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Planning for Tourism Development in Small Island Destinations: the need for a new sustainability mindset

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Title: Planning for Tourism Development in Small Island Destinations: the need for a new sustainability mindset


1
  • Planning for Tourism Development in Small Island
    Destinations the need for a new sustainability
    mindset
  • Larry Dwyer
  • President, International Academy for the Study of
    Tourism
  • Former President, International Association for
    Tourism Economics
  • Professor, Australian Business School University
    of New South Wales

2
Characteristics of SIDS
  • The natural, economic and social systems of SIDS
    are very vulnerable to external shocks due to the
    following shared characteristics
  • small size
  • Remoteness from major origin markets
  • narrow resource base
  • narrow export base
  • exposure to global challenges (economic,
    political, socio-cultural, environmental,
    technological)

3
Importance of SIDS
  • Islands are distinctive places to visit, often
    with a unique character and appeal
  • Islands, overall, are hugely important for global
    biodiversity, with many containing unique species
    on account of their relative isolation
  • Similarly, this explains the rich cultural
    heritage that can be found on many islands
  • SIDS provide a significant tourism resource but
    also a strong responsibility on tourism to
    support conservation of resources

4
The importance of tourism to islands
  • Tourism is a dominant force in the economy of
    many SIDS and provides one of only a few sources
    of foreign exchange earnings for most of them.
  • In half of the SIDS, tourism expenditure accounts
    for over 40 of all their exports of goods and
    services.
  • equates to more than 20 of GDP in two fifths of
    SIDS where data are available.
  • demonstrated by the recent graduation of Cape
    Verde and the Maldives from Least Developed
    Country status due to their levels of income from
    tourism.
  • the projected growth of the sector worldwide,
    with international tourism arrivals forecasted to
    reach 1.8 billion by 2030. The popularity of
    islands as destinations and the kinds of
    experience that they offer should enable them to
    see at least an equivalent amount of growth.  
  • Tourism income can support livelihoods in many
    island communities.
  • They are also uniquely placed to benefit from,
    and provide support for, the special cultural and
    natural heritage assets which are a feature of so
    many of the worlds islands.
  • Tourism contributes to economic resilience in
    SIDS.

5
Global growth forecasts and future market patterns
  • SIDS should see continuing growth in forthcoming
    years up to 2030.
  • The forecast is for global growth in
    international tourist arrivals to continue but at
    a more modest pace, from 4.2 per year
    (19802020) to 3.3 (20102030) as a result of
    four factors
  • the higher base volumes
  • lower GDP growth as economies mature
  • lower elasticity of travel to GDP
  • a shift of falling transport costs to increasing
    ones

6
Success? Yes if its only about numbers!!!
7
Challenges to Development of SIDS
  • Transport Access  
  • Scarce and fragile natural resources  
  • Climate Change
  • Low Multiplier effects (leakages) 
  • Community Engagement

8
Opportunities for Development of SIDS 
  • Economic Growth
  • Employment Women Empowerment 
  • Promotion and protection of natural resources
  • Blue Green Economies 
  • Investment and Value Chains
  • Resilience

9
Three accepted propositions
  • Tourism as a key driver of sustainable
    development in islands
  • For many islands, tourism is the single most
    important economic activity, with clear
    opportunities for future growth
  • Therefore tourism must feature strongly on the
    sustainable development agenda of islands and be
    given high priority in programmes to support SIDS
    and other island territories
  • Natural and cultural heritage as primary assets
    for island tourism
  • Tourism is well placed to generate awareness and
    support for the unique biodiversity and rich
    cultural heritage of islands, on which it depends
  • Tourism development must be carefully planned and
    managed so that it has a positive impact on
    island resources, environments and communities
    and responds to the challenges of climate change
  • Importance of Sustainable Tourism Development

10
3 pillars of sustainable tourism
  • environmental sustainability emphasizes the
    protection and conservation of the environment
  • economic sustainability increasing incomes and
    employment, foreign exchange earnings, public
    revenues, poverty alleviation, business
    development and investment to stimulate local
    economies
  • socio-cultural sustainability harmonises with
    social values and cultural integrity

