USAID CONSERVATION OF CENTRAL AMERICAN WATERSHEDS
PROGRAM
DELIVERABLE NO 2: BUSINESS MODEL DOCUMENT FOR A DESTINATION MANAGEMENT ORGANIZATION IN BOCAS DEL TORO, PANAMA SUBCONTRACT #EPP-I-04-03-00014-03
FEBRUARY 2009
This publication was produced for review by the United States Agency for International Development. It was prepared by Solimar International.
BUSINESS MODEL DOCUMENT FOR A DESTINATION MANAGEMENT ORGANIZATION IN BOCAS DEL TORO, PANAMA
Contract No. EPP-I-04-03-00014-03
Submitted By: Solimar International
Contact: Natalie Beesley, Program Manager 2445 18th Street NW Second Floor Washington, DC 20009 Tel: (202) 518-6192 (x104) Fax: (202) 518-6194 Email: [email protected]
Submitted To: Chemonics International
The author’s views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States Government.
CONTENTS
Context ………...………………………………………………………………………....1
Section 1. Background …………………………………………...…………....Pages 2-7 1.1 USAID-CCAW Project Background……..………………………………..…2 1.2 Sustainable Tourism Cluster Objective…………………………………..…..2 1.3 Overview of the Elements of a Destination…………………………..………3 1.4 What is Destination Management? …………………………………………..5 1.5 What exactly is a Destination Management Organization?...... 6 1.6 How does a DMO differ from a Destination Management Company?...... 7
Section 2. Organization Environment…...………...………………..……..…Pages 8-12 2.1 Analysis of the Worldwide Tourism Industry………………….…………….8 2.2 Analysis of the Central American Tourism Industry……………………....…8 2.3 Analysis of the Panamanian Tourism Industry……...………………………..9 2.4 Tourism in Bocas del Toro…………………………………….……………10 2.5 S.W.O.T. Analysis…………………………………….…………………….12
Section 3. Organization Overview……………….……..…………………..Pages 13-19 3.1 Name of Organization …………………………...………………………….13 3.2 Governance………………………………………………………………… 13
Section 4. Business Strategy.…………………..………………..…………..Pages 20-25 4.1 Business Positioning Statement, Mission, and Objectives…………………20 4.2 Business Model………………………………………...…………………...20 4.3 Market Segmentation …………………………………………….………...24
Section 5. Marketing Strategy………………………………………..……..Pages 26-27 5.1 Marketing Position…………………………….……………………………26 5.2 Marketing Strategy…………….……………………………………………26 5.3 Marketing Methods ……..……………………………….…………………26
Section 6. Operations Strategy..………………..………………..…………..Pages 28-31 6.1 Products and Services……….………………………………………………28 6.2 Office Location ……..………………………………………………………28 6.3 Office Equipment ……..……….……...……………………………………29 6.4 Products and Service Fulfillment …………………..………………………29 6.5 Operation Staff ………………………….……………….…………………30 6.6 Conservation Support ……………………...…...………..…………………31 6.7 Future Services ………..…………………...…...………..…………………31
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Section 7. Financial Projections…..……..………………...…………………Page 32-36 7.1 Major Assumptions.………………………………………………………...32 7.2 Profit & Loss Model – Projected ………………….………………………..33 7.3 Statement of Cash Flows ………………………….……………………...... 34 7.4 Income Statement …………………………………..……………………....35 7.5 5 Year Projections ………………………………….……………………....36
Section 8. Long-Term Plan and Reccommendations …………….…....……Page 37-39 8.1 Short-Term Plan………………………………………….………………....37 8.2 Long-Term Plan …………………………………………………………....38 8.3 General Reccommendations …………………………………………….…38
Resources………………………………………..………………………………………40
LIST OF ACRONYMS
ATP Panamanian Tourism Authority BTSTA Bocas del Toro Sustainable Tourism Alliance CBTO Community Based Tourism Organization CCAW Conservation of Central American Watersheds Program (CCAW) DMC Destination Management Company DMO Destination Management Organization IPAT Instituto Panameno de Turismo NGS National Geographic Society SMME Small, Medium, and Micro Enterprises TIC Tourist Information Center UNWTO United Nations World Tourism Organization
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CONTEXT
Solimar International is pleased to present this business model document that will lead the creation of a Destination Management Organization in Bocas del Toro. This initiative is financed in part through the USAID-funded Conservation of the Central American Watershed (CCAW) program. The purpose of this assignment was to develop a business model document according to local needs and circumstances that achieves the following objectives: • Enhances the competitiveness of sustainable tourism in Bocas del Toro; • Supports conservation efforts that mitigate environmental impacts; • Responds to tourism demand; and • Strengthens linkages between public and private sector groups within the DMO.
