Discusses best practices, benchmarking, and value chain analysis (VCA) for rural community based tourism

1. Moving up the Value Chain:
Best Practices & Benchmarks
for Rural Tourism
Alan A. Lew, Ph.D., AICP
Dept of Geography, Planning & Recreation
Northern Arizona University, USA
AlanLew.com
Dept of Land Resource and Tourism
School of Geographic &
Oceanographic Sciences
Nanjing University, Nanjing, China
15 November 2012

2. PPT Slides Online
• DocStoc.com
– www.docstoc.com/docs/135960665/Sustainable-Tourism-
Lessons-from-Around-the-World
• v.gd/No6drz
– www.docstoc.com/docs/135960962/NanjingU---Tourism-
Incognita
• v.gd/RxAz1L
– http://www.docstoc.com/docs/135962391/Sustainability-
and-Resilience-in-Community-Based-Tourism
• v.gd/Llcvqq
• Slidehare.net/alew

3. Outline
1. Benchmarking Indicators
2. Creating Value
3. Value Chain Analysis
4. Upscaling Product Quality
Glacier Bay
National Park,
Alaska, USA

4. ISSUES
• Demands of Development
– Increasing accountability
– Reason for Benchmarking Indicators
• Increases Between Haves & Have-nots
– How to maximize benefits for have-nots
– Reason for Value & Value Chain Analsys
• Aspirations of the Poor
– Greater day because they know more
– Reason for Upscaling Product Quality

5. 1. Benchmarking Indicators

6. Benchmarking Is …
• “The means by which we attempt to locate a level of
performance in a certain area that is superior to ours, then
to change the way we do certain activities in order to
improve our performance”
– Paul Leonard, Benchmarking expert
• “The continuous, systematic
search for, and implementation
of, best practices which lead to
superior performance
– Benchmarking Centre
View from Burj Khalifa, Dubai
• “Benchmarking is simply about making comparisons with
other organisations and then learning the lessons that
those comparisons throw up”
– European Benchmarking Code of Conduct

7. Benchmarking
Improving a Product
by Measuring it Against
a Recognized Standard
• Widely used for quality control, marketing,
finance, technology innovation
• Vaguely understood in service industries
(such as Tourism)

8. Internal & External
• Internal Benchmarking : compare
self with others in same organization
– Internal audits, targets & efficiency
– Good starting experience; Most common
approach
• External Benchmarking : compare
with other organizations
– rivals (‘competitive benchmarking’)
– non-rivals (‘best-in-class’ or ‘best-practice
benchmarking’)
– aggregated sector data (‘sector
benchmarking’)
– done by strategic consultants using
confidential data

9. External Benchmarks
• Best-in-Class Benchmarking
– Best practices in an area
• e.g. marketing, human resources
– Non-competitors from different
sectors share data & results
• Sector Benchmarking
– Led by industry associations
– To educate & stimulate
competition

11. Tourism Benchmarking
Indicators
1. Volume & Value of Tourism
– Visitor Number & Economic Value
2. Visitor Satisfaction
– Surveys of Customer Perceptions
3. Stakeholder Satisfaction
– Surveys of Tourism Providers & Residents
4. Organizational Performance
– Sustainability
• Energy use, Local sourcing, Recycling
– Management
• Financials: Cost and Efficiency
• Innovation: Strategic/Long term Objectives

12. Balanced Score-card Approach
Comprehensive view based on four (or more) perspectives:
– Customers: How do customer see us ?
– Internal Business: What processes must we improve ?
– Innovation & Learning: Do we continually learn,
improve, and create new value ?
– Financials: How do we appear to our investors &
employees ?

