Travel Impact Newswire
Edition
37 - August 12-19, 1999
Distinction
in Travel Journalism
By
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In
this dispatch:
1.
GLOBAL TOURISM CODE OF ETHICS TAKES SHAPE (1,558 words)
Summary:
The World Tourism Organisation is crafting the world's first
Code
of Ethics that will apply to visitors, the visited and the many
businesses
that make those visits possible. And it wants to know what
you
think of it.
2.
RECOVERY, RECOVERY, WHEREFORE ART THOU? (1,914 words)
Summary:
An Arthur Andersen analysis of the Asia-Pacific hotel
industry,
and where it is heading..
-0-
1.
GLOBAL TOURISM CODE OF ETHICS TAKES SHAPE
The
World Tourism Organisation, in co-operation with member countries
and
interested non-governmental organisations, has been developing a
Code
of Ethics for Tourism. Aimed at minimising the negative social
and
environmental impacts of tourism, the code has been undergone
close
scrutiny over the past three months within the WTO regional
commissions
and the Executive Council. At the core of the code are the
following
ten articles originally published in WTO News. The WTO says
it
would like additional comments before presenting the final draft to
the
WTO General Assembly in Santiago, Chile in late September.
Over
to you, readers.... Note carefully Article 6 on Consumer Rights
which
may have legal implications. Send comments to me or directly to
Deborah
Luhrman, WTO Communications Director, at
<100130.3572@compuserve.com>.
-0-
Article
1
Respect
for Host Communities
1.
The understanding and respect of the diversity of cultural values,
and
of religious, philosophical and moral beliefs are both the
condition
for and the consequence of tourism; the actors in tourism
development
and tourists themselves are duty-bound to observe the
social
and cultural traditions and practices of all peoples, including
national
minorities and indigenous peoples.
2.
Tourism activities shall be conducted in harmony with the
attributes
and traditions of the host regions and countries, and in
respect
for their laws, habits and customs.
3.
The host communities and local professional actors shall acquaint
themselves
with and respect the tourists who visit them and find out
about
their lifestyles, tastes and expectations.
4.
When visiting other places, tourists shall refrain from any
criminal
or wrongful act or any conduct which is considered to be
shocking
or injurious to the local populations.
Article
2
Tourism
and Human Values
1.
Tourism, the activity most frequently associated with rest and
relaxation,
sport and access to culture, should be planned and
practised
as a factor of individual and collective fulfilment; when
practised
with a sufficiently open mind, it is an irreplaceable factor
of
self-education, mutual tolerance and for learning about the
legitimate
differences between peoples and cultures.
2.
Tourism activities shall aim to promote human rights and, more
particularly,
the individual rights of the more vulnerable groups,
notably
women, children, the elderly or handicapped.
3.
The exploitation of other people in any form, notably sexual,
breaches
the fundamental rights of tourism; it is not a deviation of
tourism,
but the negation of tourism and, as such, shall be strictly
prohibited
and penalised.
Article
3
Protection
of the Natural Environment
1.
Following the guidelines set out in Agenda 21, all the actors in
tourism
development are duty bound to safeguard the natural
environment
in the perspective of continued and sustainable
development
geared to satisfying equitably the needs and aspirations
of
present and future generations.
2.
Forms of tourism development which are conducive to saving energy
and
reducing waste production shall be given priority and financially
encouraged.
3.
The staggering in time and space of tourist flows, particularly
those
generated by paid holidays and school holidays, shall be
promoted
in such a way as to reduce the pressure of tourism activity
on
the environment.
4.
Tourism infrastructures and activities shall be designed in such a
way
as to protect and ensure the protection of the ecosystem and
biodiversity,
and to preserve endangered species of wild fauna and
flora.
5.
Nature tourism and ecotourism are recognised as being particularly
conducive
to enriching and enhancing the standing of tourism, provided
they
respect natural environments and the carrying capacity of the
sites
visited.
Article
4
Protection
of Culture
I.
Tourism resources are part of the common heritage of mankind.
2.
