MULTIPLE NICHE STRATEGY FOR PHILIPPINE TOURISM

Prof. Danny Araneta Cabulay Dean Institute of Accounts, Business and Finance Far Eastern University, Manila, Philippines dcabulay@feu.edu.ph

In 1990, Harvard professor Michael Porter wrote The Competitive Advantage of Nations and espoused that countries need not be poor if only they could channel all their energies and resources on economic activities where they excel. Switzerland found its niche in watchmaking while Japan excelled in electronics and cars. Many European countries like Spain, France, Italy and the United Kingdom depended heavily on tourism. Unfortunately, Porter did not mention anything on the Philippines. With 231 million jobs and US$91.1 billion in GDP in 2004, the global tourism industry is clearly one of the biggest industries in the world today. As the world tourism industry continues to grow at 4% per annum, there are sectors that are experiencing rapid growth. It has become clear also that over the last few years, it is the developing world which takes an increasingly large portion of this expansion. The share of international tourist arrivals in developing countries rose from 19% in 1980 to 30% today. What will make a country a leading destination for tourists? These are the key success factors. (a) (b) (c) (d) (e) (f) (g) Capacity as a destination. Security / peace and order. Hospitality and education. Competitive prices. Government support. Effective tourism marketing. Balanced control.

What developments are happening in Asia? China is the largest outgoing tourist market in the region. Eco-tourism is still growing in popularity. Tighter security measures are implemented in regional airports. Technology explosion in travel trade, hotel, transportation and entertainment sectors More affordable holidays in long-haul destinations.

What are we expecting in the next 10 years? Full implementation of biometrics in travel.

More consumer travel loans as a result of the alliance between travel trade sector and financial institutions. Convergence of countries to facilitate regional visas. Modern equipment detect highly contagious diseases in airports. Mobile phone reservation for travel needs.

With all of these information, what is the future of Philippine tourism? Former Malaysia Prime Minister Dr. Mahathir once said, The talented Filipinos can be a very formidable force in Asia if only they get their act together. The Philippines is one archipelago in Asia that has all the important ingredients of a successful tourist destination diverse and beautiful attractions; warm, hospitable and English-speaking people; affordable standard of living and interesting culture. How come the tourism industry of the Philippines was overtaken by many of its neighboring Asian countries? Philippine tourism which is private sector-led has been heavily politicized through the years. Many secretaries of the Department of Tourism had brilliant programs that were never sustained. Some policies of the government are not really tourist-friendly. The national budget does not have tourism among its priorities. Many tourist facilities in the country need upgrading. The presence of multinational companies especially in the hotel, airline and travel trade sectors keep the industry afloat. The Department of Tourism is targeting 3 million tourist arrivals this year. It is tough to even aim for it given the current image of the country. While Thailand and Malaysia can easily achieve 10 to 15 million tourist arrivals in a year, the Philippines is practically struggling hard to regain market share and lost glory in the 1970s. There are many tourism products which the country can offer the various tourists around the world. While it is true that the country needs to focus on what it should offer the world, there is not a single tourism product that can enable the Philippines to reach its target. Based on a variety of research methods, the assessment is that the Philippine tourism industry will take off if only there was a focus on three clusters of tourism products: (a) heritage and culture (b) adventure and leisure (c) academe. Each of these clusters can generate 3.5 million tourists coming mainly from the United States, Japan, South Korea and China. These products have a multiplier effect. The Department of Tourism has adopted many campaigns in the past. There was the Balikbayan program which started the homecoming trend among overseas-based Filipinos. Wow Philippines program showcased the best of each region in the country. More Than the Usual campaign highlighted the uniqueness of the islands.