13. Net Promoter
Score (NPS)
• Rating of whether or not clients would recommend a
product or service
• Strong correlation with repeat use of products /
services and referrals
• Best indicator of overall ratings for a product or service

15. 2. Creating Value
At the PATA
Ecotourism
Conference,
Balikpapan,
Kalimantan
(Borneo),
Indonesia

16. Creating Value
• Two Types of Value
1. Customer Value = meeting needs &
desires
2. Company Value = profit & success
• Value is Created by
1. Higher quality for purchase price =
Customer value
2. Lower cost for sold price = Company Rainforest
value Canopy
Walk,
• Customer Value Poring Hot
Springs,
– must be created first Sabah,
Malaysia
– Before company profit can be claimed

17. How to Change Value
1. Reduce Quality
– Reduce Price More = Customer Value
– Reduce Cost More = Company Value
2. Keep Same Quality
– Reduce Price = Customer Value Folk artist,
– Reduce Cost = Company Value Indonesia
3. Increase Quality
– Increase Price Less or Reduce Price = Customer Value
– Increase Cost Less or Reduce Cost = Company Value
4. Increase Quality + Price + Cost
– Perceived Customer Value may Increase
– Perceived Company Value may Increase

18. Quality, Price, Cost & Value
Quality
Customer Benefit
Price Value
Business Benefit
Cost
- Customer Benefit Value = User Needs & Aspirations
- Business Benefit Value = Enterprise Profits

19. 1. Reduce Quality, Reduce Price
+ Cost More
Quality
Quality
+ customer benefit
Price
Price
= business benefit
Cost
Cost
If Cost can be reduced more than Price, then business
benefit will increase.

20. 2. Keep Quality, Reduce Cost + Price
Quality Quality
+ customer benefit
Price
Price
Cost = business benefit
Cost
If Cost can be reduced more than Price, then business
benefit will increase.

21. 3a. Increase Quality, Increase Cost
+ Price Less
Quality
Quality + customer benefit
Price
Price
= business benefit
Cost
Cost
If Price can be increased more than Cost, then business
benefit will increase.

22. 3b. Increase Quality and Reduce Cost
(on a comparable new product)
Quality
Quality
+ customer benefit
Price Price
+ business benefit
Cost
Cost
This model is appropriate for a new product. Price is the
standard market price for a comparable product.

23. 4. Increase Quality, Cost + Price
(perceived benefits)
Quality
Quality
= perceived customer benefit
Price
Price
= perceived business benefit
Cost
Cost
If Price is increased more than Cost, then business
benefit will increase. If Quality is increased more than
Price, then customer benefit will increase.

24. Methods of
Creating Value
(Spend)
• Quality Increases
– Better Facilities & Materials
(Innovate)
• Investment & Maintenance
– Better Services
• Human Resource Development
– Better Innovations
• Strategic Planning & Market Analysis
• Price & Cost Decrease
– Better Efficiency in Production
• More work per worker; More product per raw material
– Better Economies of Scale
• Increased Customers through Better Marketing

25. Creating Value in Tourism
1. Loyalty Programs for repeat customers
– Lower prices = Customer Value
– Repeat customers = Business Value
2. Facilities & Service Upgrade Programs
– New Facilities & Replacements
– Staff Training/Skills Development
– Higher costs & Lower profits
– Repeat customers & Higher net promoter scores
– Higher quality product for customers who becoming
richer over time
3. Special Experiences
– Back-stage experiences; Innovative products
– Unexpected surprises – gifts, fruit, tickets

26. Rural Tourism
Product Development
• Goals
– Increase Returns from
the Same Number of Visitors
– Increasing Tourist Stay / Nights
• Special Interest Tourism
– Spend more Money & Stay Longer
– Active & Experiential Holidays (trend)
• Personal involvement & active participation
• Learning about people, cultures, traditions, foods, arts ...
• Adventure & physical challenge attractions
– More employment for guides & transport
– Requires Careful Target Marketing

27. Iban / Dayak
Cultural
Ecotourism
in Sarawak,
Malaysia

29. Increasing Dayak Tourism Value
Group tour accommodations
Award-winning tourism
promotion poster for
Sarawk, Malaysia

30. Summary
• Value =
– Customer + Business Perspectives
– Product Quality + Price + Cost
• Value Creation =
– Efficiency & Effectiveness
• Increased Productivity
– Investments & Creativity
• Improved Product/Service Quality
• New Product Development
– Better than Competitors

