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USAID/Nepal Private Sector Engagement Assessment – Tourism Sector

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USAID/Nepal Private Sector Engagement Assessment – Tourism Sector USAID/Nepal Private Sector Engagement Assessment – Tourism Sector Photo Credits: Paragliders over Phewa Lake, Pokhara, by Ronhjones "Canyoning NP", by Krish Dulal Lumbini (2007) and Pokhara (2007), by Vyacheslav Argenberg NOVEMBER 2015 This publication was produced for review by the United States Agency for International Development. It was prepared by SSG Advisors, LLC in collaboration with the U.S. Global Development Lab’s Center for Transformational Partnerships, the Offices of Private Capital and Microenterprise and the Development Credit Authority, and the Asia Bureau at USAID. TABLE OF CONTENTS List of Acronyms .............................................................................................................. 3 Preface ............................................................................................................................ 4 Introduction and Methodology ......................................................................................... 5 Current State of the Sector: Overall Market Analysis ...................................................... 6 Current State of the Sector: Key Stakeholders’ Perspective ........................................... 6 Private Sector’s Vision of Tourism and How it Envisions Achieving That Vision ............. 9 Potential Role for USAID in Improving the Overall Sector ............................................. 13 BOX: Market Segment Example ............................................................................................15 BOX: USAID/Macedonia Example on Supporting Market-Driven Tourism .............................18 Development Value of Unlocking Tourism’s Potential ................................................... 19 Other Donor- and Government- Supported Efforts in the Sector ................................... 19 Annex 1: Tourism Sector Meeting Notes ....................................................................... 21 TOURISM ASSOCIATIONS ..................................................................................................21 NATIONAL GOVERNMENT ..................................................................................................24 INTERNATIONAL DONORS .................................................................................................25 TOUR OPERATORS - (Emerging) ADVENTURE ..................................................................28 TOUR OPERATORS - Trekking, Cultural, and Other.............................................................30 AIRLINES ..............................................................................................................................33 LODGING ..............................................................................................................................35 CONGLOMERATES ..............................................................................................................38 2 LIST OF ACRONYMS ATTA Adventure Tourism Trade Association DFID Department for International Development (UK) FITs Free Independent Travelers GDP Gross Domestic Product GoN Government of Nepal IFC The International Finance Corporation MCC Millennium Challenge Corporation NTB National Tourism Board Samarth-NMDP Samarth National Development Programme TAAN Trekking Agencies' Association of Nepal TIA Tribhuvan International Airport UNESCO United Nations Educational, Scientific, and Cultural Organization UNWTO World Tourism Organization 3 PREFACE Following Nepal’s earthquake in April 2015, both USAID/Nepal and the private sector-focused offices in USAID/Washington came together to reflect on how the Agency could reinforce the private sector’s ability to support the Nepalese recovery and reconstruction effort. The USAID/Washington team, comprising Global Partnerships (GP), Private Capital and Microenterprise (PCM) and the Development Credit Authority (DCA), grounded its work in the theory that by leveraging the activities and resources of the recovery effort, the Government of Nepal (GoN) and development partners could empower the private sector as a partner and service provider for the recovery. In addition, effective engagement of the private sector would solidify and strengthen its role as the economic foundation for Nepal’s future growth and development. In responding to USAID/Nepal’s needs and the current realities of its portfolio, the assessment team focused on two main objectives: 1. Identify potential market-based approaches to leverage private sector ideas, energy and resources for the recovery effort and longer-term, inclusive economic growth. 2. Evaluate private sector needs, interests and opportunities across agriculture, construction and tourism with the intention to “build back better”. The team also focused on alternative pathways to recovery, as indicated by the private sector’s interest and willingness to invest. Importantly, the team sought to accomplish these objectives with the least possible management burden for the Mission by drawing together the Agency’s resources and expertise in partnerships, enterprise development and private capital mobilization to provide a comprehensive vision for promoting private sector-led growth in these sectors. The assessment team set out to identify how USAID could strategically deploy its human and financial resources to unlock private sector potential in the target sectors that would lead to significant development results. The team conducted the analysis from a private sector perspective, so as to understand both sector-specific and cross-cutting constraints and opportunities, and where the private sector seemed most likely to channel its energy and resources to address sector-level issues, from enabling environment to infrastructure. While taking into account the pressures and limitations facing the Mission, the team looked to highlight opportunities for it to promote engagement models, market-based approaches and private sector services that could drive a deeper, more sustainable recovery. The recommendations that follow outline ideas for Mission-based interventions that could be achieved with current resources either through investing in new projects, potential modifications to existing projects, supporting additional studies and analysis, and brokering partnerships or collaborations that can support this private sector-led approach. However, unlocking the private sector’s development potential in each sector will require a sustained course of action. The recommendations note which steps can be taken immediately by the Mission, along with suggestions for longer term engagement. This report serves as an initial starting point for sharing ideas and opportunities – along with models used by other entities across USAID that could inform the Mission’s approach – but the USAID/Washington team expects to continue to iterate on these ideas with the Mission to develop the most effective opportunities. 4 INTRODUCTION AND METHODOLOGY While USAID/Nepal has not previously invested in the tourism sector, the earthquake presented the Mission with an opportunity to reflect on the potential role USAID could play in helping the sector “build back better.” Since the industry largely comprises private sector actors, the Mission asked the Assessment Team to meet with a range of tourism-related companies and organizations to better understand the following questions: What is the current status of the tourism industry, particularly from the private sector perspective? How can investment in tourism create a more competitive and attractive destination, particularly in a way that will benefit the population segments that USAID’s assistance targets? What restricts growth and innovation in the sector? Where might USAID interventions have the biggest impact? The team met with twelve local tour companies, representatives from the National Tourism Board and the National Tourism Promotion Committee, Nepalese tourism associations, international travel associations, NepalNow, international donors (DFID/Samarth-NMDP, IFC and UNESCO), C-Suite executives from local hotels, airlines and conglomerates with tourist- related investments, and equity fund managers. In addition, the team reviewed the National Tourism Strategic Plan 2015-2024, the Post- Disaster Needs Assessment and Samarth-NMDP’s studies on tourism in Nepal. It also considered materials from USAID tourism projects in other countries, the World Tourism Organization (UNWTO) and the Adventure Tourism Trade Association (ATTA). Due to time constraints, the team did not explore many sub-sectors of tourism (e.g. medical, wellness) or with much depth (e.g. cultural/festivals, wildlife safari, domestic). However, the team did focus on adventure tourism, given its alignment with USAID/Nepal’s environment portfolio. Adventure tourism includes trekking and mountaineering (“hard adventure”), as well as rafting, mountain biking, and other activities (“soft adventure”). Not only does this segment build on Nepal’s existing strengths and ‘brand’ (as limited as it is), it reaches more rural and remote areas than others. Moreover, adventure tourists are generally more accepting of the kind of ambiguities and challenges that travellers are likely to encounter in Nepal (e.g. airports without air conditioning, lackluster customer service in restaurants). For the purposes of this assessment, adventure tourism will encompass both “hard” and “soft”.1 1 Hard vs. soft adventure: During the interviews, the assessment team repeatedly heard reference to “soft adventure” and “hard adventure”.
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