Students from the Far Eastern University have developed an interesting campaign, explore, Experience, Excel Only in the Philippines campaign which can hopefully create interest among government technocrats. Foreign tourists are invited to explore the beautiful heritage and culture of the Philippines, experience a most memorable adventure, and excel in a quality learning center. If an active campaign can only be launched to orchestrate efforts of all pertinent sectors, The tourism industry, made up of various sectors e.g. lodging, transportation, food and beverage, recreation and services, travel trade, et al, is basically a very labor-intensive industry. In the Philippines, the National Union of Workers in Hotels, Restaurants and Allied Industries (NUWHRAIN) is the dominant player protecting the rights of workers in this industry. In 1998, approximately 2.24 million jobs were available. In 2010, it is estimated that the Philippine tourism industry will generate 3.86 million jobs. The most valuable resource by any tourism-oriented establishment is its employees. It is the right employees that add value to the service each company provides its customers. The misfit employees create problems ranging from complaints to lost business. (Jim Many companies have developed lifetime customers because of their service-oriented employees. The Shangri-la Hotel Manila, The Peninsula and Singapore Airlines have demonstrated impressive service standards as practiced by their employees consistently enabling them to garner national as well as international recognition from the industry and customers. These companies have been past recipients of the Kalakbay Award, the annual national service award to top tourism-oriented companies in the Philippines. It is important for tourism professionals and workers to be flexible and capable of multitasking. Employees who cannot cope with such requirement are bound to be physically stressed and eventually resort to a change in career. Thus, the high turnover of employees in the industry, i.e. 8% - 12%, has become a norm across all sectors. In the 1980s the World Tourism Organization widely adopted sustainable tourism development, as a thrust, countries with growth patterns which have proven to be very challenging. Niche tourism is suggested as against mass tourism. This can bring about controlled growth, preservation of tourist attractions, and steady growth in revenues for entrepreneurs in tourism. Lets try doing a Country SWOT Analysis for the Philippines. Among its major strengths are: (a) tropical climate, (b) competitive tourism professionals and workers, (c) many diverse cultural and heritage destinations, (d) aggressive new programs of government in improving infrastructures, facilities, and promoting tourism, (e) hospitality of the Filipinos, (f) strategic location in Asia, (g) improving economic status, (h) expansion of international flights, (i) English heavily spoken in the country, (j) affordable and high quality education programs. Meanwhile, the weaknesses are: (a) unsustainable tourism programs, (b) strict visa requirements, (c) poor and inconsistent tourism marketing in the past 10 years, (d) high

rate of criminality, (e) poor road signages, (f) negative image of the Philippines, (g) too much politics in government, (h) tourism is not a priority of the government. The opportunities are encouraging such as: (a) Asian neighboring countries seeking to learn English, (b) growing number of senior citizens, young professionals, sports enthusiasts and honeymooners who all love to travel, (c) large number of Filipinos living abroad with their families, (d) large number of OFWs abroad, (e) trade fairs abroad wherein Philippine booths have been recognized, (f) growing population of G7 and developing countries, (g) modern technology applications in tourism, (h) convergence of property management companies. And finally, we have a number of threats to contend with: (a) terrorism, (b) airborne diseases in Asia, (c) negative travel advisories, (d) being located in the Pacific ring of fire, (e) tight competition in Asia, (f) European countries are more cohesive and cheaper to travel within Europe. The target markets are: Primary foreign families, prospective foreign college students, Filipino migrants, honeymooners and sports enthusiasts. Secondary Retirees and baby boomers, young professionals, domestic tourists. Heritage and cultural tourism is a major source of tourist arrivals. There are over 8 million Filipino workers abroad and approximately 15 million Filipino migrants all over the world reaching third and fourth generations. It is important to encourage them to come home and visit the Philippines once again. This way, they will appreciate more their roots. Ne can visit the Philippines from 5 to 30 days. There are many activities one can engage in, such as, visiting relatives in the province, attending fiestas, visiting scenic spots and museums, having reunions with old friends, and shopping. The heaviest concentration of Filipino migrants in the US are in Hawaii, California and New York. For adventure and leisure, the Philippines asserts itself once more as the paradise in Asia. The Philippines are a diverse topography and tropical climate, which makes it ideal for sports and leisure activities for tourists like cycling, mountain trekking, spelunking, sailing, yatching, scuba diving, snorkeling, horseback riding, white water rafting, motorcross, surfing , windsurfing, parachuting, sky diving, hot air ballooning, golfing, rock climbing, jet skiing, rock climbing, bungee jumping, paragliding, car racing, boxing and wrestling. On the academe, many parents in the Asian region, find sending their children to colleges in the US and Europe to be very expensive. Instead, they strongly consider the Philippines as a good place to send their children for a good college education because: Cost of education and the standard of living is affordable English is the medium of instruction There is a good culture match as Filipinos are generally friendly

If only the country, focused on these niches, fostering harmony and education, the Philippines will once again become a preferred destination in Asia.

References: Arevalo, Adulfo, et al, Best Practices in Handling Labor Issues in Tourism-oriented Establishments in the National Capital Region, 2005. Castao, Mickey, Enterprise, Investing in Leisure, 2006. Collins, Jim, Good to Great, 2001. Cristobal, Lila, et al, Explore, Experience, Excel Only in the Philippines, 2006. Cruz, Reil, Tourism, 2000. Fyall, Alan and Garrod, Brian, Tourism Marketing, 2005 Jones, E. and Haven-Tang, C., Tourism SMEs, Service Quality and Destination Competitiveness, 2005. Novelli, Marina, Niche Tourism, 2005. Porter, Michael, The Competitive Advantage of Nations, 1990. Render, Lesley and Sharpley, The Management of Tourism, 2005. World Travel and Trade Council Estimates Applied to TMP Ratios, 2002 www.dot.gov.ph, Kalakbay Awards 2005 Zobel de Ayala, Jaime Augusto III, SGV Review, The Challenges and Opportunities in the Philippine Services Sector, 2003.