure Land Use Infrastructural Support
Economic Development Public Private Cooperation Sustainable Growth
in poor and rural areas, triple bottom line results

Sources: World Ecotourism Summit Discussion Paper, Theme A (Wight 2002); World Ecotourism Summit Final Report, Theme A (WTO 2002)
The need for Interministerial Cooperation which can provide for integrated planning of ecotourism has been underlined by nearly all existing ecotourism plans and was emphasized at WES. The World Ecotourism Summit was also quite effective at pointing out the importance of Transboundary Initiatives, to ensure the easy flow of tourism traffic between countries in order to enhance the opportunity to develop ecotourism facilities and circuits within ecosystems that cross national boundaries. Provincial or municipal governments have great responsibility for the welfare of their local citizens but often have limited authority or budget to carry out tourism planning. WES confirms that local governments need national mandates to reform land titling systems, which is one of the most difficult issues in the developing world to resolve. The need for infrastructure support to develop ecotourism is also a clear result of WES, but this depends on budget, and the need for more support in rural areas depends on governments ability to underwrite such services. Business and economic development is identified as a primary goal for ecotourism by the final reports of WES, but at present there are few bodies established to support the development of small tourism businesses in LDCs. WES presenters recommended private sector advisory boards to advise government and enhance public private cooperation. Tourism accounting systems that review economic development indicators through national accounting system reform were also identified as an important method to advance the understanding of the role tourism and ecotourism plays in the economic development of LDCs. 5.3 Ecotourism Policy and Legal Case Studies The World Ecotourism Summit (WES) also provided information on the progress of nations seeking to implement policies and legal frameworks for ecotourism. To discover in depth how this process has been transpiring in developing countries, four case studies have been summarized for this project from Brazil, Chile, Ecuador and South Africa. 5.3.1 Chile The WES presentation from Chile by the Director of the National Tourism Service and the Head of Planning is summarized in Appendix D. Chilean tourism policy leaders have sought to analyze the ecotourism business sector in terms of its competitive elements, while looking at what government can do to support private business in prioritized zones. This approach appears to be successfully integrating tourism policy development into local development planning at the municipal level, while maintaining a focus on the productive partnership between private sector and government to develop a destination. Chile has also systematically reviewed what legislation will be needed to monitor environmental impacts of tourism, not only within municipalities but across municipal boundaries. This policy framework for action appears realistic and on target. While more on-the-ground analysis is required, a positive framework appears to exist for SME development.
78
5.3.2 Ecuador Ecuadors national government published a Reglamento Presidencial sobre ecoturismo in May 2002. This presidential regulation and its articles were the result of 5 years of work and cooperation between the Ecuadorian Ecotourism Association (ASEC) and the Ministry of Tourism under the Ministra Rocio Vazquez who took office in 1998 and stepped down in 2002. In 1997, Amazonian community ecotourism enterprises were being closed down by the Ministry of Tourism as they were operating without business permits. A set of stakeholder meetings throughout Ecuador was held in Ecuador in 1997, launched initially as a TIES project with support from The Nature Conservancy to study community participation in ecotourism. TIES local partner ASEC, designed the conference, coordinated preparatory meetings, and held a national meeting which attracted nearly 100 representatives of community ecotourism projects from the sierra, Amazon, and coastal regions of the country. A document suggesting changes in the tourism law of Ecuador was published by ASEC in 1998. When Ministra Vazquez took office in 1998, she committed to the development of an ecotourism policy for the country which would legalize community enterprise. ASEC continued to develop the reglamento together with the Ministry of Tourism and expand its definition to a broader set of articles that review lines of authority for coordinating the national ecotourism policies of the country. The reglamento allows community businesses to operate under law, stipulating specific procedures for communities to obtain registration and license. It also establishes a new category of business, ecotourism business mandating a legal but voluntary certification process under a set of normas tecnicas, which define the standards for this category. It also gives ASEC a legal advisory role over the fulfillment of ecotourism policy together with the Ministry of Tourism. Finally it mandates that the Ministry of Tourism coordinate with the Ministry of Environment and the System of National Protected Areas on ecotourism policy. The reglamentos articles include many unfunded mandates which primarily serve to clarify the legal players in ecotourism without setting out specific information about how each article will be achieved. At present, at the end of 2003 there is no Minister of Tourism in place. Diego Andrade, the Executive Director of ASEC, comments that it is expected that policies will continue on track. In 2003, ASEC has moved to further the certification process, through a pilot initiative and is launching a national ecotourism planning process with Conservation International. However, the reglamento does not legislate a budget or timetable for government to fulfill its own mandates and according to Andrade ASEC has raised funds for most of the work to date. For SME development, Ecuador has a legal framework in process that offers good potential for ordering ecotourism development in the nation in future, if it is funded adequately. Support for this process from the NGO community, ASEC in particular, is an unusual plus for the nation. However, the investment climate for Ecuador is much less clear, compromised by security issues due to its proximity to Colombia, with 80% of its international tourists traveling only to the Galapagos Islands which is a saturated market, and its rain forest region, the Oriente, at nearmarket saturation according to the 2003 study for Proyecto Caiman USAID. Copyright 2004 International Finance Corporation 79
A summary of the reglamento for ecotourism is found in Appendix D. 5.3.3 Brazil The government of Brazil published Guidelines for an Ecotourism National Policy in 1994 as the result of a project of an Interministerial Working Group. This set a benchmark for action in that country, and a $13.8 million Inter-American Development Bank loan was funded to support the Brazilian governments efforts to develop ecotourism infrastructure in Amazonian Brazil. The loan package, called Proecotur, included a pre-investment sum for developing strategies in all nine Amazonian States, a detailed market study, the development of 19 management plans for existing and newly established protected areas, and pilot investments in local businesses. Proecotur has reportedly been slow to develop and move forward, but the projects framework of assistance for a region of vast ecological significance is excellent. More analysis would be needed to ascertain the environment for investment in ecolodges in Brazil, given its vast size and innumerable regional options to explore. But there are some positive indicators, such as the governments commitment to projects such as Proecotur. A summary of the strategy is found in Appendix D. 5.3.4 South Africa South Africa developed a white paper on the Development and Promotion of Tourism after democratic elections in 1994. A Tourism Task Team was appointed to represent business, the labor movement, community organizations, and national and provincial government which drafted a Green Paper on Tourism. Subsequent country-wide workshops gained comment from over 500 people, plus 100 interviews with key stakeholders were held and over 100 written submissions received. A Ministry of Environmental Affairs and Tourism (DEA&T) was founded in 1994 as one of 21 South African Government Departments to act as a lead agency for tourism policy and planning. South Africas tourism and environment sectors appear to be unusually well integrated. And there is a clear breakdown of roles for different levels of government, with a well defined set of responsibilities laid out. There is commitment to careful planning of ecotourism in protected areas as an economic engine for the nation with regulatory mandates for the monitoring of environmental impacts. There are nationally mandated and funded programs to offer communities partnerships with business and training for community members to be trained for developing small ecotourism enterprises through public private partnerships. The tourism sector of DEA&T suffers from a lack of funding for its programs, but the government is seeking multilateral and bilateral assistance. The clearly delineated ecotourism program with governmental mandate and implementation steps mapped out, suggests the government is perhaps farther along in implementing ecotourism policy and legal frameworks than any country in the world.
80
South Africa is known for its prospering ecotourism economy, with what are most probably the two largest ecotourism companies in the world based there Wilderness Safaris and Conservation Corporation. The country has emerged from apartheid with many issues, but its parks are considered to be jewels and destinations of global importance for tourists interested in wildlife. The environment for investment would need more investigation, as there have been comments from regional experts used in this study, section that the European market to S. Africa is declining. However, the policy environment appears to be very supportive for SMEs. A summary of South Africas ecotourism policies is found in Appendix D.
6.0 Nature Based Tourism Attractions

Ecolodges are dependent on nature-based tourism attractions to succeed. But the ecotourists expectations for a quality nature experience are not isolated from their desire to have a comfortable, clean lodge, and good service. The following pie chart reviews the expectations of 230 FIT travelers in Ecuador taken from a 2003 Study done for Proyecto Caiman by Green Consulting (Rodriguez 2003). This highly international group was composed of 45% Europeans, 22% U.S., 12% Canadian, 7% Latin Americans, 5% Australia and New Zealand, 2% Israelis, 1% Russians, and 1% from Africa, making it a kind of United Nations sample of ecotravelers. International FIT Visitors Ecuador Very Important Expectations
Clean and Comfortable Lodge Codes of Conduct Traditional Communities 15% 10% 9% 12% 8% Easy Access Bird Watching Adventure Options Reasonable Pricing 13% 3% 11% 9% 10% Quality Service Friendly Service Wildlife
Source: Green Consulting & Epler Wood International, 2003, Proyecto Caiman, US AID
While wildlife attractions and bird watching are rated very highly, together totaling 18% of client expectations, the nature based attraction is just a modest part of the product mix the client is Copyright 2004 International Finance Corporation 81
expecting. The combination of quality and friendly service combined is 25%. Pricing and access are also crucial considerations at 21%. . Trying to determine what nature based attractions ecotourists expect can be assisted by looking at the many surveys on the types of activities ecotourists prefer. These activities surveys mix wildlife viewing, with cultural experiences, adventure and outdoor activities. Most ecotour operators agree this is the type of product mix most ecotourists prefer. A geo-regional summary of activity preferences was collected by the authors from regional market experts. Geo-Regional Destination Pacific Ecotourism Activity Preferences
Diving, snorkeling, whale/dolphin watching, treks/walks, cave visitors,
river trips, sea kayaking, village experiences, and home stays are key activities which attract ecotourists S.E. Asia
jungle trekking/rambling/climbing, elephant trekking, indigenous/tribal
visit/study, bird & wildlife spotting, sea kayaking, rafting (bamboo/inflatable) scuba, beach camping South Asia
trekking, river trips, wildlife safaris, Katmandu, sightseeing combo
Africa South America Central America
(culture/nature/adventure) special interest groups (birdwatchers, artists, botanists) non-trekkers focus on Katmandu and other circuits game viewing, hiking, rafting, mountain biking, hunting, rafting, diving, snorkeling, fishing, etc. rain forest hikes, wildlife viewing, bird watching, general natural history, indigenous people interactions, community visits, crafts
wildlife watching, softer activities, touring, meeting the locals
To understand how wildlife viewing is rated in comparison with other activities, the survey of 230 FIT international visitors to mainland Ecuador (not including the Galapagos) rated wildlife viewing as their most important activity, as demonstrated in the bar chart below.
82
International FIT Visitors to Eucador Activity Interests % Rated Most Important