Tourism policies and activities shall be conducted with respect for
the
artistic, archaeological, cultural and monumental heritage of
countries,
which they should contribute to identifying, protecting,
enhancing
and passing on to future generations; particular care shall
be
devoted to preserving and enhancing monuments and museums which are
a
magnet for tourists; public access to privately-owned cultural goods
and
monuments shall be encouraged.
3.
The resources derived from visits to cultural sites and monuments
shall,
at least partially, be used for the upkeep and embellishment of
this
heritage.
4.
Tourism activity shall be planned in such a way as to allow
traditional
cultural products, crafts and folklore to survive and
flourish,
rather than causing them to degenerate and become
standardised.
Article
5
Ensuring
Benefits for Local Communities
1. Local communities and populations are
associated with tourism
activities
and shall participate in the economic, social and cultural
benefits
they generate, and particularly in the creation of direct and
indirect
jobs resulting from these activities.
2.
Tourism policies shall be planned in such a way as to contribute to
improving
the standard of living of the populations of the regions
visited;
tourism resorts and accommodation shall be planned and run in
such
a way as to integrate them, to the extent possible, in the local
economic
and social fabric; where skills are equal, priority shall be
placed
on using local labour.
3.
Special attention shall be paid to the specific problems of island
countries
or territories and to fragile rural zones, for which tourism
often
represents a rare opportunity for development in the face of the
decline
of traditional economic activities.
Article
6
Consumer
Rights
1.
Tourism professionals have an obligation to provide tourists with
reliable
information on their place of destination and on the
conditions
of travel, hospitality and sojourns; they shall ensure that
the
contractual clauses proposed to their clients are readily
understandable
with regard to their nature, price and quality of the
services
they commit themselves to providing and their financial
compensation
in the event of any claims against the contract.
2.
Tourism professionals, insofar as it depends on them, shall
guarantee
security and safety, accident prevention, health protection
and
the food safety of those who seek their services; they shall
develop
specific systems of insurance and assistance; they shall
accept
the obligation to be held liable.
3.
The public authorities of the generating countries and the host
countries
shall ensure that these rules are established and respected
by
tourism professionals, and shall repatriate tourists in the event
of a
serious default on their part.
4.
The press, particularly the specialised tourism press, shall
contribute
to supplying the consumers of tourism services with
accurate
and reliable information; new information technologies shall
also
be developed and used to this end.
Article
7
Employee
Rights
1.
Special attention shall be paid to guaranteeing the fundamental
rights
of salaried and free-lance workers engaged in tourism and
connected
activities, including their social welfare, bearing in mind
the
specific constraints they are subject to and the flexibility
required
of them by virtue of their jobs.
2.
Workers engaged in tourism are entitled and bound to acquire
appropriate
initial and continuous training.
3.
Workers engaged in tourism shall be protected against financial or
social
exploitation under the control of the national and local
administrations
both in their countries of origin and in the host
countries;
so far as possible, job insecurity should be kept to a
minimum;
a specific status should be offered to seasonal workers in
the
tourism sector.
4.
All individuals and legal entities shall be entitled to develop a
professional
activity in the field of tourism within the framework of
existing
national laws.
Article
8
Tourism
for All
1.
The universal right to tourism is the consequence of the right to
rest
and leisure, including reasonable limitation of working hours and
periodic
holidays with pay, guaranteed by Article 24 of the Universal
Declaration
of Human Rights and Article 7.d of the International
Covenant
on Economic Social and Cultural Rights.
2.
Social tourism, and notably associative tourism, which facilitates
widespread
access to leisure and holidays, should be encouraged and
developed.
3.
Family, youth and student tourism, and tourism for the elderly and
the
handicapped should be facilitated.
Article
9
Freedom
of Movement
I.
Tourists and workers engaged in tourism, salaried or otherwise,
shall
benefit, in compliance with international and national
legislation,
from the liberty to move freely within their country and
from
one state to another, in compliance with Article 13 of the
Universal
Declaration of Human Rights; they shall have access to
places
of transit and sojourn and to tourism and cultural sites
without
being subject to meaningless formalities or discrimination.
2.