11
Three pillars of Sustainability
12
OUR LEADERS RESPONSE
13
Environmental Impacts Negative
  • pollution (air, water, noise, littering)
  • loss of natural habitat including agricultural
    and pastoral lands
  • destruction of flora and fauna
  • vandalism
  • degradation of landscape and of historic sites
    and monuments
  • congestion including crowding
  • effects of conflicts over land use
  • effects of competition for scarce resources
    (fresh water, energy)
  • carbon footprint

14
Socio-cultural Impacts Negative
  • Create a hectic community and lifestyle
  • Introducing an immigrant workforce with attendant
    social problems
  • Competition and conflict between tourists and
    residents for available services, facilities, and
    recreational opportunities.
  • Adverse demonstration effects
  • Change or loss of local identity and values
  • Loss of traditional crafts and skills
  • Commercialization of traditional cultural events,
    arts and crafts (commodification of culture)
  • Loss of authenticity
  • cultural deterioration

15
The Standard Planning Approach
  • Conduct a SWOT analysis
  • Strengths
  • Weaknesses
  • Opportunities
  • Threats
  • Develop Strategies
  • Exploring Opportunities based on strengths
  • Exploring Opportunities by addressing weaknesses
  • Countering threats by developing strengths
  • Countering threats by addressing weaknesses
  • Applies to tourism planning
  • Geographically trans nationally, nationally,
    regionally and locally
  • tourism market segments (Business, VFR, holiday
    - - -etc.)
  • Special interest markets (cruise tourism, events
    tourism, ecotourism - - - etc)

16
But will tourism strategies work?
  • Tourism development strategies are often a mixed
    bag - -a dogs breakfast
  • Some support growth, investment, development,
    more tourist numbers
  • Others support a slowing down, lower numbers but
    greater yield
  • inconsistent strategies
  • Tourism development strategies typically ignore
    fundamental reasons why tourism growth proceeds
    in an exploitative, chaotic way
  • They are often band-aid solutions, which worsen
    tourism's negative effects
  • Ultimately, they will fail

17
4 Issues for Discussion
  • Economic Growth
  • Leakages and Multipliers
  • Investment and Value Chains
  • Resilience
  • All have relevance for understanding how to cope
    with vulnerability of SIDS

18
Economic Growth Effects of Tourism
  • Tourism is regarded as an economic development
    lever
  • Destination managers anticipate that tourism can
    - - -
  • boost business sales and output
  • income, value added
  • government receipts
  • employment
  • foreign exchange
  • reduce poverty
  • etc
  • But - - - Does tourism always offer these
    benefits?
  • What is the reality?

19
Accelerated Consumption Climate Change Energy
Fuel Material Resource Scarcity Food
scarcity Water Scarcity Ecosystem
Decline Disparate Prosperity Government
Debt Lack of Global GovernancePolitical
InstabilityPandemics
THE PERFECT STORM
20
  • Can we handle another 400 million tourists
    globally in just 6 years?

How will we handle congestion?
How will we handle waste?
How will we handle emissions?
How will we manage our thirst for water and land?
How will avoid residents backlash?
How will we protect vulnerable people and
cultures?
21
  • Are we at a tipping point?

22
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23
Two Mindsets regarding tourism
Standard Mindset Sustainability mindset
Anthropocentric Ethic Environmental Ethic
Profit Benefits
Product People
Destination Place
Price Value
Promotion Pull
Growth/Exploitation Protection
24
Tourism and the Economy Four Tools of Analysis
  • Tourism Yield Measures
  • expenditure measures popular but limited
  • Tourism Satellite Accounts
  • measures economic contribution of tourism (eg
    contribution to tourism GDP, tourism employment
    etc)
  • Economic Impact Analysis
  • estimates the effects of shocks ( or -) to
    tourism demand and supply
  • changes in economy wide output, GDP/GSP,
    employment etc
  • Cost-Benefit Analysis
  • estimates change in economic welfare from a
    policy or investment proposal

25
Tourism Yield
  • Standard measure is expenditure injected by
    type of visitor by trip and by visitor night
  • Often forms basis of destination marketing
    effort
  • Expenditure is the most commonly used concept of
    yield.
  • corresponds to the well known concept of
    marketing yield which is found in the mission
    statements of many DMOs.
  • The expenditure yield of different markets
    informs the marketing effort of many destinations
    world- wide at both national and regional levels.
  • Tourism Australia, Tourism Victoria, Tourism
    Western Australia, Kenya, NZ, Hong Kong,
    Malaysia, UK, Northern Ireland etc