31. 3. Value Chain Analysis

32. Value Chain Analysis (VCA)
Q: How to Best Target Changes to
Maximize Desired Benefit?
A: Value Chain Analysis (VCA)
– All activities required to bring a product or
service to customers
• conception, through
production, to delivery
– Focus on Points that Add Value
• to target for development

33. VCA Identifies …
Current System
1. How money flow within the production chain
2. Relationships among various actors and exchange points
in the chain
3. Share of tourism expenditures to each segment or group
in the chain
– Usually Firm or Industry Level
• Micro-level “input-output analysis”
Future Predictions / Planning
1. Potential impacts of planned interventions
– Activities that may provide higher value
for each group
2. Potential impact of broader societal trends

34. • Example of a
value chain
analysis of
Costaleo, a
fictional coffee-
producing
country in
South America.

35. VCA Questions & Data
1. For a study location, in which distinct areas does tourism
show evidence of development ?
2. How much income does tourism generate for the local
economy in each identified area ?
3. How do tourism activities in each area impact employment
& business opportunities ?
4. How does tourism in each area bring other desirable
benefits to the local community ?
5. What specific enabling changes can
be made to enhance goals, such as:
1. Pro-poor tourism development
2. Sustainability practices
3. Other

36. VCA for Rural Populations (1)
• Relationship Issues
– Limited Relationships
• In diversity of people & institutions
• Socially, economically & geographically isolated
from the mainstream economy
– Unequal Relationships
• Less influential & more dependent
• More disadvantaged (or exploited) by private
sector
• Lacking key connections
• VCA Goal: Strengthen Linkages &
Access to better quality or more
affordable goods & services

37. VCA for Rural Populations (2)
• Human Resource Issues
– Greater needs, with fewer resources
– Less entrepreneurial & more Risk-Averse
– Much shorter time horizons
– Limited resources to make informed choices
– Possibly: Lower self-esteem & culture of
dependency
• VCA Goals: Identify Incentives & Investments to
Change Behavior
– Increase effectiveness of actors
– Create new value chain relationships
– Increase capacity to empower change

38. Examples of Targeted Tourism Issues for
Rural Communities
• Overcoming Enclave Tourism
– Hotels, coaches & other vehicles, tourist sites/attractions
– Less accessible to rural local community
• Overcoming Remoteness
– Opening roads & improving transport to Transport Hubs
& Tourist Markets
• Intra-regional tourism
– Marketing to Appropriate Upscale Market Segments
• Predisposed to nature, culture and daily life of rural
communities
• International Visitors – tend to spend more – some
more than others
– Using the Longtail of Internet Marketing
• Free Social Media Outlets

39. VCA – As A Capacity Building Tool
If Open & Participatory
– Interviews, Focus Groups, Stakeholder
Engagement
= Effective Tool for
– Capacity strengthening
– Build a common
understanding of a
destination’s economic
gaps
– Promoting stakeholder
dialogue

40. Finding Value
in Shenongjia
Shennongjia National Forest County,
Hubei, China

43. VCA + Complementary
Approaches
• VCA + Sustainable Livelihoods
Approach
– SLA describes target populations: Who
they are, How they participate in value
chains & What factors constrain or enable
their engagement in upgrading
opportunities
• VCA + Food Security Programming
– FSP increases availability of food & ability
of poor to access it
• VCA + Social Protection Approaches
– SPA identifies & provides skills training,
key assets, and legal & social barriers to
build long-term capacity for VCA
participation

44. Outline & Lesson So Far…
1. Benchmarking Indicators
• Comparison to Others: Efficiency
• Net Promoter Score
2. Creating Value – to get better benchmark scores
• Quality Increase
• Price (& Cost) Decrease
3. Value Chain Analysis – to target investments
• Where to invest to get maximum local benefits
• Human resources & Innovative products
…
4. Upscaling Product Quality
• Case Study: Upscaled Ecotourism

45. Upscaling Tourism
Through Ecotourism
• Survey of North American
Ecotourism Companies
– with Ecotours to the Asia-
Pacific (excluding SW Asia)
• Absolute / Pure Ecotourism