Tourists and workers engaged in tourism are entitled to have access
to
all available forms of communication, internal or external; the
safety
of their persons and the security of their belongings should be
guaranteed;
they shall benefit from prompt and easy access to local
administrative,
legal and health services; they may freely contact the
consular
representatives of their countries of origin in compliance
with
the diplomatic agreements in force.
3.
Administrative procedures relative to border crossings, such as
visas,
and health and customers formalities shall be designed in such
a way
as to facilitate to the maximum freedom of travel and widespread
access
to international tourism.
Article
10
Implementation
and Enforcement
1.
The public and private actors in tourism development shall commit
themselves
to co-operating in the implementation of these principles
and
to monitoring their proper application.
2.
The actors in tourism development shall recognise the role played
by
international institutions and non-governmental organisations whose
activities
are related to tourism. human rights and environmental
protection.
3.
The same actors shall agree to refer any disputes concerning the
interpretation
or application of this Global Code of Ethics for
Tourism
to an impartial third party in the conditions defined
hereinafter.
-0-
2.
RECOVERY, RECOVERY, WHEREFORE ART THOU?
By
Andreas Flaig, Manager, Hospitality & Leisure, Arthur Andersen,
Hong
Kong
(This
an abridged version of an article that originally appeared in
AA's
Hospitality & Leisure Executive Report, Summer 1999).
The
hospitality industry of Asia Pacific has gradually come back from
the
jaws of economic crisis, which has spawned currency devaluations
and
declining travel in the region since mid-1997. The outlook is
generally
brighter for Asia-Pacific economies as the worst appears to
have
been weathered in 1998.
As it
tends to elsewhere, the industry will generally track the
overall
economic recovery, but with a significant lag in Asia Pacific
owing
to an array of factors that are aligned to constrain growth.
Markets
are experiencing over-capacity (particularly in the five-star
segment),
while there has been aggressive price discounting that has
brought
average rates down at roughly twice the pace of the declines
in
occupancy.
Physical
assets are deteriorating due to lack of upkeep and FF&E
reserves.
Adding to problems are legal systems that are dysfunctional
in
governing relationships between borrower and seller. And there is a
continued
widespread between bid and ask price in the transaction
market.
A
Macroeconomic View
While
a prolonged and painful restructuring is still ahead for many
regional
economies, conference panellists agreed that financial
stability
is returning to many Asia Pacific markets. Interest rates
have
fallen substantially across the board, and foreign reserves of
regional
central banks are rising.
Guonan
Ma, VP, Economic and Market Analysis Asia-Pacific, Salomon
Smith
Barney, cautioned that expansionary fiscal policy across Asia
may
have a negative effect on the recovery, and debt restructuring is
still
far from being over. Japan remains a major source of instability
in
Asia, with the potential to spoil the momentum of the region's
economic
recovery as this country represents fully two thirds of
Asia's
GDP. In addition, there is some concern over the stability of
the
Chinese currency.
In
contrast, a number of factors are mitigating toward regional
economic
recovery this year, including:
o
Stabilisation of regional domestic demand;
o
Increases in government spending;
o
Price stabilisation;
o
Plateauing of unemployment;
o
Potential investment increases as credit conditions gradually
improve.
Overall
growth in Asia is expected to reach between 3 and 4% in 1999,
and
this upturn is most in evidence in South Korea and Thailand.
A
Market Profile
Conference
panellists provided a varied picture of hotel and tourism
markets
in the Asia-Pacific. Broad political and economic trends
influencing
recovery include political instability as a major
constraint
to tourism growth in Southeast Asia. Markets like Hong Kong
and
Singapore have experienced substantial declines in visitor
arrivals
due to their heavy reliance on Japanese and Southeast Asian
markets
in 1998. Japanese tourists and business travellers in the past
have
accounted for as much as 30% of Hong Kong's visitor arrivals and
this
steady element of market demand disappeared almost overnight as
the economic
crisis deepened.
The
tourism downturn, as a result, has led to greater price
discounting
by hotels, particularly in markets like Hong Kong.
