Subsector Analysis of the Tourism Industry in Negros Occidental

Project No. 01.2467.7-001.00 Small and Medium Enterprise Development for Sustainable Employment Program (SMEDSEP)

COOPERATION Republic of the Philippines

Federal Republic of Germany

Subsector Analysis of the Tourism Industry in Negros Occidental

February 2005 Prepared/ Written by: Marian Boquiren, Ivan Idrovo and Helen Valdez, SDCAsia, Inc. Consultants [email protected]| www.sdcasia.ph

Published by: The Small and Medium Enterprise Development for Sustainable Employment Program (SMEDSEP) A DTI-TESDA-GTZ Program 10th Floor, German Development Center, PDCP Bank Centre Building, V.A. Rufino cor. L.P. Leviste Streets, Salcedo Village, Makati City www.smedsep.ph | [email protected] Ms. Martina Vahlhaus, Program Manager

Printed on: March 2005 - Makati City, Philippines Subsector Analysis of the Tourism Industry in Negros Occidental

February 2005 Table of Contents

Page Acronyms 2 Executive Summary 3 Section 1: Introduction 6 A. Objectives of the Study 6 B. Scope of Work 6 Section 2. Beginnings of the Focus on Tourism Development 8 Section 3. Industry Structure 10 A. Overview 10 B. Primary and Secondary Resource Bases 13 C. Tourism Services and Facilities 17 D. Enabling Support Environment: BDS/TVET 20 Section 4. Industry Performance 21 A. Tourist Arrivals 21 B. Tourism Receipts 22 C. Employment 22 Section 5. Proposed Fields of Change 23 A. Product and Infrastructure Development 23 B. Promotion and Market Development 25 C. Quality and Competitiveness Improvement 26 Section 6. Proposed Program Interventions 29 A. Institutional Development/Planning 29 B. Product and Infrastructure Development 29 C. Promotion and Market Development 30 D. Quality and Competitiveness Improvement 30

ANNEXES A Food Services B Travel and Tour Operators C Accommodation Services D Resorts E Transport Operators F Validation Workshop Summary Results G List of Key Informants H Accreditation I Classification and Standards: Hotels

BIBLIOGRAPHY

1 Acronyms

ANP Association of Negros Producers BDS Business Development Services CDs Compact discs COMELEC Commission of Elections CPQI Continuous Productivity and Quality Improvement CRS Customer Reservation System DA Department of Agriculture DDTVET Demand driven Technical and Vocational Education and Training DMO Destination Marketing Organization DOT Department of Tourism FGD Focus group discussion GDS Global Distribution System GMP Good Manufacturing Practices GTZ Deutsche Gesellschaft fur Technische Zusammenarbeit (GTZ) GmbH HRANO Hotel and Restaurant Association of Negros Occidental HRM Hotel and Restaurant Management IATA International Air Transport Association ICT Information and Communications Technology ISO International Organization for Standardization IT Information Technology LGU Local Government Unit LTFRB Land Transportation and Franchising Regulatory Board MICE Meetings, Incentives, Conferences, and Exhibition NAIA Ninoy Aquino International Airport NAITAS National Association of Independent Travel Agencies NATTO Negros Association of Travel & Tours Organization PAGCOR Philippine Amusement and Gaming Corporation PAL Philippine Airlines PCCI Philippine Chamber of Commerce and Industry PCVC Philippine Convention and Visitors Corporation RANI Resort Association of Negros Island SA8000 Social Accountability 8000 SBS Subsector Business Service SDCAsia Strategic Development Cooperation Asia SME Small and Medium Enterprises TCDC Tourism and Cultural Development Committee TDC Tourism Development Council TESDA Technical Education and Skills Development Authority TVET Technical & Vocational Education and Training

Executive Summary

• The tourism development agenda of Negros Occidental had its roots during a period of socio- economic crisis resulting from adverse conditions of the world sugar trade. Among the early tourism related efforts and which has become an annual traditional event is the Masskara Festival. This annual event is popular to local and foreign tourists and has helped place Bacolod, the City of Smiles, in the tourism map.

• Primary and secondary tourism resources of Negros Occidental consist of the following:

- Marine-based resources: Negros Occidental has a long coastline and boast of several natural attractions such as white sand beaches, diving sites, and marine sanctuaries.

- Land-based resources including flora and fauna: The northern and western parts are largely level plains and gently rolling slopes while the remaining portion is a land of sierras of varying elevations.

- Cultural-heritage resources: Rich culture and history of province are captured and preserved in ancestral mansions, historical monuments, buildings and churches built during the Spanish era.

- Festivals/Events: Negros Occidental is said to have the most number of festivals in the Philippines depicting certain cultures in each of its 19 towns and 13 cities.

- Entertainment: There are a number of bars with live entertainment, video, karaoke, game rooms and discos, with majority located in the Goldenfields Commercial Complex.

- Sports: Bacolod, the province's capital city has three challenging and world class golf courses, making it the golfing center in the Visayas.

- Shopping: Negros Occidental is known for its innovative gifts and houseware and food products.

• Tourism services and facilities in Negros Occidental consist of the following:

Accommodation 86 establishments with 10 first class and standard hotels; 23% are DOT accredited Food Service 1,104 food establishments in the province as of June 2004, with majority falling under the micro scale category. Only 5 establishments are DOT accredited. Travel and tour 48 establishments with 3 accredited by DOT; 30+ tour guides operators Resorts 65 resorts --- beach, mountain, agriculture, and inland Transport 3 airlines and 4 inter-island shipping companies servicing Bacolod route; inland transportation consisting of buses, jeepneys, taxis, and car rentals

• Main issues and challenges facing the industry are the following:

- Current downward trend in average expenditure per visitor

- The need for more effective and cohesive image, market positioning, and promotion

- The need to expand tourist season and reduce seasonality

- Wide variances in quality of products and services as well as the need to align these to market requirements and standards - Weak demand and supply of support services and technical and vocational training needed to improve performance of tourism enterprises and their workforce

- The need to create industry synergy and higher level of cooperation between and among public and private stakeholders within and outside the province (especially with neighboring tourism destinations).

- The need to strengthen environmental management to conserve and enhance the vital natural and heritage of the province, and that sustainable tourism development practices are observed.

• Building on current public and private sector tourism development initiatives, the following are the proposed fields of change and strategies to address the above challenges:

Product and Infrastructure Development Development of a compelling brand and product portfolio, which meet the desire for a distinctive, authentic and uniquely Negros Occidental experience Development of cultural, sporting, and social events that would contribute to the extension of the tourist season and the achievement of higher yields, improved profitability, and increased employment in the industry. Improvement of tourism related infrastructure Improvement of waste management Promotion and Market Development Improvement of destination marketing of Negros Occidental Availability of tourism information at major gateway points (e.g., airports in key cities in the Philippines, international airports in other countries) and in strategic locations within Negros Occidental. Development of tourism internet portal for Negros Occidental --- a well-designed full concept one-stop tourism virtual mall that provides visitors access to information and reservation as well as links to various tourism intermediaries. Better use of travel agencies, tour operators, and other local/regional/international tourism intermediaries to promote and distribute Negros Occidental tourism products complemented by publicity in appropriate media to create awareness and establish credibility within the segments. Quality and Competitiveness Improvement Upgrading of existing management, marketing, and general administration courses to international standards and re-alignment of requirements of the everyday operations of the tourism trade. Development and/or strengthening of local capability to deliver dualized training programs of international standards and with balanced emphasis on operational and people skills for various competencies required in the hospitality, travel, tour, and transport segments. Promotion among enterprises of the implementation of a Continuous Productivity and Quality Improvement (CPQI) Program Promotion of the effective use of information technology in improving business operations and marketing Promotion and development of a tourism-friendly culture across all sectors of the community through public awareness and education programs Establishment of a province-wide industry led quality seal program

• It is proposed that program interventions be directed towards the following:

4 Institutional Development/Planning Initiate the re-organization of the Tourism and Cultural Development Committee (TCDC) or a similar body composed of representatives of key players in the tourism sector such as ATANO and provide organizational development assistance. Technical assistance to TCDC or similar structure in the review and updating of the Tourism Master Development Plan including mentoring services during the first year of implementation Assist the TCDC in dissemination of salient points of the development plan to all stakeholders. This may be done through forums, workshops, and media publicity. Organizational development assistance to selected tourism industry associations. Product and Infrastructure Development Support the establishment of a self-sustaining tourism market intelligence system. Technical assistance to the TCDC or similar structure in the further definition of Negros Occidental brand and positioning including its consequent adoption by the various stakeholders. Develop local providers of product development services. Stimulate demand for product development services and development of various schemes to motivate tourism businesses to invest in product development Assist in the development of advocacy campaigns for increased allocation and/or prioritization of public infrastructure improvements (e.g., airports, roads, etc.). Technical assistance in the development of waste management system and establishment of pool of local experts that can assist enterprises in the set-up of their own systems. Promotion and Market Development Support the development of tourism internet portal for Negros Occidental. Improve capability of existing journalists, advertising companies, web designers, multimedia designers, graphics company, souvenir manufacturers, marketing and promotion companies, and the like to address promotion and marketing needs of the tourism industry. Technical assistance to the industry via the Tourism Council in the development of a marketing and communications plan. Broker marketing agreements between tourism service establishments and travel and tour operators. Parallel to this, assist Negros-based travel and tour agencies in forging partnerships with national and international travel intermediaries including Philippine embassies and trade attaches. Quality and Competitiveness Improvement Facilitation of linkages between industry, local providers and establishments offering internationally recognized courses Assistance in the development and/or customization of curricula as well as capability build-up of local training providers Assistance to training providers in the development of various delivery and payment modalities to address affordability and accessibility issues Development of local capability to deliver Continuous Productivity and Quality Improvement Program to enterprises. Parallel to this, stimulation of demand for program through demonstration of benefits and impact via pilots Assistance to IT training institutes in the development of customized training program for tourism businesses. Demonstrate benefits of use of IT to enterprises through pilots Marketing assistance to providers with new and/or high quality product offers Technical assistance in the development of public awareness program designed to promote province wide tourism friendly culture Technical assistance in the development and implementation of Quality Seal program

Section 1 INTRODUCTION

A. OBJECTIVES OF THE STUDY

The SMEDSEP Program is an integrated approach for the development of the private sector in the Philippines with a regional focus on the Visayas. The program comprises of four components namely:

1. SME Policy/Enabling Environment for SMEs 2. Business Development Services (BDS) for SMEs 3. Access to Financial Services for SMEs 4. Demand-driven training programs for the workforce

Using the Subsector Business Service (SBS) approach to enterprise development, SME stakeholders of Negros Occidental identified Tourism as the pilot subsector for components 2 and 4 based on the assessment that it has the highest potentials for income and employment generation. The next step is the subsector analysis in order to gain a greater understanding of the market players, their roles, and interrelationships in the tourism sector.

The objectives of the subsector analysis are to:

• Identify final sales markets and market segments • Identify market channels and trends within the tourism subsector • Identify the primary players of the tourism subsector, their roles, and interrelationships • Create the tourism subsector maps/value chain that describes the above • Identify constraints of the subsector and opportunities for growth of the sector • Identify BDS and Technical and Vocational Education and Training (TVET) interventions that can address the tourism sector constraints

B. SCOPE OF WORK

The report has been prepared in close consultation with key players in the public and private sectors involve in the Tourism sector in Negros Occidental. The research is qualitative rather than quantitative.

A mission was conducted by Katja Legien sometime in May 2004 during which parameters of the subsector study were defined. Likewise, a preliminary tourism subsector mapping was conducted by the SMEDSEP and DDTVET component teams to identify industry groups that would be included in the study and potential key informants. The scope of work of this study includes:

1. A profile of the tourism sector in Negros Occidental

2. A snapshot profile of the following 5 subsectors presented in the annexes in terms of: a) industry structure; b) value chain; c) human resources

• Food service • Travel agencies and tour operators • Accommodation • Resorts • Transport operators

3. Identification per subsector of the following:

• Constraints

6 • Current initiatives to address constraints • Potential solutions

4. Recommendations on fields of change and BDS/DDTVET interventions Beyond the scope of SDCAsia’s assignment is an analysis of the sector vis-à-vis supply of BDS and TVET in the market. Likewise, the report does not cover quantitative analysis of demand as well as identification of specific features and contents of recommended BDS and TVET products. Also, given the small sample size as identified and determined by the SMEDSEP program, the report makes no claims of statistical relevance and relied mainly on available secondary data, which is hazy at the moment given the infant status of the sector.

Section 2 BEGINNINGS OF THE FOCUS ON TOURISM DEVELOPMENT

From the 1950s to the 80s, Negros Occidental's economy was anchored around one commodity, "sugar", which made it the country's premier sugar producer. However, when the world sugar prices plummeted to rock bottom sometime in 1983, the economy of Negros Occidental was devastated. From that experience, Negrenses learned to diversify their economy. Although sugar still remains as the main agricultural produce of the province with about 56% of its land area planted to sugar cane (contributing 60% of the country’s total sugar production), other profitable ventures sprouted such as prawn and fish ponds, farms nurturing high value crops and floral species, as well as handicraft businesses. The province wide focus on the development of the tourism industry also started during this period of socio-economic crisis.

The tourism industry development agenda was received enthusiastically by both the public and private sectors as a positive way forward. The following initiatives from the government set in motion the development of the tourism industry:

1. Creation of the Bacolod City Tourism Office by virtue of City Ordinance No. 158 on February 7, 1996. Operations started on March 14, 1997 with the appointment of a Chief Tourism Operations Officer and the eventual filling up of other positions. This office attends to the different tourism activities of the City.

2. Set-up of the Tourism and Cultural Development Committee (TCDC), a policy making body composed of 8 government agencies and 7 private sector representatives. Under the TCDC, a tourist reception desk manned by a TCDC employee has been put up at the arrival area of Philippine Airlines in the Bacolod Airport. This reception desk provides brochures, and other tourism related information for the tourists. Likewise, several tourism activities have been pushed or were supported by the city government through the initiatives of the TCDC.

8 3. Devolvement of the functions of the Department of Tourism (DOT) to the local government unit in accordance with the implementation of the Local Government Code in 1992. Tourism is currently being handled by the Economic Enterprise Development Department of the city government. The Provincial Tourism and Promotion Office was created under the Office of the Governor in 1994 followed by the city and municipal offices. In 2004, the Negros Occidental Tourism Center was established.

4. Inclusion of the promotion of Negros Occidental as a tourist destination in the 7-point agenda of the incumbent provincial governor.

5. Active promotion of Bacolod as a convention center outside of Metro Manila by the city and provincial governments of Bacolod and Negros Occidental respectively. The mayor and other government officials held a series of meetings with various organizations to convince them to hold their conventions in Bacolod City. Until to this date, the government provides full support to all the big conventions held in the city.

6. Development, management, and operations of the Mambukal Mountain Resort and the Panaad Theme Park by the provincial government with support from the city government.

7. Development of the Regional Tourism Master Development Plan in 2000 with DOT Region 6 as the lead agency.

Private sector early responses to the call for diversification to tourism consisted of the following:

1. Construction and/or renovation of hotels to improve capacity to host conferences, seminars, and related events and in anticipation of growing number of inbound tourists.

2. Opening up of historical sites and development of both natural and man-made attractions.

3. Establishment of resorts, restaurants, and other tourism related services.

4. Strengthening and promotion of cultural festivals with Masskara Festival as the most popular, biggest, and most established annual event. The Masskara Festival is a Mardi Gras-like celebration that features masked and costumed street dancers, with fairs and carnivals. This is held on the third week of October, and coincides with the city's Charter Day celebration.

The Masskara festival was conceived to bring back the resilient spirit of the Negrense during the sugar crisis and the aftermath of the sinking of the Don Juan ferry, a vessel carrying many of Bacolod’s prominent families. To ease their pain, local artists, civic groups and the government organized a festival of smiles. Coined from the words “mass,” meaning a multitude of people, and the Spanish word “Kara,” meaning “face,” the Masskara Festival became a yearly showcase of the city’s talents and creativity and a celebration of their enduring spirit.

The highlight of the festival is the Masskara Street Dance competition where people wearing elaborate masks and garbed in colorful costumes move to the rhythm of Latin music along the streets. This display of joviality, coordination and stamina has become popular to local and foreign tourists and has helped place Bacolod, the City of Smiles, in the tourism map.

5. Promotion of Negros Occidental through individual website initiatives, participation in national and international Travel Mart, and other similar activities. One annual event that has helped put Negros in the consciousness of many of the Metro Manila residents is the annual bazaar and trade fair organized by the Association of Negros Producers.

Section 3 INDUSTRY STRUCTURE

A. OVERVIEW

Tourism is the term given to the activity that occurs when tourists travel. This encompasses everything from the planning of the trip, the travel to the place, the stay itself, the return, and the reminiscences about it afterwards. It includes the activities the traveler undertakes as part of the trip, the purchases made and the interactions that occur between host and guest. In sum, it is all the activities and impact that occur when a visitor travels.1 Tourism, therefore, involves four overlapping phases of consumer activity:

- Pre-travel activity: finding information, preparation of itinerary, booking the holiday or travel arrangement, and preparation before travel

- Travel: trip to and from the destination including stops en route

- Activities at destination: may be uniform in nature or characterized by a wide range of activities

- Post-consumptive behaviour: processing of photographs, handing out of souvenirs, talking about experiences, etc.

Based on the above, it can be seen that the development of an attractive tourism product package involves a diverse range of participants. Product creation in the tourism industry can be illustrated as follows:

Accommodation/ Food Service/ Tourism Distribution Product

Transportation (Tour Operators/ (Combination of Material Travel Agencies) Product and Service)

Attractions

A tourism product involves a combination of services which deliver primarily intangible, sensual, and psychological benefits as well as some tangible benefits. As such, tourism promotion, development and growth entail province and industry wide collaboration and cooperation. In many of the manufactured goods markets, consumers are fixed and products are mobile. In travel and tourism markets, consumers are mobile and the products are fixed. Revenues are captured when travelers arrive at the destination. Marketing and delivery of a tourism product involve synergistic interaction of the following six elements:2

1 Mill and Morrison, 1992 2 Les Lumsdom, Tourism Marketing

1. The physical plant, such as site or natural resource, weather and infrastructure, and the design standards applied to the built environment.

2. Service, which refers to the tasks required to meet the needs of the tourists such as in a hotel or airline facility. It is the technical element of a service provision.

3. Hospitality refers to the way in which service is provided, i.e. the something extra that makes a visitor feel good. It is distinct from the technical competence of service provision.

4. Freedom of choice refers to the notion that the visitor has some degree of choice in order for the experience to be satisfactory. It is the trigger to relaxation and allows some degree of spontaneity.

5. Involvement refers to the underlying services marketing principle of simultaneous performance or consumption. It involves participation and some degree of engagement.

6. The sixth dimension is the tourism product process. Resources are used to create tourism infrastructure and intermediate processed inputs, known as tourism facilities, but this is still a commodity. The final refinement is provided by the customer; the outcome is the ‘personal experiences’ which is intangible but highly valued experiences such as recreation, business, and social contacts.

The tourism sector in Negros Occidental, as elsewhere, comprises a network of interacting components, as illustrated in Figure 1. The components of the sector may be grouped as follows:

Component Description Primary resource base Natural environment, heritage, culture, towns and villages, outdoor activity Secondary resource base Entertainment, shopping, festivals, events, and other built attractions Tourism facilities and services Services and facilities necessary to enable tourists to access and enjoy the resources and products available Infrastructure Roads, communication facilities, power and water facilities Training and business support Business development services (BDS) and technical and vocational services education (TVET) for workers/employees and owners of tourism based enterprises Policy/enabling environment/ Institutional arrangements/structures, sectoral policies, governance community involvement and environmental management

11 Figure 1. NEGROS OCC. TOURISM INDUSTRY PLAYERS

CONSUMERS Business Travellers LEGEND: Leisure Travellers Mix of business and leisure Dotted lines indicate weak linkages

EVENTS, TRAVEL AND TOUR TOURISM OPERATORS MEDIA TRANSPORT ELSEWHERE SERVICES (NATIONAL/ INTERNATIONAL LOCAL TRAVEL LOCAL TOUR AGENTS OPERATORS

HOSPITALITY: TRANSPORT AS ACCOMMODATION TOURISM

NEGROS OCCIDENTAL

HOSPITALITY: NATURAL MANMADE FOOD/BEVERAGE ATTRACTIONS ATTRACTIONS/EVENTS

SUPPLIERS

I N F R A S T R U C T U R E

BDS/TVET PROVIDERS

REGULATORY AGENCIES (ACCREDITATION, SANITATION, PERMITS, ETC.)

LOCAL GOVERNMENT/TOURISM AGENCIES/TCDC

12 B. PRIMARY AND SECONDARY RESOURCE BASES

The strength of the appeal of a destination to tourists is, more than any other factor, linked to the quality of its primary and secondary resource bases. These resources stimulate the interest to visit a destination area as well as define its image. Natural, man-made and cultural attractions provide the visitor with the essential incentive to choose a destination and are also the primary measures in assessing the satisfaction of having visited a destination. In general, the demand for the other components of tourism derives from the original stimulus that comes from the interest in experiencing the different attractions.

The vast array of natural, secondary, and cultural resource bases of Negros Occidental provides viable tourism assets that can potentially attract a diverse range of tourists if properly promoted and packaged together with quality tourism services and facilities. These tourism assets include the following:

1. Marine-based resources: Negros Occidental has a long coastline and boast of several natural attractions such as white sand beaches, diving sites, and marine sanctuaries. Examples of areas that can be promoted as Diver’s Paradise are:

- The deep blue waters of China Seas in Southern Negros, particularly in the area of Danjugan Island in Bulata, Cauayan

13 - Sipalay Island, which has potential for development based around water recreation, including underwater activities and surface recreation.

Although sustainability needs to be assured by low-key development, consideration should be given to a small beach hotel and associated beach upgrading.

A coastal resource management project, which in the long term seeks restoration of damaged reef areas, is being implemented in Sipalay and Danjugan Islands under the umbrella of a provincial environment program called the Southern Negros Coastal Development Program. The Philippine Reef and Rainforest Conservation Foundation, Inc. in partnership with Coral Cay Conservation started in 2000 the conduct of training on marine resource management to communities, fisherfolks, and government personnel.

- Other places such as the Isla Puti, Sagay Marine, Lakawon Island or Inampulugan Island, etc.

2. Land-based resources including flora and fauna: The northern and western parts are largely level plains and gently rolling slopes while the remaining portion is a land of sierras of varying elevations. Tourism assets include the following:

- Mt. Kanlaon, which rises to an elevation of about 8,100 feet, is the highest peak in the province, and is considered also be the highest in central Philippines. Other mountains are Mt. Mandalagan and Mt. Silay. Aside from beautiful sceneries, these areas boast of therapeutic hot springs, rejuvenating mountain streams, and several mountain climbing, hiking, and trekking trails.

- Rural uplands, where there is potential to capitalize on the scenic beauty of the Balabag highlands and the surrounding areas. The peaks in the area have exceptional viewscapes (including views of San Carlos, Mount Kanlaon, Cebu and Bacolod) and good access is available from the Trans- Link Highway. As per the San Carlos City development plan, it is envisaged that development would initially be built around the provision of countryside recreation, including viewpoints, walking trail and rest area provision, together with a core visitor center.

14 - Other areas are: Mambukal Mountain Resort, Patag Valley, Guintubdan, Codcod Rice Terraces, Ubong, Hagdanan, Pating Caves, etc.

3. Cultural-heritage resources: Rich culture and history of province are captured and preserved in ancestral mansions, historical monuments, buildings and churches built during the Spanish era. The ancestral houses, in particular, reflect the grandiose and lavish lifestyle of the Negrense elite during the turn of the century. Other attractions with rich cultural and industrial significance are the sugar mills, vintage steam locomotives, and the Sugar Museum.

4. Festivals/Events: Negros Occidental is said to have the most number of festivals depicting certain cultures in each of its 19 towns and 13 cities, with Panaad in Negros as the Festival of all Festivals. To date, the most popular and which has gained national prominence is the Masskara Festival. The other festivals are, more or less, popular only within the province and/or region.

With millions of cockfighting afficianados in the Philippines, domestic tourism may also capitalize on the popularity of Negros Occidental as the “Home of the Champions”. To date, it is known as the breeding ground of ‘champion’ fighting cocks but it may also be possible to build a tourism marketing storyline along this favorite pastime of many Filipinos.

5. Entertainment: There are a number of bars with live entertainment, video, karaoke, game rooms and discos, with majority located in the Goldenfields Commercial Complex. Casino Filipino is also located within the same complex.

Negros Occidental is also famous for its Kabataang Silay Performing Arts and Rondalla Ensemble. These Young Cultural Ambassadors of Silay bring out the best of Philippine Visayan and rural folk dances and music. The Teatro Amorseco has been voted twice as the Best in Cultural Presentation in the Philippine Travel Mart.