70% 60% 50% 40% 30% 20% 10% 0%
W ild li f e W al ks /H ik in g no u. dv en t er in te n. at dv e w tc hi ng io n e Vo lu n ur .. .. g Bi rd
% Very Important
ki ng
ig e
/ In ve dy
st ig Se r io u
nd
od er
ca l /I
Tr ek
at
Lo
St u
Activity
Source: Green Consulting & EplerWood International, 2003, Proyecto Caiman, US AID
From the combination of these and many other studies (such as those reported in Wights paper in the Encyclopedia of Ecotourism 2001), it can be concluded that wildlife viewing is of the highest importance to this market. It is the primary attraction for ecotravelers from around the world, those traveling independently and with ecotour operators. However, it is only a part of the ecotravelers expectations, and cultural differences affect tastes in tourism products. Europeans are known to like cultural interactions and information, and are less mad about natural history than Americans. However U.S. tour operators report a growing interest in cultural information and interactions with local people. This appears to be a cutting edge approach among the most innovative tour operators and non-profits in the U.S. at present. For example, the prestigious American Museum of Natural Historys Discovery Tours is incorporating many more interactive cultural elements to their highly successful tour program. All ecotravelers want to be active outdoors (the adventure and exercise can be soft or hard depending on the group). Finally ecotravelers want to be educated. Study/or investigation into issues relevant to the destination visited makes the ecotravel experience distinctive, especially if delivered by expert local guides, and this component has a great deal to do with how travelers feel about their experience upon returning home. 6.1 Charismatic Wildlife Attractions What distinguishes a wildlife attraction and makes it bankable very much relates to the charisma of the wildlife being viewed. General wisdom from tour operators and lodge owners can be summarized as follows:
83
The natural attraction must be distinctive. The more distinctive the wildlife attraction, the more the client will potentially pay, especially if the attraction has charisma. Gorillas and all great apes have charisma, perhaps more charisma than any other wildlife attraction in the world. Individuals are willing to pay more, and travel longer distances to dangerous and remote sites in Central Africa to see these endangered and highly unique creatures. Large marine creatures also have charisma, such as Whale Sharks and Whales. An entire industry has grown up around whale watching, and data shows it has had considerable positive economic benefits to declining coastal fishing communities. The Big Five in Africa, which are all large mammals lions, leopard, cheetah, Cape buffalo, and rhino have long been star attractions on the African plains. When large mega fauna are not present, rain forest destinations have done very well featuring monkeys or lemurs and large colorful flocking birds.
While hardly a science, it is possible to generate an assessment of a destination by how charismatic the fauna is. As a very general example, that would have to be considerably expanded, the Table C provides some guidelines. Table C Charismatic Wildlife Attractions High Charisma Medium Charisma Great Apes Primates Whale Sharks Coral Reef Fish & Sea Turtles Whales Dolphins & Large Fish The Big Five in Africa Deer, Antelope, Large Hoofed Mammals (Prey) Wildebeest migration, and Elephant, Giraffe other large congregations of mammals such as elephant seals Large Colonies of colorful Toucan & colorful birds of birds penguin, parrots, the rain forest macaws Large Predator Birds & Colorful butterflies Colorful Vultures Harpy Morpho, Monarchs Eagle, Andean Condor Polar Bears, Pandas Grizzly, Black and other Bears
Lower Charisma Peccary, anteaters, rodents General fish diversity Coral Reef creatures Small mammals Koala, Kangaroo very abundant smaller mammals Smaller, duller birds Smaller, less colorful insects Red pandas
6.2 Bird watching
84
Birds and endemic bird species have a very strong appeal, but only within a narrow market (about 10-15% of the ecotourism market seeks to bird watch for nearly 100% of their activity time). Endemic birds or birds found only in limited regions have an important role in ecotourism and ecolodge development. Regions that have been previously unexplored by birders, but have many endemic species or interesting populations of birds, will draw specialty bird watching companies from around the world. Bird watching companies have excellent local scouts working on the ground who are willing to look far and wide for the best birding destinations. FIT birders and birding companies help to make a name for destinations that might otherwise be unknown. Intrepid birdwatchers can be found in countries not yet known for ecotourism, such as Sri Lanka, Malaysia, Indonesia, and other high biodiversity countries that are still not heavily visited. Bird watching is the one ecotourism activity that has a high correlation to the level of biological diversity found in a site. Countries such as Mexico, Costa Rica, Panama, Ecuador, and Peru have all tapped a birding market over the last 15 years which has been lucrative and can be the first flush of market enthusiasts for a new lodge. While birdwatchers once cared little about the quality of their accommodations, tour leaders now report that they are looking for comfortable, quality accommodations for their clients. Birders are increasingly gaining confidence in traveling overseas. One manager of a leading birding company in the U.S. comments that birders who only traveled within North America are heading south. First, they choose countries closer to home, such as Mexico, and then slowly head toward Central America, then South America. Similarly, European birdwatchers begin at home, travel to the Mediterranean and slowly move towards Africa and Asia. While all other ecotravelers are motivated by a mix of attractions, birders focus on one attraction only new and unique birds for their lists. 6.3 Distinct Geo-regional Natural Attractions Each geo-regional destination has distinct natural attractions that will motivate the market to visit. While Central and South America are known for their rain forests, the Pacific is distinct as a natural destination, as are South and South East Asia, and Africa.
Geo-Regional Destination Central & South America Pacific South and South East Asia Africa
Distinct Natural Attractions Rain forests, Primates, Macaws & Distinctive highly diverse bird life Pristine coral reefs Tiger, Asian Elephant, Coral reef some pristine, Distinctive highly diverse bird life Large herding wildlife, Big Five, Primates, Great Apes, Hunting Cats, Distinctive bird life
Ecotourists are likely to travel farther and farther from their home regions, as they gain experience, to see new and distinct natural attractions. However, the tendency for travelers to go Copyright 2004 International Finance Corporation 85
farther away from home will depend almost entirely on a security and world health environment that is better than during the 2001-2003 period.
7.0 Technical Assistance Needs Assessment