Domestic
demand for food and beverage also has contracted measurably
with
the crisis. In times of economic stress like these, relationships
between
owners and management companies are strained, suggesting that
both
sides will need patience and care to optimise the end result. And
hotel
development is largely at a standstill throughout Asia-Pacific
with
some exceptions in India, North Asia and Australia. Recent
openings
of luxury hotels included The Peninsula in Bangkok, the
Shangri-La
and Grand Hyatt in Shanghai and the Mandarin Oriental in
Kuala
Lumpur.
Governments
and tourism boards throughout the region with the support
of
the private sector will need to encourage new demand through more
aggressive
marketing campaigns in key markets. ''Amazing Thailand''
has
been extremely successful and should be used as a blueprint.
On
the positive side of the ledger, significant strides have been made
by
owners and managers alike to reduce labour and other operating
costs
at both the corporate and property level. The relatively mature
tourism
markets such as Bali (with good infrastructure and access),
Seoul
(with favourable supply) and Bangkok are set to recover earlier
than
other Asian markets. Hotel supply growth is likely to focus on
branded
limited-service products in cities and luxury resorts. The
markets
to watch for resort expansion are Phuket, Bali and the
Maldives
with new city hotels coming on line in Hong Kong, Shanghai,
Delhi,
Seoul, Taipei and Tokyo.
Regional
trends shaping the hospitality markets are reflected in
visitor
arrivals, occupancies and yields for hotel companies:
Visitor
Arrivals
These
numbers showed steep declines in 1998 compared to the previous
year
in most countries, including Hong Kong (down 7.7%), Singapore
(down
4.5%), Australia (down 3.5%) and Indonesia (down 16.7%).
Thailand,
Malaysia and South Korea were the bright spots in the region
in
terms of tourist arrivals, which saw a strong growth in 1998 over
1997.
Hong Kong was up 14% on year-to-date figures for January and
February
of 1999. But it is important to look at expenditures, as well
as
visitor arrivals, in these key markets.
Although
the visitor arrivals are slightly up, the expenditures by
tourists
are not moving in the same direction, providing further
evidence
that the market demand is shifting in some locations.
Yields
and Occupancy
Operating
performance figures furnished by Arthur Andersen's
Benchmarking
survey for 17 Asia-Pacific cities also draw a clear
picture
of the market's volatility. There have been drastic changes in
revenue-per-available
room (yield). Jakarta's yield, for example, (in
US$
terms) fell 54% in 1998 over 1997. Kuala Lumpur was down 50%,
while
Bali dropped 40%. In contrast, Bangkok showed a yield decline of
only
3%, followed by Tokyo's 7% and Taipei's 10% drop in RevPar in
1998
over 1987. In the first three months of 1999, Bangkok, Tokyo and
Seoul
showed positive growth in yield after two years of decline.
Hotel
Market Business Cycle
Hotel
markets are in various phases throughout the business cycle. The
Philippines,
China, Singapore and Hong Kong seem to have passed the
peak
and are now in a downward cycle. The length of that cycle will
depend
primarily on general economic conditions and on the
demand-supply
equation. Both Malaysia and Indonesia are currently
going
though a severe trough. In the case of Malaysia this was caused
by a
very significant increase in hotel supply. In Indonesia, however,
the
political and economic instability in 1998 was the principal
reason
for the poor state of its hotel market. Taiwan, Seoul and parts
of
Australia are in an upswing nearing its peak.
An
Investment Profile
The
conference also dealt with issues from the international
investor's
perspective, including the bleak record of recent hotel
transaction
activity in Asia. Antony Karp, Executive Vice President of
Jones
Lang LaSalle Hotels, profiled the current state of the market.
There
are 1.6 million hotel rooms in Asia, with China, Japan and
Thailand
accounting for 77% of that total. Since 1998, however, there
have
been only eight Asian-based transactions totalling 3,200 rooms
(0.2%
of total market). The transaction turnover has amounted to
US$300
million or US$95,000 per room.