6. Sports: Bacolod, the province's capital city has three challenging and world class golf courses, making it the golfing center in the Visayas. It also has various sports and fitness facilities within the metropolis. It also has the biggest bowling lane in Visayas.

The province was the host of the Centennial Palaro in April 1998 which paved for the construction of the Panaad Park and Stadium (Negros Occidental Sports and Recreational Park) in a 20-hectare land surrounded with fully grown eucalyptus trees. Its main stadium and open bleachers could seat 15,000 spectators. The entrance to the stadium serves as the stage for Panaad activities. It has a rubberized "Regupol" track oval. Across the stadium are tennis courts and an olympic-sized swimming pool featuring a touch pad, electronic timer and camera track.

7. Shopping: Negros Occidental is known for its innovative gifts and houseware and food products. The most popular landmark of Bacolod City is the Association of Negros Producers (ANP) Showroom, a one-stop showcase of handicrafts and food products. The Showroom has been declared by the Bureau of Domestic Trade Promotions (an agency under the Department of Trade and Industry) as the top trade house in the country.

16 C. TOURISM SERVICES AND FACILITIES

1. Accommodation

Category No. of Establishments No. of DOT Accredited Establishments De Luxe Hotel 0 0 First Class Hotel 3 2 Standard Class Hotel 7 5 Economy Hotels 76 5 Tourist Inns 3 Pension Houses 5 Apartels TOTAL 86 20

The accommodation establishments in Negros Occidental can be characterized as follows:

• Establishments operate as independents (i.e., not part of a nationwide or international chain of hotels/lodging facilities). The bigger hotels are owned by corporations while smaller establishments are generally single proprietorship or family owned and usually managed and operated by the owners and immediate family. There is one government-owned hotel, the Casino Filipino Hotel, which is operated by PAGCOR and also houses the casino facilities.

• 48% are located in Bacolod and the rest are scattered in other cities and in major destination areas.

• Only the first class and standard class hotels have the capabilities to host conventions and meetings. Services of the smaller establishments are limited to the basic room and bath. Except for the apartels, all of the establishments offer serviced type of accommodation services.

• First class and standard class hotels generally have more than 50 rooms. For the rest of the 76 establishments, the average number of rooms is 10 with majority non-airconditioned.

• Only 23% of the establishments are accredited by the Department of Tourism (DOT). Many of the accommodation establishments do not see the need for accreditation while others are wary of investment costs to implement the necessary changes to meet requirements/standards vis-à- vis non-fiscal incentives offered by DOT to accredited establishments. This may be an indication that majority of the establishments are not confident that they have met and complied with the minimum standards set by DOT.

Non-fiscal incentives to accredited establishments consist of: a) membership to Philippine Convention and Visitors Corporation (PCVC) and inclusion in its marketing and promotional programs; issuance of DOT identification cards to bonafide employees; b) technical/security/ facilitation support or assistance; and, c) endorsement to embassies and travel trade associations for utilization of establishment's facilities and services. Additional incentives to accommodation establishments are: a) endorsement to the Ninoy Aquino International Airport (NAIA) and other international airport for issuance of access passes to qualified personnel; b) endorsement to the Commission on Elections (COMELEC) for exemption from liquor ban during election related events; and c) endorsement to the Department of Agriculture (DA) for importation of meat and meat products.

• Reservation and booking of rooms in first class and with some standard hotels may be made via: a) travel and tour operators – either from website or face-to-face; b) direct booking to the hotel – either phone, in-person, and fax. For individual travelers, rates are generally lower when made via the internet and travel agencies rather than through direct booking with the hotel. None of the hotels have websites capable of accepting reservations.

• Business travels and conventions represent majority of the total revenue mix.

17 2. Restaurants/Food Service Establishments

Negros Occidental is one of the provinces in the Philippines known for its great local cuisine. It is particularly popular for sugar-based food items, delicacies, the chicken “inasal” (roasted chicken), and grilled seafood such as the tiger prawns. Special attractions include the following: a) the Pala- pala market and similar establishments where customers can buy fresh produces and seafood and ask the establishments to cook these: b) establishments where customers can catch their own fish - --‘cook and eat what you catch’; c) grilled food and native ambiance; and d) “eat all you can” establishments.

Negros Occidental abounds with restaurants of various types. Upscale specialty restaurants as well as modest alfresco set-ups serve Negrense, Filipino, continental, and oriental cuisines. Popular burger, pizza, and other fastfood outlets are also found in Negros Occidental. Based on DTI registration database, there are 1,104 food establishments in the province as of June 2004, with majority falling under the micro scale category. Only 5 establishments are DOT accredited.

3. Travel Agencies and Tour Operators

Travel Service No. of Establishments No. of DOT-Accredited Establishments Travel agencies 38 Tour operators 5 3 Travel and tour agencies 5 Tour guides 30+ 1

Travel agencies and tour operators in Negros Occidental are generally micro scale enterprises. A bigger percentage of the clients of travel agencies are the outbound travelers. Tour operators, on the other hand, cater mainly to inbound tourists.

Interviews seem to indicate that tour operators have stronger linkages with the local tourism industry than the travel agencies. To date, there are six tour packages being offered, namely: Bacolod City Tour, Negros Sugar Tour, War Memorial Tour, Victoria Milling Company Tour, Steam Engine Tour, Transportation Tour, Golf Tour, and the Annual Negros Cultural Tour (the longest running cultural tour in the country). Popular stop-overs include the ANP showroom and restaurants where almost always tour operators earn some commissions. Pick-up points are usually the bigger hotels (first class and standard hotels).

It is more likely for travel agencies to have some relationships with the bigger hotel establishments rather than with the pension houses, tourist inns, and economy hotels. It is, however, claimed that commissions given by Negros-based hotels are lower compared to same establishments elsewhere. Hotels, on the other hand, refer their clients needing ticketing services to the travel agencies that they have some informal working relationships. First class and standard hotels also have business arrangements with Metro Manila based travel and tour operators.

4. Resorts

According to key informants, there are 65 resorts3 of various categories based on location --- mountain, beach, inland/agricultural. Majority of the establishments though are beach resorts. Resorts range from low to high end.

5 of the resorts are government-owned. One resort is said to have been accredited as a convention facility. Some of the resorts have combined lodging, meeting facilities, souvenir shops and an array of amenities and activities as a means of expanding clientele. The bigger resorts also offer off-site excursions for guests.

3 No directory of resorts

5. Transport Services

Bacolod City is the gateway to Negros Occidental. It is 50 minutes from Manila and 30 minutes from Cebu by plane. There are three airlines servicing the Bacolod route, namely: Cebu Pacific, Philippine Airlines, and Air Philippines. These airlines have tie-ups with selected hotels (first class to standard hotels) in the form of discounts, earned mileages, package rates, etc.

Airline Hotels with Tie-ups Offer Cebu Pacific Sugarland Hotel Discounted Rates Mileage Philippine Airlines L’Fisher Hotel, Bacolod Convention Plaza, Natures Village Resort Air Philippines Casino Filipino Hotel, Royal Am Rei Hotel

Bacolod City is also accessible by boat through the following routes: a) from Manila – 20 hours; b) from Iloilo – 1 hour by fast boats and 2 hours by bigger boats; and c) from Cebu. The province has six seaports dominated by 4 inter-island shipping lines namely: Negros Navigation and William, Gothong & Aboitiz; and Sulpicio Lines, Inc. and West Visayan Shipping Company. The first two provide cargo & passenger services while the latter two provide cargo service only. By land from Cebu, Bacolod City is approximately 7 hours.

Transportation within the province is mainly by land through its road networks connecting its 19 municipalities and 13 cities. Airconditioned and metered taxis are numerous within the city. Public utility jeepneys are the common mode of transportation. For long distance and inter-town travel, air conditioned and ordinary buses are among the options. Car rental services are also available with rates depending on the type of vehicle and distance traveled. Information for car rental services is available at majority of the first class and standard hotels or via tour operators.

19 D. ENABLING SUPPORT ENVIRONMENT: BDS/TVET

Tourism is a ‘people industry.’ Development of the skills base of the province and further cultivation of the inherent hospitable nature of the people to match changing and complex requirements of tourists would be critical to accelerating the growth of the tourism industry and to providing good employment prospects for Negros Occidental residents. As a service industry, the quality of the tourism experience is largely dependent on the inputs of wide range of people who interface with the visitor. The challenge facing many of the tourism businesses is to ensure that procedures and delivery mechanisms are in place to ensure a consistency in the standard of service which the customer receives.

More work is still needed though to convince establishments of the importance of investing in skills for improved profitability and success. Only a few of the companies have a structured training plan and human resource development budget. Barriers to pursuit of skills and knowledge upgrading tend to be cost-related, the lack of local supply of relevant support services, and, for smaller companies, ‘time out of the business’ is an issue. Likewise, the high proportion of part-time and seasonal workers requires cost and time to hire, retrain and re- orient new staff on-the-job while attempting to maintain "seamless" customer service. Although some initiatives have been initiated by the chamber and associations in bringing in training services closer to the industry, on-the-job training will likely remain a leading training delivery method in the tourism sector. It is perceived as being less expensive, easier to control, more flexible and permits the implementation of customized in-house programs.

To date, the tourism sector is already experiencing problems in the recruitment and retention of suitably skilled managers and middle management staff. Bigger companies hire managers from outside of the province. This, in one way or another, suggest the need to look into match of training and education services available in the province vis-à-vis the demands of the industry in relation to market requirements.

Other internal factors that would impact tourism development in the area would include:

• The degree to which the Negros tourism businesses would be able to improve its ability and capability to develop world class tourism products with a specific local identity that would appeal to various market segments and be competitive with other destinations

• Success in inculcating throughout the industry a culture of quality and improved productivity

• Improving the capability of industry to undertake regular market research and access market information

• Marketing cohesiveness and effectiveness in attracting visitors to the province

• Improvement of environmental protection and compliance to ensure sustainable tourism

20 Section 4 INDUSTRY PERFORMANCE

A. TOURIST ARRIVALS

• Based on the 2002 tourism data from the National Statistics Coordination Board (NSCB), Negros Occidental ranked 14th among all provinces in the Philippines in terms of number of inbound tourists with a market share of 1.57%.

Top 15 Province/City: Inbound Tourists, 2002 (excluding Metro Manila) Province/ No. of Inbound Tourists % to Ranking City Foreign Overseas Domestic Area Total Phil. (Destination) Travelers Filipinos Travelers Total Cavite 97,897 0 1,924,168 2,022,065 18.77% 1 Laguna 1,157,857 6,695 43,455 1,208,007 11.21% 2 Baguio City 36,760 5,337 1,140,593 1,182,690 10.98% 3 Cebu City 285,820 963 549,588 836,371 7.76% 4 Davao City 49,341 7,450 374,563 431,354 4.00% 5 Quezon 1,616 570 324,729 326,915 3.03% 6 Aklan 78,877 2,410 235,005 316,292 2.94% 7 Cagayan 13,008 0 289,855 302,863 2.81% 8 Cagayan de Oro 8,218 637 262,156 271,011 2.52% 9 Camiguin 5,066 425 204,283 209,774 1.95% 10 Iloilo Province 10,646 6,212 190,922 207,780 1.93% 11 Zambales 65,828 4,432 136,391 206,651 1.92% 12 Ilocos Norte 44,910 38 134,362 179,310 1.66% 13 Negros Occidental4 14,244 2,385 152,736 169,365 1.57% 14 Batangas 9,209 4,154 155,877 169,240 1.57% 15 NATIONWIDE TOTAL 2,144,536 66,265 8,562,147 10,772,948 % TO NATIONWIDE 19.91% 0.62% 79.48% Source: National Statistics Coordination Board

• Of the 169,365 inbound tourists in 2002, 8.41% were foreigners and the rest were Filipino travelers. In the nationwide totals, foreign travelers comprised 19.91% of the total number of inbound tourists. Negros Occidental ranked 13th in terms of number of foreign travelers, with a 0.66% market share.

• In terms of Filipino inbound tourists in 2002, Negros Occidental ranked thirteenth among all provinces, with a 1.80% market share. Among Western Visayas provinces, Negros Occidental ranked third with Aklan and Iloilo in the first and second ranking respectively.

• In 2003, number of tourist arrivals in Negros Occidental increased by 40%. According to the Negros Occidental Tourism Promotion and Development Division, over 112,000 local and foreign tourists visited the province in the first four months of 2004, which is more than last year’s arrivals of the same period.

• Peak months are from January to June and September to November. Average hotel occupancy rate is from 40% to 50% which is lower than Metro Manila (average occupancy rate – 68%).

4 Data from the Negros Occidental Tourism Center indicated a total of 183,088 tourist arrival for 2002

21 Meetings, Incentives, Conferences, and Exhibition (MICE) market has significantly improved occupancy rate and the overall tourism arrivals in the province.

B. TOURISM RECEIPTS

• Aggregate tourist receipts in 2003 increased by 26.31% over 2002 figures. However, average expenditure per tourist decreased from PhP 14,936 in 2002 to PhP 13,474 in 2003.

Distribution of Western Visayas Tourist Receipts by Province, 2002-2003 Province Amount (in PhP thousand) % Growth Change 2002 2003 Aklan 5,814,522.35 6,602,637.09 13.55 Antique 131,717.08 247,183.20 87.66 Capiz 484,641.57 488,777.84 0.85 Guimaras 2,011,695.46 2,148,651.79 6.81 Iloilo 3,819,702.85 3,946,732.15 3.33 Negros Occidental5 2,529,574.22 3,195,016.54 26.31 Western Visayas 14,791,853.53 16,628,998.61 11.12 Source: Department of Tourism – Region 6

C. EMPLOYMENT

• Among the different subsectors in the tourism industry, the hotels generate the highest number of employment.

Type of Establishment Est. No. of Establishments Ave. No. of Employees Accommodation, 50 rooms and above 10 30 – lean ; 112 - peak Accommodation, less than 50 76 10 – lean; 23 - peak Tour operators/Travel agencies 48 2 to 3 Resorts 65 5 to 20

5 Data from Negros Occidental Tourism Center indicated total tourist receipts of PhP 534,250,764 for 2002 and PhP 833,033,558 for 2003 based on PhP 2,918/person average daily expense.

22 Section 5 PROPOSED FIELDS OF CHANGE

Main issues and challenges facing the industry are the following:

1. Current downward trend in average expenditure per visitor

2. The need for more effective and cohesive image, market positioning, and promotion

3. The need to expand tourist season and reduce seasonality

4. Wide variances in quality of products and services as well as the need to align these to market requirements and standards

5. Weak demand and supply of support services and technical and vocational training needed to improve performance of tourism enterprises and their workforce

6. The need to create industry synergy and higher level of cooperation between and among public and private stakeholders within and outside the province (especially with neighboring tourism destinations).

7. The need to strengthen environmental management to conserve and enhance the vital natural and heritage of the province, and that sustainable tourism development practices are observed.

Building on current public and private sector tourism development initiatives, the following strategies are proposed to address the above challenges:

A. Product and Infrastructure Development

Negros Occidental has the tourism assets to potentially attract increasing numbers of visitors in the following tourism circuits: a) ecotourism; b) sand, sea, and resorts: c) cultural tourism; and d) MICE market. The challenge for the industry is to package these assets in a way that makes Negros Occidental a desirable, affordable, and year-round ‘must-visit’ destination.

Recommended Fields of Change and Improvement

1. Development of a compelling brand and product portfolio, which meet the desire for a distinctive, authentic and uniquely Negros Occidental experience a) Brand development and market positioning

The current marketing slogan “Sugar and More” may need to be re-assessed as to its ability to capture the interest and imagination of potential visitors. It is effective for those who may be interested to know more about the sugar industry but this is a very limited market. Negros Occidental needs to develop a distinctive market position and a brand that can compete with many other destinations, some of which will be offering similar experiences and packages. There must be a consistency among the various offerings and it should be this positioning statement that should guide this consistency.

Effective positioning will require the projection of a number of appeals which will act as motivators for particular market segments. Prerequisites in the development of an effective positioning and brand are the following:

- Development of an understanding of how people perceive Negros Occidental as a destination, including its natural and built environment, culture, its quality of service and value for money

- Analysis of market and consumer trends

- Identification of the most viable market segments and choosing the most efficient means of communicating with those target markets

The destination positioning and brand should be reflected in everything that Negros Occidental as a tourist destination does or stands for --- not only its promotion, but also the policies and procedures, employee attitudes, customer relations, complaint handling, and the various other details that combine to make the tourism experience. It is necessary that the positioning is reflected back to the provincial tourism development plan. b) Product development plan formulation

To bring about concerted, focused, and coordinated product development efforts within the industry, the province needs an updated tourism development plan which is aligned to its desired market positioning and, more importantly, upheld and shared by all stakeholders both in the government and private sectors. Review and strengthening of tourism product development plan would involve the following: a) identification of key products; b) assessment of their scale of opportunity; c) determination of resource requirements and actions needed to maximize potential and develop specific product differentiation factors that the tourism industry can introduce and sustain as marketing proposal; and d) packaging of the various products into full concept tourism packages. The plan should also outline the ways in which private and public sector organizations can coordinate resources to develop and promote a destination. c) Product portfolio development

Most of the responsibility for the development of needed products and services for the targeted markets and market segments will be on the private sector. It is, therefore, necessary that they are equipped with the necessary product development know-how and skills as well as possess an in-depth understanding of the market requirements and standards. Inputs from design consultants capable of developing products and services with a specific local identity would accelerate the development process.

2. Development of cultural, sporting, and social events that would contribute to the extension of the tourist season and the achievement of higher yields, improved profitability, and increased employment in the industry.

This will primarily pertain to the development and expansion of the activity product base by building on the resource foundations already in place. The industry should introduce innovative mechanisms and activities that would encourage visitors to spend more money while in Negros Occidental and/or prolong their stay.

Lifestyle researches indicate a growing interest in events and festivals together with an increasing incidence of events becoming a prime motivator for travel. In many cases, tourists are looking for more ‘content’ in their holidays. Cultural activities, for example, can be effective in attracting high-yield tourists as has been the experience of the province with the Masskara Festival. The province has to stage more events particularly during the lean season. These events can help to differentiate the various tourism products, encourage repeat visits and reduce the ‘been here, seen that’ syndrome. Traditional festivals and events in the different municipalities should be better promoted for these provide excellent focus on the areas’ culture and traditions.

Events, whether of cultural, sporting, and social themes, should enhance the desired image of Negros Occidental as a tourist destination and, ideally, with national and international appeal. Similar to the Masskara Festival, these events should have a champion as well as adequate organization and marketing management resources. These should also be attractive to potential sponsors. Combination of activities such as mixing sports activities with each other, with special

24 events, cultural pursuits or gourmet foods are becoming popular in many major tourism destinations.

3. Improvement of tourism related infrastructure

An integrated public infrastructure network with convenient transfers between different modes of transport is important to support growth of tourism and deal with increasing customer expectations. Improvement of the airport and the roads should be among the priorities of the province. The poor state of the roads in some areas has an impact on the condition of the vehicles used and, therefore, on customer satisfaction and on costs in the part of transport operators.

There is also the need to further develop and upgrade accommodation and convention facilities and services including expansion of geographic spread parallel to niche market development initiatives (e.g., bed and breakfast accommodations showcasing Negrense hospitality in a homestay environment, enhancement of the ‘sense of place’ or element of creative flair in hotels and convention facilities, etc.).

4. Improvement of waste management

The province has to step up efforts to protect, conserve, and manage the environment. Province wide promotion and implementation of waste management would be of primary importance, as anything less will undermine the desired positioning of Negros Occidental as a tourist destination. With growing customer awareness of the value of good environmental practice in relation to waste management, Negros Occidental has an opportunity to gain a competitive advantage.

B. Promotion and Market Development

Although the province has been quite successful in penetrating the MICE market, awareness of Negros Occidental as a tourist destination is still low both in the domestic and international markets. Generally, marketing is fragmented. Individual promotions and advertising are undertaken by hotels, resorts, attractions, event organizers, local government, and DOT to draw people to the city. In many of the establishments, main focus of marketing activity is publicity at the point of arrival. The need to have coordinated promotional activities is imperative if a clear image is to be portrayed of the province. Parallel to this, Negros Occidental must market itself aggressively and consistently to ensure that: 1) the province is at the forefront of a potential visitor’s mind as it competes for attention with an increasing number of alternatives; and 2) interest is translated into firm bookings and sales. Two critical factors, therefore, that the Negros Occidental tourism industry has to address in its promotion and marketing activities are:

- How to effectively communicate the range, appeals and experience value of the destination or product (message and medium)

- How to achieve effective distribution of a product meeting a wide range of individual demands

Recommended Fields of Change and Improvement

1. Improvement of destination marketing of Negros Occidental a) Use of market intelligence and consumer feedback in the preparation of communication and promotional plan as a means of improving quality of info content and the relevance of information to targeted markets. Generic destination awareness campaigns should gradually shift to featuring a range of motivations and allied leisure and business products.

25 b) A focus on best prospects market sectors. Given the limited marketing resources, the industry has to focus campaigns to markets and consumer segments that will offer best returns on investment. c) Expansion of range of promo collaterals both to induce visit and reinforce holiday experience such as:

- Pictorial references and souvenirs to reinforce image of holiday experience - ‘Tangibilize’ offer in brochures, CDs, and videos – visual displays of the real things d) Marketing along the lines of product themes built around the destination positioning would help to get across the diversity of products which are available within Negros Occidental e) Upgrading of marketing capabilities of tourism businesses including advertising agencies and providers of tourism promotion services

2. Availability of tourism information at major gateway points (within and outside the Philippines) and in strategic locations within Negros Occidental. These can be in the following forms:

- Information kiosks at high density tourist spots - System of information tourist signage - Self-service information centers at strategic locations

3. Development of tourism internet portal for Negros Occidental --- a well-designed full concept one-stop tourism virtual mall that provides visitors access to information and to reservation as well as links to various tourism intermediaries.

4. Better use of travel agencies, tour operators, and other tourism intermediaries to promote and distribute Negros Occidental tourism products complemented by publicity in appropriate media to create awareness and establish credibility within the segments.

C. Quality and Competitiveness Improvement

The Negros Occidental tourism sector is dominated by micro, small, and medium enterprises. With generally low barriers to entry, the Negros Occidental’s tourism industry is characterized by varying levels of experience, skills, qualifications, business acumen, and professionalism. The result is inconsistent and wide variance in product and service delivery. Increasing competition and the trend towards higher expectations of service quality highlights the need to embrace an industry wide approach to delivering quality experiences.

As a predominantly service industry, businesses and their workforce play a critical role in delivering quality experiences. It is not just the natural beauty of Negros Occidental that will determine its competitiveness in tourism, but also how these resources are managed and to what extent these are complemented with high quality innovations and services. Planning for the appropriate mix of competencies and skills and generally raising industry professionalism and standards are among the key challenges and opportunities for Negros Occidental. Excellence in customer service can provide the province with a clear competitive advantage, both nationally and internationally.

Parallel to this, quality and value for money need to be constantly reinforced by good physical, operational and service standards delivered through continuous investment in plant, facilities and personnel. As such, tourism businesses need to derive an adequate profit to ensure continued expansion and proper maintenance of services and facilities. Many of the businesses in the sector are ‘low profit earners’ particularly the micro businesses. Profitability of the sector needs to be improved by increased utilization of assets, particularly high capital assets of accommodations and resorts; the introduction of greater efficiencies, especially for the higher number of micro and

26 small enterprises; and ensuring that increases in sales are achieved on the basis of value-added strategies rather than competing on price (low price offer).

Access to continuous education, skills upgrading, and training at all levels are critical bases for growth. However, to date, market for business development services and vocational education in Negros Occidental is weak, both in terms of supply and demand. Training and business development services providers tend to lag behind developments in the industry. On the other hand, demand and willingness to pay for support services and training are generally weak. The current skills gap is felt both at the management and specialized operational levels. Specifically, the following are the identified skill gaps across the five subsectors:

- The lack of management and marketing skills - The need for closer realignment of operational skills to market standards and needs - The need for multi-skilling while still being a specialist - The lack of adequate skills in information technology - The need to enhance people and customer care skills - The lack of work readiness of recent graduates

Performance of tourism businesses can further be improved through better knowledge, expertise and customer care. To ensure that quality of businesses and their workforce would not be a continuing constraint to the growth of the industry, the following measures are recommended:

Recommended Fields of Change

1. Upgrading of existing management, marketing, and general administration courses to international standards and re-alignment to requirements of the everyday operations of the tourism trade. This can be effectively carried out through partnerships between industry – local academe – schools elsewhere offering internationally recognized courses.

2. Development and/or strengthening of local capability to deliver dualized training programs of international standards and with balanced emphasis on operational and people skills for various competencies required in the hospitality, travel, tour, and transport segments. Franchising arrangements and/or affiliation with internationally recognized providers may be among the options that can be pursued by local providers.

3. Promotion among enterprises of the implementation of a Continuous Productivity and Quality Improvement (CPQI) Program.