The business model document is intended to assist the cluster initiative determine: • Management/Leadership Structure • Legal Establishment • Market Analysis • Marketing and Sales Strategy • Operational Structure • Financial Plan
The business model document begins with Section I, the background information necessary to provide a general introduction to CCAW: its purpose, a description of the sustainable tourism cluster’s project component and the description of the role of a Destination Management Organization. Section II analyzes the local tourism industry and its environment. Section III details the Destination Management Organization overview, management structure, and legal issues for establishing the entity. Section IV details the business strategy and model for the Destination Management Organization, including the products and services offered as well as how the entity will generate revenue. Section V reveals a marketing strategy for the organization. Section VI provides more details on the organization’s operations while Section VII provides detailed financial projections. Section VIII provides a long-term action plan (five years) and general recommendations to guide the formation and daily operations of the organization.
AUTHOR’S NOTE: The information and recommendations presented in this document are the result of research and analysis conducted in Bocas del Toro during the period of December 2008 through February 2009. It is intended to provide the stakeholders of Bocas del Toro with suggestions on how to best develop a successful destination management organization that will increase the competitiveness of sustainable tourism, generate increased revenue for tourism linked to conservation, and improve the environmental performance of tourism operations. These recommendations are intended to be a starting point for discussions and the plan will be validated and refined after feedback from local stakeholders is received.
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SECTION 1. BACKGROUND
1.1 USAID-CCAW Project Background The objective of the USAID-funded Conservation of Central America Watershed (CCAW) program is to improve the management of two of Central America’s most important watersheds—the Gulf of Honduras (in Belize, Guatemala, and Honduras) and the Cahuita-La Amistad-Río Cañas-Bocas del Toro watershed (in Costa Rica and Panama). Both watersheds are sites of critical biodiversity importance, where USAID has identified three primary intervention components to serve as the basis for the CCAW program. These components are: • Increased sustainable finance for areas of critical biodiversity importance; • Improved implementation of existing management plans for areas of critical biodiversity importance; and • Enhanced private sector management and participation to enhance biodiversity conservation, natural resource management, and sustainable economic growth.
With tourism having grown over 70% over the past decade in Bocas del Toro, unplanned tourism development is putting tremendous pressure on the area’s natural resources. Bocas del Toro has become the second most popular tourist destination in Panama (after Panama City) and is consistently attracting more tourists every year. Currently, it is estimated that 100,000 tourists visit Bocas del Toro each year and this figure is likely to increase given the consistent growth of tourism in the region.1 Additionally, despite the general deceleration of international tourist arrivals in 2008, Panama was one of the few countries to show very positive results.2
In May/June 2008, a tourism value chain analysis was conducted for the Bocas Archipelago to examine opportunities and limitations for key players focusing on value chains with social and environmental links. The analysis indicated that there is little awareness among the actors in the tourism value chain of the negative impacts that tourism has on the environment. As a result, Bocas del Toro risks losing its pristine environment, which is the area’s main attraction and principal reason why tourists visit the archipelago. Sustainable tourism clusters have proven to be effective at providing incentives for behavior change in the tourism sector and for strengthening linkages between key tourism actors to increase conservation awareness throughout the value chain.
1.2 Sustainable Tourism Cluster Objective The overall purpose of the USAID-CCAW program in Bocas del Toro—and the objective of this business model document—is to establish a sustainable tourism cluster for the region. This cluster will serve as a mechanism to encourage collaboration, participation and the inclusion of key public and private groups in order to enhance the development and management of sustainable tourism in the region. Creating a destination management organization (DMO) will foster a common vision of sustainable
1 EPYPSA. La Estrategia de Desarrollo Sostenible para la Provincia de Bocas del Toro. 2 UNWTO World Tourism Barometer. Volume 7. No. 1. January 2009.