Ecolodge development has been successful as a conservation and sustainable development tool largely thanks to the efforts of private entrepreneurs -- individuals in developing countries who have a genius for private business in difficult underdeveloped environments. This study indicates that the large majority of successful, profitable ecolodges are privately owned and managed. They have succeeded against many odds in regions that lack basic infrastructure such as sewage treatment and energy, agriculture suited to hotel restaurants, construction services that understand the needs of international clients, and trained hotel personnel. Many of these individuals have made profits, while also taking on the responsibility of community development and environmental conservation in their regions. They have trained their communities to understand foreign languages, and understand hotel service standards achieving 80% employment within local communities. They have fostered many smaller businesses, as can be demonstrated by the fact that the 15 business studied in Section 4.0 Table A, have fostered 73 ecolodges, many of which are small community based offshoots of the senior enterprise. There is excellent empirical evidence to show that private sector entrepreneurs have the skills to create profitable, sustainable lodging that generates excellent benefits for communities and the environment. The secrets behind the success of these individuals can be sized up by a number of important items that distinguish them from mainstream hotel entrepreneurs. 1. they understand how to provide smooth logistical experiences in regions fraught with unreliable transport issues 2. they understand the local business environment and are willing to devote a great deal of extra time working with members of local communities to develop a mutually acceptable plan. 3. they are savvy about sourcing out low cost financing, negotiating rates no higher than 12%. 4. they have an uncanny ability to position their products in a competitive marketplace, and market their properties at minimum cost, on average just 6% of operating costs. 5. they are willing to devote a healthy dose of sweat equity during start-up, which offsets an unquantifiable amount of expense during construction and the early years of operations. 6. they are flexible and creative and highly transparent in working out community agreements that share ownership, pay fees for use of land, or build, operate, and transfer (BOT) ownership. 7. they are very skilled at making strategic alliances with NGOs 8. they have a strong understanding of natural history, and a passion for wildlife. 9. they know how to develop tours that will have exciting wildlife attractions that are relatively reliable 10. they understand the fundamental importance of training and maintaining a highly qualified group of guides 11. they understand the dynamics of rural development and the many local conflicts between communities Copyright 2004 International Finance Corporation 86
12. they are effective proponents of the benefits of sustainable development Technical assistance needs are great under these circumstances, but highly variable and difficult to classify, when success appears to depend on so many unique and unusual talents to make business work in such challenging business environments. This section seeks to study the question of technical assistance needs by investigating 1) private sector reports on existing green funds 2) green fund manager reports on the ecolodge sector 3) private sector comments on existing NGO capacity to provide technical assistance 4) NGO comments on ability to provide technical assistance. Recommendations on technical assistance approaches will be made by the authors using a check list of technical assistance needs and recommendations for program structure. Finally, a discussion of appropriate business climates for an IFC pilot ecolodge finance program will be discussed. 7.1. Private Sector Comments on Green Loan Funds Entrepreneurs who already received approval from Green Loan Funds were questioned on their experiences. The overall response was that the funds were difficult to work with. The entrepreneurs stated that: Transactions are too complex Reporting requirements are too high Rate of decision making is too slow Contracts too complex and time consuming Contract stipulations impede other investments NGO oversight is intrusive Among the lodges in this study, the Green Loan Funds from TNC and CI have only invested in lodges which have 100% foreign ownership. This indicates that local entrepreneurs from developing countries have been unable or unwilling to handle the requirements of the Green Loan Funds. It also indicates that Green Loan Funds have not assisted local entrepreneurs in developing ecolodges to the degree possible, a key goal for any international development project. 7.2 Green Loan Fund manager reports on the ecolodge sector Green Loan Fund managers from TNC and CI find ecolodges to be a risky investment. They commented that ecolodges are highly vulnerable to externalities, have complex operations in remote areas, require highly sophisticated knowledge of international markets, have small margins, and are often operating in areas where there is fierce competition. Green Loan Funds have received many ecolodge proposals, and have had a high rate of turning them down. The TNC Eco-Empresas fund, which only finances NGO-led projects has a 2% approval rate for ecolodges, a 5% approval rate for sustainable agriculture, and a 10% approval rate for sustainable forestry. The reasons cited by manager Tammy Newmark are: Poor planning, poor concepts and no management
87
No business people involved in proposals All vision and no reality Too many micro projects applying
Newmark cited Ecuador as the country in Latin America with the highest rate of proposals that were not viable; without business plans, without management, and without an understanding of the international market. Green Loan Fund managers can only supply limited technical assistance. They recognize their committee process can be slow, and CI has faced questions about how to ensure that projects they support meet biodiversity conservation standards. While monitoring is not officially supported through loans, the cost of monitoring is too high for the businesses they support. The alternative of using local banks however seems tenuous to CI manager Jennifer Morris. She remarks, They price their credit vis a vis risk, and even with outside guarantees, eligible lodges will go elsewhere, as bank loans will be too expensive. 7.3 Private Sector comments on NGO capacity to provide technical assistance Private sector ecolodge survey participants reported limited NGO capacity in their regions to assist with business development needs. They suggest NGOs could assist with: Community training Community development planning Environmental impact monitoring 7.4 NGO comments on technical assistance capacity Two international NGO managers, from the Nature Conservancy and Conservation International (CI) were interviewed regarding their views on technical assistance capacity of their organizations. The international NGO sector provides assistance through its NGO network in the developing world. Most projects are not involved directly with ecolodges, but rather support local NGOs that may have involvement with ecotourism projects. Many developing country NGOs looked at ecotours in the 1990s as a tool to raise financial support for their organizations. But most local NGOs are not developing or managing ecolodges. Most international NGO managers for ecotourism have moved away from direct support of NGO ecotourism business development. Conservation International comments that many small NGO projects are struggling in Central America, and that funding is needed to properly reinforce existing investment in these small enterprises. In general, many local NGOs have had little success with finding a market. Questions of unfair competition have also been raised. Should the NGO community be subsidized to run businesses that offer the same services as the private sector, but without the same tax liabilities? Should NGO projects receive funds from foundations to market their
88
products, when the private sector is reaching the market without subsidies? In the past, there may have been concern that the private sector would not generate the conservation and community benefits that ecotourism model requires. This study shows that the private sector is very capable of developing profitable ecolodges that generate many sustainable development benefits, beyond what the NGO community has been able to achieve. However, community enterprises will need specialized support, often beyond what the private sector can provide. The best model for community enterprise marketing and technical assistance the authors are aware of can be found with Cooprena, a Costa Rican cooperative that provides technical assistance and marketing to its network of lodges throughout Costa Rica. Further investigation of this model as a means to provide technical assistance to small community enterprises is recommended by the authors. In general, however, NGOs are not well equipped to assist with ecolodge development. TNCs ecotourism director stated that local business experts in developing countries are far better suited than NGOs to provide technical assistance for ecolodges. 7.5 Technical Assistance Needs Checklist The interviews with successful ecolodge companies, in Section 4.0, indicate that most ecolodge managers have technical assistance needs that are related to business, finance, infrastructure, and management. While some of these needs can be met locally, more sophisticated technical assistance needs cannot, such as business plans for investment capital, market studies, triple bottom line approaches, and technology systems for energy, waste, sewage and water. A summary of the technical assistance needs of existing ecolodge managers are as follows: Accounting and Financial Statements Business Planning for internal use Business Planning for Finding Investment Capital Financial Projections Financing Approaches for Start-up or Expansion Staff Management and Training Energy, Waste, Sewage and Water system technologies Exit strategies Business growth strategies creating efficient systems for business expansion Destination market studies Triple bottom line approaches, such as non-traditional ownership strategies In addition, as mentioned in section 7.3, the private sector commented that existing NGOs in their regions would be useful in contributing to community training, community development planning, and environmental impact assessments and monitoring. 7.6 Technical Assistance Recommendations 7.6.1 Business Mentorship Program
89
It is recommended that a new paradigm in ecolodge technical assistance be considered. Structuring this assistance will have to depend on the following expertise: Private business planners with a track record in profitable ecolodge development Experience in developing financial statements Experience in developing business plans Experience with developing financing packages, including non-traditional ownership approaches Understanding of the logistical management requirements and costs of business in remote settings Ability to establish management and staff systems that work in remote settings Technical understanding of sewage, water, waste, and energy systems for lodges, and local construction techniques Understanding of consensus decision making techniques, such as community and staff involvement approaches In-depth understanding of native wildlife, visitor management, conservation of biological diversity, and experience working with local NGOs Understanding of quality interpretation approaches Ability to assess positioning in marketplace and review and advise on market strategies Such assistance must be found within the private sector community. While the numbers of individuals with this experience are few, there are consultants from the developing world in every geo-destination with the qualifications listed above. While assistance cannot be found in every country, regional expertise is possible to obtain in Ecuador, Peru, Costa Rica, Belize, Brazil, South Africa, Kenya, Fiji, Thailand, Malaysia, and Nepal. This expertise could be tapped for technical assistance purposes throughout each geo-region. Given the highly unique skills required to foster ecolodge businesses, the authors recommend a business mentorship program. Skilled consultants, with business backgrounds in ecolodge development could foster the development of new lodges and the expansion of existing businesses. There is good reason to believe this will work. In this study, 15 ecolodges generated over 70 smaller businesses. This strongly indicates that the business community is very ripe to expand and generate new businesses, but have faced many barriers. If a system were developed to help ecolodge businesses to gain business support, loans, and mentorship, it is likely many successful businesses could be expanded and new businesses fostered, primarily at the small business level. In addition senior enterprises could be assisted with developing micro enterprises at the community level. Such a program would not require extensive institutional overhead. Each business mentor would require terms of reference to identify and help develop viable, fundable ecolodge proposals with local entrepreneurs. In order for a pilot to see results, a 2-3 year period for the mentorship program would be required. Candidates for filling the role of business mentors should be mid-career professionals who have worked for a successful ecolodge, and now work as independent consultants for international organizations or local private business. Their level of accountability,
90
professionalism, and results orientation must be high, and they should be capable of reporting directly to an international manager. 7.6.2 Engaging the Private Sector in Ecolodge Development and Sustainability Most ecolodges identified areas where technical assistance could enhance their sustainability and performance. Creating a business mentorship program is one way in which these businesses can benefit. Some other approaches to promoting the sustainability of ecolodges could include: 1) Find innovative mechanisms to encourage long-term business relationships between private tour operators (local and international) and ecolodge owners/operators. Business relationships which are mutually beneficial are more sustainable and have a greater likelihood of providing long-term value. Grant funding to cover the initial costs (legal, financial, travel, training, technical assistance) of starting up these partnerships/relationships could be useful. Loans could also be included as part of the program. 2) Provide technical assistance and loan and grant financing to successful ecotourism businesses to assist them in expanding and replicating their business models. These businesses are proven and have already reached the top of the learning curve. The ability to replicate their successful model while meeting the unique conditions of that specific area and market is much greater when compared to a typical start-up. Reaching certain economies of scale is a critical success factor for ecolodges and this approach would support the transference of know-how and increase economies of scale. 3) Provide incentives and technical assistance to successful local lodge owners and/or tour operators to expand their product offering to include an ecolodge business that follows sustainability principles. The prospect of working with indigenous communities and subscribing to environmental sustainability can be expensive and daunting for tourism businesses unfamiliar with this niche of tourism. There are many benefits of following triple bottom line principles but they are often little understood or difficult to measure. 7.6 Analysis of Ecolodge Business Development Climates In reviewing different regions of the world, in terms of market growth and development in Section 3.3.7, it appears that most regions of the world have an optimistic outlook for ecotourism growth. Africa appears to have the least upbeat current scenario. There are concerns in South Africa as well as East Africa that the European market is not growing, and that Europeans are increasingly traveling to Asia for more cultural experiences. This would have to be studied much more closely to be definitive. In general, ecolodge business optimism remains firm, despite the many difficulties and recent downturns in the markets in the last 2 years. According to the market demand studies recorded here, there is every reason to believe that ecotourism will grow in developing countries, if appropriate well-designed facilities are developed that are comfortable and meet the demand for quality wildlife attractions. These facilities will have to be within reasonable access to secondary domestic airports, or airstrips that are easily serviced by affordable commercial aircraft, in order to appeal to mid-market travelers. Copyright 2004 International Finance Corporation 91
Given that the mid-market is presently underserved and is growing substantially in all origin markets, a global ecolodge development strategy could be developed for this market. It would be possible to determine which regions of the world have excellent wildlife attractions that are within striking distance of commercial, reliable, safe domestic air service for the key origin markets. Such a study is recommended to help determine the best options for ecolodge development in terms of location. The other factor is, of course, the entrepreneur. Entrepreneurs are the key success factor of an ecolodge business. In discussions with Tammy Newmark of Ecoempresas, she recommended, look at regions where projects make sense, then target people/entrepreneurs who have the capability to do something. Finding entrepreneurs cannot be done passively. The ecolodge business is far too unusual, and associated with funding sources that are only available to NGOs, to simply advertise the availability of finance and wait for applications. It will be crucial to foster a sense of excitement within the business community. Promotion of the proposed business mentorship program would be one way to make it clear that this program is about helping local entrepreneurs. It is recommended that several key regions are identified for technical assistance through research on ecolodge potential, location, and market. Because technical assistance is unlikely to succeed if offered passively, it is recommended that business investment seminars are held in key gateway cities. Such business investment sessions could be positioned to include finance institution representatives to answer questions, the business mentors with information on services, and good geographical research on locations of interest for investment. This approach has been taken recently in Chile for mass tourism development, and has drawn significant interest, from both local and international investors. Undoubtedly, national government representatives would take a keen interest in developing information on ecolodge business investment opportunities and provide technical support. Such sessions would not only attract entrepreneurs, they would attract local investors and others interested in learning about how to work for such businesses. Taking this very important step would build a climate where entrepreneurs are working with local equity investors, their governments and local banks to succeed. Through this type of business approach, ecolodge development will emerge are a genuine business opportunity for local business people, not a hobby for environmental activists, or a form of revenue for NGOs. Such a proposal for technical assistance would need to be further elaborated for IFC, but this provides the key components of a potentially highly successful program. Determining the best countries for such endeavors should be very carefully considered. Criteria should include: Wildlife attractions relatively accessible by small, national aircraft Under-developed regions that have charisma, beauty, wildlife Avoid saturated countries that are potentially over developed for ecotourism Political policies and frameworks that protect the region from overdevelopment if at all possible Territorial rights of local indigenous people protected Entrepreneurial cultures that value nature and wildlife
92
Origin markets within reasonable air distance that are seeking new types of experiences primarily U.S., Europe, and Australia and New Zealand, with the possibility of Japan
It is premature to name the best countries for ecolodge development without further investigation and research. However, a preliminary list based on word of mouth, discussions during international conferences with regional experts, and personal experience follows: Chile Brazil Peru Nicaragua S. Africa Zambia Namibia India Sri Lanka Malaysia Vietnam Fiji Creating a quality list of prime ecotourism investment countries would be an excellent project for the next phase of the IFC program. Good destinations for support will determine the success of the pilot project. The demand characteristics for specific destinations should be looked at closely before a selection is made. For example, Ecuador was mentioned as a possible pilot, yet a just completed 2003 EplerWood International market demand study on Ecuador (2003) shows that the ecolodge market is reaching saturation, and the declining security situation on the Colombian border is pushing more and more of the Ecuadorian ecotourism market to the Galapagos (at present 80% of the ecotourism market to Ecuador visits only Galapagos). Market intelligence of this nature should inform decision making in the next phase. International markets will determine the success of projects with only a few exceptions in the developing world. If good destinations with strong demand signals are selected that are ready for more ecotourism development, strong business technical support is provided, and a viable system of bank loans for these unusual businesses can be fostered, there is every reason to believe that a dozen new ecolodge businesses could be fostered over the next 5 years, assuming a decent global security situation. Such businesses will have to be very dispersed geographically, by their very nature. It is therefore wise to consider regional support strategies, if possible, where banking and technical services are not piloted in one country but in a regional grouping of countries simultaneously. 7.7 Checklist for Successful Technical Assistance for Ecolodge Development A checklist of the key components of a successful technical assistance program is as follows:
93
Target locations that are within reasonable access of domestic gateways which can be reached efficiently and cost effectively by safe air transport from international gateways. Target countries which have attracted media attention and have viewable, charismatic wildlife Target countries that are not saturated but are close to already existing hubs for ecotourism such as Panama and Nicaragua for Costa Rica; Peru and Bolivia for Ecuador; Sri Lanka and India for Nepal; Vietnam and Malaysia for Thailand; and Namibia and Zambia for South Africa Provide business mentorship assistance using experienced ecolodge professionals for targeted regions Recognize additional challenges of running triple bottom line ecolodge enterprises, and support established senior ecotourism businesses with incentives, loans and grants to expand their businesses, partner with local lodges, and develop a variety of junior enterprises both with local entrepreneurs and communities. Undertake inbound market surveys in target gateways for FIT and tour operator travelers, and researching key market channels for success in origin markets Undertake business investment seminars in cooperation with tourism boards or ministries to identify promising local entrepreneurs and leverage local investment Qualify and train banking organizations to provide loans Develop strategic relationships with local NGOs to assist with community training and environmental monitoring
8.0 Conclusions