CPQI focuses on capacity building and works with enterprises through a sequence of support services to improve production processes and business performance. Specific objectives of the program are:

- To facilitate improvements in organizational abilities in one or various function areas within the enterprise that will enable it to significantly increase its productivity as well as transform orientation from inspector-based to individual worker-based quality control improvements

- To introduce and facilitate adoption of quality management elements and socially responsible practices under the ISO and SA8000 standards

- To facilitate the adoption and implementation of environmental management systems within the context of business growth and profitability

Methodology at Enterprise Level: “Learning by doing/Mentoring” through the involvement and development of the capacity of all personnel and subcontractors of the enterprise. This has to be done in collaboration with external BDS providers who will support the process and implementation of solutions/corrective actions.

27 4. Promotion of the effective use of information technology in improving business operations and marketing.

There is a need to motivate hotel and tourism enterprises in Negros Occidental to use information technologies and information networks. The system of information technologies (SIT) in the tourism industry includes the following: computerized reservation systems, teleconferencing, video text, videos, video brochures, computers, management information systems, airline electronic information systems, electronic funds transfer systems, digital telephone networks, smart cards, satellite printers, and mobile communications. The increasing use of the Internet for destination marketing, direct sales and bookings has given rise to electronic tourism markets and, at present, tourism is among the important application domains in the World Wide Web. The rapid diffusion of information technologies throughout the travel and tourism industry is expected to improve the efficiency of production and the quality of services provided to consumers, and to generate increasing demand for new services.

5. Promotion and development of a tourism-friendly culture across all sectors of the community through effective public awareness and education programs.

Much of the enjoyment of a trip comes from casual contacts that the visitor has with local service providers and residents. It is, therefore, important for each Negrense to fully embrace tourism. Public awareness and education programs on customer orientation would help enhance the inherent hospitable nature of Negrenses and put into action the city’s slogan “City of Smiles.”

6. Establishment of a province-wide industry led quality seal program

Uptake for accreditation in Negros Occidental, has been relatively low with less than 10% of the companies currently DOT-accredited. Companies generally felt that accreditation is not that important nor does it provide the business perceived advantages. In addition, there is a low consumer awareness of what a DOT accreditation means (e.g., difference between a DOT- accredited and non-DOT accredited establishment). Some measures to strengthen the current accreditation system would be the following:

- Enhancement of value of DOT accreditation both for consumers and tourism enterprises through inclusion of standards/criteria meaningful and relevant for both parties and aligned to international accreditation system.

- Re-engineering and streamlining of the accreditation processes to make it more effective and efficient for businesses.

- Improvement of incentives for accredited establishments

- Effective promotion of accreditation program both to enterprises and consumers

Introduction of changes to the DOT accreditation would take quite some time. An alternative would be to establish an industry led quality seal program. In a quality seal program, public and consumer recognition are given to those businesses that strive to maintain and improve ethical and professional standards that are set and agreed to by the industry itself. In many of the tourism quality seal programs abroad, the system provides businesses with a tool to measure and improve their business performance over time. It also involves documenting systems of management and operations in order to ensure that they are able to consistently supply the goods and services advertised. In turn, the quality seal system provides clients and industry colleagues with an assurance that participating businesses are committed to professionalism both in business operations and delivery of service. The quality seal program, as can be gleaned from experiences of other countries, can be a powerful tool in encouraging the development of each participating enterprise in the Negros Occidental tourism industry as well as an effective marketing tool.

28 Section 6 PROPOSED PROGRAM INTERVENTIONS

A. Institutional Development/Planning

1. Initiate the revitalization of the TCDC or similar multi-sectoral organizations like ATANO and provide organizational development assistance.

2. Technical assistance to TCDC or similar multi-sectoral organizations like ATANO in the review and updating of the Tourism Master Development Plan including mentoring services during the first year of implementation

3. Assist TCDC or similar multi-sectoral organization like ATANO in dissemination of salient points of the development plan to all stakeholders. This may be done through forums, workshops, and media publicity.

4. Organizational development assistance to selected tourism industry associations.

B. Product and Infrastructure Development

1. Support the establishment of a self-sustaining tourism market intelligence system. This may be operated by TCDC or a local research company. Program support should be directed towards the development of an efficient and cost-effective means of:

- Locating/identifying information sources and needed information - Translating and applying these information materials to the context of SMEs - Packaging and disseminating these information to SMEs

2. Technical assistance to TCDC in the further definition of Negros Occidental brand and positioning including its consequent adoption by the various stakeholders. Assistance may be in the following areas:

- Research and development - Support to market launching of revitalized brand - Support to development of phased-in campaign directed to enterprises (buy-in) and to target markets

3. Develop local providers of product development services. Technical assistance may consist of:

- Technology and knowledge transfer/training - On-the-job training: program supported providers work with a pilot group of enterprises (preferably, the more progressive and influential entrepreneurs) - Assistance in the development of financial sustainability schemes vis-à-vis affordability of services - Assistance in development of markets for services

4. Encourage existing tourism enterprises to invest in product development via:

- Workshops on best practices and on current tourism product trends including envisioned product development directions of the whole tourism industry

- Exposure to working with professional design consultants. This can be part of the on- the-job training of local providers under the initial tutelage of international consultants. Results of these pilots disseminated to encourage similar initiatives from other tourism enterprises.

29 - Broker agreements with finance institutions to provide soft loans for product development projects of tourism businesses parallel to establishment of linkages with local product development providers trained/supported by program

5. Assist in the development of advocacy campaigns for increased allocation and/or prioritization of public infrastructure improvements (e.g., airports, roads, etc.).

6. Technical assistance in the development of waste management system and establishment of pool of local experts that can assist enterprises in the set-up of their own systems.

C. Promotion and Market Development

1. Support the development of tourism internet portal for Negros Occidental. Assistance may be directed towards the following:

- Technical expertise: concept, content, and technology - Development of financial sustainability schemes - Development of promotional campaign (directed to potential users of services)

2. Improve capability of existing journalists, advertising companies, web designers, multimedia designers, graphics company, souvenir manufacturers, marketing and promotion companies, and the like to address promotion and marketing needs of the tourism industry. Technical assistance may consist of the following:

- Skills upgrading - Development of services/Revitalization of existing services - Development of delivery and payment schemes to make services more accessible and attractive to target clients - Pilots: local providers work with selected group of enterprises as part of the on-the-job training as well as to validate benefits of services. If successful, results of pilots can be used as part of the promotional campaign for the services

3. Technical assistance to the industry via the Tourism Council in the development of a marketing and communications plan. This may also be part of the on-the-job training of program supported local promotion and marketing providers.

4. Broker marketing agreements between tourism service establishments and travel and tour operators. Parallel to this, assist Negros-based travel and tour agencies in forging partnerships with national and international travel intermediaries including Philippine embassies and trade attaches.

D. Quality and Competitiveness Improvement a) Facilitation of linkages between industry, local providers and establishments offering internationally recognized courses b) Assistance in the development and/or customization of curricula as well as capability build-up of local training providers c) Assistance to training providers in the development of various delivery and payment modalities to address affordability and accessibility issues. d) Development of local capability to deliver Continuous Productivity and Quality Improvement Program to enterprises. Parallel to this, stimulation of demand for program through demonstration of benefits and impact via pilots. e) Assistance to IT training institutes in the development of customized training program for tourism businesses. Demonstrate benefits of use of IT to enterprises through pilots.

30 f) Marketing assistance to providers with new and/or high quality product offers g) Technical assistance in the development of public awareness program designed to promote province wide tourism friendly culture. h) Technical assistance in the development and implementation of Quality Seal program.

Annex A FOOD SERVICES ESTABLISHMENTS

1 Table of Contents

Section 1. Industry Structure 3 A. Players and Relations in the Subsector 3 B. Products and Services 6 C. Markets 7 Section 2. Value Chain 9 Section 3. Human Resources 14 Section 4. Constraints and Potential Solutions 17 A. Management/Organization 17 B. Human Resources 18 C. Technology/R and D 18 D. Inputs 19 E. Market Access/Marketing 20

2 Section 1 INDUSTRY STRUCTURE

A. PLAYERS AND RELATIONS IN THE SUBSECTOR

1. Food Service Establishments

• The food service industry in Negros Restaurant Industry Definition based on the PSIC Occidental is characterized by national PSIC Code Description and international chains as well as individual small and micro businesses. 98101 Restaurants and Cafes Bacolod City abounds with restaurants, 98102 Refreshments and Ice Cream Stands, most of which offer Negrense cuisine. As Kiosks, and Counters of June 2004, there are 1,104 DTI 98103 Day and Night Clubs registered food service establishments ranging from full-service restaurants to 98104 Cocktail Lounges and Bars Operation self-service/fast food establishments. Source: National Statistics Office These establishments include fine dining restaurants, specialty and theme restaurants, fast food outlets, canteens, eateries, and food courts.

• Restaurant business is relatively easy to enter particularly the low-end segment consisting of carenderias and eateries as well as snack stalls. In Negros Occidental, there are more mid-low to low end establishments than upscale and fine dining restaurants. Set-up and operations of medium end and upscale full-service restaurants though entail both high labor costs and capital. Exit barriers are relatively high for this particular segment primarily because the food equipment is quite expensive and their use is also specialized.

• Upscale and fine dining restaurants are generally owned and located in first class and standard hotels The bigger hotels in Bacolod City generally have two restaurants: a) an upscale formal restaurant; and b) casual coffee-type restaurant.

• The full-service category is dominated by grill/buffet type and casual dining restaurants. These restaurants usually offer Negrense and Filipino cuisine. Many of these restaurants have a Filipiniana theme.

• Popular special attractions in Negros Occidental include the following: a) the Palapala market and similar establishments where customers buy the fresh produce and ask the establishments to cook these; and b) establishments where customers catch their own fish --- ‘cook and eat what you catch’. A trend in the restaurant industry rapidly gaining popularity is the ‘eat-all-you-can buffets’, which are offered at reasonable prices.

• In the outskirts, many of the food service establishments are the carenderias and a few specialty and themed eating places. Considered as ‘top of the line’ food service establishments in the rural areas are the restaurants in the resorts. Likewise, resort restaurants are almost always the only ones with capacity and capability to cater to functions and events.

• Fast food establishments include giants such as Jollibee, McDonalds, Pizza Hut, etc. The fast food chain outlets are located mostly in Bacolod with a concentration in the malls. In the fast food segment, Jollibee remains at the top. Chowking remains the Number 1 and undisputed Chinese restaurant in the country (and most likely also in Negros Occidental) in terms of sales and total number of branches nationwide.

• Capital investments particularly for franchises can range anywhere from PhP 100,000 to PhP 30 million. A Jollibee franchise in the Philippines reportedly ranges from P15 million to P30 million,

3 depending on the store size and model. A usual store is roughly 350 square meters. US firms have a very strong presence in the Philippine food franchising industry.

• Domestic and international food chains and franchises facilitate transfer of technology to the local restaurant industry. Training, marketing, and distribution channels are arranged by the franchisor. They provide training of potential employees and employ strict quality control systems. Likewise, prior knowledge and experience are not required of franchisees since franchisor provides the new entrant fully developed management and production systems. In one way or another, the rise of shopping malls in Negros Occidental eases the entry of new restaurants and fast food outlets particularly in terms of promotion and establishing its presence in the market.

• International and national fast food chain outlets pose serious competition for single-unit food service establishments. Aside from the fact that these are massively advertised, they have also the added advantage of being able to provide better service and quality products at prices at par or sometimes lower than that of similar products.

• Of the 1, 104 restaurants, only 5 are accredited by DOT. Application for accreditation by restaurants follows the same procedure and requires the submission of general requirements as discussed under the hotel subsector and detailed in Annex H. Restaurants need to submit the following in addition to the general requirements: food and beverage prices/menu; comprehensive general liability insurance; and fire safety inspection certificate. In the same Manila.

Accredited restaurants enjoy the additional following incentives specific to restaurants: 1) Endorsement to COMELEC for exemption from liquor ban during election related events; and 2) Endorsement to the DA for importation of meat and meat products on top of the benefits accorded to all accredited establishment.

• Unity and mutual cooperation among restaurants are being promoted, albeit intermittently and on an adhoc basis, by the Hotel and Restaurant Association of Negros Occidental (HRANO). The association has also conducted some training courses aimed at upgrading and professionalizing the industry.

2. Relations with Input Suppliers/Backward Linkages

Restaurant Industry Backward Linkages Rank1 Industry 1 Slaughtering and meat packing 2 Rice and corn milling 3 Ocean, coastal, and inland fishing 4 Meat and meat products processing 5 Wholesale and retail trade 6 Canning and preserving of fruits and vegetables 7 Vegetables 8 Flavoring extracts, mayonnaise, and food coloring products 9 Soft drinks and carbonated water 10 Cutlery, handtools, general hardware 11 Coffee roasting and processing 12 Coconut 13 Electricity

1 Based on value (PhP)

4 Restaurant Industry Backward Linkages Rank1 Industry 14 Malt and malt liquors 15 Noodles 16 Eggs 17 Miscellaneous food products 18 Fruits and nuts 19 Roots and tubers 20 Aquaculture and other fishery activities 21 Others

• The biggest suppliers of the food service industry are the slaughtering and meat packing, rice and corn milling, and ocean, coastal, and inland fishing subsectors.

• Suppliers of food produce have substantial influence over pricing of goods and services especially in the fast food industry because of the limited supply or lack of substitutes. Majority of the respondents indicated that a significant volume of the food supply is sourced outside of the province for any or all of the following reasons: a) local supply of inferior quality; b) no available supply; and c) volume of local supply not sufficient.

A restaurant owner, for instance, indicated that he sources blue marlin from General Santos, oysters from Roxas and scallops from Victoria. Another respondent claimed that they source lettuce from Baguio through a supplier because the lettuce from Kanlaon is not as good. A café shop owner-respondent says he source 90% of coffee beans from either Batangas or Cavite through a coffee roaster based in Manila and only 10% locally because the local supply is minimal. Other products being sourced from Cebu and Manila are meat, frozen food, and imported ingredients.

• Majority of the food service establishments buy their vegetables mostly on a daily basis. Factors that affect choice of suppliers are prices, substitution of raw materials, freshness, and consistent quality. Commissaries, particularly of fastfood chains and hotel restaurants, demand vegetables to be of the right variety, size, form, and quantity, and free from damages from insects or mishandling. During lean months or off-season, quality and price inconsistency are more pronounced.

• Hamburger chains have the highest demand for lettuce (iceberg), salad tomatoes for their sandwiches, potato fries, white and red onions, bell peppers --- all of which are medium to high value vegetables.

Chinese dishes require herbs and spices such as onions, garlic, ginger, kuchay, celeries, brocolli, young corn, bell peppers, etc., which are mostly high value vegetables. Restaurants catering to the high-end Chinese market require their vegetables to be of superior quality. Filipino restaurants require vegetables for “pinakbet, sinigang, kare-kare, nilaga, or tinola,” which are generally low to medium priced vegetables. Seafood specialty restaurants require herbs and spices.

Generally, hotels with restaurants require high value fruits and vegetable crops and herbs and spices. Their volumes are not as big as that of supermarkets but they follow strict quality standards. There is also the general preference for imported vegetables. Credit terms extend to as long as 30 days.

• In many cases, relationships with local suppliers and suppliers from Cebu and Manila (meat, frozen food, coffee, imported ingredients) have been established and maintained informally. These suppliers are already familiar with the quality requirements of the establishments. Formal contracts cover the transactions with big companies supplying food and beverage items.

5 In some cases, exclusive contracts bind the relationships. Payments to local suppliers are on a cash basis while terms are agreed upon in the contract with bigger establishments.

• Suppliers of food items from Cebu or Manila ship the materials either by air or water, depending on the shelf life of the items. Perishable goods are transported by air.

• Purchase of equipment, furniture and fixtures are usually one-time investment with very slow upgrading during the lifetime of the establishment particularly for the micro businesses. Equipment purchasing decisions depend on the type of establishment. For example, local single-unit restaurants particularly the micro businesses would usually just require basic food service and kitchen equipment, with price as the main criterion. Establishments that are part of international and national chain have the relatively more sophisticated equipment.

Restaurant owners use both local and imported equipment, furniture, and fixtures. Two problems though with the locally made equipment are the lack of after-sales service and the difficulties in sourcing spare parts.

• Among medium and high end restaurants as well as chain food establishments, the ambiance of the place is given much emphasis. For chain establishments, design and layout are usually provided by the franchisor. For individual restaurants, it is usually the owner and/or the manager who decides on the interior decoration. The bigger and more progressive companies hire the services of a designer. Atmospherics2, nowadays, are built with the restaurant concept, which has an immediate sensory impact on customers.

3. Relations with Other Tourism Establishments/Forward Linkages

• Relationship between restaurants and hotels, event organizers, travel agents, and tour guides is generally limited to referrals. Exceptions to these are package deals particularly for conventions and events where restaurants are formally contracted by events organizers.

• Tour guides and taxi drivers earn commissions from transactions with some restaurants for clients they refer. Some restaurants however, complain because tour guides ask for discounts when they make arrangements with the restaurants and still ask for commission on the day of the transaction. It seems that there is no pricing system in place to include incentives for intermediaries and, on the other hand, intermediaries do not fully understand how commissions are collected.

B. PRODUCTS AND SERVICES

• The hotel restaurants cater to both hotel guests and walk-in customers. Compared to free- standing or independent eating establishments, hotel restaurants particularly those in the first class and standard hotels generally offer higher degree of service sophistication. This requires additional food preparation and service skills training. Most hotel guests would patronize the restaurant for breakfast meals but, more often than not, prefer to take their other meals at independent restaurants outside of the hotel. One of the reasons for this is the higher prices charged by hotels compared to independent restaurants outside of the hotel. Breakfast time is usually the busiest for hotel restaurants.

• The bar is an important revenue source for the food and beverage department of a hotel. Generally, profit percentage on all beverages is higher than on food items. Likewise, unlike restaurant meals, a beverage can be stored if not sold.

• A popular service of hotel restaurants is what they call banqueting for local clients. These are for events like weddings, baptisms and birthdays where the hotel provides food, beverages and

2 The design used to create a special atmosphere

6 venue for the occasion. Another service offered by hotel restaurants is catering, usually as part of the ‘convention package.’ These two services provide good income for the hotels because of the economies of scale these events offer. Another is the provision of food and beverages as component of the package for ‘convention.’

• Banqueting and catering are also being offered by restaurants. These two activities are significant sources of income.

• Fine dining and specialty restaurants offer a wide variety of international cuisines. Many of the restaurants employ the American service, a simplified Russian service technique. The food is prepared and dished onto individual plates in the kitchen, carried into the table, and served to guests. This method of service is more popular than the Russian service because it is quicker and the guests receive the food hot and beautifully presented.

• Self-service restaurants usually have several foods displayed on counters. The customer makes his/her selections and usually pays for the entire meal at the end of the line. The fast food restaurants, usually operated in chains or as franchises and heavily advertised, offer limited menus --- typically comprising of hamburgers, hot dogs, fried chicken, or pizza. There are also fast foods specializing in Filipino cuisine like the ‘lechon manok’ and some snack food. These are usually single units and not part of a chain. These fast foods particularly those operated in chains or franchises have the advantage of speed, convenience, and familiarity to diners. Delivery services are also offered by most of the fast food and restaurant chains.

• Fast food chains also offer year round party packages, which generally include the venue, food, party games and give-aways. The parties may be on-site or off-site.

• Intense competition particularly in the fast food industry makes it imperative for establishments to continuously come up with new products or improve their products and services. Some companies (e.g., Jollibee) give incentives to motivate employees to maintain high standards of quality service and cleanliness. Also important in the food service industry is courteous and friendly personnel. Speedy service is also among the more important attributes expected from a fast food restaurant.

• There is no pronounced business seasonality in the food service industry. It is, however, observed that sales are significantly higher during the month of December due to the Christmas shopping (which is an activity adjunct to eating out) and celebration of Christmas parties and dinner in restaurants.

C. MARKETS

• Food service of hotel-based restaurants are targeted but not limited to hotel guests. These restaurants have the same market with accommodation during MICE as food is most often a part of the package. The MICE market is local and domestic. Domestic market consists mostly of big companies based in Manila.

• Main clients of banqueting and catering are the local residents and institutions. Restaurant and fast food clientele consist mainly of the local populace. It is estimated that only about 20% of their customers are from the outside of the region, either domestic or foreign tourists. Peak months for restaurants are from December to February.

The youth is a growing segment of the market since eating out is a regular activity among the young especially among students. Majority patronize the fast food establishments primarily because of the relatively affordable prices, heavy influence of advertising, and fast and prompt service.

Other markets include families who make weekend dining an occasion and professionals who opt to eat out during lunch and snack breaks. Institutional buyers avail of the services of the

7 food service industry for occasions such as seminars, workshops, meetings, company celebrations, and marketing and promotional activities.

• Restaurants and cafes are frequented by corporate people who combine dining and short discussions/meetings. There is a perceived growing market of coffee drinkers as the student population is joining the ranks and utilizes the cafes to meet classmates and friends. A restaurant owner, however, claims that this market is becoming saturated owing to the entry of several establishments providing similar services.

• Recent studies show that the Filipino consumers value the following characteristics of restaurant products and services as the most important, according to priority: a) flavor and taste; b) value for money/nutrient content; c) presentation and packaging; d) variety; e) systematic ordering and selling; f) feeling of security in food and environment; g) prompt delivery and service; h) consistency of service; i) feeling of recognition and importance; and j) feeling of security in location and accessibility. 3 With the present economic difficulty, customers want wide variety of cheaper but better tasting food making the task of menu preparation doubly challenging.

• Competition is fierce in the food service industry particularly among the fast food establishments. Although market is large, it is generally price sensitive and with strong brand loyalty. Market niching is, likewise, practiced. With quite a number of food service establishments in Negros Occidental, pricing schemes and marketing strategies are crucial determinants of market shares. Promotion campaigns of restaurants are usually geared towards the following: a) ‘value for money’ concepts; and b) brand loyalty and consciousness. Major players particularly the food chains invest heavily on advertisement.

• Restaurants generate customers via direct marketing, promo/discounts, radio and newspaper advertisements, tender/bidding/proposals, signage, sponsorship of events, referral, word of mouth and through intermediaries like event organizers, travel agents, tour guides and taxi drivers. Food chain outlets are more active in promoting service than the individual non-chain restaurants.

3 Dr. Divina Edralin and Ms. Paulynne Castillo, An In-depth Study of the Hotel and Restaurant Industry in the Philippines, August 2001.

8 Section 2 VALUE CHAIN

FIRM Menu Planning: most important ingredient in a restaurant’s success; menu must be in line with restaurant concept and concept INFRASTRUCTURE must be based on what target market expects. Main considerations in menu planning and which, oftentimes, are not fully considered by owners and/or managers are the following: a) needs and desires of guests; b) capability of cook; c) equipment capacity and layout; d) consistency and availability of main ingredients; e) price and pricing strategy (cost and profitability); f) nutritional value; g) accuracy in menu; h) menu analysis (contribution margin); i) menu design; and j) menu engineering

Food safety/sanitation/Good Manufacturing Practices (GMP): industry needs to improve training and implementation of practices and procedures in food safety and GMP; not widely practiced in smaller and lower end establishments

Financial Management: accounting, billing and payment system – in many establishments, this is done manually; cost control/cost prevention - accountability for food and labor costs is a required skill for which chefs and/or owners need to be trained further

Inventory control and tracking: inventory management is key to balancing raw material demand and supply; many of companies practice ‘just-in-time delivery’

Product specifications/Production process and quality control standards: in many establishments, these are not formally documented and based on locally acceptable norms

Franchisors especially international chains provide the new entrant fully developed management and production systems. HUMAN RESOURCE Recruitment via local newspaper advertisements and referrals; priority given to those laid off due to seasonality MANAGEMENT Orientation and training for new employees; on-the-job training; in chain restaurants, there are training opportunities for employees

Employees work by shifts

Compensation as per Philippine Laws and prevailing market rates TECHNOLOGY Recipe/product development; several fast food chains serving only western food have introduced items or adjusted recipes to local DEVELOPMENT/ palate R and D Limited use of information technology in operations especially among single unit or stand alone restaurants

9 Micro scale food service establishments utilize very basic technology

Domestic and international food chains and franchises facilitate transfer of technology PROCUREMENT In micro scale establishments, daily purchase of fruits and vegetables, meat, fish, etc. at public markets to ensure freshness. Purchase is usually done by owner and/or person trusted by owner. Same person may also do the receiving, storing, and inventory.

In bigger establishments, purchases are covered by contracts and purchase orders. Some suppliers deliver directly to establishments. Institutional suppliers like softdrinks companies deliver the goods to the establishments.