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development for the region as well as increase cooperation and cohesion among the varying stakeholders in order to promote Bocas del Toro as a sustainable tourism destination.
1.3 Overview of the Elements of a Destination A tourism destination is defined as a physical space in which a tourist spends at least one overnight. It includes tourism products such as support services and attractions and tourist resources within one day’s return travel time. It has physical and administrative boundaries defining its management, and images and perceptions defining its market competitiveness. Local destinations incorporate various stakeholders often including a host community, and can create network to form larger destinations3 (such as the La Amistad region encompassing the southern part of Costa Rica and Bocas del Toro).
Destinations contain a number of basic elements that attract the visitor to the destination and satisfy their needs upon arrival. These basic elements can be broken down into attractions (the ‘must sees’ or ‘must dos’) and the other remaining elements as described below. The provision and quality of these elements will be influential in the visitor’s decisions to make their trip.
Attractions Attractions are often the focus of visitor attention and may provide the initial motivation for the tourist to visit the destination. These can be categorized as natural (e.g. beaches, parks, weather), built (e.g. iconic buildings such as the Eiffel tower, heritage monuments, religious monuments), or cultural (e.g. museums, theatres, cultural events). They could be in the public realm such as a nature park, cultural or historical sites or could be community attractions and services such as culture, heritage or lifestyle. Other, less tangible factors, such as uniqueness and emotional or experiential triggers are also attracting tourists to destinations.
In the case of Bocas del Toro, the islands offer visitors a number of attractions including luxurious rain forests with an abundance of fauna and flora, islands and beaches that compete with the best among the Caribbean, coral reefs in crystal clear waters, mangrove islets in a lake-like scenery, indigenous Nbogle-Bugle villages, and the Bastimentos marine park. The Caribbean architecture, the local cuisine, and the people have all contributed to making Bocas del Toro a major tourist destination in Panama.
Amenities Amenities are the wide range of services and facilities that support the visitors’ stay and include basic infrastructure such as utilities, public transport, and roads as well as direct services for the visitor such as accommodation, visitor information, recreation facilities, guides, operators, restaurants, and shopping.
Given the growing tourism industry in Bocas del Toro, the government faces challenges implementing and maintaining the basic infrastructure needed to accommodate tourism. A shortage of water is common on some of the islands (notably the Caranero island),
3 World Tourism Organization. A Practical Guide to Tourism Destination Management (2007).
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roads within the main island of Colon are in poor condition, and the islands do not have adequate waste management systems. Regarding direct services for tourists, there is a lack of adequate visitor information and there few tour guides at the destination.
Accessibility A destination should be accessible to a large population base via road, air passenger services, rail, or boats. Visitors should also be able to travel with relative ease within the destination. Visa requirements, ports of entry, and specific entry conditions are considered as part of the accessibility of the destination.
Bocas del Toro is relatively easy to access. Three airlines companies (Aeroperlas and Air Panama from Panama and Nature Air from San Jose) run daily flights to the main island. Many independent travelers choose to travel by road and boat due to the close proximity of Bocas del Toro province from the Costa Rican border.
Image A unique character or image is crucial in attracting visitors to the destination. It is not sufficient to have a good range of attractions and amenities if potential visitors are not aware of this. Various means can be used to promote the destinations image (e.g. marketing and branding, travel media, e-marketing). The image of the destination includes uniqueness, sights, scenes, environmental quality, safety, service levels, and the friendliness of people.
The image of Bocas del Toro image is one of untamed, laid-back Caribbean charm. The islands are evolving rapidly from a great backpacker’s secret into a more upscale destination and this image is likely to change given the large-scale real estate development and increasing crowds in the region.
Price Pricing is an important aspect of the destination’s competition with other destinations. Price factors relate to the cost of transport to and from the destination as well as the cost on the ground of accommodation, attractions, food, and tour services. A tourist’s decision may also be based on other economic features such as currency exchange.