There are many positive market trends for ecolodges. But there are significant barriers to the growth of the industry, primarily related to local business climates, transportation, infrastructure and other issues typical of developing countries. 8.1. Positive Trends The ecolodge business has a 30 year opportunity for significant expansion with all of its key origin markets staged for 10-20% annual growth in the more special interest travel market. The special interest trend is driven by the fact that an unprecedented number of healthy 60+ seniors with higher disposable income will want to travel between the years 2000 and 2030, that the average education level is increasing, information technologies are well-organized to facilitate special interest travel, and lifestyles in the key demand countries are shifting away from luxury sun/sand resorts; to more active, educational travel experiences. Ecolodge entrepreneurs worldwide are bullish. They believe in their businesses, and have seen success after negotiating very tricky start-ups. Successful ecolodges have now established their unique brands in the market place, and they see the opportunity to expand. Businesses such as Canopy Tower, Tiamo, Rainforest Expeditions, Wilderness Safaris, and Lapa Rios studied in Section 4.0, are actively discussing or pursuing expansion plans. 15 of the private, profitable businesses studied in Section 4.0 have developed over 70 successful lodges. (Forty four of these smaller subsidiaries are owned by Wilderness Safaris.) Nine of the companies studied had an integrated business model where revenues came from more than one ecolodge or other tourism related operation. Copyright 2004 International Finance Corporation 94
This indicates the potential for improving the reach of successful ecolodge ventures, in terms of their profitable triple-bottom line models, by helping them to expand. Ecolodge development will be of particular significance to developing countries. Studies of the U.S. outbound ecotourism market show that 70% are traveling to the developing world. The US is the key global market identified for all geo-regions for ecolodges. This is especially true for Central, South America and the Caribbean, where Europe was found to be secondary. Southeast Asia also references the importance of the U.S. ecotourism market which is growing, while Europeans to the region are still on package tours that do not offer ecotourism options. South African tourism is driven primarily by European visits, in particular the UK and Germany. The Internet is making marketing and commission costs much lower. Websites provide excellent advance information to special interest travelers, both for undecided travelers and for those needing pre-departure information, at very reasonable rates. This trend has already helped ecolodges in developing countries to reach their audience directly. The businesses studied in Section 4.0 have kept their marketing costs to below 10% of operating costs, nearly eliminating the need for costly advertising, and paring down substantially the cost of trade show participation. The Internets ability to provide secure payment systems internationally virtually eliminates the need for travel agents in origin markets. This allows ecolodge management to provide good quality customer service and information from their own headquarters, with direct supervision, thereby increasing the probability of converting shoppers to buyers. And ecolodges have already established convenient secure bookings systems that result in advance payments received without delay or commissions, thereby improving cash flow and net profits. The Internet is enabling ecolodges in LDCs to market and cater directly to the FIT market, which is approximately 50-60% of the market worldwide for ecotourism. For 10 of the 15 businesses surveyed in Section 4.0, FIT bookings through the Internet, email or travel agencies represented 50% or more of their reservations. There is a growing special interest tour market worldwide. In Section 2.4, Market Outlook Trends, the authors find that the aging, educated, populations of Europe, Japan, the U.S. and Australia will take an increasing interest in customized tours that cater to their life long hobbies, and will travel more in the 55-75 year old range. Special interest tours create an important source of demand for ecolodges. In Section 4.0, businesses named international tour operators as the second most important source for reservations. There is a demand for comfort in all markets, not luxury. This makes per room costs lower, estimated at $58,000 per room to build, not including sweat equity. The majority of the accommodations studied in Section 4.0 fell into the Comfortable category. None met the luxury definition. There is gap in product availability for the mid-priced market, thereby making the mid-priced, comfortable lodges in Section 4.0 in higher demand. Eleven of the 15 lodges surveyed in Section 4.0 were mid-priced, underlining the fact that this is the most successful category for existing ecolodges. The demand for more comfortable, well-designed lodging will continue to accelerate as post-war baby boomers age. Most accommodations found in the market place at present were not designed with the aging baby boomers in mind. The ecotourist profiled in Section 3.1 is neither a 95
backpacker or a high class adventurer. Most are middle aged, highly educated professionals who seek to admire natural scenery and view wildlife. Facilities need to be designed with comfort for those who seek to be active during the day and comfortable in the evenings. Accessible locations will be in the biggest demand. The majority of ecolodges surveyed in Section 4.0 were less than one hour in transportation time from a local airport. However most were not directly accessible from international airports, requiring at least one local connecting flight. Luxury pricing will be justified for exclusive ecolodges. Luxury will be defined less by amenities and more by pristine locations, making profit margins excellent for those lodges meeting these criteria.
8.2. Negative Trends Government policies and legal frameworks are not in place, and there is limited budgetary commitment to developing policies to ensure tourism is sustainable. SMEs will not receive special consideration from governments in terms of programs that assist their efforts to conserve natural environments and benefit local communities. Overbuilt tourism destinations with poor environmental planning will become increasingly common. This will destroy ecolodge development opportunities and undermine business for ecolodges in locations under stress. Boom style development will continue to expand in coastal Central America. South American ecotourism will be threatened by oil and mining interests. Southeast Asia ecolodge development will be hampered by mass tourism development without controls and persistent ecosystem damage caused by logging and plantations in wildlife corridors crucial to ecotourism. Eco-social concern in the market is not matched by actual demand in the marketplace. To date, less than 10% of the ecotourism market has been shown to inquire or take an interest in eco-social investment or accomplishments. Triple bottom line approaches will not have profitability benefits in the short term, except in terms of eco-efficiencies. Ecotourism is a form of responsible business that benefits long-term protection of environment and community participation, but the benefits are difficult to quantify in terms of profitability or greater market access. Shorter vacations will make it difficult to compete for remote destinations that have poor, expensive, unsafe transportation infrastructure. Remote lodges will have to provide custom transport and rely on a high-paying luxury market to pay the price. Many of the best wildlife destinations in the world will remain inaccessible and difficult to develop for ecotourism without highly charismatic wildlife attractions. Long-haul travel destinations will be the most vulnerable to downturns in security and safety environments. Developing country SMEs will be the most vulnerable to such downturns, due to their distance from origin markets. 8.3 Ecolodge Business Essentials Optimally, an ecolodge should be one hour from a local airport that has reasonable connections to an international gateway. An ecolodge should be launched by individual entrepreneurs with an understanding of business, local construction, customs, natural history, interpretation and guiding, and
96
community development, who are willing to commit significant personal sweat equity during the start-up, while developing professional management over time. The ecolodge should be staffed by community members, with just under 2 staff per room. The construction should take in one year and cost just under $60K per room. There will be a 4-5 year break even period, which requires sufficient capital to cover start-up shortfalls. There should be a business plan with expansion of new lodge facilities thought through in terms of capital and land required. Marketing can be as low as 10% of operating costs through effective utilization of word of mouth, free publicity and the Internet (primary source of information to the market). Multiple lodge developments by one ecotourism business has the advantage of distributing marketing costs among more than one product, additional service and cross-selling to the same client, and diversification of risk particularly in transboundary locations where security environments can change radically in one country and remain stable in another. Wildlife viewing is the primary attraction and must be accessible, viewable, and have charisma, and be explained by qualified, excellent guides that know their natural history and have excellent ability with the languages of the visitors.
8.4. Ecolodge Business Drivers Good locations Charismatic wildlife Entrepreneurial leadership Patient investment that allows 4-5 year breakeven period Long-term debt Quality guides Special interest marketing Well-done content rich website for each lodge or the business Quality customer service, and rapid booking capability Excellent management of logistics in remote settings Interactive staff that is relaxed with foreign visitors 8.5. Costs Unique to Ecolodges Cost of community agreements Cost of providing sewage and waste treatment infrastructure Cost of alternative energy and remote energy generation Cost of developing land-use protection plans to conserve natural landscape Cost of training guides and local staff Cost of conservation initiatives Cost of social development initiatives Cost of hosting students and other local visitors interested in sustainable development 8.6 Ecolodge Business Performance Copyright 2004 International Finance Corporation 97
Profit Margin highly variable but approximately 12% Return on investment between 10-30% with 5 year start up
8.7 Debt Requirements Long term credit for over 5 years Few short term cash needs $200K average needed for Start-up 80K average needed for expansion
9.0 Summary
In the last 2 years, the global health and security environment has been poor, causing a significant downturn in the entire travel industry. Travelers from Europe, Japan, the United States, Australia and New Zealand all opted to take shorter trips, closer to home and avoid long-haul travel for their vacations. This had serious impacts on the ecotourism industry serving developing countries, particularly Africa and Asia -- both long-haul destinations. Well established ecolodges run by the private sector were able to survive this downturn, and ten of the 15 lodges in this study achieved profits during the downturn years. Small community enterprises, many established by NGOs, have not fared as well and many less viable enterprises have been disappearing or sought additional support from donors over the last 2 years. Despite this downturn, all surveys indicate that, the demand for special interest travel is set to grow substantially in the next 20 years, because of the aging population of post-war baby boomers that will seek to travel more extensively in the next 20 years, have a more informal way of traveling then their parents, are more active and healthy, and are seeking to fulfill lifelong interests while traveling in their golden years. This will benefit the ecolodge market greatly, and sets the stage for excellent investment opportunities in developing countries for ecolodge development. The profitable ecolodge businesses surveyed for this study were pioneered by highly creative entrepreneurs that have developed a new niche in the travel market that features lodging in tune with nature that is less costly to build yet attracts a well-heeled market. The Internet has greatly benefited these businesses and allowed them to appeal to both the Free and Independent Travel market (FIT) and ecotours. The trend for more direct bookings from Europe, Japan, North America, Australia and New Zealand indicates that the cost of marketing for these independent businesses will remain lower than the mainstream industry, if they properly assess and target their market and use Internet technology to describe their product with excellence, provide outstanding and prompt service and secure on-line bookings, and reach their market through effective use of search engines. Surveys on ecolodge supply reveal many fluctuating and dynamic parameters. There is an insufficient supply of middle priced ecolodges worldwide. As a result, conventional accommodations, such as motels and guest houses are being used by ecotravelers. While travelers claim in demand surveys they are keen on ecological product, they do not demonstrate a strong interest in demanding an eco-social product when they travel according to suppliers, unless the ecological option is clearly the preferable comfort and price option. Efforts to market Copyright 2004 International Finance Corporation 98
facilities as environmentally sound and socially beneficial have therefore not resulted in significant additional business for ecolodges (less than 10% of the market). A special interest focus has proved to be of primary importance (90% of the market). In the ecotourism world, the number one special interest is wildlife viewing. The highly enthusiastic birding market (about 10% of the ecotourism market) often scouts out new destinations with interesting birds and then flocks to them, helping to establish whole new destinations for ecotourism. But most ecotravelers choose their destination first based on word of mouth, or special interest magazine reading, and then seek out the most interesting activities and lodges found there by cruising the internet. Viewable wildlife is the most important natural attraction, but authentic cultural interactions are of growing importance -- particularly for the European market. While most travelers still select a destination first, pioneering ecolodges have been able to launch new destinations through good design, great location selection, and excellent niche marketing. The potential for well designed new ecolodges to bring travelers to new remote and wild areas appears to be excellent, if appropriate locations are selected, good business planning is applied and international market savvy is exercised. Ecolodges have suffered from very poor government policy environments that have not recognized the importance of this sector. Tourism boards and ministries do not deliver market intelligence for ecotourism businesses or help market ecotourism as part of their portfolio of responsibilities. In addition, outside of protected areas, governments have offered few viable legal and policy frameworks to protect ecolodges from overdevelopment in boom coastal regions, particularly in Central America and Southeast Asia, and the lack of infrastructure in most rural areas in developing countries has forced ecolodges to solve energy and waste issues without incentives or support. Business essentials for ecolodges vary substantially from other tourism businesses, because of the additional challenges of working in remote areas. An appropriate location is critical, as in all lodging and real estate, but the criteria for selecting a high quality location is unique. Optimally an ecolodge should be one hour from a local domestic airport that has reasonable connections to an international gateway. This location must have significant wildlife resources and good cultural interaction opportunities. Community member programs are essential and must be longterm to develop well-trained staff with foreign language skills, and to spin off a variety of wellmanaged, small micro enterprises. Construction is challenging due to the remote nature, difficult climates, and the need to work with local artisans who frequently do not work on deadlines. Operational challenges are frequent, due to distances from maintenance, energy and food services. It is therefore appropriate to provide ecolodges with a 4-5 year break even period to establish the systems that operate best for their unique businesses. Once the ecolodge businesses negotiate the challenging first phase, costs of operation can be very competitive. Marketing on the internet is as low as 10% of operating costs, and local communities frequently can be highly loyal to the enterprise due to the fact that it draws in many opportunities to meet and exchange with visitors, learn languages, provides capital for micro enterprises, reinforces cultural identities, and offers a kind of life quite distinct from what is the norm in remote regions. Expansion is still on the drawing boards for a number of profitable ecolodges surveyed, because of the difficulties of obtaining capital. But there are clear Copyright 2004 International Finance Corporation 99
advantages for ecotourism businesses to expand, in terms of economy of scale and diversification of risk. These businesses perform well once the early years are over. They generate good return on investment, are profitable, and have significant benefits for both conservation and local communities. However, because the costs of start-up are so significant and unique, any assistance initiative to this sector must come to a full understanding of the sectors special requirements in order to viably support these powerful engines for local development. Section 7.5 provides an important list of costs unique to ecolodges that must be considered in any plan to support ecolodge development. It is difficult to discuss ecolodges, as compared with more traditional business in terms of expectations for market return, unless these costs are very carefully reviewed and considered. Technical assistance for ecolodge development in future will have to be progressive, market savvy and highly proactive in order to generate more profitable businesses. The support of a business mentorship program is recommended. Support in terms of patient long-term loans, grants for costs unique to ecolodges, and incentives for successful businesses to act as senior enterprises to a variety of smaller junior businesses would make a substantial difference in creating a business environment where ecolodges can thrive. Selecting locations for such support will be critical, as they must be very strategic in terms of a sophisticated understanding of international market trends. Developing a global plan that highlights priority areas for support, seeks out entrepreneurs, supports successful enterprises through well trained finance institutions, and works with local government to select and develop strategic sites for development, would be an exciting model for developing this highly promising market.
100
10.0 References
Ackerstein, D.S. and K.A. Lemon. 1999. Greening the Brand; Environmental Marketing Strategies and the American Consumer in Greener Marketing, A Global Perspective on Greening Marketing Practice, eds. M. Charter and M.J. Polonsky, Greenleaf Publishing, Sheffield, UK (includes Roper study information) Asociacin Ecuatoriana de Ecoturismo (ASEC) 2002. Reglamento Presidencial sobre ecoturismo. http://www.ecoturismo.org.ec/paginas/reglamento.htm Asmal. 2003. Australian Travel (http://www.asmal.com/Aumarket/audp2001.htm) and New Zealand Travel (http://www.asmal.com/Nzmarket/nzdp2001.htm) Blamey, R. and D. Hatch. 1998. Profiles and Motivations of Nature-Based Tourists Visiting Australia. Occasional Paper No. 25. Bureau of Tourism Research, Canberra. Blangy, S. and SECA. 2001. The French Ecotourism Market. WTO. Madrid. Blangy, S., G. Dubois, and F. Kouchner. 2002. Ecotourism: The French Experience - Know-How Guide. AFIT Collection. (Agence Franaise de l'Ingnierie Touristique). Diamantis, D. 1998. Ecotourism: Characteristics and Involvement Patterns of its Consumers in the United Kingdom, PhD dissertation, Bournemouth University, UK. Diamantis, D. 1999. The Characteristics of UKs Ecotourists. Tourism Recreation Research 24(2):99-102 DWIF: German Economic Institute for Tourism Research 2001. Ecotourism Market Study in Germany. Munich University and BTE Tourims Management Regional Development
EplerWood International. 2003, Results of International Market Study for Huaorani/Awa Territory, Proyecto Caiman, USAID, Quito, Ecuador
European Travel Commission 2003. Future Trends in Tourism, working draft, released at the World Travel Mart, November. Fahn, James. 2003. A Land on Fire, Environmental Consequences of the Southeast Asian Boom. Westview Press, Boulder, Colorado, U.S Feige, M., N. Goern, H. Rein, S. Pohontsch, A. Gloger, and S. Schmiedl. 2001. The German Ecotourism Market. WTO. Madrid. F.U.R. 2002. The 32nd Reiseanalyse RA 2002. Reiseanalyse Aktuell, Forschungsgemeinschaft Urlaub und Reisen e.V.: Hamburg/Kiel F.U.R. 2003. The 33rd Reiseanalyse RA 2003. Reiseanalyse Aktuell, Forschungsgemeinschaft Urlaub und Reisen e.V.: Hamburg/Kiel Goodwin, H, and C. Townsend. 2001. The British Ecotourism Market. WTO. Madrid. Hardwick, H. 2000. Educational Travel: Factors Influencing Traveler Choices. Menlo Consulting Group, 9 Feburary. Hamele, H.. 2002. Holiday 2002: German tourists expect environmental quality. Presentation, 27 March. HLA Consultants and ARA Consulting 1004. Ecotourism Nature/Adventure/Culture: Alberta and British Columbia Market Demand Assessment. 6. volumes. Canadian Heritage, Industry Canada, BC Ministry of Small Business, Tourism and Culture, Alberta Economic Development and Tourism. IPK International. 2002. Press Release: The Latest Global Travel Trends 2002-2003. Pisa Forecast Forum. Released at the World Travel Market, 12 November.
101
IPK International. 2003. First World Travel Monitor Results 2002 presented 10 March, 2003 at ITB Berlin. Travel Impact Newswire, 19 March. IPK International. 2003. Global Travel Market Report. Presented at the World Travel Mart 2003 Forecast Forum. Travel Impact Newswire. 20 November. Japanese Association of Travel Agents 1999. Over 60 Generation and Overseas Travel. October. Japanese Association of Travel Agents 2002. Results from Eco-tourism Survey. September. Japanese Association of Travel Agents 2002. Survey on Japanese Travel Agents Prospects for NextGeneration Senior Citizens, October 7. Japanese Association of Travel Agents 2003. 5th JATA Survey on Travel Market Trends: Overseas, June 2003. JATA-Net 2003. Data Files 2002; Number of Japanese Overseas Travelers by Destination. Japanese Association of Travel Agents. Available at: www.jata-net.org.jp. Kobayashi, H. 2003. Japanese Travel Trends 2002. presented as IPK International Japan to ITB Berlin. Travel Impact Newswire, 19 March Lanier, P. 2002. Despite Dire Predictions By The Media, Travelers Say Otherwise. Travel Commerce Report. Vol. 1 ( 9): March 20. Latitude Nelson. 2003. An International and National Level Overview. Nelson New Zealand. Available at: http://www.nelsonnz.com/trade/international_overview.html
Maldonado, Carlos, 2002. Servicios Empresariales Para el Desarrollo del Etnoturismo Comunitario en Bolivia, Ecuador, y Peru, Equipo Tecnico Multidisciplinario Para Los Paises Andinos, Ofician Internacional Del Trabajo, Geneva, Switzerland http://www.ivsde.microempresa.org/pdf/cmaldonado.pdf
Multilateral Investment Fund (MIF) 2003. International Accreditation System and Consolidation of National Systems for Sustainable Tourism Certification to Facilitate SME Competitiveness and Market Access, Docment of the Inter-American Development Bank, Washington, D.C. Pam Wight and Associates. 2002. The Canadian Ecotourism Market. WTO. Madrid. Rodriguez, Arnaldo. 2003. Final Market Research for FITs in Ecuador, Green Consulting, Proyecto Caiman, USAID, Quito Ecuador QTTC. 2003. Ecotourism Consumer Research: International Leisure Market Survey. Australia (1999). Tourism Queensland. QTTC. 2003. Nature Based Tourism in Queensland (1999). Tourism Queensland. Sanders, E. 2001. The US Ecotourism Market. WTO. Madrid. Santelices, O. and H. Rivas 2002. Planificacin Integral en Areas Rurales: Un desafo para la competitividad de los destinos de ecoturismo, Theme A Ecotourism Policies and Planning, World
Ecotourism Summit Final and Preparatory Meeting Reports, World Tourism Organization, Madrid, Spain http://www.world-tourism.org/sustainable/IYE/quebec/cd/start.htm
Scheyvens, R. Eco-and Budget Tourism in Samoa: In Hall, C.M. (ed.) The High Value of Low-Cost Tourism. Ecotourism, Wilderness and Mountains Conference Abstracts:25-26. Shellum, S. 2003. In the Footsteps of a Legend: Hotel Asia Pacific. ETurboNews, November 19.
102
Soavinski, R., Proecotur, Program for the Development of Ecotourism in the Legal Amazon Region, Brazil, Theme A Ecotourism Policies and Planning, World Ecotourism Summit Final and
Preparatory Meeting Reports, World Tourism Organization, Madrid, Spain http://www.world-tourism.org/sustainable/IYE/quebec/cd/start.htm