26
Useful Measure?
  • Measures of economic (expenditure) yield can
    guide destination stakeholders as to
  • the origin markets that should be promoted
  • the types of products and services that should
    be developed to
  • attract high yield visitors
  • Important for assessing relative importance of
    both mature and emerging source markets
  • Who cares?
  • Destination Marketers
  • Individual firms (within and outside tourism
    industry)
  • Tourism industry stakeholders generally

27
Expenditure Yields - - of limited value !!!
  • gross expenditure data does not in itself
    provide information on what products tourists
    purchase. Give no indication of the business
    sectors that receive the sales revenues.
  • tourist expenditure is not an indicator of
    profitability to firms. Profit is not uniform
    across industries.
  • gross tourist expenditure does not inform us
    about the import content of the goods and
    services purchased by tourists (leakages)
  • gross tourist expenditure does not inform us
    about the contribution to tourism output, tourism
    gross value added, tourism employment (need a
    TSA)
  • Expenditure measures ignore the economic impacts
    of tourist expenditure (indirect and induced
    effects) such as contribution to Gross Domestic
    (or regional) Product, Gross Value Added, and
    employment. (need an economic model)
  • Does not provide information on the geographic
    spread of revenues or impacts to the wider
    destination
  • expenditure injections per se tell us nothing
    about the social or environmental costs and
    benefits associated with different visitor market
    segments.

28
The Ideal Tourist Two main Perspectives
  • Economic Perspective
  • Tourist has economic value to destination
  • 4 measures as highlighted
  • Sustainability Perspective
  • Tourist has economic, social and environmental
    value to destination
  • Does it matter which perspective is adopted?
  • YES

29
Sustainable Yield
  • In the context of sustainable development, it is
    impossible to consider the economic dimension in
    isolation from the social or environmental and
    vice versa
  • This implies a re-examination of the notion of
    yield and its implications for tourism firms
  • On a broader view, the notion of yield
    includes social and environmental value in
    addition to economic value
  • But - - difficulties in measuring social and
    environmental footprints of tourists
  • Attempts to operationalise this measure (Dwyer)
    have been unsuccessful

30
Leakages and Multipliers
  • The small economic base and the land scarcity of
    many SIDS means that they are prone to financial
    leakages and to shortage of labour and skills.
  • The contribution of tourism to GDP diminished by
    leakages of foreign exchange earnings due to
    imports of materials and equipment for
    construction, consumer goods, and repatriation of
    profits earned by foreign investors.
  • Tourism leakages in some SIDS economies can be as
    high as 56 (UN-OHRLLS, 2011).
  • Leakages reduce the multiplier effect of tourism
    expenditure

31
Standard View The Multiplier Effect
  • Direct Spending Direct spending relates to
    purchases of goods and services directly
    attributable to tourist activity.
  • Indirect spending Firms that sell GS to
    tourists purchase inputs from other firms and
    these other firms (suppliers) purchase inputs
    from other firms (suppliers) and so on - -
  • Induced spending Induced effects arise when the
    recipients of the direct and indirect
    expenditure-firm owners and their employees-
    spend their increased incomes.
  • This in turn sets off a process of successive
    rounds of purchases by supplier firms, plus
    further induced consumption - --

32
Size of Multiplier
  • The stronger are the links between tourism and
    other sectors within a destination, the greater
    will be the value of the relevant multiplier
  • Thus SIDS at great disadvantage compared to more
    developed destination

33
Direct spending by visitors is only the tip of
the iceberg
Relatively easy to measure visitor numbers,
expenditure
Hard to measure subsequent spend by suppliers,
induced effects, investment etc
The indirect impact of tourism is much larger
Huge Economic Impact
34
In the real world - - -
  • Leakages. Additional inputs and final products
    may be imported due to domestic shortages
  • reduces the multiplier effect
  • Factor supply constraints
  • economies experiencing an increase in tourism
    expenditure face labour, land and capital
    constraints.
  • tourist expenditure thus results in increased
    prices rather than increases in output, income
    and employment
  • factor constraints lead to interactive industry
    effects which change the industrial composition
    of an economy
  • Real exchange rate appreciation.
  • Increased inbound tourism will strengthen the
    real exchange rate leading to a reduction in
    other exports and/or increase in demand for
    imports at the expense of the demand for domestic
    import competing commodities
  • government fiscal policy
  • expansionary or restrictive?