46. Country # Tour % of all Tour
or Region Companies Companies
Where North
• Indonesia 16 40.0
• India 13 32.5 American
• Australia 12 30.0 Ecotours to
• Nepal 12 30.0
• Bhutan 10 25.0 Asia Went
• New Zealand 8 20.0 (mid-1990s)
• Tibet 8 20.0
• China 7 17.5
• Thailand 7 17.5
• Burma 5 12.5
• Cambodia 5 12.5
• Laos 5 12.5
• Pakistan 5 12.5
• Malaysia 4 10.0
• Papua New Guinea 4 10.0
• Russian Far East 4 10.0
• Vietnam 4 10.0
• Central Asia 3 7.5
• Japan 3 7.5
• Mongolia 3 7.5
• Sikkim 3 7.5
• Philippines 2 5.0

47. Java, Indonesia

48. Ecotour Types & Activities
• NATURE Type (22 respondents)
– Wildlife (5), Nature (4), Natural history (3), Jungles & Rainforests (2),
Science-based nature tours (2), Fossil expeditions, National Park's, Nature
reserves, Orangutans, Ornithology, Village wildlife conservation, Zoos
• CULTURE Type (14)
– Culture (6), Agriculture, Anthropology, Countryside tours, Culture
exchanges, Ethnic area lodge, Food, Local guides, Sustainable technology
• ADVENTURE Type (4)
– Soft adventure (2), Adventure, Hard adventure,
Outdoor adventure
• PHYSICAL-LAND Activities (15 respondents)
– Trekking (7), Walking (3), Cycling/Mountain Biking (2),
– Backpacking, Bush Walking, Day hiking, Physical activity
• PHYSICAL-WATER Activities (6)
– Boat rides, Diving, Rafting, Sailing, Sea Kayaking,
Whitewater rafting Trekking in Nepal
• EDUCATION / OTHER Activities (11)
– Educational (3), Guest scholar/teachers/experts (3), Animal riding safaris
(2), Bird watching (2), Local educational programs, Photo-taking safaris,
Study tours N = 31 respondents

49. Orangutan
Rehabilitation
Balkipapan, East Kalimantan,
“Charismatic Fauna” Indonesia

50. Ecotourism Management Policies
1.Use guides native to visited area * 31 77.5%
2.Have an education program for local guides 26 65.0%
3.Provide a pre-arrival information packet 24 60.0%
4.Providing a % of tour profits to local groups 19 47.5%
5.Participate in local cleanup programs 17 42.5%
6.Pack-it-out requirements 15 37.5%
7.Other activities to support sustainable dev.** 16 40.0%
N = 40 respondents
* 67% use local guides exclusively
** see next slide

51. Rainforest Education
& Research Tourism
Balikpapan,
E. Kalimantan,
Indonesia

52. Other Activities to Support Sustainable
Development (40%)
Donations: Generous donations to local charities; Funds for
conservation & research (2); Land purchases for conservation;
Sponsor Village Folk Theatre; Support clinic, school and
religious organizations; Support local environmental groups
Education: Environmental education kits; Quality environmental
education; Scholarships; Post-trip mailings; Teach adult
education class in ecotourism; Up to 70 pages long pre-arrival
packets; Support village
libraries; Environmental reading library
Services: Provide medical services; Lobby
government to protect rainforest; Support
orphanages; Peer exchanges; Tree planting (2)
Economic Development: Use of all reusable
materials; Support ecovillages; Encourage Near Tonle Sap
eco-purchases; Support local handicrafts; Invest Lake, Cambodia
in eco-lodges; Support indigenous tourism projects

53. Added Value / Cost of
Ecotours
Extra Cost of Conducting
Eco-sensitive Tours
High: 40.0 % of Tour Price
Mean: 11.1
Low: 0.0
Willingness of Participants to Donate Money to
Local Environmental & Social Causes
Very willing 38.9 %
Somewhat willing 55.6
Not Interested or willing 5.6