Spenceley, A. 2001. Integrating Biodiversity into the Tourism Sector; Best Practice and Country Case Studie, Case Study of South Africa. Institute of Natural Resources, Pietermaritzburg, South Africa The Nature Conservancy. 2002. Results of the Ecotourism Programs Conservancy Members Ecotraveller Survey., September. The Nature Conservancy website. Torres Riesco, J.C. 2001. The Spanish Ecotourism Market. WTO. Madrid. Travel Commerce Report 2002. Research. Vol 1 (23) July 10. Available at: http://www.travelcomexpo.com/2002ny/arch_July10.htm Travel Impact Newswire. 2003. Women-Only Travel: The Guys Better Move Over.18 August. Travel Industry Association of America. 2002. 2002 Outlook Forum, 9-12 October. Travel Industry Association of America. 2002. The Geotourism Study. Sponsored by National Geographic Traveler. Travel Industry Association of America. 2003. Travel Trends: Tia.org/Travel/TravelTrends.asp USTOA. 2003. Five Early Travel Trends, United States Tour Operators Association, available at: http://www.ustoa.com/../consumernews/earlytrends_c.cfm Walker, R. 1999. The Australian as Untourist. The Christian Science Monitor, 20 May. Weaver, D.B. and L.J. Lawton 2002. Overnight Ecotourist Market Segmentation in the Gold Coast Hinterland of Australia. Journal of Travel Research, 40, Feb.:270-280. Wight, P.A. 1993. Sustainable Ecotourism: Balancing Economic, Environmental and Social Goals Within an Ethical Framework. Journal of Tourism Studies, 4(2):54-66. Wight, P.A. 1997. Ecotourism Accommodation Spectrum: Does Supply Match the Demand? Tourism Management 18(4):209-220. Wight, P.A. 2001. Ecotourists: Not a Homogenous Market Segment, pp. 37-62 in The Encyclopaedia of Ecotourism, D.B. Weaver et al. (eds.) CAB International: Wallingford, UK.
Wight, P.A. 2002. Ecotourism Policy and Planning: The Sustainability Challenge. Theme A World Ecotourism Summit, submitted to WTO/UNEP as a Summary of the Regional Preparatory Conferences to serve as Discussion Paper for the Summit. WTO 2002. World Ecotourism Summit Final and Preparatory Meeting Reports, World Tourism Organization, Madrid, Spain http://www.worldtourism.org/sustainable/IYE/quebec/cd/start.htm
WTO 2003. WTO World Tourism Barometer. Vol. 1(2) October. World Tourism Organization. WTO 13 October, 2003. Tourism Highlights, Edition 2003. Changes in market behaviour and weak world economy dictate tourism trends. World Tourism Organization.
103
Appendix A Regional Market Experts Noah Shepherd Consultancy 52/2 Moo 9, Soi Makaam Moo T. Bang Pra, A. Sri Racha C. Chonburi 20210 Thailand noah@shepherd.com Southeast Asia Peter English, CEO & President Tropical Nature 1250 Twenty-fourth Street NW Suite 300 Washington DC 20037 penglish@tropicalnature.org South America Lisa Choegyal Tourism Resource Consultants PO Box 242, Kathmandu Nepal lisa@mos.com.np trcnz@trcnz.com South Asia & the Pacific George Duffy, President Worldwide Ecolodges PO Box 1020, Black Diamond Alberta T0L 0H0 Canada info@worldwideecolodges.com Latin America
104
Anna Spenceley The Institute of Natural Resources 67 St Patricks Road Private Bag X01 Pietermaritzburg 3209 South Africa SpenceleyA@nu.ac.za Southern Africa Kurt Holle, General Manager, Rainforest Expeditions (Posada Amazonas/Tambopata) Aramburu 166-4B Lima Peru kholle@rainforest.com.pe South America Seleni Matus Conservation International 1919 M St NW, Suite 600 Washington, D.C. 20036 USA s.matus@conservation.org Central America Origin Market Information for Europe: Herbert Hamele, President ECOTRANS e.V. European Network for Sustainable Tourism Development Berliner Promenade 7, D-66111 Saarbruecken, Germany Lisa Davies, Media & Market Research European Travel Commission P.O. Box 25-10000 Brussels, Belguim
105
Appendix B Ecolodge Survey Sources Contact Jan Wigsten Eco Tour Production AB Norra Kustvgen 17 620 20 KLINTEHAMN, Sweden Ph: 0498 487105 Fx: +46 498 487115 cellphone +46 708 487145 Jan.wigsten@nomadicjourneys.com http://www.nomadicjourneys.com Michael Hartman Tiamo Resorts General Delivery Driggs Hill, South Andros Island Bahamas 1 242.357.2489 1 242-357-2873 Mike@tiamoresorts.com http://www.andros-bahamas.com Katrina Adams Box 399, Kosrae, FM 96944 Micronesia kosraevillage@mail.fm http://www.kosraevillage.com Fax -- +691 370.5839 Phone -- +691 370.3483 Arnaldo Rodgriquez Canodros, Guayaquil, Ecuador 2735 PO Box 59-9000 Miami, FL 33159-9000 arodriguez@green-consulting.com http://www.kapawi.com Kurt Holle Aramburu 166, 4B Lima 18 Peru 511 421 8347 kholle@rainforest.com.pe www.raiinforest.com.pe
Nomadic Journeys
Tiamo
Kosrae Village
Kapawi
Posada Amazonas
106
Lapa Rios
Hans Pfister Box 025116-SJO 706 Puerto Jimenez, Costa Rica hans@cayugaonline.com 506 288 5803 Nelissa Peralta Sociedade Civil Mamiraua Universidade Federal do Par, Setor Profissional, Campus Guama Rua Augusto Correa, n. 1, Bairro: Guama CEP: 66075-110 - Caixa Postal 8.600 Belem Para - Brazil 55 91 249 6369 nelissa@mamiraua.org.br http://www.mamiraua.org.br/ecoturismo/ Raul Arias Apartado 0832-2701 WTC Panama City, Panama 011) 507-264-5720 263-2784 507 612-9176 cell stay@canopytower.com
http://www.canopytower.com
Mamiraua
Canopy Tower
Cooprena
Leyla Solano P.O. Box 6939 - 1000 San Jos, Costa Rica 506-248-2538 cooprena@racsa.co.cr http://www.turismoruralcr.com/ingles/ Albert Teo Shoplot 12A, 2nd Floor, Lorong Bernam 3 Taman Soon Kiong 88300 Kota Kinabalu Sabah, Malaysia Tel; 60-88-234009 albert@borneoecotours.com http://www.borneoecotours.com
Sukau Rainforest
107
Wilderness Safaris
Andy Paine P O Box 5219, Rivonia, 2128, South Africa Telephone :- + 27 11 807 1800 (Switchboard) andyp@wilderness.co.za http://www.wilderness.co.za Andrew Fairley TUR Property Ltd
38 - 40 Garden Street South Yarra, Victoria AUSTRALIA, 3141
Turtle Island Fiji
613 9823 8300 aef@turtlefiji.com.au http://www.turtlefiji.com.au