Meanwhile
in Japan and Korea, U.S. funds have been keen to acquire
debt
rather than assets at 20 to 30% of replacement costs. The gap
between
buyers and sellers, however, remains between 10% (in Bali and
Bangkok)
and 40% (in Kuala Lumpur and Jakarta). Many funds have thus
preferred
to use the route of acquiring debt rather than negotiate
with
often reluctant owners who seem to want to weather the storm.
Whether
the funds will ever be able to control the assets in the
future
will largely depend on the execution the prevailing foreclosure
laws.
In countries where these bankruptcy and foreclosure laws are not
yet
widely implemented, financial institutions and funds have been
more
conservative in acquiring debt.
Also
shaping the investment market are the government-run asset
management
companies (AMCs), which are currently buying up
non-performing
loans supposedly based on market value as part of a
restructuring
of the local hotel industry. Some of the AMCs are
currently
in the loan management stage, while others are contemplating
either
management with the help of new operators or disposal of assets
to
domestic and foreign investors through open tender or private
placement.
If
the AMCs decide to sell, the inactive acquisitions market may turn
around
rather quickly, and price levels will be set to trigger further
sales
elsewhere. The market needs liquidity, but the AMCs are aware of
the
implications if they are seen to be "selling out their country" --
most
likely to foreign investors as funds domestically are scarce.
The
outlook for hotel transactions in 1999 looks thus somewhat more
promising
with Bangkok, Phuket and Bali likely to see some "action."
Yields
are forecast to stay below 10%, while debt funding will become
a
transaction requirement. As market fundamentals continue to recover,
some
liquidity will also return to the hotel industry.
The
Commercial Framework - Structural Reform
The
unfavourable investment environment has clearly turned investors
away.
Attracting them back will be a significant element in the
recovery.
But insufficient regulatory enforcement remains one of the
most
formidable obstacles to foreign investment. In some economies,
bankruptcy
and insolvency regulations have not been implemented
effectively.
Many banks have had their hands tied in terms of
foreclosing
on properties that are for all practical purposes
bankrupt.
In
Indonesia, Malaysia and Thailand, owners thus have little pressure
to
realise sales as lenders have no rights to pressure owners to sell
assets.
Newly passed insolvency legislation is being scrutinised by
the
market in Bangkok, and activity is expected as a result in the
second
half of this year.
In
many cases, neither owners nor lenders have been prepared to
restructure
over-valued assets on balance sheets. Reform actions
directed
at legal and bankruptcy rules have not been effective. In
some
cases, there appears to be little appetite or will to reform.
Legal
reforms must establish clear property and creditors security,
Penny
Goh, Partner of Allen & Gledhill, told the conference. Courts
must
be empowered to honour contractual rights in obligations of
lenders
and borrowers. And effective insolvency laws should simplify
bankruptcy
proceedings and regulate distribution of assets with
particular
attention to improving legal procedures for realisation of
securing
collateral without being subject to costly and time-consuming
court
procedures.
If
the required legal reforms are not quickly and effectively
implemented,
the inflow of foreign capital necessary for debt
restructuring
will be slowed. ''This will be a major setback in the
effort
for economic recovery,'' remarked Penny Goh.
Looking
Ahead
As
the hospitality industry recovers and some of the traditional
relationships
so often tightly held and obscured from view are
restructured,
we can expect to see a greater openness that will, in
turn,
encourage an increased flow of capital into the region. And as
the
region emerges from this financial crisis, opportunities will
emerge.
Arthur
Andersen, for example, estimates that only 17% of the hotel
supply
in Asia Pacific is branded. This suggests significant potential
for
expansion of internationally branded marketing systems in the
future.
In the wake of financial restructuring, we can also expect to
see
more consolidation of the industry, as has been so much in
evidence
elsewhere in the world.
And
as for a timetable for recovery, the concerns and promise for the
Asia
Pacific region were summed up thus: "We expect that the recovery
generally
will take hold in the second half of 1999 with progress more
apparent
in the first year of the new millennium and beyond. When we
meet
again next year, I think that the tide will have turned
significantly
and improvements in performance will be apparent. Not
all
the region's problems will have been resolved, but we will be a
few
steps closer on that path."
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========================
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