Among bigger establishments (e.g., hotel restaurants, franchise and chain restaurants, some small and medium scale restaurants), restaurant operators have purchasing systems (usually manual) that determine the following: a) product specifications for each item; b) theft and losses control; c) the amount of each item that should be on hand (par stock and reorder point); d) who will do the buying and make purchasing decisions; and e) who will do the receiving, storage, and issuing of items.

Low price – good terms – good quality MAIN ACTIVITIES INBOUND LOGISTICS OPERATIONS OUTBOUND MARKETING AFTER SALES SERVICE Pre-purchase: Table service: Mobile delivery service Direct marketing Feedback gathering done - Plan menu - Greet the guest informally most of the time - Determine quality and - Hand out menu; in some Food served directly at Referral; word of mouth quantity needed to cases, help is extended tables or handed to Small gifts/ discounts to produce menu to customers in deciding customers Promo / discounts/ Gift loyal customers - Determine inventory orders certificates stock levels vis-à-vis set - Take orders par levels - In some restaurants, Radio and newspaper ads - Identify items for servers check whether purchase including guests need something Signage specifications else and satisfied with their orders Tender/bidding/proposals Receive, inspect, and store - Check for additional deliveries. Inspection --- orders Sponsorship of event usual visual and random sampling. Food/order preparation Commissions (to tour - In quick service/ buffet guides, taxi drivers) Issue food supplies for establishments/

10 production and service. cafeteria, stock Some owners issue supplies products needed for the to the kitchen on a daily day are prepared (either basis to ensure freshness full or semi) prior to and for better control. rush hours Owners generally follow - For many of the full ‘first in – first out system’ service establishments, food ad beverages are prepared as they are ordered. Many of the owners are conscious of the time required to prepare orders --- objective is to minimize waiting time of customers.

Billing and payment

Cleaning/dishwashing

Entertainment

11 • In the food service business, one of the challenges is to create a restaurant concept that fits a definite target market. The restaurant’s concept, location, menu, and ambiance should intertwine and have a close fit with each other. Oftentimes, putting these elements together and cohesively is one of the weaknesses of food service establishments. The atmosphere of a restaurant plays an important role in the decision-making process used by potential customers in selecting restaurants. Atmosphere and ambiance are created by the lighting, furniture and furnishings, music, uniforms of the servers and other frontline staff, etc.

• The menu is the most important ingredient in a restaurant’s success. Capabilities of the chefs, equipment capacity and layout have impact on the efficiency and speed that orders are prepared.

• Many restaurant owners use a combination of comparative pricing and individual dish pricing. A comparative approach analyzes the price range of the competitors. The second method is to cost the individual dish item in the menu and multiply it by the ratio amount necessary to achieve the desired food cost percentage.

• In cafeterias and small eateries, the menu may be written in a blackboard. Fast food service menu are usually illuminated above the order counter. More formal menus are often single page, or folded with three or more pages.

Like the brochure of the hotel, a menu is a sales and motivational tool. A menu’s design can subtly influence the guest as to what to order. The paper, colors, and artwork all play important roles in influencing guest decision and in further establishing the restaurant’s image and ambiance.

• Ideally, servers should not only be order takers but should also function as salespeople of the establishment. A server who is not well educated about the menu can seriously hurt the business. Competent servers can do some ‘suggestive selling’ as a means of increasing food and beverage sales.

• Another important aspect of a restaurant business is the ‘back-of-the-house’ operation. The ‘back-of-the-house’ refers to all areas that the guests do not come into direct contact with. This includes purchasing, receiving, storing/issuing, food production, stewarding, budgeting, accounting, and control.

• Controlling the production process is important to: a) ensure quality and consistency; and, b) minimize waste and incidences of spoilage due to overproduction (especially for food prepared in advance --- such as in cafeteria and eateries, fast food chain). Parallel to this, restaurants need to have reliable sales data in order to be able to set realistic par levels.

• In a study conducted by the Center for Food and Agribusiness of the University of the Asia and the Pacific, the following are the critical success factors of restaurant operations in the Philippines:

Advertising and Promotion/Extensive Marketing. To maintain a competitive edge in the industry, players spend millions on advertising. There are different kinds of gimmicks like a toy in every set meal for kids, discounted food items if you purchase two items, free gift items, raffle draws and a lot more. Some food companies even get celebrity endorsers to create brand consciousness and market loyalty.

Market niching is key. Entrants must strive to project an image that can shift brand loyalty from existing players. A well-managed logistics and marketing support system are required to run several local operations. Aggressive marketing is required to make a strong impact. However, good marketing strategies mean having sufficient capital to support the marketing campaign. There is also some degree of capital investments in order for restaurants to provide the necessary ambiance and image in support to its marketing.

12 Proper Pricing. With the present economic slowdown, people eat out but with a limited budget. Price cuts and discounts are offered to increase sales. Food outlets that offer the most value for money (less than P100/ meal) are the popular ones. Almost all eating places offer their own price cuts or discounted meals.

Quality of Food, Service and Facilities. Providing high quality food that conforms to the taste of the consumer coupled with fast and efficient service in a clean environment is a big incentive to growth. Consumers have become even more discriminating and quality-conscious.

Product Lines. Targeting the consumers' taste buds means continually upgrading the menu. This is one key in capturing more customers.

Strategic Locations. Location and restaurant concept must go hand in hand. The location should appeal to the target market. Malls, university areas, and other places where there is heavy pedestrian traffic are the usual places where food outlets are highly patronized. Prime locations such as malls though cost more so operators must charge more for their menu items or generate sufficient volume to keep the rent/lease costs to between 5 and 8 percent of sales.

Availability of Raw Materials. The smooth operations of food outlets require a steady and adequate supply of raw materials. These companies must then establish tie-ups with reliable suppliers.

Franchising. For new investors, franchising is a good way to start. With franchising, there is already product identification.

13 Section 3 HUMAN RESOURCES

• Many of the food and beverage servers including cleaners are part time employees. In fast food chains, a significant portion of the employees are part time students. Tips comprise a major portion of earnings, so there is keen competition in jobs where potential earnings from tips are greatest --- bartenders, waiters and waitresses, and other jobs in popular fast food outlets, restaurants, and fine dining establishments. One restaurant owner claimed that his establishment provides free meals to employees while they are on duty as an incentive.

• Recruitment of staff is either through referrals or newspaper advertisement. Short listed applicants undergo interviews and qualified applicants undergo on the job trainings. On the job trainings are conducted by the owner or the supervisors. In-house training is necessary but very limited in terms of increasing or enhancing overall in-house skills and knowledge. According to FGD participants, there is no pool of skilled workers for the food service subsector available in the province. Most food and beverage serving and related workers pick up their skills on the job by observing and working with more experienced workers.

There are not much training opportunities for restaurants claimed a respondent because there are no providers of trainings in culinary arts in the area. HRANO took the initiative and provided or organized cooking demonstrations and basic food safety trainings.

• Due to the relatively small size of most food-serving establishments, opportunities for promotion are limited. For waiters, waitresses, and bartenders, advancement usually is limited to finding a job in a busier or more expensive restaurant or bar where prospects for tip earnings are better. Some hosts and hostesses and waiters and waitresses advance to supervisory jobs, such as maitre d’hotel, dining room supervisor, or restaurant manager. In larger restaurant chains, food and beverage service workers who excel at their work often are invited to enter the company’s formal management training program.

• Full service restaurants would usually have the following organizational structure: a) Kitchen: cooks, assistants, expediter, receiver, dishwasher; b) Bar: bartenders, cocktail servers; and c) Front of the house: hostess, servers, entertainers

• Food and beverage serving and related workers are the front line of customer service in restaurants, coffee shops, and other food service establishments. These workers greet customers, escort them to seats and hand them menus, take food and drink orders, and serve food and beverages. They also answer questions, explain menu items and specials, and keep tables and dining areas clean and set for new diners. Most work as part of a team, helping coworkers during busy times to improve workflow and customer service.

There are no specific educational requirements for food and beverage service jobs. Many employers prefer to hire high school graduates for waiter and waitress, bartender, and host and hostess positions, but completion of high school usually is not required for fast-food workers, counter attendants, dishwashers, and dining room attendants and bartender helpers. A job as a food and beverage service worker serves as a source of immediate income, rather than a career, for many people. Many entrants to these jobs are in their late teens or early twenties and have a high school education or less. Usually, they have little or no work experience. Many are full- time students or homemakers. Food and beverage service jobs are a major source of part-time employment for high school and college students.

• Waiters and waitresses take customers’ orders, serve food and beverages, prepare itemized checks, and sometimes accept payment. Their specific duties vary depending on the type of establishment. In coffee shops and fast food outlets, servers are expected to provide fast, efficient, and courteous service. In fine dining restaurants, where more complicated meals are prepared and often served over several courses, waiters and waitresses provide more formal service either American and Russian style emphasizing personal and attentive treatment. They

14 may recommend certain dishes and identify ingredients or explain how various items on the menu are prepared.

Waiters and waitresses sometimes perform the duties of other food and beverage service workers especially in fast food outlets. These tasks may include escorting guests to tables, serving customers seated at counters, clearing and setting up tables, or operating a cash register. However, full-service restaurants frequently hire other staff, such as hosts and hostesses, cashiers, or dining room attendants, to perform these duties.

Waiters and waitresses need a good memory to avoid confusing customers’ orders and to recall faces, names, and preferences of frequent patrons. In some cases and especially among those working in fast food outlets, the waiters and waitresses need to be quick at arithmetic so they can total bills manually. Prior experience waiting on tables is preferred by restaurants and hotels that have rigid table service standards. Jobs at these establishments often offer higher wages and have greater income potential from tips, but they also have stiffer employment requirements, such as higher education or training standards, than other establishments. Knowledge of a foreign language is helpful to communicate with a diverse clientele and staff.

• Bartenders fill drink orders either taken directly from patrons at the bar or through waiters and waitresses who place drink orders for dining room customers. They prepare mixed drinks, serve bottled or draught beer, and pour wine or other beverages. Bartenders must know a wide range of drink recipes and be able to mix drinks accurately, quickly, and without waste. Besides mixing and serving drinks, bartenders stock and prepare garnishes for drinks; maintain an adequate supply of ice, glasses, and other bar supplies; and keep the bar area clean for customers. They also may collect payment, operate the cash register, wash glassware and utensils, and serve food to customers seated at the bar. Bartenders usually are responsible for ordering and maintaining an inventory of liquor, mixes, and other bar supplies.

Some bartenders directly serve and interact with patrons. Bartenders should be friendly and enjoy mingling with customers. Bartenders at service bars, on the other hand, have less contact with customers. They work in small bars often located off the kitchen in restaurants, hotels, and clubs where only waiters and waitresses place drink orders.

Some bartenders acquire their skills by attending a bartending or vocational and technical school. These programs often include orientation on local laws and regulations, cocktail recipes, attire and conduct, and stocking a bar. Although few employers require any minimum level of educational attainment, some specialized training is usually needed in food handling.

• Full-service upscale restaurants hire hosts and hostesses to welcome guests and maintain reservation or waiting lists. They may direct patrons to coatrooms, restrooms, or to a place to wait until their table is ready. Hosts and hostesses assign guests to tables suitable for the size of their group, escort patrons to their seats, and provide menus.

• Dining room and cafeteria attendants and bartender helpers assist waiters, waitresses, and bartenders by cleaning tables, removing dirty dishes, and keeping serving areas stocked with supplies. Sometimes called backwaiters or runners, they bring meals out of the kitchen and assist waiters and waitresses by distributing dishes to individual diners. They are also in-charge of making sure that there is an adequate supply of clean linens, dishes, silverware, and glasses. Likewise, they keep the bar stocked with glasses, liquor, ice, and drink garnishes.

Dining room attendants set tables with clean tablecloths, napkins, silverware, glasses, and dishes and serve ice water, rolls, and butter. At the end of the meals, they remove dirty dishes and soiled linens from tables.

Cafeteria attendants replenish serving counters with food, trays, dishes, and silverware and may carry trays to dining tables for customers. Bartender helpers keep bar equipment clean and wash glasses. Dishwashers clean dishes, cutlery, and kitchen utensils and equipment.

15 • Counter attendants take orders and serve food in cafeterias, coffee shops, and carryout eateries. In cafeterias, they serve food displayed on steam tables, carve meat, dish out vegetables, ladle sauces and soups, and fill beverage glasses. In coffee shops, counter attendants take orders from customers seated at the counter, transmit orders to the kitchen, and pick up and serve food. Counter attendants also take carryout orders from diners and wrap or place items in containers. They clean counters, write itemized checks, and sometimes accept payment. Some counter attendants may prepare short-order items, such as sandwiches and salads.

• One of the most important aspects of running a successful restaurant is having a strong back of the house operations particularly in the kitchen. As pointed out by respondents, the chef and the kitchen crew are among the more important employees in a restaurant establishment. The owners of restaurants keep an eye on the kitchen or are even the cook themselves. The chef in one hotel-based restaurant needed to have a background in international cuisine. These people hold the fate of the restaurant in terms of food quality and safety.

Ideally, chefs need a strong culinary foundation and multi-culture cooking skills. They also need to possess traits such as passion, dependability, cooperation, and initiative. Additional management skills needed include strong supervisory skills, accounting, sanitation/safety, nutritional awareness, and marketing/merchandising.

• Controlling costs is an essential part of food and beverage operations. Effective control of food costs entails having a cost-effective purchasing system, a controlled storage and issuing system, and strict control of the food production and sales. A main implication for this is the need for skilled employees in the ‘back of the house’ operations, which unfortunately, many of the smaller establishments lack.

• With labor costs comprising a significant percentage of the variable costs, staffing is an important factor in the daily operations of a food service establishment. Generally, fast food restaurants have the lowest labor costs percentage while upscale full service restaurants having the highest. Quick service restaurants have a lower payroll cost primarily due to their limited menu and service.

• In many of the international food chains, food cost percentage is used as a yardstick for measuring the skill of the chef, cook, and management to achieve a predetermined food cost percentage --- usually 28 to 32 percent for a full service restaurant and a little bit higher for a high volume fast food establishment.4

Another operating ratio used by experienced restaurant operator is the contribution margin, which in one way or another is also dependent on the skills of the chef and the manager. The contribution margin is the amount that a menu item contributes to the gross profit, or the difference between the cost of the item and its sales price.

4 John R. Walker, Introduction to Hospitality

16 Section 4 CONSTRAINTS AND POTENTIAL SOLUTIONS

A. MANAGEMENT/ORGANIZATION

Constraints Current Initiatives Potential Solutions Operations not standardized in Owner or manager has to Organizational development small establishments; no closely supervise day-to-day formal documentation of operations Continuous Productivity and processes and standards Quality Improvement

Exposure to operations of food chains and franchises/ Benchmarking visits Food safety and cleanliness not Seminars, training on food Good Manufacturing Practices conscientiously implemented safety being conducted by customized to various types HRANO and size of operations Only a few establishments Accreditation seminars being Enhancement of value of DOT accredited by DOT conducted by DOT accreditation both for consumers and tourism Low appreciation of “Deputization” of local tourism enterprises through inclusion of accreditation offices to do documentation of standards/criteria meaningful compliance and relevant for both parties and aligned to international accreditation system.

Effective promotion of accreditation program both to enterprises and consumers

Streamlining of accreditation procedures and assistance to food service establishments in meeting requirements

Weak cooperation and Informal cooperation; referrals Promote collective marketing collaboration among and servicing among the establishments, which to a Some sporadic actions from different players with HRANO significant extent undermine HRANO to promote unity and as the starting point. capacity and competitiveness networking among the of industry to host big events different establishments Strengthen HRANO so as to and conventions. enable it to play a more active role in promoting unity and cooperation among the members

B. HUMAN RESOURCES

Constraints Current Initiatives Potential Solutions Limited specialized culinary Cooking demonstrations Technical schools and HRM training available in Negros schools in Negros Occidental Occidental tie-up with Manila and Cebu- based culinary training providers In-house training capability Senior staff undergo training Conduct of trainors’ training not sufficient to equip from external providers program (didactic and subject employees with skills required matter expertise) for senior to meet market requirements staff and owners involved in in- house training activities as well as other local providers. Facilitate tie-up with restaurant training institutes with international accreditation

Encourage food service establishments with in-house training programs to share their “trainors” and programs at reasonable fees with other establishments.

Encourage training providers in Negros Occidental to tap company-based trainors as guest lecturers and resource persons. Need to improve productivity Multi-skilling via on-the-job Productivity standards training definition – Continuous Productivity and Quality Improvement Program Lack of attention to skills and Conduct BDS awareness knowledge upgrading especially campaign elaborating on among single unit benefits, providers, etc establishments and micro businesses High costs of specialized HRANO organizes common Promote cost sharing among training especially for the trainings establishments smaller establishments Train key people who can train the other employees

C. TECHNOLOGY/R AND D

Constraints Current Initiatives Potential Solutions Limited use of ICT to increase Use of computers for encoding, Awareness campaign on the use efficiency and enhance reservation tracking, and of ICT in inbound, outbound, services to guests simple financial system in operations, and marketing bigger establishments functions. Perceived high cost of

18 Constraints Current Initiatives Potential Solutions information technology Stimulate demand by building pilot projects to demonstrate the benefits of ICT in company’s day-to-day operations

Training/mentoring in the use of ICT. Facilitate linkages with Cebu ICT companies Limited product dev activities; Ad hoc and intermittent Support private sector lack of info to base product product dev activities providers in the development dev activities of affordable market research and information services

Enhance capability of local chefs and food technologists

Demonstrate benefits of working with professional chefs and food technologists through pilots. Poor environmental Some piecemeal initiatives to Promotion of clean and green compliance/increasing recycling, environment friendly practices including recycling environmental costs practices and the use of environmentally No support from government friendly products (e.g., re: recycling. biodegradable detergents, etc.) to both public and private sectors

Improvement of the ability of environmental managers or promoters to speak the “language of business” to accelerate the spread and implementation of responsible environmental management practices in SMEs.

Skills training courses should be based on environment friendly production technologies

D. INPUTS

Constraints Current Initiatives Potential Solutions Increasing cost of supplies Explore possibilities of bulk- buying especially for goods Lack of suppliers in Bacolod sourced outside the locality Inconsistent quality of fresh Source from Baguio (lettuce); Establish a comprehensive produce Batangas & Cavite (coffee); resource/suppliers database, GenSan (blue marlin); Roxas including self-sustaining Sometimes, volume not (oysters) & Victoria (scallops) capability for regular updating. sufficient through suppliers; herbs and

19 Constraints Current Initiatives Potential Solutions spices; specialty needs Explore possibility of suppliers’ accreditation system. To promote equitable participation among all players, program should ensure that suppliers have access to a range of business development services that will enable them to match the agreed standards and requirements. Increasing utility costs (power Encourage utility providers to and water) conduct orientation on conservation measures

E. MARKET ACCESS/MARKETING

Constraints Current Initiatives Potential Solutions Lack of capability and capacity Promote collective marketing to design and conduct campaigns marketing campaigns especially among micro businesses Enhance capability of marketing/advertising firms in Negros Occidental to provide relevant and affordable services to food service industry

Customize existing training modules on marketing to context of restaurant industry. Facilitate tie-ups between local training providers and experts on restaurant marketing Lack of market data and info Develop self-sustaining local on restaurant markets in capability to conduct regular Negros Occidental customer and market surveys and the consequent packaging and dissemination of results to enterprises.

Interventions should be aimed towards the development of an efficient and cost-effective means of: • Locating/identifying information sources and needed information

• Translating and applying these information materials to the context of the enterprises

20 Constraints Current Initiatives Potential Solutions • Packaging and disseminating these information to SMEs

Annex B TRAVEL AGENCIES AND TOUR OPERATORS

1 Table of Contents

Section 1. Industry Structure 3 A. Players and Relations in the Subsector 3 B. Products and Services 6 C. Markets 6 Section 2. Value Chain 8 Section 3. Human Resources 11 Section 4. Constraints and Potential Solutions 12 A. Management/Organization 12 B. Human Resources 13 C. Technology/R and D 14 D. Inputs 14 E. Market Access/Marketing 15

2 Section 1 INDUSTRY STRUCTURE

A. PLAYERS AND RELATIONS IN THE SUBSECTOR

• The tourism industry essentially consists of two parts:

- The first part includes transportation, accommodation, and attractions. The producers of these services like air, sea, and railroad carriers, hotels and other forms of tourist accommodation, and the various forms of attractions like beach resorts, parks and natural attractions are called the service suppliers.

- The second part includes the services sector composed of travel agencies and tour operators, which is used to deliver these products to the consumer. These distribution channels of the tourism industry are very important, because the products of the tourism industry are invisible services, incapable of feel, smell, touch and inspection at the point of sale.

• There are basically two main channels of distribution in the travel and leisure industry:

- The first way of distribution is direct to the tourist via direct marketing, phone or fax, Web and advertising in different kinds of media.

- The second, more common way is selling the products and services through intermediaries to the customers.

An important difference between the travel industry and other industries is the status of the retailer (e.g. the travel agents). Travel retailers do not buy goods and services, and they do not mark up a price. They get paid a commission or a percentage of the selling price by the wholesaler or the supplier.

• The following are the main players in the traditional distribution chain of the travel and tourism products:

Consumer

Non-existent in Negros Occidental

Travel Agent

CRS/GDS DMOs/ Planners

Tour Operator

Structure of the Distribution Flow in the Tourism Industry (Adapted from Werthner 1999) Supplier

3 - Suppliers - Consumers - Destination Marketing Organizations/Planners/Administrators - Tour Operators - Travel Agents - Reservation Systems

• Travel agencies advise and sell a range of holidays and other tourism offerings including airline tickets and visa and passport assistance. Agents are the retailers in the chain, selling travel services or packaged trips to the customers. They act as intermediaries between the traveler and the supplier.

On the other hand, tour operators traditionally have the wholesaling and packaging role. They bring together the essential elements of a holiday such as transport, accommodations, entertainment events and visits to attractions and sell these to travel agents in bulk. Tourist guides and tourist information services play a supporting role to the tourism product, offering information and services usually at the tourism destination.

• However, in the national and international scene, the traditional delineation is no longer that clear as tour operators are increasingly selling their packages direct to customers, cutting out the intermediary. In Negros Occidental, some companies act both as travel agencies and tour operators at the same time. In many cases also, hotels and airlines sell direct to customers, bypassing travel intermediaries altogether. Likewise, in the worldwide market, the impact of new technologies on distribution and marketing channels means that, for the customers, the traditional roles are blurred.

• According to the Negros Occidental Tourism Center, there are 38 licensed ticketing/travel agencies, 5 tour operators and 5 operating both as travel agency and tour operator. Of the 48 agencies, one (1) has stopped operations recently.

Travel agencies and tour operators in Negros Occidental are mostly micro, individually owned enterprises, established with minimal start-up capital used to purchase computer and basic furniture, rent a space and buy the initial tickets. These are small offices managed by an average of 2 to 3 staff including the owner/manager. The agencies are equipped with telephone, facsimile machine and computer.

• Internet connection is vital to the operations of travel agencies. Almost all travel agencies use the Amadeus computer reservation system software. These customer reservation systems (CRSs) allow airlines and other users to monitor, manage, and control their capacity (yield management) and the clients. Working with CRS and Global Distribution System (GDS) provided airlines and travel agencies with competitive advantage in the field of information handling within the tourism industry.

• Airlines, general sales agents and IATA are the sources of the tickets for the ticketing service. The discount on the tickets depends largely on the volume of purchase (block booking) which agencies in Negros Occidental cannot afford. In most cases, these local travel and tour agencies have linkages with Manila based similar establishments especially for outbound tourism. No contracts bind the transactions rather the relationship is based on trust.

• Though relationships are not fully developed in the sense that local travel and tour agencies do not strongly promote the services of hotels/resorts and vice versa. Relationships between local travel and tour agencies and Negros based hotels involve primarily the former making the reservations in behalf of clients and providing ticketing services to the latter’s clients. These transactions though are not governed by formal contracts. The travel agencies work more with the bigger accommodation establishments rather than the pension houses, apartels and inns.

• Tour operators have linkage with Rent –A-Car owners. There is no linkage, however, developed with bus operators to service big group tours. Tour operators indicated that it is possible to

4 contract the services of bus companies but they find the rates quite high. Current trend is to hire smaller vehicles for tours but this also entails fielding more guides.

• Out of the 10 agencies engaged in tour operation, only three are accredited by DOT. There are also more than 30 but less than 50 tour guides but there is only one (1) licensed/accredited tour guide.

• Although DOT accreditation is an additional credential, individuals/operators involved in tour operation find the requirements stringent. A tour guide, for example, needs to undergo the seminar for a fee conducted by the DOT, present a certificate of good health from a licensed government physician, and secure a clearance from the National Bureau of Investigation.

• Mountain/cave guides need to meet the following additional requirements: a) training on basic life support from the Philippine National Red Cross; and b) certification issued by the Mountain Guides Association of the Philippines, Inc./ Philippine Cave Guides Association, Inc. or any other DOT recognized mountaineering/caving organization that the applicant has the necessary mountaineering/caving skills, equipment and experience in guiding. On top of these are the accomplishment of application forms and filing the same at the DOT regional office (Iloilo) or in Manila.