Chalalan
Guido Mamani
591 3 892 2419 phone 591 2 213 73 91 san jose 591 3 892 2309 fax
Chalalan_eco@yahoo.com http://www.chalalan.com Cascada Expediciones
Javier Lopez Casilla 211, San Jose de Maipo Santiago, Chile Javier@cascada-expediciones.com http://www.cascada-expediciones.com David Kagan Wilderness Gate Suite 1414, 222 North La Salle Chicago, IL 60601 picobonito@caribe.hn http://www.picobonito.com
Pico Bonito
Appendix C Marketing Information from Regional Experts Marketing is a problem for a number of ecotourism operations. Experts and ecolodge operators had a number of comments related to marketing: Pacific: Need media involvement, guidebooks, special interest tour operators, high destination image & good representation. Word-of-mouth is a very strong marketing tool. Some lodges use press releases, and works on getting editorial coverage. The only place that ads are effective is in the Asian market. It is particularly important to get writers to visit. Trade shows are expensive, but do work. Copyright 2004 International Finance Corporation 108
S.E. Asia: Travel agents have consistently failed to deliver Asian ecotourism products and services, probably due to lack of understanding of product and customer needs, so operators think direct marketing to the end user/FIT is most effective through media webs, together with: intensive media marketing campaigns, and news stories in papers and magazines. It is felt that National Tourism Associations need to better understand the importance of ecotourism, but unfortunately are driven by numbers performance, not by other measures. One lodge finds working with an environmental NGOs is becoming more significant to them, through a partnership project which brings visitors to the lodge. The NGO works with tour operators in Holland, Denmark, etc. and this is very successful. Working with other NFPs such as regional museums, and organizing ecotourism conferences may stimulate markets. Although many FITs visit the ecolodge websites, in terms of purchase decision, 10% buy on the Lonely Planet/travel agents word-of-mouth. So a website is not the sales instrument, although its a research tool for ecotourists. Some SE Asian countries are unable to do e-commerce, so lodges require other forms of consumer contact. International tour operators provide 50% of the business to one lodge, but this is felt will reduce over time, as they are marking the trips up too much. Ground operators are depending less and less on international tour operators. They are using direct bookings on the internet. Central Asia: one lodge depends upon travel agents or operators, who sell the lodge under another famous brand name (not in the name of the ground operation). The lodge picked out market leaders in various countries, and so now have very diversified clients. They have little internet use and refer enquiries to UK agents. Many of this lodges products are not on the internet, but are owned by the overseas tour operators (and were actually developed by the ecolodge operator especially for them). Africa: Domestic marketing needs to use domestic magazines (e.g., Getaway) and newspapers, and also the internet, international trade fairs, tour operators and various mixed types of media should be used. Marketing needs to emphasise the cultural side of Africa. South America: Word-of-mouth is a very important marketing tool. Operators find Travellers complement their information through a variety of sources. However, once a person sees the lodge name in a tour operators program, they may check on the internet, or call a couple of friends to verify. This combination leads to a sale. They also emphasise that smart press is important. For example a piece on Macaws in Natural History may be better than a piece in the Travel World News. They also feel a range of travel distributors should be contacted via trade shows, door to door, etc. And of course, guidebooks are obvious, and easy to get into if done the right way. One lodge says the internet plays an important role in vacation research and investigation, but the bookings are often through travel agencies. It should be viewed as a marketing tool. Also feels that foreign tour operators are better at selling more complex products, while local operators or agencies can sell standardized products. Poor strategies are said to be advertisements and aggressive traditional sales strategies Copyright 2004 International Finance Corporation 109
One lodge uses their projects to get exposure in articles, give prizes, etc. They also work with a range of distribution channels, travel agencies, non profits, internet, local travel agencies, etc. They focus on the experience to be enjoyed: interpretation, activities, conservation and sustainable development, rather than focusing on wildlife, food, lodging - the conventional product. The experience is used as a marketing tool. Central America and the Caribbean: A wholesaler feels that while the internet is all right as a marketing tool, consumer searches are usually by destination. It is better, therefore, to use mixed media (e.g., trade shows, travel agents, ads, FAM tours, media visits, coop marketing, and travel guide editor or writers FAMs). Advice on media includes: markets are getting older so literature should be in large text and with many images, and multi-media CDs with sound and motion work well with older markets. One suggestion is the need to create awareness about ecolodge products and the fact that eco is not just roughing it. People love the idea of an ecolodge once they understand this. One Caribbean lodge indicates that different media attract different interests: fishing clients come via agents, but 85% of guests are FITs connecting through the internet, and 58% use search engines. In addition, 11% come because of word-of-mouth and they have many repeat clients. This lodge has now dropped print advertising (their brochure is downloadable from their website) and instead lists their website and pays for clicks, through Google and Overture. Without the internet they say they would not exist. Also, they are listed in significant websites, such as National Geographic Travel, Conservation International, having come second in important awards. They are also beginning to hold special events in quiet months, and they sometimes sell these out. A Central American ecolodge indicated that 50% of their visitors are FITs (coming through the internet, word-of-mouth, articles in periodicals) and 50% come through international tour operators and agencies in the US and UK (e.g., specialized birding companies). Most operator communications are via the internet, whether with operators or FITs. One lodge used to have only word-of-mouth marketing, till the late 1990s, but after 9/11, they had to work harder, but still do not advertise. They focus on good PR and articles, and their website is now completed. They also joined luxury link (www.luxurylink.com) and have a relationship with local agencies (giving 25% commissions). They do not do trade shows abroad, but participate in local trade shows. They find soft marketing works better, through word-ofmouth. Although they have a database of thousands of guests, they have never used this to market. Although most of their clients go to an agency, but they dont market strongly to agencies either its a soft approach to marketing. Another lodge focuses on getting articles written about them. They try to use the internet, and participate in some auctions and advertising using search engines. They dont work with US tour operators, and found that marketing to institutions did not work either. They also think that if the country spent more money, they could piggy-back on that advertising. One lodge focuses exclusively on birders. But this year they will change their marketing strategy, to reach individual clients directly. They will do more ads in magazines, and Copyright 2004 International Finance Corporation 110
consumer fairs. He wants to go directly to consumers with packages, as it makes more money to offer product directly. While there will always be a market for group travel, they feel their guides are now good enough to go to represent the lodge at trade shows. Most lodges spend a very small amount of their budget on obtaining market information, and also not very much on marketing. It is felt a large budget is not a requirement for success, although larger budgets could likely improve sales. Success requires a clear vision of how to position the lodge in the market, whatever way that market may be accessed. Contacts, strategic alliances, word-of-mouth, articles, research projects, awards, etc., are all successful for operators, in various combinations. One Central American country examined ecotourism demand and supply and surveyed visitors to determine how they had arranged for their accommodations. They found:

37% made accommodation arrangements directly in person, or by phone, after arriving in the country 32% contacted the accommodations directly through the internet/web before arriving 32% booked through a travel agent in their home country 22% contacted accommodations directly by phone/fax/email before arriving in the country 15% arranged through an institution or tour operator in home country 13% contacted a tour operator in the destination, who arranged accommodation, after arriving in the country 5% arranged through a tour operator in the destination
These survey findings give some helpful marketing direction. A range of communications channels is appropriate, and there is obviously a strong role for the travel trade (travel agents, wholesalers, and tour operators) both internationally and at the destination, as well as internet marketing.
111
Appendix D Ecotourism Policy Summaries
Chile
Chile Ecotourism Policy and Planning Case Study Chilean National Tourism Service 1. Objectives Creation of Local Ecotourism Agendas Using participatory processes To assure that there is genuine sustainability
2. Understanding the Competitive Factors of Ecotourism from Viewpoint of Destination Condition of the Supply Side 1. The natural and cultural resource 2. Accommodations 3. Access to capital and available technologies 4. Human resources 5. Tourism information 6. Basic infrastructure 7. Cost of goods 8. Quality of tourism services 9. Support Sectors and Related Industries 10. Tourism Operators 11. Recreation and Sport infrastructure 12. Transport services 13. Design and Printing services 14. Basic services 15. Demand Conditions 16. Tourist profile 17. Motivations 18. Level of comfort required 19. Level of satisfaction related to products offered 20. Strategies and ability of the Business Sector to Cooperate 21. Type of business associations 22. Type of cooperation achieved 23. Government role 24. Regional tourism policies 25. Guidelines for the sector 26. Tourism information 27. Facilities in remote rural and border areas 28. Programs to productively develop tourism 29. Community tourism planning 3. Success Factors Achieved from Government Action in Cooperation with Private Sector in Prioritized Zones Copyright 2004 International Finance Corporation 112
Local authorities cooperating in incorporating tourism in their Regional Development Strategies An integrated design for tourism development, under a central guiding image for the destination, executed by both the private and public sectors in tourism zones The definition of how development should function, under the concept the heritage of the destination, which catalyzes work from all players The pressure from local entrepreneurs linked to tourism in natural areas, to associate themselves with promotion, training, and technology transfer initiatives that they themselves organize through associations.
4. Key Factors that Organize Development Territorial land use planning and environmental protection Quality of service Basic infrastructure and service Develop and training of human resources Product Development Marketing Tourist Information 5. Formulation of Local Agendas for Tourism Development Looking at tourism as part of an integrated local development plan including agriculture, industry. Use of the agenda setting process as a means to coordinate action which the municipality seeks to rationalize Involves negotiation and consensus building with communities, public and private organizations It must support a technical feasibility component for both economic improvement and environmental protection 6. Formulation of System for Monitoring Environmental Impacts of Tourism Goal to minimize impacts that will undermine the natural resource attractions New legislation requires the use of a System for Evaluation of Environmental Impacts for tourism projects in rural areas that have been targeted for ecotourism development Using this System of Evaluation of Environmental Impacts, there is an effort to create destination focuses that look at the impacts on ecosystems that cross municipal boundaries, in which case there must be supramuncipal review and cooperation, such as the case of wetlands, watersheds, etc. The implementation is linked to planning for municipal functions, such as Communal Development, Regulatory Planning, and Local Ordinances Policy has established a system of monitoring indicators for the development of tourism with national territory which is being linked to national tourism development
Source Paper Presented at World Ecotourism Summit (WES), 2002
By Oscar Santelices Altamirano & Humberto Rivas Ortega Director and the Head of Planning of the Chilean National Tourism Service
113
Ecuador
Ecuador Ecotourism Legal and Policy Case Study Reglamento Presidencial sobre ecoturismo 2002 1. Objectives Ensuring the participation of local communities in the activity Ensuring ecotourism respects cultural traditions of local communities and the protection of natural environments, avoiding environmental contamination Establishment of a legal standard for the development of the ecotourism activity To ensure that ecotourism is properly coordinated by the government, particularly that the services and activities are properly coordinated with the National Council on Sustainable Development To ensure that one of the key activities of the Ministry of Tourism is the promotion of ecotourism activities 2. Specific Articles of interest in this ruling are as follows: The national ecotourism policy will be coordinated by the Ministry of Tourism which will establish mechanisms of cooperation for the stakeholders, incorporate the cosmovision of the culture of local communities, and formulate plans according to intersectorial, multidisciplinary development plans that involve criteria for conservation of natural protected areas, models of participation for local communities, and levels of responsibility for public and private entities, and the pariticpation of NGOs. Develop zoning for national tourism, including areas for ecotourism management Promote the certification of national ecotourism in natural areas with both social and conservation criteria Assure that there are mechanisms to prevent environmental contamination Support the reinvestment of economic benefits in local communities Support community efforts to manage their natural resources Promote training activities for local communities Develop ecotourism in the national system of protected areas Coordination of policy for ecotourism with the Ministry of Environment and Tourism, and the System of National Protected Areas 3. Functions of the Ministry of Tourism Determination of types of ecotourism permitted Classification of the corresponding activity Oversight and control of quality Ensure regulations are carried out Formulation of this ruling within the general planning of tourism Zoning for ecotourism within protected areas Support for certification of businesses
114
4. Legalization of community businesses that can operate under the law, commercialize their products and market them directly to tourists. Via a petition of those interested and the type of activity to be carried out A certified act of their community assembly, with whom the legal responsibility lies Obtaining a registration and license from the Ministry of Tourism Obtaining a permit and authorization from the Ministry of Environment if their activity is to be realized in a national protected area 5. New Category of Business in the Ministry of Tourism, Ecotourism Business, under the classification for accommodations. This category can be voluntarily certified and legally recognized to validate the ecotourism category Such certification can be solicited upon registration of an ecotourism business, and this certification recognizes the businesses ability to conserve biodiversity and prevent environmental contamination Standards for certification will be elaborated by the Ministry of Tourism Businesses not opting for certification can still obtain registration and license Businesses choosing certification will have direct access to benefits established in the Tourism Law and within the promotional planning of the country carried out by the Ministry of Tourism The standards for certification are to be published by the Ministry of Tourism with the technical advice of the Ecuadorean Ecotourism Association 6. Coordination of the Ecotourism Policy The Ministry of Tourism together with the Ecuadorean Ecotourism Association (Asociacion Ecuatoriana de Ecoturismo (ASEC) will watch over the fulfillment of the ecotourism policy Planning for protected areas will be coordinated between the Ministry of Tourism and Environment Participative planning will be the base of all decision making 7. The Ecuadorean Ecotourism Association will be financed by its own institutional budget Funds raisied for the maintenance and distribution of information about ecotourism activities in Ecuador Funds raised by certification of businesses Funds raised through international cooperation Funds raised through corresponding laws
Source: ASEC 2002, http://www.ecoturismo.org.ec/paginas/reglamento.htm
115
Brazil
Brazil Ecotourism Legal and Policy Case Study Proecotur 1. Objectives: Undertake sustainable ecotourism development in Brazilian Amazon. To establish the appropriate framework and to implement the necessary conditions, including required public investments, which will allow the nine Brazilian Amazonian States to prepare themselves and soundly manage selected ecotourism areas. 2. Goals: Develop ecotourism products Implement basic services infrastructure Create positive conditions for investment Survey national and international markets Propose a legal framework for the activity Train human resources Foster the use of appropriate technologies Value local culture Help finance biodiversity conservation
3. Planning State and local strategies with recommendations for high potential, sustainable ecotourism developments in selected geographic areas that will be used to guide future investments Master plans for Amazonian States Finance small pilot infrastructure for protection of existing natural areas and to facilitate ecotourism reception during program execution period Pre-feasibility and feasibility studies for eventual project financing 4. Institutional and Business Strengthening Technical advisory services for ecotourism businesses Best practice information for business management, biodiversity conservation, and the use of appropriate technologies Training in ecotourism, ecotourism business opportunities and awareness building for state and municipal public officials
Source: Paper Presented at WES 2002 By Ricardo Soavinski, Proecotur General Coordinator
116
South Africa
South Africa Ecotourism Legal and Policy Case Study 1. Ministry of Environmental Affairs and Tourism (DEA&T) Raises profile of tourism industry Develops sectors potential to create wealth and generate employment Links management of tourism with critical environmental products, and formulates a cohesive development strategy that includes environmental monitoring, regulation and impact assessment Coordinates ministries with impact on tourism Facilitates creative and strategic interaction between tourism policy and policies guiding land management, water, energy and other natural resources
2. Overall budget for DEA&T is relatively low, 1-2% of government expenditures 2% of budget is on ecotourism, 1994-1998 Study by Tourism Infrastructure Working Group 1999 found that there is a preponderance of overlapping tourism initiatives and tourism planning programs that have received government endorsement 3. DEA&T has a Tourism and Resource Management Branch Mandate is to create conditions for responsible tourism growth and development Promote conservation and development of natural and cultural resources Promote enhanced safety and quality of environment Provide accessible environmental and tourism information for sound planning and decision making Tourism and Environment divisions cooperation is weak, and the tourism division is vastly under-resourced by comparison. 4. Provincial Tourism Organizations (PTOs) Reflect national tourism organization structure Assist community organizations Administer registration of guides
5. Tourism Law Reform Identify legal obstacles, gaps and changes required for tourism development to prosper 2001 Tourism Amendment Act o DEA&T to create national database of tour guides and code of conduct for all activities o Facilitate entry of disadvantaged sectors of the community into tour guiding sector o Review of international tourism guidelines o Financial assistance for the development of a national sustainable tourism plan 6. Integration of biodiversity conservation and tourism Expansion of protected areas while unleashing tourism potential (e.g. Greater Addo National Park)
117
7.
Promotion of World Heritage Sites which enhance protection of conservation areas while increasing public awareness with respect to nature-based tourism potential (e.g. Greater S. Lucia Wetland park) Encouragement of Spatial Development Initiatives which promote industrial, commercial and tertiary sector activities in specific corridors, and encourage public private partnerships and investment. Endorsing Transfrontier Conservation Areas to increase geographical area available to conservation and encourage international cooperation Generating strategies such as Tourism in GEAR, which involve commercialization of protected areas and job creation schemes Protected Areas and Tourism No policy that determines level or extent to which protected areas must be developed Many PAs have zoning to plan regions with varying levels of tourism development Movement toward concessioning private sector to handle commercialization opportunities, along with stringent integrated environmental management process.
8. Examples of Current Proposed Strategies Sustainable tourism development promotion through incentives to private enterprises Mandatory implementation of Integrated Environmental Management procedures for all tourism projects Encouragement of social and environmental audits of tourism projects Encouragement of tourism development in areas where it offers competitive form of land-use Encourage the creation of successful pilot tourism programs Ensure tourism does not deprive communities of access to resources needed for their livelihoods Coordination of provincial conservation authorities and legislation to encourage uniform and coordinated approaches Workshops for conservation authorities on the tourism sector 9. Business Support Business Trust offers training at school level DEA&T and Tourism Enterprise Program with Business Trust to identify and develop partnerships and synergies between emerging business, communities and corporate initiatives. 4000 enterprises are likely to benefit. Training through a National Qualifications program for unemployed and those already in tourism sector targeting the qualification of 10,000 individuals.
Source: Anna Spenceley, UNEP Biodiversity Planning Support Program Case Study, Institute of Natural Resources S. Africa (2001)
118