35
Increased tourism to Fiji
  • Narayan (2004) used a CGE model to simulate the
    long-run impact of a 10 per cent increase in
    visitor expenditures on Fijis economy from its
    three main source markets - Australia, New
    Zealand and USA
  • The projections indicate that the impact on real
    GDP in Fiji is a relatively large 1.15 per cent
  • The increasing economic activity increases real
    wage rates which positively impacts private
    disposable incomes
  • This, in turn, leads to an increase in real
    private consumption helping to increase real GDP
  • This generates increased government revenue,
    value added tax and income tax revenues and an
    improvement in real national welfare.
  • BUT - - - - - - -

36
But - - - adverse effect on traditional exports,
together with increased imports
  • The real outputs of the hotel industry,
    transportation, commerce and other private sector
    output are amongst the most positively affected
    exports
  • However, due to exchange rate appreciation, the
    real outputs of the various traditional export
    sectors decline. These include coconut output,
    ginger, processed food, textile, clothing and
    footwear, other manufactures
  • There is also a rise in domestic prices of goods
    and services relative to foreign prices, further
    eroding the competitiveness of the traditional
    export sectors
  • These price and exchange rate effects also result
    in an increase in imports, implying reduced
    output of various import competing industries
  • For Fiji these include fruit and vegetables,
    beverage and tobacco, transport, property
    services, and business and other private services
    imports all of which are connected closely with
    the tourism industry

37
Gainers and Losers
  • study indicates that for an island developing
    country such as Fiji, an expansion in inbound
    tourism can generate growth in real GDP
  • - - However, effects on the real exchange rate,
    real wages and the CPI imply that the gains to
    tourism related sectors are offset to some extent
    by losses in traditional export and import
    competing industries
  • Similar results would apply to other developing
    economies given an expansion of the tourism
    industry

38
Local Prosperity and Poverty Alleviation
  • This aspect of sustainable tourism is concerned
    with
  • maximising the retention of tourism income in the
    local economy
  • the creation of quality employment
  • equitable distribution of economic benefits
    within society, providing opportunities for poor
    communities.
  • BUT - - Tourism does not necessarily alleviate
    poverty
  • Thailand Study (Wattanakuljarus Coxhead,2008)

39
Is an expansion of tourism good for the poor in
Thailand?
  • Tourism expansion in a destination may well
    create jobs for unskilled workers, and this would
    have a direct poverty alleviation impact.
  • But much of the gain from tourism growth accrues
    to factors other than unskilled labor, so income
    distribution may actually worsen. In addition,
    low-skill jobs in other sectors may be destroyed,
    and returns to agricultural land, from which the
    poor derive a considerable share of their income,
    may fall as tourism expands (crowding out
    effects)
  • Wattanakuljarus and Coxhead (2008) use a CGE
    model for Thailand and simulate the effects of
    tourism growth.
  • Their stated goal is to answer the question is
    tourism growth pro-poor?

40
Study Findings
  • Promotion of Thailand as a tourism destination
    will not necessarily advantage the poor
  • Distribution of the gains from tourism depends on
    the factor ownership.
  • Owners of the factor that gain most from a given
    shock will benefit most from tourism growth
  • Increased international visitation particularly
    to a less developed country such as Thailand may
    increase the gap between rich and poor
  • Thus, additional policy instruments are required
    in Thailand to correct for the inequalities
    occasioning tourism growth

41
Lessons for SIDS?
  • Expansion of tourism draws resources from other
    sector
  • There will be gainers and losers within and
    outside tourism
  • There aint no such thing as a free lunch
    (TANSTAAFL)

42
Risks of Overspecialisation
  • One type of risk relates to a dependency on
    tourism in general as an export market.
  • The global financial crisis has demonstrated the
    risks involved in tourism dependency arising from
    sudden unfavourable changes in demand from world
    markets
  • Another type of risk involves too much reliance
    on tourism from particular origin markets or too
    much reliance on a particular tourism product
    (e.g. conventions, health tourism, pilgrimage).
  • Given the discretionary nature of tourism
    expenditure, the industry is extremely sensitive
    to crises of every type (economic, environmental,
    political).
  • Some diversification of production and exports
    can be prudent even if it entails a temporary
    decrease in trade.
  •  Both of the above types of risk are compounded
    by the reality that TNCs firms are increasingly
    'footloose', with ability to move and change at
    very short notice creating uncertainty for the
    host destination