54. Managing Tourist Behaviour
- We strictly enforce proper behaviour on our tours 42.9%
- We explain proper behaviour, but leave it up to the individual 33.3
- We only explain proper behaviour in the most sensitive place 11.9
- We seldom ever direct tourists in how to behave 11.9
Comments:
– Our travellers typically already know how to behave
– We talk to individuals privately if there is a problem
with their behaviour
– Our policies vary based upon the destination
– Our operators are responsible for establishing proper behaviour
– We don't accept participants who will not behave
– Policies vary depending on the place
• N = 42 respondents
In Nepal’s Khumbu Region

55. Tour Group Size
Smallest Average Largest
Group Group Group
• Mean 4.5 11.4 24.7
• Median 2 8 15
• Range 1 - 22 3 - 60 4 - 125
• Do you intentionally limit tour group sizes?
• Yes 34 (81%) No 8 (19%)
• If yes, what is your size limit?
– Mean: 14.9
Mt.
– Median: 14.5 Kinabalu,
– Range: 6 - 40 Sabah,
Malaysia

56. Reasons Limiting Tour
Group Size – p.1
1. IMPACTS: (19)
1. To reduce/lessen impact / damage (7)
2. To minimize cultural concerns/impacts (4)
3. To minimize environmental impacts (4)
4. To ensure privacy
5. To ensure sustainable impact
6. Lower impact from camping
7. Impacts are greater with over 16 persons
Hiking Mt. Kinabalu,
Sabah, Malaysia
2. EXPERIENCE: (14)
1. To ensure a quality and genuine experience (5)
2. Provide more personal contact/attention (3)
3. Increased opportunity to interact with locals / cross-cultural
experience (2)
4. Better group rapport / dynamics (2)
5. To give more in-depth insight & equal service to each client
6. To enhance enjoyment of the environment and activities

57. Reasons Limiting Tour Group Size – p.2
3. CAPACITY: (8)
1. Due to the carrying capacity of the product (2)
2. Based on capacity of lodges (2)
3. Safety and the ability to airlift out of National Parks and mountains
by helicopter if the weather turns bad
4. Our maximum size depends on the itinerary
5. Depends on destination, group size may be as little as two persons
6. Allows use of smaller vehicles to get to more remote places
4. SERVICE: (8)
1. Ease of handling/controlling smaller groups (2)
2. Guides are unable to have personal contact and control the situation
with more than 17 persons
3. More than eight is a mob
4. Some private groups may exceed our maximum
5. Logistics of moving too large a group in the destination region
6. Manageable, yet profitable, size
7. We break our larger groups into smaller groups of four to five
persons each for daily activities

58. The North American
Ecotourism Market
• Specialty Tourism / Niche Market
– Good for the Environment,
• But may not meet full economic
needs of an entire community
– Fairly Wide Variety of Types & Activities
– Willing to Pay More for Higher Quality
• Ecotour Quality
– Low Impact, Responsible Travel
• Social & Environmental Contributions
– Authentic & Insightful Place Experiences
• Real Interactions with Locals (not staged?); Educational
– Well Managed with Personal Service
• Small groups sizes, appropriate to destination

59. Options for Upscaling
Ecotourism Destinations
1. Improving Quality
•Smaller groups, personal attention; Improved facilities and
human resources to meet market expectations
2. Reducing Price
•Collaboration with complementary services; Awareness of
competition’s quality & price
3. Becoming More Efficient
•Efficient managements & delivery of conservation &
authenticity products; Human resource development; Aware
of new technologies & skills; Efficient marketing
4. Being Innovative
•Creating unique selling propositions (activities, attractions)
for a place; Surprise experiences; Awareness of global
competition
5. Improving Linkages / Relationships
•Through online longtail marketing & collaborations

60. Outline &
Conclusions
1. Benchmarking Indicators
• Comparison to Others:
-- Efficiency Near Yangshuo (Guilin), China
• Net Promoter Score
2. Creating Value – to get better benchmark scores
• Quality Increase
• Price (& Cost) Decrease
3. Value Chain Analysis – to target investments
• Where to invest to get maximum local benefits
• Human resources & Innovative products
4. Upscaling Product Quality
• Case Study: Upscaled Ecotourism