Ecolodges EplerWood

Hochgeladen von

Dokumentinformationen

Originalbeschreibung:

Originaltitel

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

Ecolodges EplerWood

Hochgeladen von

Copyright:

Verfügbare Formate

Final Report A Review of International Markets, Business, Finance & Technical Assistance Models for Ecolodges in Developing Countries

Copyright 2004 International Finance Corporation

Copyright 2004 International Finance Corporation

Copyright 2004 International Finance Corporation

Copyright 2004 International Finance Corporation

Copyright 2004 International Finance Corporation

TRAVEL TRENDS INFLUENCING ECOTOURISM DEMAND .......................... 14

ECOTOURISM MARKET DATA ........................................................................ 24

3.1 Market Characteristics: A Geo-regional Analysis

3.2 Ecotourism Accommodation: A Demand Side Analysis

3.3 Ecolodge Demand: A Supply Side Perspective

4.0 ECOLODGE BUSINESS AND FINANCE STUDY .................................................. 43

Framework for Classification ................................................................................................................... 45 Individual Business Model Analysis.......................................................................................................... 50

4.2 Summary of Key Business & Finance Findings

Copyright 2004 International Finance Corporation

5.0 ECOTOURISM POLICY AND LEGAL FRAMEWORK REVIEW ............................ 70

6.0 NATURE BASED TOURISM ATTRACTIONS ........................................................ 81

TECHNICAL ASSISTANCE NEEDS ASSESSMENT ........................................ 86

8.0 CONCLUSIONS ...................................................................................................... 94

Copyright 2004 International Finance Corporation

10.0 REFERENCES ................................................................................................... 101 APPENDIX A............................................................................................................... 104

APPENDIX B............................................................................................................... 106

APPENDIX C............................................................................................................... 108

APPENDIX D.............................................................................................................. 112

Copyright 2004 International Finance Corporation

Copyright 2004 International Finance Corporation

Copyright 2004 International Finance Corporation

Travel Trends Influencing Ecotourism Demand

Copyright 2004 International Finance Corporation

Declines in Regional Markets Since 9/11

Copyright 2004 International Finance Corporation

Copyright 2004 International Finance Corporation

Copyright 2004 International Finance Corporation

Copyright 2004 International Finance Corporation

U.S. Green Consumers 1997

Labels are changed/adapted from Roper for this report

Copyright 2004 International Finance Corporation

High 42% Medium 8%

Copyright 2004 International Finance Corporation

Copyright 2004 International Finance Corporation

Ecotourism Market Data

The socio-demographic characteristics of ecotourists are:

Copyright 2004 International Finance Corporation

Copyright 2004 International Finance Corporation

Europe U.K. North America

Copyright 2004 International Finance Corporation

lifestyles/cultural sites or attractions Secondary Trends:

Copyright 2004 International Finance Corporation

In Europe, the following destinations were mentioned:

Markets UK: Germans:

Developing Country Destinations Preferred

Copyright 2004 International Finance Corporation

Peru & Guatemala Honduras Brazil

Ecotourism Accommodation: A Demand Side Analysis

In an survey, ecotourists most

Copyright 2004 International Finance Corporation

Canada Ecotourists surveyed prefer: 43% hotel/motel 27% tent/camping

Accommodation Characteristics and Preferences Baby boomers responses

Usual preferences of actual ecolodge

visitors 52.8% ecolodge

visitors when traveling for ecotourism purposes

Copyright 2004 International Finance Corporation