• Aside from the general accreditation requirements for all applicants, tour operators must show:

- Proof of P500,000 working capital - Proof of inbound or local tour operations (official receipts of bookings from DOT accredited hotels/resorts) - Tour packages with tariff rates - Copy of Surety Bond submitted to Local Government Unit (LGU) - General Manager shall have at least 3 years managerial experience in tour operations - Bio-Data of two permanent staff who shall have at least 2 years experience in tour operations .

Other accreditation requirements include the following: - office space should be located in a commercial area, must be easily identifiable and shall be used exclusively for the tour operation business - An affidavit executed by the general manager of the main office acknowledging the existence of the branch office, assuming full responsibility of its operations and certifying that it is not managed nor operated by other persons/ entities other than the duly accredited employees and officers

The only benefit that accrues to an accredited tour operator is endorsement to NAIA and other international airports for issuance of access passes to qualified personnel. As such, many of the tour operators are not that keen to get an accreditation given all the requirements.

• The National Association of Independent Travel Agencies (NAITAS)-Bacolod Chapter has 14 travel and tour agency members in Bacolod City. According to its website, NAITAS was organized at the national level in response to the need for a nationwide network of non-IATA travel agencies.

• NATTO (Negros Association of Travel & Tours Organization), which is envisioned to help promote inbound tourism, has no staff to undertake the necessary tasks and police its ranks. A member thinks that the cut-throat competition can be avoided if the association members define the mark-ups and make this binding by signing a memorandum of understanding or some sort of a business ethics.

5 B. PRODUCTS AND SERVICES

• Most of the travel agencies provide local and international ticketing service for outbound tourist and earn from commissions and service fees. This service involves making the necessary seat reservation in a selected aircraft based on the date and flight schedule preference of the client, confirming the ticket and releasing this to the client upon receipt of payment. There are agencies which provide this service only.

• Passport processing facilitation is another popular service provided by travel agencies also for outbound tourists. This involves providing the client with information on the various requirements, checking and compilation of requirements and documents, filing of the application, and follow-up until the passport is released. Visa assistance could involve visa processing, extension or renewal. Income is in the form of processing fee.

• Hotel booking or reservations with hotels or resorts entails ensuring that clients have the necessary accommodations of their choice in their respective areas of destination. Income comes in the form of pre-agreed discount or commission. According to FGD participants, the discount offered by resorts is low compared to other similar establishments in the region. Likewise, travel agencies complain that hotels do not accommodate their booking requests during peak seasons like Maskara and Panaad festivals and/or when there are conventions.

• Tour operators handle arrangements for transportation, destinations, and food. In many cases, they also take care of the logistics during the tour itself. They earn commission from restaurants, although there are cases where restaurants complain because tour operators ask for discounts when they make the reservations and additionally ask for commission on the day of transactions. Similarly, tour operators get discounted price from transport operators.

• Available Negros Occidental tour packages are very much limited. To date, the Negros Occidental Tourism Center recommends 6 tours: Bacolod City Tour, Negros Sugar Tour, War Memorial Tour, Victoria Milling Company Tour, Steam Engine Tour, Transportation Tour and Golf Tour. The ANP showroom is a popular stop over for shopping.

• International and domestic (outside Negros Occidental) tour packages for outbound tourists include activities/destinations, accommodations, food service, and transportation. Clients can choose from a wide range of tour packages depending on their interests and budget.

C. MARKETS

• Only 4 to 5 of the travel and tour agencies are engaged in inbound tourism. One tour operator is the conduit of PAL for its Negros Occidental inbound tourists. Majority focused on outbound tourism and finds this to be more lucrative than inbound tourism. According to key informants, incentives offered by Negros hotels and other similar establishments are low compared to establishments in other areas and not even sufficient to cover communication costs. It is claimed that only one Negros resort offers a 30% commission.

Parallel to this, there seem to be more outbound tourists than inbound tourists. Both travel agencies and tour operators believe that there is no cohesive and unified marketing plan to bring in inbound tourists. There is also a lack of promotional materials on tourist destinations.

• Cut throat competition for outbound tourism exists among the establishments. FGD participants believe that there are too many travel agencies although everybody gets the same rates or commission. Hotels give good discounts except during events such as the Masskara and Panaad festivals and conventions.

• Travelers from the province or outbound tourists comprise majority of the clientele of travel agencies especially for the ticketing service. Clients include overseas Filipino workers. They

6 also have a few clients coming from other regions and foreigners. Respondents said there was no change in the demand during the last 12 months.

• Services for passporting and visa assistance cater to the needs of the local populace. Visa assistance service is also extended to foreign tourists who happen to be in the area when the need arises.

• Clients for local and domestic tour packages like the popular ‘lakbay aral’ are students, local government units and local tourists. These are either inbound or outbound tourists.

• Local tourists, who are most often independent travelers, avail of the international tour packages provided by travel agencies. The demand for domestic and foreign tour packages is said to be increasing during the last 2 years.

• Hotel and resort reservations and transportation arrangement are part of the packaged tours for inbound travelers. However, only a few inbound tourists avail of these packaged tours from the local travel agencies. The very few who avail of this service are individual travelers. Hotel and resort reservations form part also of outbound domestic and international tour packages.

• The relationship of travel and tour agencies with hotels and resorts is in making reservations for their clients. The hotels and resorts also refer their guests to the travel agencies for ticketing and visa assistance. Referral made by hotels and resorts for their guests is an added service. They do not promote each other even just simply having information materials of the other in their office.

• Marketing by travel agencies is done through direct marketing, tri-media advertisements, brochures/flyers, webpage of intermediaries, participation in trade fairs and travel marts, networking especially with corporate clients, promo/discounts, referrals and word of mouth. Referral by former clients is more effective in generating clients from the local populace and internet for domestic and foreign clients. Brochures/flyers are the least effective because of limited venues where these can be displayed and disseminated. According to respondents, travel agencies are not welcome to leave these information materials at hotel and bank counters. Tour operators do direct marketing especially in schools for the lakbay aral and conduct familiarization tours to show the actual attractions/destinations. They also participate in trade fairs and make use of the other marketing tools used by travel agents.

• Collective marketing is done only during participation in trade fairs and travel marts. Participation in these activities is usually spearheaded/coordinated by the provincial tourism center and not by the travel and tour organization. The association though was organized with the task to promote inbound tourism.

• It was claimed that more and more clients prefer on-line payment but establishments are constrained to subscribe to it because of the investment requirement on the software and the deposit required by the banks.

7 Section 2 VALUE CHAIN

FIRM Reservations/booking systems/tracking INFRASTRUCTURE Operation procedures (usually not written but handed down orally to employees) HUMAN RESOURCE Recruitment: referral – posting MANAGEMENT Training: on-the-job training; airline provides updates; training on use of CRS software (Amadeus) Compensation as per Philippine Laws and prevailing market rates TECHNOLOGY Databases of schedules, airfares, hotels, etc. DEVELOPMENT/ CRS – Amadeus R and D Use of internet for marketing but usually limited to webpages/cannot accept reservations in their own sites Computerized booking Computerized financial systems (for the bigger companies) Communication facilities No online payment facilities PROCUREMENT Lowest price – good terms – good quality (Buy from wholesalers in Manila- Block booking) Has linkages with airlines (PAL), tour operators (mostly for outbound travel) MAIN ACTIVITIES INBOUND LOGISTICS OPERATIONS OUTBOUND MARKETING AFTER SALES SERVICE Procure tickets from Itinerary preparation / By mail and/or in- Direct marketing (Person-to-Person Sales Follow-up calls airlines presentation to clients person delivery of Calls) tickets, Get and confirm Ticket reservation and purchase reservation Brochures/flyers (not that effective)Online reservation from other coupons / marketing via other intermediaries tourism suppliers Hotel and transport vouchers, (resorts, hotels) arrangements passport, and Referral; word of mouth other documents Visa and passport assistance Promo/discounts

Arrange reservations for special Networking with corporate clients interest activities/tours Participation in trade fairs

• Tourism is an information intensive industry. Information is one of the most important quality parameters to generate action from the potential customers. When a tourist decides to go on a trip and books and offer, the product does not exist physically. What the customer is buying is the right to the product, a hotel room and/or an airline flight seat. Travel is information at the point of sale. Usually the decision process depends only on the given information. Information technology can assist travel intermediaries in reaching out more customers cost effectively.

• Travel agents must offer specialist knowledge in order to offer added value for customers to keep them purchasing through their networks. The travel agent is expected to supply information, offer travel advice, sell ancillary services, collect payment, and administer the holiday and travel bookings. Reliable service and customer contact is a must to generate trust and repeat bookings.

Below are the IT-based enablers for each link in the travel value chain based on the Sabre operations and from which Negros Occidental travel agencies can adapt to their own operations.

Travel Value Chain Enablers: Sabre Experience

Enablers: Enablers: Enablers:

• Traveler profile • Fast delivery of • Traveler location • Demand itinerary detection management • Integrated banner • Merchant proximity • Point of sale advertising • Wireless access and campaign • Email database notification management marketing • Targeted • Point of sale tele- • Response advertising in scripting management public spaces including quick confirmations with other suppliers in the package

9 • The following are the activities involved in the development, management and administration of tour packages1:

Phase Activity Research Review market performance Forecast market trends Select and compare existing and new destinations Determine market strategy Capacity Planning Tour specification Negotiate with and contract suppliers Financial Evaluation Determine exchange rates – current and trend Estimate selling prices Finalize tour prices Marketing Brochure/communication planning and production Promo collateral distribution and launch Multi-media advertising and sales promotion Market launch Administration Establish reservation system Receive and process reservation Tour accounting and documentation Tour Management Customer care at destination Customer correspondence Payment of suppliers Legend Skills and know-how need to be enhanced/upgraded

1 Les Lumsdon, Tourism Marketing

Section 3 HUMAN RESOURCES

• With an average of two to 3 staff, multi-skilling is a standard practice. Likewise, there is no clear delineation between staff involved in travel agency operations and those in-charge of tour operations. There are 5 establishments that are involved in both travel and tour operations.

• With the nature of the job in travel agencies, basic knowledge in computer (word and excel) is required of every applicant who wants to work in these establishments. Because the staff will be dealing with people of various nationalities through various modes of communication, he/she must be able to read, write and speak the English language and must be able to pay attention to details. An employee must handle clients with ease, provide fast service, must be friendly and accommodating.

• Basic skills are augmented by on-the-job training provided by employers/owners. Employees though are seldom sent to trainings to hone their skills. Airline sponsored trainings are provided to give updates on the airline industry products. An owner, for example, has participated in a training on the operation/use of the online reservation software (Amadeus) and was the one who trained his staff. There is no continuous capability building or comprehensive training packages for employees to be able to respond/deliver their tasks.

• There seem to be a fast staff turnover due to limited opportunities for advancement given the size of the firm. Managers are left with no option but to let go and recruit and train new staff.

• Employees are expected to be able to package a holiday which best suits the interests of the client. To do this, one must be knowledgeable of all the basic elements including the cost, location, description and understand the culture of the client to be able to adjust and fit the offer. To do this, one must have packaging skills to be able put together the best product offer for a particular client/market.

• DOT accreditation is not a requirement but can be an added credential for the establishment. Accreditation of an establishment does not translate to automatic accreditation of its tour guides and drivers. For tour guides to be accredited by DOT, they have to undergo several trainings in a special school in Manila. DOT does not provide the required trainings. Managers are also required to undergo training in tour operations but many of those currently occupying this position have not complied with this requirement. In many instances, both managers and owners rely on experience. Majority of the managers are also the owners.

Section 4 CONSTRAINTS AND POTENTIAL SOLUTIONS

A. MANAGEMENT/ORGANIZATION

Exposure to operations of travel agency and tour operator chains/ Benchmarking visits No updated business plan; Strategic planning limited service and client portfolio Market research

Business planning

Only a few establishments Accreditation seminars being Enhancement of value of DOT accredited by DOT conducted by DOT accreditation both for consumers and tourism Low appreciation of “Deputization” of local tourism enterprises through inclusion of accreditation offices to do documentation of standards/criteria meaningful compliance and relevant for both parties and aligned to international accreditation system.

Effective promotion of accreditation program both to enterprises and consumers

Streamlining of accreditation procedures and assistance to establishments in meeting requirements

Weak cooperation and Irregular meetings; referrals Strengthen travel agents and collaboration among travel tour operators associations agencies and tour operators, Some sporadic actions from which to a significant extent HRANO to promote unity and Participation in the

12 Constraints Current Initiatives Potential Solutions undermine capacity and networking among the organization of the Negros competitiveness of industry to different establishments Convention and Events Bureau host big events and (private-sector led initiative) conventions.

B. HUMAN RESOURCES

Constraints Current Initiatives Potential Solutions In-house training capability Staff sometimes sent to airline Facilitate tie-up between local not sufficient to equip product updates seminars training institutes and employees with skills required accredited organizations to meet market requirements Training on use of reservation elsewhere offering training for software travel agencies and tour operators

Capability building of local training institutes - Need for skills upgrading in Intermittent training organized Benchmarking missions to order for subsector to by tourism agencies and progressive travel agencies and effectively provide distribution organizations in Negros tour operators and marketing services to Occidental tourism businesses: Upgrade and update existing On-the-job training competency standards to be at - Tourism core par with international - Tour and travel agency Training sponsored by suppliers occupational standards operations - Tour Guiding Facilitate tie-ups between - Tour planning and accredited national/ marketing international providers and - Retail and wholesale travel local providers events - Attraction and visitor Upgrade capability of local information (from design to advertising and promotion effective dissemination) agencies, graphics designers, and other related professions High attribution rate Human resource management particularly among lower rank provider to assist companies in employees finding innovative contract and benefit schemes to employees, team building, OD, etc High incidence of piracy Innovative compensation and contract schemes

Code of ethics among travel agencies and tour operators via association Lack of professional/ Use of tourism officers Development of local accredited tour guides capability to conduct the following: High cost of training for tour - accreditation (from guides application to examination) - conduct of relevant training courses by accredited local trainors

13 Constraints Current Initiatives Potential Solutions Limited capability of training 9 training providers offering Capability of existing trainors providers short-term tourism courses and support in the (TESDA) development of training courses aligned with international standards

Facilitate tie-ups between local providers and established national/international accredited training organizations (e.g., franchise arrangements, etc.)

C. TECHNOLOGY/R AND D

Enhance capability of local tourism product development designers and consultants

Demonstrate benefits of working with professional tourism product development consultants through pilots.

D. INPUTS

Constraints Current Initiatives Potential Solutions Perceived high rates charged Vans are used for local tours Advocacy by companies with big buses but entails more tour guides Encourage investment from An association member private sector acquired a vehicle which is made available to other

14 Constraints Current Initiatives Potential Solutions members at reasonable price Government sectors have buses Lack of access to financial Linkage with providers that can services to augment existing assist companies to access capital (for wholesale purchase micro finance services of tickets, marketing campaigns, etc.) Micro travel agencies not able Jetsetter and commuter passes Explore collective purchase by to avail of the same discount micro businesses via rates, privileges, and product association portfolio given by airlines to big companies;

E. MARKET ACCESS/MARKETING

Constraints Current Initiatives Potential Solutions Very few inbound tourist avail Establishment of linkages with of services of local travel Manila, Cebu, and Boracay agencies travel intermediaries in development of ‘off-season packages and promotion campaigns’. Investigate inclusion of Negros Occ in Cebu and Boracay packages. Limited marketing efforts; Intermittent marketing Unified marketing campaign no unified marketing plan and campaigns; individual company anchored on specific product regular/continuous campaign efforts; differentiation factors that the province can sustain as a Participation in travel marts, marketing proposal trade fairs Preparation of a unified Organization of Negros Visitors marketing plan and campaign and Convention Bureau

Incomplete and unconsolidated Data coming from local and Develop self-sustaining local market data and information provincial tourism authorities capability to conduct regular customer and market surveys Inadequate dissemination of and the consequent packaging same and dissemination of results to enterprises.

Interventions should be aimed towards the development of an efficient and cost-effective means of: • Locating/identifying information sources and needed information • Translating and applying these information materials to the context of the enterprises • Packaging and

15 Constraints Current Initiatives Potential Solutions disseminating these information to SMEs Exclusion of Negros Occidental Promotion in local and foreign Consolidate efforts, make good in the 12 DOT tourism priority markets done by LGUs products available, meet DOT areas standards and lobby Need improvement in product Individual efforts to improve Development of product and offer products market development plan. Review relevance of current Lack of brand awareness Have a brand “Sugar and More” brand/marketing slogan. outside Negros 10 years old Promote collaboration among different players to come up with integrated packages aligned to market trends.

• ‘Visualization’ of offer in brochures, CDs and videos – visual displays of the real thing

• Linkages with international airlines/tour operators; invitation of tourism journalists for inclusion in journals, magazines, etc.

• Availability and dissemination of information and promo materials at strategic locations Lack of standardized pricing Promote price standardization of packages via association

Annex C ACCOMMODATION SERVICES

1 Table of Contents

Section 1. Industry Structure 3 A. Players and Relations in the Subsector 3 B. Products and Services 5 C. Markets 6 Section 2. Value Chain 8 Section 3. Human Resources 10 A. Employment 10 B. Competencies and Training 10 Section 4. Constraints and Potential Solutions 12 A. Management/Organization 12 B. Human Resources 12 C. Technology/R and D 14 D. Inputs 15 E. Market Access/Marketing 15

2 Section 1 INDUSTRY STRUCTURE

A. PLAYERS AND RELATIONS IN THE SUBSECTOR

1. Accommodation Establishments

• Of the 86 establishments listed in the records of the Negros Occidental Tourism Center, 48% are located in Bacolod City, the capital of Negros Occidental.

• Based on DOT’s classification, there are 3 first class hotels and 7 standard class hotels. There is no de luxe class hotel yet in Negros Occidental. The remaining 76 establishments consist of economy class hotels, tourist inns, apartels, and pension houses. The number of establishments per category, however, cannot be established as there are no disaggregated data available.

• The first class and standard class hotels are generally owned by large Filipino corporations. Some have been in the business for more than 10 years with the oldest hotel established in 1974. These hotels have more than 50 rooms and employ more than 80 people each. To date, international hotel chains with operations in the Philippines have not ventured into Negros Occidental.

• The smaller accommodation establishments are usually organized and registered as single proprietorship, family owned and managed by the proprietor. The establishments have on the average 10 rooms and cater to walk-in clients who have known the establishments through referrals.

• To date, only 20 of the 86 establishments have the DOT accreditation. Accreditation with DOT is voluntary. To apply, an establishment has to submit a copy of the mayor’s permit/municipal license, business name certificate for single proprietorship or the articles of incorporation/partnership and bylaws for corporation or partnership; latest income tax return and audited financial statements and contract of lease or certificate of title. Other documents include a duly accomplished application form, list of officials and employees, valid visa and labor permit for foreign nationals and a board resolution authorizing a bonafide employee to file/transact business with the DOT. Additional requirements to be submitted by accommodation establishments are: a) Current room rates with food & beverage prices/menu; b) comprehensive general liability insurance; and, c) fire safety inspection certificate. Application maybe filed with the regional office (Iloilo) or at the accreditation division in Manila.

Accreditation can provide establishments with additional credentials. Many of the businesses though do not apply because of compliance problem, particularly implementation of suggested improvements based on the findings of the inspection. Full details of accreditation requirements, procedures and fees are presented in Annex H and minimum standards to be met in Annex I.

Non-fiscal incentives are accorded to all DOT accredited establishments such as: a) membership to Philippine Convention and Visitors Corporation (PCVC) and inclusion in its marketing and promotional programs; issuance of DOT identification cards to bonafide employees; b) technical/security/ facilitation support or assistance; and, c) endorsement to embassies and travel trade associations for utilization of establishment's facilities and services. Additional incentives to accommodation establishments are: a) endorsement to the Ninoy Aquino International Airport (NAIA) and other international airport for issuance of access passes to qualified personnel; b) endorsement to the Commission on Elections (COMELEC) for exemption from liquor ban during election related events; and c) endorsement to the Department of Agriculture (DA) for importation of meat and meat products.

3 • Interaction among owners of accommodation establishments is facilitated via the Hotel and Restaurant Association of Negros Occidental (HRANO). To date, the organization does not have a physical base and staff.

Recently, the association has provided seminars on quality control, proper food safety and cooking demonstrations. These trainings are provided for free with trainors coming from the association or hired from Manila. The high cost of getting trainors makes it difficult for the association to organize trainings regularly.

In addition to the provision of trainings, it serves as a venue for information sharing about suppliers, upcoming trainings, seminars and networking. Marketing activities is acknowledged to be very minimal; hence, the association recognizes the importance of a marketing arm to provide the needed marketing for the industry.

Members expect HRANO to play an active role in tourism promotion. At present, this is carried out through activities implemented in tandem and in coordination with the provincial tourism center. The association has yet to define specific action plans on how to effectively fulfill its mission.

2. Relations with Input Suppliers

• In the accommodation business, the environment in which the services are delivered is as important as the provision of services. Both functionality and aesthetics of the physical infrastructure contribute to making the establishment attractive or not to the customers. The interior and exterior aesthetics of the building provide tangible cues as to the level of services and the nature of establishment. This underlying principle of simultaneous provision and consumption makes suppliers of the goods and services related to the exterior and interior of the hotel including construction companies to be among the important players in the accommodation subsector.

Set-up and maintenance of the physical infrastructure and facilities are among the major expense accounts (and, oftentimes, the highest) of an accommodation business. Some of the hotel owners prefer to source out housewares, linens, and decors from Manila where prices are lower (especially for imported items) and the availability of a wider range of choices.

• Accommodation establishments particularly the economy to first class hotels work with design and architectural consultants to ensure that design standards bring to the location the desired atmosphere. It is also these hotel categories who are more likely to invest in regular maintenance and continuous upgrading of facilities.

• For soap and other toiletries, the bigger accommodation establishments purchase by bulk and repackage these using their own packaging.

• Raw materials for food are sourced locally, from Cebu and Manila. Local suppliers of these products (fish and vegetables) have been established and maintained informally and these suppliers are familiar with the quality requirements of the establishment.

Suppliers of food items from Cebu or Manila ship the materials either by air or water, depending on the shelf life of the items. Perishable goods are transported by air.

• Other players are those providing maintenance and security and accounting if these services are outsourced; and water, power and communications service providers.

4 3. Relations with Other Tourism Establishments

• Whether accredited or not, some of the bigger hotels have established relations with travel and tour operators based in Manila who refer their inbound clients for their accommodation needs and are paid per transaction. Locally based travel and tour operators also deal with hotels for the accommodation needs of their inbound clients and the hotels in return refer their guests who need ticketing services and visa assistance to the travel and tour agencies. One can hardly find though tour information of tour operators in the accommodation establishments.

The relationship of local travel and tour operators with hotels suffer though during peak months, according to FGD participants, when hotel occupancy rates are high. Reservations requested by local travel agencies and tour operators are not being considered. This situation puts the local travel and tour agencies at stake. The travel and tour operators however, cannot complain against the hotel management because the relationship is informal. This problem arises especially during Maskara and Panaad festivals and sporting events.

• Among the 3 hotels interviewed, one claimed to have linkage with an airline. Majority of the FGD participants though indicated that they have good linkages with travel local writers and photo journalists. There is no information however, to which newspapers/magazines these writers feed their writings and the frequency.

• Relationship between tourist inns, apartels and pension houses with marketing intermediaries like travel agencies and tour operators is weak. These smaller establishments are not also known by corporate clients which is the main market of the hotels in the province.

B. PRODUCTS AND SERVICES

• The range of services provided by an accommodation establishment is one of the basis for its classification. First class hotels, for example, must have at least one (1) suite room per 40 guest rooms; provide 24-hour hot and cold bath, room and porter services; and radio and television set in the rooms. Furniture and linens are also of high quality compared to standard and economy class hotels. Recreational facilities like swimming pool and at least either a tennis court, golf or gym must be available within the vicinity. It must also have special rooms for conferences or banquets. Standards per hotel classification are detailed in EO 120 which is attached as Annex C.

• The 3 respondent hotels (2 first class and 1 standard) differentiate their establishments from the smaller ones by the wide range of services that they offer such as: accommodation and food service; function rooms for meetings, conferences and other events; business center and rooms which provide internet access, photocopying, fax, and telephone services; swimming pool; laundry; airport transfer, transport or vehicle hire; safety deposit box and foreign currency exchange.

• Economy class hotels, apartels, tourist inns and pension houses offer limited services. Basic service is accommodation and bath although some provide breakfast. These do not have conference rooms, bathroom maybe common and food service not available. The least these establishments can offer is a bed and common bath in a non-airconditioned room. In apartels for example, the guest can do his/her own cooking. Furniture is minimal and of lower quality. Guest rooms are not necessarily airconditioned. Details of the standards are found in Annex I.