43
Volatility
44
Economic Leakages and Local Supply Chains
  • The contribution of tourism to local prosperity
    and how this reaches different parts of the
    economy and society is best understood by
    considering the structure and performance of the
    tourism value chain.
  • A value chain comprises a complex set of
    components which constitute the visitor
    experience (travel to and within the destination,
    sleeping, eating, shopping, visits and
    activities, and return home) and all the
    transactions associated with them, including the
    supply linkages behind each one.
  • tourism value chain analysis has been carried out
    in a number of countries and local destinations
    in order to assess income flows in the tourism
    sector and the percentage that flows to poorer
    groups of the society to identify interventions
    to help poverty reduction
  • Dwyer and Thomas, Cambodia study
  • different visitor yield measures provide an
    important basis for the development of strategies
    to increase tourism's pro-poor impact
  • .

45
Pro poor income effect in Cambodia by origin and
length of stay
46
Cape Verde Study of Tourism Value Chain
  • Direct jobs in the tourist sector number of
    jobs in the tourism workforce, including hotel
    workers the proportion in non-management grades
    and, of those, the likely proportion from poor
    backgrounds
  • Indirect links with the construction sector the
    numbers of FTE construction workers actively
    building tourism assets in Cape Verde, and their
    average daily wage rates almost all
    constructions workers are from poor backgrounds
  • Indirect links with agricultural supplies the
    value of local purchases of food and beverages,
    based on spend by hotels on food and beverages
    the proportion of this that is supplied locally,
  • Taxation This mechanism for transferring
    resources from tourist to poor workers appears to
    be supported in Cape Verde through progressive
    policies relating to poverty reduction 

47
Recommendations
  • recognising that tourism in Cape Verde does not
    currently take place where poor people live
  • ensuring the availability of indigenous workers
    with the correct skills to participate fully in
    the tourism sector as it moves forward (compare
    Macau)
  • working with the construction sector to identify
    and train Cape Verdean workers to occupy higher
    skilled positions with attractive wage levels
  • identifying specific agricultural inputs required
    by the tourist industry which are particularly
    appropriate for cultivation in Cape Verde
  • reviewing the fiscal incentives awarded to the
    tourist industry to create a more level playing
    field between foreign and domestic companies.

48
Lessons for SIDS?
  • Undertake detailed analysis of the tourism value
    chain
  • to identify how the local island economy and
    communities can gain maximum advantage from
    tourism
  • to design and implement measures to strengthen
    local employment and engagement in the sector,
    including access to training
  • Policy makers should
  • integrate tourism in national sustainable
    development plans
  • emphasise the linkages of tourism with local
    economies
  • Promote a foreign investment framework that
    stimulates the use of local products and skills

49
Community Engagement
  • essential that local communities are consulted,
    engaged and empowered to influence decisions on
    tourism development in SIDS (UNWTO)
  • This dialogue should engage communities in
  • planning and decision taking on tourism at a
    local level
  • pursuing equitable benefits from tourism within
    communities
  • a beneficial interaction between communities and
    tourists

50
Four Types of Agents for Sustainable Tourism
  • The Responsible Government
  • The Responsible Tourist
  • The Responsible Operator
  • The Responsible Host
  • Each has role to play in reducing vulnerability
    of small island tourism

51
The Responsible Government
  • Employs comprehensive evaluation criteria in its
    own decision making in formulating tourism
    development strategies and policies
  • more use of cost benefit analysis (CBA) in
    assessing sociocultural, environmental and
    economic effects
  • identification of gainers and losers among
    tourism stakeholders and wider community
  • employs precautionary principle in decision
    making
  • takes genuine account of effects on future
    generations
  • addresses market failures associated with tourism
    development
  • enacts environmental protection mechanisms with
    adequate monitoring and enforcement
  • values community consultation
  • Tourist operators should have no licence to
    operate in the future unless they act
    responsibly