• There exists though a strong drive by owners and management to surpass the minimum requirements per accommodation establishment classification in line with their objective of making Bacolod a convention center outside Metro Manila.

• Below is the comparative room rate of first class, standard hotels and other accommodation establishments.

5 Hotel Category Type of Room Price Range (in US$) First Class Deluxe and super deluxe 50.00 – 100.00 Standard Class Budget saver, standard, 10.00 – 29.00 executive, deluxe Pension house, tourist Aircon and non-aircon 3.00 – 13.00 inns, apartel

As indicated in the table above, there is a big difference in room rates between first class hotels and the pension houses and similar establishments. Pension houses, tourist inns and apartels, which provide basic amenities like room, bed and at least common toilet and bath, are priced between Php150/night to PhP700 a night, the lowest of which is for a bed in a non- airconditioned room and the use of a common bath. Room rates of standard hotels and first class hotels range from US$ 26 to US$ 100 per night depending on the room classification. The availability of a wide range of accommodation facilities makes it affordable for different income brackets to spend their holidays in Negros Occidental.

C. MARKETS

• 90-95% of the clientele consists of locals. Inbound foreign tourists comprise only 5 to 10% of the clientele.

• Majority of the local inbound tourists are participants of conventions and similar events and are from the corporate world. Negros’ share in the convention market or the MICE market (meetings, incentives, conferences, and exhibition)1 is increasing but at a slow pace. A bigger share in the national convention market is seen by hotels as the most important strategy in increasing occupancy rate.

• Focused group discussion participants estimated the average annual occupancy rate of hotels to be between 40%-50% which swells up to 150% (triple sharing) on peak seasons. Peak months are from January to June and September to November while lean months are July, August and December. MICE activities such as conventions and events like the Panaad and Maskara festivals and athletic/sports push up occupancy rates.

Average occupancy rate of Negros Occidental is lower compared to similar establishments in Metro Manila, where the average occupancy rate for the period January to July 2004 was at 68% posting a 21% increase over the same period in 2003.

• In the world tourism market, the MICE market is the fastest growing segment, which accounted for $90 billion in 1997 and growing by 8 to 10 percent per year. The top 10 reasons for hosting a meeting conference are: education, training, decision making, information exchange, research, sales, strategic planning, team building, product launch and problem solving. Facility availability, reputation for high quality service, travel distance for attendees, promotional qualities, image of venue, price, value for money, weather, activities offered and accessibility are the top 10 factors influencing the selection of venue.

• Although the main market of hotels in Bacolod is the MICE, an establishment does not have the capacity to host a really big event alone. This does not mean, however, that additional accommodation facilities have to be developed but rather there is a need to foster higher collaboration among players to optimize existing facilities. The venue of a big event can be in

1 A meeting is an event where people, either from a single company or organization or from a broader spectrum, come together to exchange information: cocktail functions, product launches, lunch, dinner and breakfast meetings including occasions like weddings constitute a meeting per WTO definition. Incentives include travel to a foreign country or other parts of the same country as part of motivational scheme to reward or increase employee effort. Conferences is said to be a multi day event having at least 100 delegates attending the event to exchange information. Exhibitions is the bringing together of people for the purpose of viewing products and/or services.

6 one of the establishments with the most spacious conference hall; accommodations and food can be co-hosted. It would be necessary though to provide good transport service to shuttle participants from venue to accommodation and vice versa.

• Conference halls are also used by local residents during banquets for occasions like birthdays, baptisms and weddings. Other services like the swimming pools are also availed by the local residents. Other hotel services such as internet access, photocopying, telephone and others are patronized mainly by regional or foreign guests. This does not mean that the local populace does not make use of these services but rather they avail these in other establishments purposely set up for such.

• Visitors/tourists who avail the services of the pension houses, apartels and tourists inns are mostly walk-in clients who learned about the establishment through referral. The pension houses, apartels, and tourist inns cater to a market segment different to that of the hotels.

• Marketing tools of accommodation establishments are presented in the table below:

Hotels Tourist Inns, Pension Houses, Motels Face to face marketing: account executives Walk-in/Word of mouth visit prospective clients including events organizers, cocktails for managers of big corporations Direct mail: proposals via mail Signages Paid advertisements in newspapers, radio Referrals and television Brochures/flyers printed and distributed Webpage of intermediaries like travel agencies Discounts Walk-in/word of mouth referrals Signages

• Most of the hotels maintain their relations with big companies and aggressively market their services directly through their account executives usually through regular visits. One hotel respondent sponsors cocktail parties for managers of big companies. Tourist inns, pension houses and apartels rely mostly on referrals made by past clients and acquaintances to sell their services.

7 Section 2 VALUE CHAIN

FIRM Financial Management – Guest Account/Room Management INFRASTRUCTURE Customer Relations (needs improvement in many of the establishments) Inventory control and tracking, Just-in-time delivery Reservations/booking systems/tracking (manual in majority of the establishments) Waste disposal and management (only in very few establishments) Care and maintenance schedules and procedures (the bigger establishments)

HUMAN RESOURCE Recruitment: referral – posting MANAGEMENT Training: on-the-job training; practicum for students; senior employees training new entrants Compensation as per Philippine Laws and prevailing market rates

Accommodation businesses hire extra part-time employees to meet changes in demand arising from seasonal fluctuations. There are certain inefficiencies arising from the use of seasonal labour, transaction costs stemming from more frequent hiring and training and from other administrative matters

TECHNOLOGY In the bigger establishments, technology is used to enhance guest experience (e.g., internet access in rooms) and improve DEVELOPMENT operations efficiency

Use of internet for marketing – webpage; on-line advertisement via travel agencies (for bigger establishments only) Computerized booking and reservations/financial system for bigger establishments Communication facilities – business centers; rooms – mainly telephone

PROCUREMENT Lowest price – good terms – good quality Has regular suppliers For bigger establishments, procurement governed by contracts, purchase orders, etc.

MAIN ACTIVITIES INBOUND LOGISTICS OPERATIONS OUTBOUND MARKETING AFTER SALES SERVICE Receipt, inventory, Accommodation -check-in Confirmation of reservation Direct Marketing – internal Follow-up call/ feedback distribution of goods and till check out: room via email, phone, in person- and external/ offsite and gathering done informally supplies preparation and --directly or indirect onsite most of the time

8 maintenance, various through intermediaries Tracking down of occupancy services to guests (laundry, Tri-media ads; online Birthday cake or other small and booking vis-à-vis food, calls, etc.) marketing via gifts to preferred guests/ assignments intermediaries (for bigger gift certificates Conferences – preparation establishments) to cleaning up Referral; word of mouth Promo/discounts Facilities and premises maintenance and security Networking with corporate clients

Tender/bidding/ proposals

9 Section 3 HUMAN RESOURCES

A. EMPLOYMENT

• Hotels have the following main departments: operations, front office, housekeeping, food and beverages, accounting, engineering/maintenance, sales and security. The hotel workforce can be split into core and ancillary workers. Core workers have direct dealings with the provision of accommodation, food, and drink. Ancillary occupations support this core work.

• Seasonal fluctuations demand flexible work patterns, often with a high proportion of part-time and casual workers. Average number of employees in standard and first class hotels is estimated from 30 people during lean months to 112 during peak months based on the standard employment rate of 1.5 person/day, 50 average minimum number of rooms per establishment and 40% to 150% occupancy rate,.

One of the hotels indicated that number of employees range from 150 to 200 depending on the season. Another accommodation establishment maintains a total of 80-85 employees and augments this with on call employees when they have big projects and the other has 96 employees.

• Accommodation businesses hire extra part-time employees to meet changes in demand arising from seasonal fluctuations and when there are big conventions, athletic/sporting events, and during the Panaad and Maskara festivals. However, there are certain inefficiencies arising from the use of seasonal labour, particularly transaction costs incurred from more frequent hiring and training and from other administrative matters.

• Recruitment of staff is either through advertisements or referrals. Short listed applicants undergo written exams, series of interviews and one hotel requires applicants to be subjected to drug test. People in the front desk of hotels must be college graduate, conversant in English and with pleasing personality while those in the housekeeping must, at least, have 2 years college education.

• While the local labor market provides the needed workforce, some positions which require higher expertise are outsourced from either Cebu or Manila. Two respondents claim that the positions of supervisor down to rank and file are sourced within Bacolod but some department heads to manager are outsourced. In one particular establishment, the manager-respondent is not from the province and 3 department heads out of 9, come from other provinces.

• Laid off staff (due to seasonality) and students who have undergone practicum with the establishment are given priority during next hiring.

• In the bigger accommodation establishments, employees are unionized and have collective bargaining agreement with management. One provision stipulates that retrenched workers are given priority whenever there are vacancies. Vacancies must be posted first in bulletin boards at the hotel so that present staff can inform their former co-workers before these are advertised outside.

B. COMPETENCIES AND TRAINING

• Hotels need managers who have skills on: people management, commercial skills and business acumen, problem solving, succession planning, resource planning, knowledge of industry trends, innovative skills to secure and keep repeat business. To date, accommodation establishments have difficulties in finding good managers within Negros Occidental. Likewise, owners and

10 managers need to upgrade their product and market development skills including know-how on current market trends.

• Core staff must be knowledgeable on industry specific and vocational skills: mainly technical skills such as food production and preparation, stock management, cost control, housekeeping, simple maintenance and troubleshooting like electrical, communications, etc.; business support skills for corporate clients oriented hotels, play skills and activity-leading for family oriented hotels, language and English proficiency/communication skills.

Vocational Competencies Required in the Hospitality Sector Tourism Core Events, Recreation and Sports Food and Beverage Service Cookery Housekeeping Patisserie Catering Gaming Front Office Source: National Tourism Competencies Development Plan, June 2004

• Important also are soft competencies particularly affective skills such as attitude, values, emotional quotient, people orientation, ability to communicate with wide range of customers, willingness to learn, etc.

• Newly hired employees are trained in house but regular staff members are sent for advanced trainings outside the establishments or trainors are invited to train them. In house or on the job trainings are provided by the owner or the supervisors to new recruits. Two respondents indicated that they conduct the following in-house training and workshops for their staff: a) housekeeping and front desk operations; b) values formation; c) team building; d) productivity; and d) quality service.

• Hotel owners and managers generally recognize the need for skills upgrading. Likewise, the industry also acknowledges the fact that there is a lack of training courses responsive to the needs of the accommodation industry in Negros Occidental. The hotel association has organized some training and workshops but these initiatives are sporadic.

• Although establishments acknowledge the need to update and gain new skills, they are not inclined towards formal, structured and time consuming courses. They desire short, action oriented trainings focused on practical and subject-specific intensive half day to one day trainings which they can easily balance with business activities.

• Multi-skilling is seen by many of the respondents as a way for maintaining a regular number of full-time employees. This implies the need for employees to acquire basic competencies for various tasks.

• Awareness in proper waste disposal and management is low in most of the establishments. Parallel to this, owners and managers are dismayed at the seemingly slow response of the government to improve waste management system. Segregated biodegradable and non- biodegradable waste, for example, end up mixed when collected as there are no initiatives for composting. Some initiatives in recycling though have been initiated at the provincial level.

11 Section 4 CONSTRAINTS AND POTENTIAL SOLUTIONS

A. MANAGEMENT/ORGANIZATION

Constraints Current Initiatives Potential Solutions Operations not standardized in Owner or manager closely Organizational development small establishments; no supervise day-to-day formal documentation of operations Continuous Productivity and processes and standards Quality Improvement Low appreciation of Conduct of accreditation Enhancement of value of DOT accreditation seminars by DOT accreditation both for consumers and tourism “Deputization” of local tourism enterprises through inclusion of offices standards/criteria meaningful and relevant for both parties and aligned to international accreditation system.

Effective promotion of accreditation program both to enterprises and consumers

Streamlining of accreditation procedures and assistance to accommodation establishments in meeting requirements

It may, however, take some time to make changes in the accreditation system since this would involve actions from the national government. As such, the province may want to explore the implementation of an industry led quality seal program. Weak cooperation and Informal cooperation; referrals Promote collective marketing collaboration among and servicing among the establishments, which to a Some sporadic actions from different players with HRANO significant extent undermine HRANO to promote unity and as the starting point. capacity and competitiveness networking among the of industry to host big events different establishments and conventions.

B. HUMAN RESOURCES

Constraints Current Initiatives Potential Solutions Limited supply of qualified Companies recruit from Cebu Upgrading of HRM courses in managers within Negros and Manila Negros Occidental schools in close collaboration with industry players.

12 Constraints Current Initiatives Potential Solutions Conduct of short term management training through tie-ups between internationally accredited HRM providers and the technical and HRM schools in Negros Occidental.

One important area of innovation and emphasis for management training is quicker response to –-- or anticipation of –-- market developments. In-house training capability Senior staff of bigger Conduct of trainors’ training not sufficient to equip establishments undergo program (didactic and subject employees with skills required training from external matter expertise) for senior to meet market requirements providers (usually Manila- staff and owners involved in in- based) house training activities as well as other local providers.

Encourage hotels with in-house training programs to share their “trainors” and programs at reasonable fees with other establishments.

Encourage training providers in Negros Occidental to tap company-based trainors as guest lecturers and resource persons. High turnover rate particularly Promote use of human resource among lower rank employees management provider to assist companies in definition of innovative contract and benefit schemes to employees, team building, OD, etc Lack of awareness and Benchmarking missions and information on international dissemination of international job/quality standards among occupational standards to majority of hotel owners and facilitate identification of skills managers. As a consequence, requirements work and customer service standards are based on locally accepted norms. Likewise, accommodation businesses are not also clear on the training requirements for their workforce. Wide seasonal fluctuations lead Hiring priority of employees Promote multi-skilling parallel to inefficiencies in the use of laid off due to low occupancy to development of products both capital assets and labor. that would reduce seasonality

Establish tracking system of trainees from vocational/ tech schools/training centers to

13 Constraints Current Initiatives Potential Solutions facilitate hiring during peak season Need to improve productivity Implementation of Continuous Productivity and Quality Improvement Program

Promote use of technology to improve efficiency

Benchmarking missions and exposure to best practices Smaller establishments cannot HRANO organizes common Develop local pool of trainors afford cost of specialized training but on an intermittent consisting of in-house trainors training (usually available only basis of accommodation in Manila) establishments

Promote collective acquisition of services as a means of bringing down individual costs

C. TECHNOLOGY/R AND D

Constraints Current Initiatives Potential Solutions Limited use of ICT to increase Dial-up internet connection in Awareness campaign on the use efficiency and enhance rooms in L’Fischer and of ICT in inbound, outbound, services to guests Sugarlandia operations, and marketing functions. Perceived high cost of Use of computers for encoding, information technology reservation tracking, and Stimulate demand by building simple financial system in pilot projects to demonstrate bigger establishments the benefits of ICT in company’s day-to-day operations

Foster collaboration among industry players in the development of full packages. Demonstrate benefits of working with professional product development consultants through pilots. Poor environmental Some piecemeal initiatives to Promotion of clean and green compliance/increasing recycling, environment friendly practices including recycling environmental costs practices and the use of environmentally No support from government friendly products (e.g., re: recycling. biodegradable detergents,

14 Constraints Current Initiatives Potential Solutions etc.) to both public and private sectors

Skills training courses should be based on environment friendly production technologies

D. INPUTS

Constraints Current Initiatives Potential Solutions Increasing costs of supplies Explore possibilities of bulk- buying especially for goods sourced outside the locality

Promote recycling and good housekeeping Perceived lack of suppliers in Establish a comprehensive Bacolod for quality meat, fish resource/suppliers database, and vegetables including self-sustaining capability for regular updating.

Explore possibility of suppliers’ accreditation system. To promote equitable participation among all players, program should ensure that suppliers have access to a range of business development services that will enable them to match the agreed standards and requirements. Increasing utility costs (power Conservation measures and water) disseminated to enterprises

E. MARKET ACCESS/MARKETING

Constraints Current Initiatives Potential Solutions Seasonality of sales/demand Establish linkages with international, Manila, Cebu, and Boracay travel intermediaries and airlines in development of ‘off-season packages and promotion campaigns’. Investigate

15 Constraints Current Initiatives Potential Solutions inclusion of Negros Occidental in Cebu and Boracay packages.

Work with other tourism industry players in the development of innovative mechanisms that would expand the tourist season such as staging of events. Insufficient effort to market Promotion via tourism attaches Implementation of planned Negros Occidental / Bacolod --- info materials dissemination Convention and Visitors Bureau City as a key tourism and MICE and visits to tourism attaché --- owned and managed by site destination resulting offices in source country private sector --- which will among other things to slow take the lead in marketing growth of hotel subsector Intermittent marketing campaigns; individual company Lack of government resources efforts to support marketing campaign Lack of access to market data Develop self-sustaining local and info capability to conduct regular visitor and market surveys and Some market data available at the consequent packaging and DOT but these are very limited dissemination of results to and not consolidated. enterprises.

Interventions should be aimed towards the development of an efficient and cost-effective means of:

• Locating/identifying information sources and needed information • Translating and applying these information materials to the context of the enterprises • Packaging and disseminating these information to SMEs Marketing policies of Marketing campaigns usually Access to marketing providers companies have not really focused on price discounts. who can help companies to given so much attention to the design marketing campaign development of product anchored on specific product differentiation factors in differentiation factors that the addition to price. company and the industry as a whole can sustain as a marketing proposal The industry has not fully Web presence either via own Review current training maximized the use of website or sites of travel modules on marketing and technology for marketing intermediaries incorporate use of ICT as activities marketing instruments. Ongoing website development Websites of hotels have no by PCCI and VAST Support the development of a capability to accept self-sustaining tourism internet

16 Constraints Current Initiatives Potential Solutions reservation except for those portal for Negros Occidental. with linkage to established Explore possibilities of building travel intermediaries. on current initiatives of PCCI and VAST. Existing Negros Occidental tourism websites have incomplete info and are not updated regularly Limited info re: hotels in major Web-based advertisements and In collaboration with experts/ source markets DOT promotion campaign providers, accommodation establishments should pursue Local capability to develop the development of a multi- marketing campaigns need to pronged promotion strategy be enhanced such as:

• Pictorial references and souvenirs to reinforce image of holiday experience • ‘Tangibilize’ offer in brochures, CDs and videos – visual displays of the real thing • Linkages with international airlines/tour operators; invitation of tourism journalists for inclusion in journals, magazines, etc.

Support to capability build-up of marketing and advertising agencies in the development and implementation of marketing campaigns for hotels and other accommodation establishments. Lack of information re: hotels Signages; radio and newspaper Together with other tourism at the local level ads; yellow pages - directory subsectors, Invest in the set-up of self-service tourism info counters at strategic places. This may be done in collaboration with advertising companies as well as sponsorships from big businesses (e.g. SMART, Globe, SM group of companies, Coca- cola, etc.)

Annex D RESORTS

1 Table of Contents

Section 1. Industry Structure 3 A. Players and Relations in the Subsector 3 B. Products and Services 4 C. Markets 5 Section 2. Value Chain 7 Section 3. Human Resources 9 Section 4. Constraints and Potential Solutions 10 A. Management/Organization 10 B. Human Resources 11 C. Technology/R and D 12 D. Inputs 13 E. Market Access/Marketing 13 F. Infrastructure 14 G. Policy 15

2 Section 1 INDUSTRY STRUCTURE

A. PLAYERS AND RELATIONS IN THE SUBSECTOR

1. Resorts

• DOT defines resort as any place or places with pleasant environment and atmosphere conducive to comfort, healthful relaxation and rest, offering food, sleeping accommodation and recreational facilities to the public for a fee or remuneration. Resorts maybe categorized as beach resort (located along the seashore), inland resort (located within the town proper or city), island resort (located in natural or man made island), lakeside or riverside resort (located along or near the bank of a lake or river), mountain resort (located at or near a mountain or hill) and theme parks.

• It is estimated that there are at least 65 resorts offering accommodation and food services as well as amenities like souvenir shops and some recreational facilities. Of the 65 resorts, 5 are government owned while the rest are privately owned resorts --- single proprietorship and corporations. One (1) resort is accredited as a convention facility according to data provided by the provincial tourism center.

• The government owned resort is dependent on the provincial government which has direct control over the establishment. Some of the municipal governments have invested in the establishment. Private concessionaires are also operating in the resort providing particular services like boating and biking. Facilities and supplies are said to be sourced by the Department of Dudget and Management (DBM), hence the resort does not relate directly to suppliers but receives these from the DBM.

• Compared to hotels, resorts are more operationally intensive, service oriented, and face seasonal business patterns. Resorts cost more to build than traditional hotels, but they generate more revenue from longer guest stays.

• The association of resort owners is called Resort Association of Negros Island (RANI). It is a relatively active group but would benefit significantly from organizational development intervention.

2. Relations with Input Suppliers/Backward Linkages

Backward Industry Linkages Ocean, coastal, and inland fishing Furniture and fixtures Electricity, Water, Communication Rice and corn milling Toiletries Soap and other detergents Wholesale and retail trade Slaughtering and meat packing Non-life and other insurance activities Banking Vegetables Furniture and furnishings Petroleum refineries Cigarettes Malt and malt liquors Recreational facilities and equipment Carpets and rugs Tour and travel agencies Laundry, dry cleaning Construction Coffee roasting and processing Transport services

3 • Backward linkages of resorts are more or less the same as the hotels. One difference is that resorts spend more than hotels for recreational facilities and in the infrastructure for activity- based products. Equipments for recreation like dive facilities are imported, others like pump boats are assembled locally.

• Supplies and raw materials for restaurants operated by resorts account for about 15 to 20% of the resort’s operating cost. Most of the raw materials for food are sourced from the Bacolod City market and the rest are sourced on site. Relationship with suppliers is informal. One resort sources its vegetables within the resort where they also maintain farming activities, another buys its fish supply in the municipality where it is located.

• Other major suppliers of resorts include power and other utilities and toiletries and related products.

3. Relations with Other Tourism Establishments

• Resort operators have strong relationship with local tour operators according to FGD participants. Tour operators bring their clients to the resorts. Between travel agencies and the resorts, the relationship is very weak. Travel agents seldom include the resorts in tour packages for inbound tourism. According to the travel agents, the commission being offered by resorts in the province is very low (between 5 to 10%) which is not enough to cover cost of communications compared to other destinations which offer as high as 40%. Only one resort owner offers 30% commission. Besides local travel agencies claimed that the resort owners do not provide information materials.

• It was also gathered that information on transport plying the routes is minimal and access roads to the resorts from the main road are poor.

B. PRODUCTS AND SERVICES

• DOT classification depends largely on the variety of services offered by resorts. Classification under Philippine tourism for resorts is ‘AAA’, ‘AA’, ‘A’ and special interest resorts with triple A offering the best services and facilities. ‘AAA’ resorts provide first class guest rooms, at least 4 sports and recreational facilities and conference and convention facilities while ‘A’ resorts provide economy class guest rooms, at least 2 sports and recreational facilities but do not have conference and convention facilities. A special interest resort must have camp and ground sites. The resorts in Negros Occidental, however, have not been classified by DOT.

• The 65 resorts offer services such food and accommodation, parking lot, and souvenir shops. Resorts provide venues also for picnics. Food and beverage services are available to both long staying and day guests. To increase occupancies, resorts have diversified their marketing mix to include conventions, business meetings, adventure tourism, ecotourism, etc.

Accommodation is provided in air conditioned, ordinary rooms and cottages. The inland resort, for example, has 27 rooms that can accommodate more or less 50 people and a conference room which can seat 50-200 people while the foreign owned beach resort can accommodate only 16 visitors and has no function rooms. Another beach resort has a function hall which can accommodate 60 guests.

Average capacity of a resort as estimated by FGD participants for overnight accommodation (with bed) is 50 people; can cater to between 80-200 people for meetings/conferences and can serve around 500 people for picnics.

Swimming, picnicking, diving, snorkeling, trekking, boating, fishing, bird watching, etc. are some of the possible activities a visitor can enjoy while in these establishments. The inland

4 resort located in an agricultural area sells vegetables and ornamental plants produced in the resort.

• Because resorts are quite of considerable distance from Bacolod City, guests particularly those coming from places outside of Negros Occidental are cocooned in the area and tend to stay longer. This presents a challenge to the food and beverage unit to provide quality menus that are varied and are presented and served in an attractive manner. Resorts though can achieve much higher per capita food and beverage revenues than traditional hotels. This is due to menu pricing and the greater number of meals captured on-site.

Likewise, guests expect to be pampered and/or presented with wide range of activity options. This requires good range of product offers as well as attentive, well-trained staff with good people relations skills.

C. MARKETS

• 90% to 95% of resort clients are day guests consisting mainly of local residents. They usually avail of the swimming and picnic facilities of the resorts including rental of cottages and huts as well as food and beverage services. Non-Negros Occidental residents and a few foreigners comprise the overnight and long-term guests. To date, Negros Occidental does not figure prominently in tour packages offered by national and international travel agencies and tour operators.

• Resorts face strong seasonal fluctuations especially with overnight and long-term occupancy. Day-guests are higher during weekends and usually peak during summer months. This presents a challenge in attracting, training, and retaining competent staff. Conventions and business functions have enabled some resorts to mitigate effects of seasonal fluctuations. However, in many resorts, facilities cannot accommodate big groups.

• In more developed tourism industries, an emerging trend during off-season is to form strategic alliances among complementary tourism businesses to market vacation packages. Partners may include hotels, airlines, car rental companies, credit card companies promoting entertainment events and sporting attractions.

The other strategy involves spreading demand over a less concentrated and longer period of time. This is typically accomplished by using the pricing mechanism. For example, most travelers face higher room rates during busy summer months. Likewise, many established resorts have adopted a form of dynamic pricing developed by the airline industry to mitigate this (e.g., blocks of room offered at lower prices for conferences or other events provided that they are reserved in advance; travelers requiring rooms on shorter notice are charged higher room prices).

• The foreign owned resort claims that there is an increasing demand from European tourists for the past months. This claim is based on the marketing efforts he does targeting the European market.

• Resort owners and account executives use various promotional tools such as: - Tri-media advertisements - Distribution of brochures - Online marketing via own websites and travel intermediaries - Destination marketing via travel agents and tour operators - Participation in travel marts/fairs - Face-to-face marketing

Resort owners also conduct familiarization tours for intermediaries and journalists. Direct marketing is most effective with domestic tourists and online marketing works more for

5 foreigners though very minimal foreigners visit Negros Occidental yet. The least effective is through brochures inspite of its costly development, printing and distribution costs.

• Marketing is done individually. There is no unified and collective marketing campaign among resort owners as well as with other players in the tourism industry. There are no linkages, for example, with hotels in Bacolod for product development to provide enhancement to the ‘convention’ product to extend the stay of participants in the province. A possible added feature of the convention package could be a stay of the spouse/family in one of the resorts while the convention is ongoing or an additional night/day in a resort for participants.

• To date, it would seem that resorts are not yet profitable businesses, however, the potential exists.

6 Section 2 VALUE CHAIN

FIRM Financial Management – Guest Account/Room Management; financial systems --- still generally manual INFRASTRUCTURE Customer Relations Inventory control and tracking; just-in-time delivery; random visual inspection of goods Reservations/booking systems/tracking Some ad hoc implementation of environmental management and waste disposal No formal documentation on processes and standards; standards based on local norms HUMAN RESOURCE Recruitment: referral – posting MANAGEMENT Training: on-the-job training; practicum for students; owners training new entrants; cross training of employees – multiskilling Compensation as per Philippine Laws and prevailing market rates TECHNOLOGY Use of internet for marketing – webpage; on-line advertisement via travel agencies DEVELOPMENT/ Computerized booking and reservations/financial system (bigger establishments) R and D Communication facilities – business center; rooms – mainly telephone PROCUREMENT Lowest price – good terms – good quality Has regular suppliers For bigger establishments, procurement governed by contracts, purchase orders, etc. MAIN ACTIVITIES INBOUND LOGISTICS OPERATIONS OUTBOUND MARKETING AFTER SALES SERVICE Receipt, inventory, Accommodation – check in Confirmation of Direct marketing Follow-up call/ distribution of goods and till check out: room reservation via email, feedback gathering supplies preparation and phone, in-person --- Tri-media ads; brochures; online done for corporate maintenance, various directly or indirect marketing via intermediaries clients Tracking down of services to guests (laundry, through intermediaries occupancy and booking food, calls, etc.) Destination promotion marketing by Lost and found service vis-à-vis assignments travel agents & tour operators Coordination of activities - Sending of greeting -- assistance to guests for Participation in travel marts/fairs cards specific activities Familiarization tours / travel exchange Exit surveys Facilities and premises maintenance and security Referral; word of mouth/discount promo

7 • Resort entry barriers, which include economies of scale, infrastructure, and product differentiation, are significant particularly for those who will venture in first class operations with full-service accommodation, convention, and food service facilities. Presently, only a small percentage of the province potential business and tourist areas has been developed.Moreover, an entrant would need high start-up costs from advertising, image building to offset leverage of existing prominent hotels.

• Location, amenities, and the quality and range of services offered allow resorts from micro to large-scale establishments to vary room prices. While there are already quite a number of players in the market, the resort industry can be characterized by still a rigid competitive structure. Resorts sell more or less the same service but differ in quality and style. The better and wider the service, the higher the rates.

• Important factors in resort marketing are: a) the image of the destination and of the area as a whole; b) staffing and culture in terms of service provision; and c) attractiveness of activities. In both factors, the Negros Occidental resort industry needs to improve. More extensive use of information technology can greatly enhance the productivity and efficiency of resorts.

• Tourism development follows its own dynamism, what is referred to as the resort cycle; that is, tourist destinations tend to pass through successive stages, from discovery, to growth, to maturity and then on to decline. It is the task of tourism planners and policy makers to ensure that a given tourist destination avoids reaching the impasse brought about by boom-bust cycles by factoring in not just the economic and ecological side of development but also the social and cultural aspects, thus forging a more sustainable future for tourism.1

1 Jose Eleazar Bersales, Contested Space : Tourism Power and Social Relations in Mactan and Panglao Islands, 2003

8 Section 3 HUMAN RESOURCES

• Many of the establishments are family owned and are operated informally. In many instances, managers double as workers and may not necessarily possess skills in people management, commercial and business acumen, problem solving, succession planning, resource planning, knowledge of industry trends, innovative skills to secure and keep repeat business.

• Skills required from employees vary widely. One beach resort hires people with no experience at all and train them to do housekeeping, laundry and other routinary tasks. An inland resort employs people as waiters with minimal experience which they enhance through on the job trainings. In the government owned mountain resort, the supervisory and managerial positions are occupied by government recruited employees while the janitorial and security services are provided by service agencies. Most of the resort owners, however, indicated that chefs should have good cooking skills and experience.

• Some establishments advertise vacant positions in order to be able to select qualified personnel. Experience in other similar establishment is an advantage for applicants. Workforce are available and sourced within the province but not of the quality desired.

• On the job training is provided by the owners. It is rare, however, for employees to undergo additional training with external providers due to affordability issues, time availability, and the perceived lack of relevant local providers.

• Due to the seasonality of the business, multi-skilling is employed. The employees of an inland resort, for example, possess skills in agricultural related tasks and as such do agricultural jobs such as weeding and planting when there is not much to do in the resort operation. Competence is derived from attitude to work: enthusiasm, people orientation, commitment, the will to learn.

• Employees in resorts need the following industry specific and vocational skills:

- Technical skills such as food production and preparation, food safety, nutrition analysis, stock management, cost control, housekeeping - Simple maintenance and troubleshooting like electrical, plumbing, communications - Play skills and activity leading for family oriented resorts - Language and English proficiency/communication skills

• Average number of employees per establishment is between 5-20. The mountain resort, which employs 88 people, is an isolated case. An inland resort has 15 and a beach resort has 5 and the other has 2 full time and 2 part time employees.

9 Section 4 CONSTRAINTS AND POTENTIAL SOLUTIONS

A. MANAGEMENT/ORGANIZATION

Exposure to operations of resort chains and franchises/ Benchmarking visits Food safety and cleanliness not Seminars, training on food Good Manufacturing Practices conscientiously implemented safety being conducted by customized to various types HRANO and size of operations Only a few establishments Accreditation seminars being Enhancement of value of DOT accredited by DOT conducted by DOT accreditation both for consumers and tourism Low appreciation of “Deputization” of local tourism enterprises through inclusion of accreditation offices to do documentation of standards/criteria meaningful compliance and relevant for both parties and aligned to international accreditation system.

Effective promotion of accreditation program both to enterprises and consumers

Streamlining of accreditation procedures and assistance to establishments in meeting requirements

Weak cooperation and Informal cooperation; referrals Promote collective marketing collaboration among and servicing among the establishments, which to a Some sporadic actions from different players with RANI as significant extent undermine RANI to promote unity and the starting point. capacity and competitiveness networking among the of industry to host big events different establishments Strengthen RANI so as to and conventions. enable it to play a more active role in promoting unity and cooperation among the members

B. HUMAN RESOURCES

Constraints Current Initiatives Potential Solutions Concept of customer Mentoring from management Customer relationship relationship management not management customized to fully integrated resort operations in the standards of service Limited capability to address Some training initiatives Workplace safety and health health & safety standards and standards first-aid facilities Train staff on basic health care/first-aid

Linkages with doctors/medical clinics Work ethics/habits of local Values orientation, work ethics staff needs improvement (cultural constraint; lack of commitment) Limited specialized culinary Cooking demonstrations Technical schools and HRM training available in Negros schools in Negros Occidental Occidental tie-up with Manila and Cebu- based culinary training providers Difficulty to retain staff due to Innovative work contract remoteness of resorts scheme and work schedules; quarters for workers In-house training capability Senior staff undergo training Conduct of trainors’ training not sufficient to equip from external providers program (didactic and subject employees with skills required matter expertise) for senior to meet market requirements staff and owners involved in in- house training activities as well as other local providers. Facilitate tie-up with restaurant training institutes with international accreditation

Encourage resorts with in- house training programs to share their “trainors” and programs at reasonable fees with other establishments.

11 Constraints Current Initiatives Potential Solutions knowledge upgrading especially campaign elaborating on among single unit benefits, providers, etc establishments and micro businesses High costs of specialized RANI sometimes organizes Promote cost sharing among training especially for the common trainings establishments smaller establishments Train key people who can train the other employees

C. TECHNOLOGY/R AND D

Enhance capability of local chefs and food technologists

Improvement of the ability of environmental managers or promoters to speak the “language of business” to accelerate the spread and implementation of responsible environmental management

12 Constraints Current Initiatives Potential Solutions practices in SMEs.

Skills training courses should be based on environment friendly production technologies

D. INPUTS

Constraints Current Initiatives Potential Solutions Increasing cost of supplies Explore possibilities of bulk- buying especially for goods Lack of suppliers in Bacolod sourced outside the locality

Greening of resorts and rooms – increase recycling activities Increasing utility costs (power Encourage utility providers to and water) conduct orientation on conservation measures

E. MARKET ACCESS/MARKETING

Customize existing training modules on marketing to context of restaurant industry. Facilitate tie-ups between local training providers and experts on restaurant marketing Lack of market data and info Develop self-sustaining local on resort markets in Negros capability to conduct regular Occidental customer and market surveys and the consequent packaging and dissemination of results to enterprises.

Interventions should be aimed towards the development of an efficient and cost-effective means of: • Locating/identifying information sources and needed information

13 Constraints Current Initiatives Potential Solutions • Translating and applying these information materials to the context of the enterprises • Packaging and disseminating these information to SMEs Need improvement in product Individual efforts to improve Development of product and offer products market development plan. Review relevance of current Lack of brand awareness Have a brand “Sugar and More” brand/marketing slogan. outside Negros 10 years old Promote collaboration among different players to come up with integrated packages aligned to market trends.

Develop local capability to deliver product and market development services. Limited promo-materials Web ads; DOT promotion Work with providers in the available in major source campaign development of multi-pronged markets and within Negros promotion strategy such as: Occidental • Pictorial references and souvenirs to reinforce image of holiday experience • ‘Visualization’ of offer in brochures, CDs and videos – visual displays of the real thing • Linkaging with international airlines/tour operators; invitation of tourism journalists for inclusion in journals, magazines, etc. • Availability and dissemination of information and promo materials at strategic locations

F. INFRASTRUCTURE

Constraints Current Initiatives Potential Solutions High transport cost; Bad roads Lobby with government to improve access roads No designated area at the Coordinate with airport airport to pick up resort guests management Cell sites, telephone facilities make representation with lacking communications companies Power (electricity) quality is Lobby with electric

14 Constraints Current Initiatives Potential Solutions poor / inconsistent – power loss cooperative intermittent Lack of water supply for most Seek government intervention; island resorts advocacy campaign

G. POLICY

Constraints Current Initiatives Potential Solutions Local real estate taxes: Board of Investments Assist in simplifying Documentation to comply with incentives for investors requirements/process through incentives is expensive legislation (consultancy) Voluminous bureaucratic Assist in simplifying registration requirements like requirements/process through Environmental Compliance legislation Certificate (ECC) compliance Security for mountain and Seek cooperation of island resorts surrounding communities

Annex E TRANSPORT OPERATORS

1 Table of Contents

Section 1. Industry Structure 3 A. Players, Services, and Relations in the Subsector 3 B. Markets 5 Section 2. Value Chain 6 Section 3. Human Resources 8 Section 4. Constraints and Potential Solutions 9 A. Management/Organization 9 B. Human Resources 9 C. Technology/R and D 11 D. Inputs 11 E. Market Access/Marketing 12

2 Section 1 INDUSTRY STRUCTURE

A. PLAYERS, SERVICES, AND RELATIONS IN THE SUBSECTOR

1. Transportation to and from Negros Occidental

• Negros Occidental is one of the two provinces in Negros Island. It can be reached from the other parts of the country by air or water.

• By air, Negros Occidental can be reached from Manila and Cebu through the Bacolod Airport. Bacolod City is serviced by the Philippines Airlines, Air Philippines and Cebu Pacific with plane flights from Bacolod to Manila and Cebu with connecting flights from Cebu to Davao, Cagayan de Oro, Cotabato, Surigao, Butuan, Zamboanga, Bohol, Leyte, and others. The airport has to be improved so that bigger airplanes can land.

• It can also be reached via water transportation from Cebu, Iloilo and Manila and Iloilo. The province has six (6) seaports serviced by the following inter-island shipping lines namely: a) Negros Navigation and William Lines; b) Gothong and Aboitiz; c) Sulpicio Lines, Inc/; and d) West Visayan Shipping Company. The first two provide cargo and passenger services while the latter two provide cargo service only.

• By land, it can be reached from the other province in the island, Negros Oriental, through ordinary and air conditioned buses. Buses ply the route Dumaguete-Hinobaan-Bacolod route.

2. Inland Transportation

• Transportation within the province is mainly by land through its road networks connecting its 19 municipalities and 13 cities. Major mode of transportation is by buses, jeepneys and taxicabs. For long distance travel, air conditioned and ordinary buses are the best option. For the shorter distances, there are jeepneys and taxicabs. Jeepneys have their specific routes and loading areas. Routes of taxicabs are mostly confined within Bacolod City. Pedicabs provide short distance transportation in some places outside Bacolod like San Carlos City. Access to islands like, in the case of island resorts, is by banca.

• Transportation facilities are owned by bus companies, car rental agencies, other establishments and individuals. Hotels, for example, have their own vehicles which cater mainly to the needs of the establishment but in some cases are chartered to customers. Transport utilities include buses, jeepneys, vans, taxicabs, pedicabs and bancas.

Capitalization of land transport companies ranges from micro (1 unit) operating only within Bacolod City to large --- owning a fleet of buses plying several routes in and outside the province. The entry of several 1 or 2-unit operators was hastened by the investments of overseas Filipino workers.

• Per provincial tourism center data, there are 5 small bus companies registered in various municipalities and one big bus company (CERES – Vallacar Transit) which owns a fleet of 307 buses operating in the area. Government, school and private owned buses are also available for tours. There are also vehicles registered for private use yet offered for hire under the chartered trip scheme. A taxi operator respondent claims to have 38 units.

Freight, also known as way bill, is an additional service provided by a bus company wherein it transports cargo for a fee from terminal to terminal. Said company claims to generate 10-15% of its income from this service.

3 • Car rental services, with rates depending on vehicle type and distance traveled, are also available. There are 4-5 private rent-a-car companies but only one (1) is registered. These rent- a-car companies own a total of 40 units operating in Negros Occidental.

Prices differ based on the seating capacity of the vehicle and the amenities available like air conditioning. According to the respondent from the bus company, peak months for chartered trips are April, May, November and December.

• There are vehicles registered for private use yet offered for hire under the chartered trip scheme. It is a source of sideline income for the owners. Some of these units are found plying the route to and from the airport.

• The president of the Bacolod Airport Drivers Association claims to have 130 members, each member owns at least one or two units of either taxi or van. Members are drivers or owners of at least one or 2 units of vehicles (taxicab, van, private vehicle) which cater to the transport needs of incoming passengers at the Bacolod Airport. This has been disclaimed however by FGD participants saying that not all of the members own a vehicle, some are barkers only. It is a culture-base (damayan) organization which collects monthly fees and provides monetary aid to members in times of sickness and death.

Per information gathered, this group also do not use taxi meters but instead charge fixed rates. Members charge a uniform rate of PhP100 regardless of the distance of the destination.

• Taxis (PUs) ply the major routes 24 hours a day, especially in Bacolod, to any point in Negros Island. Generally, taxi fares are based on meters except for units owned by the Bacolod Airport Drivers Association which are said to be claimed to be charging fixed rates.

• For tourism purposes, not a single enterprise has been accredited with DOT as tourist transport operator. Accreditation requirements specific to tourist land transport operators on top of the general requirements are: a) Land Transportation and Franchising Regulatory Board (LTFRB) franchise; b) Transportation rates; c) Land transportation office official receipt and certificate of registration (OR/CR); and d) Insurance policies (third party liability & personal accident). Application procedures are the same in all establishments and corresponding fees are found in Annex A.

The additional incentive for DOT accredited tourist land transport operators though, does not apply in the province but for Metro Manila --- exemption from Metro Manila Development Authority's (MMDA) Unified Vehicular Volume Reduction Program (UVVRP). Per above requirement, vehicles intended for private use cannot be used for tours.

Similarly, a driver who is considered one of the frontliners must be accredited. A driver applying for accreditation must submit the following: police clearance, barangay clearance, driver’s license and LTFRB franchise/OR/CR.

• The transport subsector as a whole is not conscious of tourism because they earn their income from the general riding public. This maybe the reason that there is no DOT accredited tourist transport operator in the area. This situation possess a challenge to the prime movers of the tourism industry in the province not to forget that the first and last encounter a tourist will experience upon entering and before leaving a place is that with the driver. Thus the first and last impression comes from the transport subsector.

• The integration of Negros Occidental transport network with convenient transfers between different modes of transport will become more important in order to deal with increasing customer expectation.

4 3. Relations with Input Suppliers: Inland Transportation Companies

• Suppliers of engines, units, tires, fuel, and maintenance like lubrication oil: One respondent, a large family corporation, said they assemble their own units using engines and chassis from multinational companies (Mitsubishi, Hino & Nissan). This company owns and operates allied companies engaged in body building, foundry, recapping, break lining and the like. A taxi operator procures units from Nissan while members of the drivers association acquire assembled/finished units from local suppliers. Suppliers of parts, tires, fuel and other maintenance needed are available at wholesale and retail stores.

• Service providers: These ranges from individuals/companies which provides repairs and maintenance services and training. Only TESDA was identified as provider for trainings. Except the large bus company which diversified to other transport related businesses to provide the needs of its units, micro and small operators rely on the services of other establishments for repairs and maintenance. There are numerous small automotive shops in Negros Occidental.

4. Relations with Other Tourism Establishments

• Bus companies, taxi owners, rent-a-car agencies and jeepney owners have relationship with hotels, resorts, travel/ticket agents and tour operators. These transport utilities are tapped by the latter to provide transport service to their customers. The tourists, however, like local residents can ask the services of the transport group directly but for someone who might be new in the area, he/she might prefer that transport will be taken cared of by intermediaries whom he/she has other transactions. It is assumed that intermediaries especially travel agencies and tour operators earn commission from transport providers.

• Airlines have tie-ups with selected hotels (usually first class and economy hotels) in the form of earned mileages, discounts, package rates, etc.

B. MARKETS

• General Public: Any member of the population who needs transport to reach his/her destination. This is the main market of the sector estimated at 80% by the association and a taxi driver. Customers are mainly from the province like students among others.

• Schools needing chartered buses for lakbay aral or educational/field trips either go directly to the bus company or via tour operators. Inbound tourist needing bus transport avails the services of the bus company through the tour operator.

• Tour operators provide transport service as part of the tour packages according to the bus company. Tour operators arrange with the company and pay agreed amount whether it is full or not and abide by the number of hours agreed upon or pay additional amount for the extra hours.

• Tourists: According to the Airport Drivers Association and by a taxi driver, only 20% of their income is derived from tourists. A bulk or 80% is received as payment of transport services from regular customers and the local riding public.

• Transport operators especially the micro businesses conduct very limited marketing activities. Only the large bus company advertises their trip schedules in the newspaper, radio and television. It has also its own terminal with signage and regular route. The members of the taxi drivers association make their units available at the arrival area of the airport. The Airport Drivers Association also mentioned that they have “suki” or regular customers who inform them when they need transport. With the advent of wireless communication, some taxicab drivers hand out their mobile phone numbers to passengers for some repeat business and referrals. Jeepneys have also their regular route and terminals from which they are assured of passengers.

5 Section 2 VALUE CHAIN

INLAND TRANSPORTATION FIRM Administrative/Financial Management System in bus companies; with micro business: simple recording or no recording at all – INFRASTRUCTURE owner performs all tasks from driver to maintenance

Service/Maintenance System

Trip Schedules for buses; routines and routes

Visual inspection of vehicles HUMAN RESOURCE Recruitment: referral – posting MANAGEMENT Training: on-the-job training Compensation as per Philippine Laws and prevailing market rates; boundaries as per prevailing rates in the area

TECHNOLOGY Manual; limited use of computers DEVELOPMENT/ Basic communication facilities R and D Some have handheld radios assigned to units PROCUREMENT Lowest price – good terms – good quality Has regular suppliers For bigger establishments, procurement governed by contracts, purchase orders, etc. MAIN ACTIVITIES INBOUND LOGISTICS OPERATIONS OUTBOUND MARKETING AFTER SALES SERVICE Receipt, inventory, Dispatch of units Confirmation of booking Direct marketing Bigger companies give give- distribution of parts and aways during Christmas to supplies Pick-up of passengers Face-to-face delivery of Signages/Terminals preferred customers services Visual check-up of vehicles Drive to destinations Referral; word of mouth

Some drivers double up as Advertisements – tri-media tour guides (informal) and porters Taxi drivers give out cell

6 Drop off of passengers phone nos. to generate repeat clients Garage

Key issues that inland transport industry has to address to improve profitability and to provide adequate support to tourism include the following:

- Operational efficiency - Safety and security - Delivery of differentiated services for different segments of the travel market - Creation of the means through which a high level of integration between modes can be achieved - Environmental management/Reduce emission/Cleanliness/Maintenance

Section 3 HUMAN RESOURCES

• The bus company claims to employ at least 1,300 people at its Bacolod branch alone. Only male experienced drivers with the necessary license are qualified to drive. Conductors must know how to handle passengers in addition to having basic arithmetic skills. Those in the maintenance are required to have graduated in automotive course and certified by TESDA. They have undergone additional trainings on automotive while with the company. Employees are also sent to attend LTO organized fora and trainings to be updated on the policies, rules and regulations.

• Taxi drivers of the company interviewed need to know how to use the radio aside from having the necessary driving skills. The radio system connects all the units and the base enabling everybody to communicate with each other whenever necessary. The base can trace the whereabouts of all the units. Personal hygiene and good grooming is a must for drivers in this company. This company claims to give awards to model drivers. Drivers must also possess basic mathematical abilities needed in calculation of payment and change.

• Except for administrative, finance and logistics support, the operations and maintenance is male dominated requiring skilled and licensed drivers. Buses are accompanied by conductors who assist passengers with their baggage/cargo.

• Drivers are hired from the local market as these people are knowledgeable of the area. For taxis and vans, the units are driven either by the owner or a hired driver. Compensation is based on prevailing market rates in the locality.

• A training for drivers, conductors, front desk people called “Mabuhay Host program” was conducted a few years ago. Consciousness of drivers on tourism, however, is still very low and not a single driver has been accredited by DOT.

8 Section 4 CONSTRAINTS AND POTENTIAL SOLUTIONS

A. MANAGEMENT/ORGANIZATION

Exposure to operations of transport operators active in tourism related activities/ Benchmarking visits Only a few establishments Accreditation seminars being Enhancement of value of DOT accredited by DOT conducted by DOT accreditation both for consumers and tourism Low appreciation of “Deputization” of local tourism enterprises through inclusion of accreditation offices to do documentation of standards/criteria meaningful compliance and relevant for both parties and aligned to international accreditation system.