52
The Responsible Tourist
  • Has greater social, cultural and environmental
    awareness regarding tourisms impacts.
  • Responsible Travellers Low impact, high yield,
    dispersed, engaged
  • Adheres to credo of responsible traveller
  • Wants to learn and grow as a result of travel,
    to be changed, transformed by having experiences
    that help them see the world from a different
    perspective, or that enrich, challenge and
    provide more fulfilment
  • seeks out the different, the authentic, and the
    real, more meaningful social encounters,
  • prefers to deal with environmentally and
    socially responsible operators
  • recognises that health, happiness and well being
    cannot be achieved exclusively through
    acquisition of material goods
  • increasingly seeks quality over quantity and
    experiences over products

53
The NEW Consumer
54
New Consumers still want MORE, but they are
defining that differently. Now they seek more
meaning, more deeply felt connections, more
substance, more control and a greater sense of
purpose.
55
Implications of New Tourist for Destination
Marketing importance of Pull
  • PULL relates to the biggest challenge most hosts
    face on a daily basis attracting the right
    customer.
  • Destination marketing should be LESS PUSH AND
    MORE PULL
  • Instead of asking what tourists do we want to
    target in promotion, we should ask what
    tourists do we want to attract? These are
    different questions
  • Involves creating the type of destination that
    ideal tourists will wish to visit
  • the challenge is to attract the right customer
    the one who truly values what the provider has to
    offer. (The ideal tourist?)
  • Attracting the right type of tourist is more
    important than attracting large numbers

56
Implications of New Tourist importance of
place
  • The starting point for all tourism planning is
    about experiences that are unique to a PLACE
  • It is the place that can be valued, celebrated,
    expressed and experienced
  • Emphasis on PLACE provides opportunity to sustain
    value because every place is unique.
  • Respect for Place implies that space and
    locations are not merely space as real estate to
    be carved up and enhanced with amenities and
    infrastructure.
  • Sense of Place provides an antidote to the sea of
    sameness, uniformity and mediocrity that plagues
    tourism development
  • Respect for local identities and cultures
    benefits not only the host country and its
    people, but also correspond to the customers
    desire for authenticity
  • reduces market dependency and volatility

57
The Responsible Operator
  • Understands customer needs
  • attracts stakeholders who are in alignment with
    the core purpose and values of firm
  • Social Responsibility becomes an agent of change
    through conscious leadership to make the
    community a better place
  • understands that doing good is good for business.
    Thus introduction of TBL, CSR, shared value not
    an additional cost of doing business
  • adopts a long term perspective on business
    outcomes
  • Strategic alliances and partnerships.
    Collaboration replaces competition as firms in
    different sectors work together to deliver the
    whole experience to visitors
  • Use of local material and skills whenever
    possible.
  • emphasises Relationship marketing, Customer
    Relationship Management, brand equity
  • close links with customers makes tourism markets
    more resilient to changing circumstances in the
    remote environment
  • attempts to attract Responsible Tourists (Pull)

58
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59
The Responsible Host Community
  • Responsible hosts must ask What kind of future
    do we wish to create?
  • Community members look into the future and
    imagine what they would like their community to
    be (visioning)
  • involves identifying what is really valued by
    the community
  • What type of tourism do we want (if any) ? (the
    ideal tourist?)
  • What kind of tourist do you wish to attract? Mass
    tourists vs Responsible tourists
  • DMO think of themselves as HOSTS, assuming a much
    broader range of responsibilities.
  • Local residents can to express what it means to
    them and be involved in extending the invitation
    to guests to experience the place for themselves
  • Adopts attitude that destination is a protected
    landscape wherein the goals for conservation are
    dramatically expanded from protection of nature
    and biodiversity to include a broader cultural
    context and social agenda
  • Views the products of Mass tourism as out of
    place

60
Conclusion
  • Imagine......Tourism that comprises
  • a network of host communities each exploring how
    to deliver net benefits from tourism,
  • a good living for people,
  • Transformative experiences for guests
  • promoting cultural tolerance and peace
  • Environmentally friendly
  • reduces volatility
  • Do we have this???. Answer NO
  • Need change of mindset wherein tourism
    stakeholders truly adopt the principles and
    practices of a community based sustainability
    model

61
  • Thank You
  • Merci
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