Effective promotion of accreditation program both to enterprises and consumers

Streamlining of accreditation procedures and assistance to establishments in meeting requirements

B. HUMAN RESOURCES

Constraints Current Initiatives Potential Solutions Concept of customer Mentoring from management Customer relationship relationship management not management customized to fully integrated “Mabuhay” Host program by transport businesses in the standards of service DOT Tourism consciousness Lack of tourism orientation/ Brochures and flyers available campaign and its consciousness in tourism office for pickup by prospects/opportunities

9 Constraints Current Initiatives Potential Solutions taxi/bus operators Lack of discipline – personal Peer mentoring/ Mentoring Training/workshops on: hygiene, work safety from owners consciousness, proper vehicle Values Orientation maintenance LTO/LTFRB accreditation requirements for tourist Workplace, environmental, transport providers health and safety standards

Cleaner Production Lack of English proficiency Basic English proficiency training Note: English proficiency is value added but not considered a constraint In-house training capability Some employees undergo Conduct of trainors’ training not sufficient to equip training from external program (didactic and subject employees with skills required providers matter expertise) for senior to meet market requirements staff and owners involved in in- house training activities as well as other local providers. Facilitate tie-up with transport operation training institutes with international accreditation

Encourage transport companies with in-house training programs to share their “trainors” and programs at reasonable fees with other establishments.

Encourage training providers in Negros Occidental to tap company-based trainors as guest lecturers and resource persons. Need to improve productivity Multi-skilling via on-the-job Productivity standards training definition – Continuous Productivity and Quality Improvement Program Lack of attention to skills and Conduct BDS awareness knowledge upgrading especially campaign elaborating on among single unit benefits, providers, etc establishments and micro businesses High costs of specialized Promote cost sharing among training especially for the establishments smaller establishments Train key people who can train the other employees

C. TECHNOLOGY/R AND D

Training/mentoring in the use of ICT. Facilitate linkages with Cebu ICT companies Poor environmental Some piecemeal initiatives Promotion of clean and green compliance/increasing environment friendly practices practices including the use of environmental costs environmentally friendly products

Skills training courses should be based on environment friendly technologies

D. INPUTS

Constraints Current Initiatives Potential Solutions Increasing cost of supplies Training program on proper vehicle maintenance / good environmental practices as a means of reducing waste, pollution, etc.

Cleaner Production Program Continuous Productivity and Quality Improvement

11 E. MARKET ACCESS/MARKETING

Constraints Current Initiatives Potential Solutions Need improvement in product Individual efforts to improve Develop local capability to offer products deliver product and market development services. Development of product differentiation factors in addition to price (e.g., clean vehicles, courteous drivers, drivers possess basic info about places to be visited, etc.) Need to strengthen linkages Some have established Involvement of transport sector with other players relationships with hotels, in the development of restaurants and tour operators packages so as to promote a consistent image among all the players

Broker linkages. Set-up of database of qualified transport operators

Annex F VALIDATION WORKSHOP SUMMARY RESULTS

Results of the validation workshop indicate that:

1. Priority area for intervention is on Promotion and Marketing followed by Quality and Competitiveness Improvement.

2. Top 5 specific fields of change most relevant to the needs of the tourism businesses are the following:

• Improvement of destination marketing of Negros Occidental

• Availability of tourism information at major gateway points (within and outside the Philippines) and in strategic locations within Negros Occidental.

• Upgrading of existing management, marketing, and general administrative courses to international standards

• Better use of travel agencies, tour operators, and other tourism intermediaries to promote and distribute Negros Occidental tourism products complemented by publicity in appropriate media to create awareness and establish credibility within the segments.

• Development of a compelling brand and product portfolio, which meet the desire for a distinctive, authentic and uniquely Negros Occidental experience 3. Below is the breakdown of votes of participants as to the top 2 most relevant fields of change per category. Fields of Change No. of Votes Product and Infrastructure Development 52 Development of a compelling brand and product portfolio 16 Development of cultural, sporting, and social events 12 Improvement of tourism related infrastructure 14 Improvement of waste management 10 Promotion and Market Development 74 Improvement of destination marketing of Negros Occidental 23 Availability of tourism information at major gateway points and in 13 strategic locations within Negros Occidental. Development of tourism internet portal for Negros Occidental 21 Better use of travel agencies, tour operators, and other 17 local/regional/international tourism intermediaries Quality and Competitiveness Improvement 59 Upgrading of existing management, marketing, and general 17 administration courses to international standards Development and/or strengthening of local capability to deliver 11 dualized training programs of international standards Promotion among enterprises of the implementation of a Continuous 2 Productivity and Quality Improvement (CPQI) Program Promotion of the effective use of information technology in improving 10 business operations and marketing Promotion and development of a tourism-friendly culture across all 10 sectors of the community Establishment of a province-wide industry led quality seal program 9

Annex G LIST OF KEY INFORMANTS

KEY INFORMANTS Name Position Company George Zulueta Executive Director Metro Bacolod Chamber of Frank Carbon Vice President Commerce & Industry (MBCCI) Gaspar Gayona Director Technical Education & Skills Development Authority (TESDA) Jennelyn Cordero Tourism Officer Provincial Tourism Office Nixon R. Yap Bacolod City Tourism Office Perfecto C. Yap Provincial Director Department of Trade & Industry (DTI) Marivic Pio Association of Negros Mey Santos Producers (ANP) Nestor Evaristo President Hotel & Restaurant Association of Negros Occidental (HRANO) Dominic Pena President Airport Drivers Association Rainier Perales Branch Manager Ceres Bus Lines Angela “Nena” de Leon Proprietor Pavilion Taxi Estrella H. Moran Proprietor/Manager Techno Tours and Travel Agency Greg Flores Manager Filipiniana Tours & Travel Agency Augusto P. D. Sison General Manager The Sugarland Hotel Robert Balde Manager L Fisher Hotel “Chang” Executive Assistant Bacolod Convention Plaza Manager Bobby Magalona Manager Bob’s Cafe Nestor Evaristo Proprietor/Gen. Manager Aboy’s Restaurant Mark Kalita Manager Takatuka Lodge & Dive Resort Freddie W. Zayco Managing Director Punta Bulata Resort Ruth Cruz Proprietor/Manager The Quite Place Farm Resort Ellen Marie Jalandoni-Vazquez Officer in Charge Mambukal Resort

Annex H ACCREDITATION

SOURCE: DEPARTMENT OF TOURISM

What is an Accreditation? A certification issued by the Department of Tourism that the holder is recognized by the Department as having complied with its minimum standards in the operation of the establishment concerned.

Who may apply for DOT Accreditation?

• Travel and Tour Services • Accommodation Facilities

o Tour Operators o Hotels o Tourist Transport Operators o Resorts - Tourist Land Transport o Apartels - Tourist Water Transport o Tourist Inns - Tourist Air Transport o Motels o Tour Guides o Pension Houses o Mountain/Cave Guides o Restaurants o Professional Congress o Shops/Department Stores Organizers o Sports & Recreational Centers o Training Centers o Training Programs o Trainors o Rest Areas in Gasoline Stations o Spa o Museums/Galleries o Foreign Exchange Dealers o Calesas o Homestay Sites

Non-Fiscal Incentives to Accredited Establishment • Membership to Philippine Convention and Visitors Corporation (PCVC) and inclusion in its marketing and promotional programs. • Issuance of DOT ID cards to bonafide employees. • Technical/security/facilitation support or assistance. • Endorsement to embassies and travel trade associations for utilization of establishment's facilities and services.

Additional Incentives to DOT Accredited Accommodation Establishments • Endorsement to Ninoy Aquino International Airport (NAIA) and other international airports for issuance of access passes to qualified personnel. • Endorsement to Commission on Elections (COMELEC) for exemption from liquor ban during election related events. • Endorsement to the Department of Agriculture (DA) for importation of meat and meat products.

Additional Incentives to DOT Accredited Restaurants • Endorsement to COMELEC for exemption from liquor ban during election related events. • Endorsement to the DA for importation of meat and meat products.

Additional Incentives to DOT Accredited Tour Operators • Endorsement to NAIA and other international airports for issuance of access passes to qualified personnel.

Additional Incentives to DOT Accredited Tourist Transport Operators • Exemption from Metro Manila Development Authority's (MMDA) Unified Vehicular Volume Reduction Program (UVVRP). • Endorsement to Maritime Industry Authority (MARINA) for issuance of Certificate of Public Convenience (CPC) and availment of deregulated rates.

Procedures in Applying for a DOT Accreditation Original Application Renewal of Application 01 Applicant shall request for inspection of the establishment being applied for at the DOT Accreditation Division in Manila or the Regional Office concerned. 02 The DOT shall conduct inspection of Applicant shall file/submit application the establishment. and all supporting documents. 03 The DOT shall inform the applicant in Applicant shall ensure that the writing of the result of inspection application form is properly filled-up whether favorable or unfavorable and the documents are complete and duly arranged based on the processing guide. 04 If the result is favorable, applicant The DOT shall conduct inspection of may now file and submit all the establishment. supporting documents. If the result is unfavorable, applicant may request for reinspection once deficiencies are corrected. 05 Applicant shall ensure that the The DOT shall inform the applicant in application form is properly filled-up writing of the result of inspection and the documents are complete and whether favorable or unfavorable duly arranged based on the processing guide. 06 Application shall be processed and If the result is favorable, the DOT shall evaluated by the DOT. process and evaluate the application.

If the result is unfavorable, applicant may request for reinspection once deficiencies are corrected. 07 Applicant shall be notified within Applicant shall be notified within three three (3) working days if there are (3) working days if there are any any deficiencies noted during final deficiencies noted during final evaluation evaluation. 08 Upon full compliance with all Upon full compliance with all requirements, a certificate of requirements, a certificate of accreditation shall be issued by the accreditation shall be issued by the DOT duly signed by the DOT duly signed by the Undersecretary of Tourism Services Undersecretary of Tourism Services and Regional Offices if entity is and Regional Offices if entity is located in Metro Manila or the located in Metro Manila or the Regional Director if it is located in the Regional Director if it is located in the Region. Region. 09 The applicant shall pay accreditation The applicant shall pay accreditation and other related fees when and other related fees when certificate certificate is ready for release. is ready for release. 10 Applicant may request for IDs of its Applicant may request for IDs of its personnel upon payment of P30.00 personnel upon payment of P30.00 ID ID fee for each employee. fee for each employee

General Requirements Requirement Legal • Mayor's Permit/Municipal License • Business Name Certificate for Single Proprietorship • Articles of Incorporation/ Partnership & By-Laws for Corporation/Partnership Financial • Latest Income Tax Return and Audited Financial Statements Physical • Contract of Lease of office space/Certificate of Title Other Documentary • Application Form Requirements • List of Officials and Employees • Valid visa and labor permit for foreign nationals • Board Resolution xxx authorization for bonafide employee to file/transact business with DOT

Additional Requirements for Accreditation of Accommodation Establishments and Restaurants 1. Current room rates with food & beverage (f & b) prices/menu 2. Comprehensive General Liability Insurance 3. Fire Safety Inspection Certificate

Additional Requirements for Accreditation of Tour Operators Who may apply for accreditation as tour operator? => A resident Filipino citizen registered as a single or sole proprietorship => A partnership organized under the laws of the Philippines, at least 60% of its capital is owned by Filipino citizens => Corporations organized under the laws of the Philippines, at least 60% of the subscribed common or voting shares of stock of which is owned by Filipino citizens and the composition of its Board of Directors being at least 60% Filipinos => Foreign individual/entity organized under Philippine laws with a minimum paid-in equity/capital of Two Hundred Thousand U.S. Dollars (US$200,000) pursuant to the provisions of the Foreign Investments Act of 1991, otherwise known as R.A. 7042. 1. Proof of P500,000 working capital 2. Proof of Inbound or local tour operations (official receipts of bookings from DOT accredited hotels/resorts) 3. Tour packages with tariff rates 4. Copy of Surety Bond submitted to Local Government Unit (LGU) 5. General Manager shall have at least 3 years managerial experience in tour operations 6. Bio-Data of two permanent staff who shall have at least 2 years experience in tour operations 7. Office space requirements -should be located in a commercial area, must be easily identifiable and shall be used exclusively for the tour operation business. 8. For tour operators with branches - affidavit executed by the general manager of the main office acknowledging the existence of the branch office, assuming full responsibility of its operations and certifying that it is not managed nor operated by other persons/ entities other than the duly accredited employees and officers of the main office.

Additional Requirements for Accreditation of Tourist Transport Operators • Land Transport 1. Land Transportation & Franchising Regulatory Board (LTFRB) Franchise 2. Transportation rates 3. LTO Official Receipt and Certificate of Registration (OR/CR) 4. Insurance Policies (Third Party Liability & Personal Accident) • Water Transport 1. Certificate of Public Convenience and/or Provisional Authority from Maritime Industry Authority (MARINA) 2. Certificate of Inspection by MARINA valid for one year 3. Certificate of Compliance with MARINA's MC 65/65A and 150 • Air Transport 1. Franchise to Operate from Civil Aeronautics Board (CAB) 2. Certificate of Airworthiness of aircraft from Air Transportation Office (ATO)

Additional Requirements for Accreditation of Tour Guides/ Tourism Frontliners 1. Attended/passed the seminar conducted by the DOT 2. Certificate of Good Health from a licensed government physician 3. National Bureau of Investigation (NBI) Clearance • For Mountain/Cave Guides to include: 1. Certificate of training on basic life support from the Philippine National Red Cross or its equivalent institution. 2. For Mountain Guides, a certification issued by the Mountain Guides Association of the Phils., Inc. (MGAPI) or any other recognized mountaineering organization by the DOT that the applicant has the necessary skills, equipment & experience in guiding. 3. For Cave Guides, a certification issued by Phil. Cave Guides Association, Inc. (PCGAI) or any other duly recognized caving organization by the DOT that the applicant has the necessary caving skills, equipment and experience in guiding.

• For Taxi Drivers/Frontliners to include: 1. Police Clearance 2. Barangay Clearance 3. Driver's License 4. LTFRB Franchise/ OR/ CR

Additional Requirements for DOT Accreditation of Museum 1. Proof of membership with the National Committee on Museums.

Additional Requirements for Accreditation of Traininig Center (for renewal only) 1. List of all training programs conducted during the previous year including the number of employees and graduates. 2. List of successful graduates per training program including skills acquired and respective places of employment.

Additional Requirements for Accreditation of Traininig Programs 1. Approval of programs by the Tourism Industry Board Foundation, Inc. (TIBFI)

Additional Requirements for Trainors/Faculty 1. Completed the Train-the -Trainors Program by the DOT and TIBFI. In lieu, must show proof of experience & knowledge on subjects handled.

Additional Requirements for Accreditation of Professional Congress Organizers 1. Proof that the applicant has successfully organized & managed, promoted and/or arranged in the past two (2) years at least five (5) national and/or international conventions (Proof shall consists of written testimonials from Presidents & Chairmen of the events claimed to have been handled.) 2. Office space must be located in a commercial district and easily identifiable.

Additional Requirements for Accreditation of Foreign Exchange Dealers 1. Office space requirements -it shall be located at the ground floor of a building in a commercial area with pleasant & decent atmosphere; easily identifiable with a signage and shall be exclusive for foreign exchange business.

Additional Requirements for Accreditation of Spa 1. Valid health certificate of all massage therapists. 2. Shall have at least one (1) DOH registered massage tharapist supervising a maximum of 20 massage attendants. 3. Fire Safety Inspection Certificate 4. Situated in a safe and reputable location with clean, calm and relaxing environment.

Additional Requirements for Accreditation of Galleries 1. Proof of membership with the National Committee on Culture and the Arts - Committee on Independent Art Galleries.

Additional Requirements for Accreditation of Calesas 1. Proof that the driver has passed the seminar for calesa drivers conducted by the Department. 2. Police and barangay clearance. 3. Certificate fo good health issued by a duly licensed physician for the calesa driver 4. Certificate of good health issued by a duly licensed veterinarian for the horse.

Accreditation Fees • Accreditation and other related fees Type of Establishment Accreditation Fee Accommodation Hotel de Luxe PhP 2,700 First Class Hotel 2,400 Standard Hotel 2,000 Economy Hotel 1,400 Resort Class “AAA” 2,700 Resort Class “AA” 1,400 Resort Class “A” 700 Special Interest Resort 700 Tourist Inn 700 Apartel 500 Pension House 300 Motorist Hotel (Motel) 300 Travel and Tour Services Tour Operator 1,400 Tour Guide/Mountain Guide/Cave 150 Guide Professional Congress Organizer 700 Tourist Transport Operator Bus 350 Coaster 200 Van 150 Car 100 Air Transport 1,400 Water Vessel 1,400 Tourism Related Establishments Spa 1,000 Restaurants, department store, 300 tourist shop, sports & recreational center, museum, gallery, training program, trainors, training center, foreign exchange dealer,calesa, homestay Sticker big 100 Sticker small 50 Identification Card (ID) 30

Grounds For Cancellation of Accreditation 1. Making false declaration or statement or making use of any such declaration or statement or any document containing the same or committing fraud or any act of misrepresentation for the purpose of obtaining the issuance of accreditation. 2. Failure to maintain DOT standards and requirements for the operation of the establishments; 3. Failure to comply with or contravene any of the conditions set forth in the rules and regulations governing the accreditation of accommodation facilities, tourism related establishments and travel and tour services; 4. Violation of or non-compliance with any provisions of the Rules, Orders, Decisions, Circulars issued by DOT and other concerned agencies; 5. Allowing or permitting the establishment or its facilities to be used for illegal, immoral or illicit activities; 6. Conviction of a crime involving moral turpitude, dishonesty, misrepresentation or misconduct; and 7. Any other act or omission that works against the interest of the tourism industry.

Annex I Classification and Standards: Hotels and Resorts

DEPARTMENT OF TOURISM

Classifications and Standards (Hotels and Resorts)

Hotels: Hotels are classified and certified by the Department of Tourism. Hotels falling hereunder have complied with its minimum standards in the operation of the establishment concerned to ensure the safety, comfort, and convenience of tourists.

The following are the minimum requirements for the operations of the different hotel classifications in the Philippines when accredited by the Department of Tourism:

Economy Standard First Class De Luxe Class Class Class Bed Rooms • rooms are at • rooms are at • rooms are at least • rooms are at least least eighteen least eighteen twenty-five (25) twenty-five (25) (18) sqm (18) sqm sqm sqm • private • private • private bathroom • private bathroom bathroom with bathroom with with bathtub and/or with bathtub and shower and 24- shower and 24- shower and 24- shower and 24- hour cold hour cold hour running hot hour running hot running water running water and cold water and cold water and hot water at and hot water at • telephone • telephone selected hours selected hours • radio, television • radio and • cold drinking • telephone or piped-in music television water • cold drinking • cold drinking • cold drinking • room service water water water • room service • 24-hour room • in-room service refrigerator and well-stocked mini- bar • 24-hour room service Facilities • Sundry Shop •Function/Conferen •Function/Conferen ce Facilities ce Facilities • Swimming Pool • Swimming Pool • Tennis, Golf, • Tennis, Golf, Squash or Gym Squash or Gym Facilities or a tie-up Facilities within the vicinity of • Live the hotel entertainment • Live • Barber Shop, entertainment Beauty Parlor and • Barber Shop, Sundry Shop Beauty Parlor and • DOT-accredited Sundry Shop Travel • DOT-accredited Agency/Tour Travel Counter Agency/Tour Counter Services • Porter • Porter • Porter • Porter • Mailing • Foreign • Foreign • Foreign • Long Exchange Exchange Exchange Distance/Overse • Mailing • Mailing • Mailing as calls • Long • Long • Long • Telex Distance/Overse Distance/Overseas Distance/Overseas • Laundry and as calls calls calls Dry Cleaning by • Telex • Left Luggage and • Left Luggage and arrangement • Laundry and Safety Deposit Safety Deposit • Medical Dry Cleaning by Boxes Boxes Services upon arrangement • Telex and • Telex and request • Parking Facsimile Facsimile • 24- hour • Laundry and Dry • Laundry and Dry Medical Services Cleaning Cleaning • Airport • Parking/Valet • Parking/Valet Transfers Services Services • Medical Services* • Medical Services* • Limousine • Business Center Service, Airport • Limousine Transfers Service, Airport available 24 hours Transfers available 24 hours

Resorts: Resorts are classified and certified by the Department of Tourism. Resorts falling hereunder have complied with its minimum standards in the operation of the establishment concerned to ensure the safety, comfort, and convenience of tourists.

The following are the minimum requirements for the operation of the different resort classification in the Philippines when accredited by the Department of Tourism:

Class A Class AA Class AAA Special Interest Minimum • free parking for free parking for • in a suitable • camp and Requirements guests (if guests (if location free of ground sites shall applicable) applicable) noise, be distant from • Economy class • Standard class atmospheric, and any form of guest rooms guest rooms • marine pollution nuisance and • public • public • free parking for shall not washrooms washrooms guests (if endanger any • at least two (2) • at least three (3) applicable) sources of water sports and sports and • First Class supply or other recreational recreational guest rooms natural resources facilities facilities • public • spacious guest • employee • conference and washrooms rooms with facilities convention • at least four (4) comfortable • at least one (1) facilities sports and bed/s food & beverage • employee recreational • separate clean outlet facilities facilities toilet and bath • conference and facilities for Male convention and Female facilities guests with • employee running water (if facilities available in the area)

GENERAL RULES ON THE OPERATION AND MANAGEMENT OF RESORTS

Maintenance and Housekeeping. Maintenance of all sections of the resort shall be of acceptable standard, and shall be on a continuing basis, taking into consideration the quality of materials used as well as its upkeep. Housekeeping shall be of such a standard ensuring well-kept, clean and pollution-free premises. A vermin control program shall be regularly maintained in all areas of the resort. Regular and hygienic garbage disposal systems shall be maintained. Sanitation measures shall be adopted in accordance with the standards prescribed under P.D. 856, the Code on Sanitation of the Philippines.

Lifeguard and Security. All resorts shall provide the services of a sufficient number of well- trained lifeguards duly accredited by either the Philippine National Red Cross, the Water Life Saving Association of the Philippines or any recognized organization training or promoting safety objectives, and adequate security whenever there are guests.

Medical Services. All resorts shall provided the services of a physical, either on-call or on full-time basis, depending on their volume of operation and accessibility to hospitals or medical centers. In addition, resorts shall employ adequate first-aiders who have completed a course in First Aid duly certified by the National Red Cross or any other organization accredited by the same. Adequate First Aid medicines and necessary life-saving equipment shall be provided within the premises.

Fire-Fighting Facilities. Fire-fighting facilities shall be provided in accordance with the Fire Code of the Philippines.

Signboards. Appropriate signboards shall be conspicuously displayed outside the Establishment showing clearly the name and classification of the resort as determined by the Department of Tourism

Beach and Lakeside Resort. There shall be placed on a beach or lakeside resort an adequate number of buoys which shall be spread within the area to be determined by the Resort Owner or keeper as safe for swimming purposes, and in compliance with existing government regulations and/or local ordinances on the placing of such buoys.

Designated Areas. the distance fronting the area of the resort with adequate number of buoys as provided in the preceding section shall be designated as the area for swimming purposes, and no boat, banca, or other crafts shall be allowed to enter the area so designated. The Resort Owner or his duly authorized representative shall be empowered under these rules to enforce the above, and shall likewise designate a portion of the beach front to be used exclusively for loading and unloading of resort guests, unless otherwise designated elsewhere by rules and regulations specific to the area

Precautionary Measures In no case shall resort management allow swimming at the beach front beyond 10:00 pm and appropriate notice shall be posted to inform guests of such. night swimming at the pool shall be allowed only if there are adequate lifeguards on duty and when the pool premises and sufficiently lighted. Management shall post sufficient and visible signs in strategic areas in the resort or at the beach to warn guests of the presence of artificial or natural hazards, danger areas, or occurrences thereat.

Prohibited acts and practices No pets or animals shall be allowed to swim/bathe along beaches. Likewise, "pukot" fishing and washing of fishing nets shall be strictly prohibited in beach resorts. Resorts owners shall prohibit ambulant vendors from peddling their wares within the resort premises in order to provide their guests a certain degree of privacy to enable them to relax and enjoy their stay thereat. Littering in resorts shall be strictly prohibited. resort owners shall keep their premises clean and shall adopt their own anti-littering measures. without prejudice to existing ones, no resort shall be established or constructed within a radius of five (5) kilometers from any pollution-causing factory or plant.

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PROGRAM MANAGEMENT Martina Vahlhaus, Program Manager H 10th Floor, German Development Center, PDCP Bank Centre Building, V.A. Rufino corner L.P. Leviste Streets, Salcedo Village, Makati City ( +63 2 8123165 (local 46) * SMEDSEP c/o GTZ-Office Manila, P.O. Box 2218 MCPO Makati City, Philippines 8 [email protected]

Training Services Christian Widmann H 4th Floor, TESDA Central Office, East Service Road, Taguig, Metro Manila ( +63 2 8938297, 8405035, 8179095 (fax) 8 [email protected]

Business and Financial Services Markus Ehmann, Business Development Services Harald Neimeier, Financial Services H 38 Acacia Street, Lahug, Cebu City, 6000 ( +63 32 4122256, 2344494 (telefax) 8 [email protected]

Deutsche Gesellschaft für Technical Education and Department of Trade GFA Management Technische Zusammenarbeit Skills Development and Industry (GTZ) GmbH Authority