Prices have being steadily rising in Bocas del Toro over the last five years due to the increase in visitation. However, compared to similar destinations, Bocas del Toro still offers reasonably priced options for both budget and upscale travelers.
Human Resources Tourism is labor intensive and interaction with local communities is an important aspect of the tourism experience. A well-trained tourism workforce and citizens who are equipped and aware of the benefits and responsibilities associated with tourism growth are indispensable elements of tourism destination delivery and need to be managed in accordance with the destination strategy.
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The unplanned tourism development of Bocas del Toro is reflected in the lack of a skilled labor force at the destination. This lack of quality human resources creates a barrier for investors and prevents the local population from benefiting economically from the archipelago’s tourism growth. As of now, the government has not provided adequate financial resources to raise awareness among the local population of tourism’s economic opportunities or provide for training programs.
Bocas del Toro—as a destination—is relatively well equipped to excel in all of these categories. Fundamentally it already provides visitors with exotic attractions, accessibility via air and road and boat, and a unique image at a competitive price. Infrastructure and building capacity among the local labor force remain two of the biggest challenges for the growth of Bocas del Toro as a sustainable tourism destination going forward.
Once implemented, a destination management organization can help find solutions to these issues through training, marketing, and increased stakeholder collaboration while furthering the objective to enhance sustainable tourism in the region.
1.4 What is Destination Management? Destination management is the coordinated management of all the elements that make up a destination (such as the attractions, amenities, access, marketing and pricing as discussed above). It takes a strategic approach to link these sometimes very separate entities for the better management of the destination. Collaborative management can help to avoid duplication of effort with regards to promotion, visitor services, training, business support and identify any management gaps that are not being addressed.
The elements of the destination are supported by marketing activities that motivate people to visit the destination followed by the delivery of services on the ground to ensure that expectations are met. Underlying these activities is the need to ensure a suitable environment, (physical, social and economic) in which to develop tourism. A Destination Management Organization is well positioned to lead and co-ordinate these different aspects of the destination.
Creating a suitable environment. This is the foundation of destination management upon which the marketing of the destination and the delivery of the experience depend. Before the visitor is attracted by marketing or arrives at the destination the right social, economic and physical environment in which to develop tourism must exist. A strong and authoritative DMO will be necessary to provide the leadership and to drive and co- ordinate this process. Creating the right environment includes: • Planning and infrastructure; • Human resources development; • Product development; • Technology and systems development; • Related industries and procurement.
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Marketing. Destination marketing should face outwards to attract visitors to the area. It should promote what is most attractive to potential tourists and most likely to persuade them to visit. The key functions are: • Destination promotion, including branding and image; • Campaigns to drive business, particularly to SMMEs (Small, medium, and micro enterprises); • Unbiased information services; • Operation/facilitation of bookings; • CRM (Customer Relationship Management).
Promotion may not follow public sector boundaries and often cuts across them to represent many regions or destinations, although individual regions may also be responsible for their own marketing. This may be the case for the Bocas del Toro DMO upon promoting the transnational La Amistad region (which encompasses the southern part of Costa Rica and Bocas del Toro).
Delivery on the ground. Ensures the quality of every aspect of the visitor’s experience once they arrive at the destination. This includes: • Destination coordination and management for visitor ‘quality of experience’; • New product and package “start-ups”; • Events development and management; • Attractions development and management; • Training and education; • Business advice; • Strategy, research and development
1.5 What exactly is a Destination Management Organization (DMO)? To compete in today’s competitive environment, destinations need to look at a new and integrated approach to development used by economic suppliers worldwide that focuses on “clustering”, or the continuous engagement of all stakeholders in a process of learning and innovating how they deliver their services. Representatives from Bocas del Toro (including tourism businesses, NGOs, conservation organizations, community members, and others) will come together to form the stewardship (or advisory) council that will guide the destination management organization regarding issues that arise in the planning, management, and implementation of DMO initiatives.
The DMO will have the overall mission of leading, coordinating, promoting, and managing the long-term development and marketing of a destination. By creating a brand for the entire community, and all of its tourism related entities, a DMO gets a destination into the public’s consciousness, creating a continuous awareness of and demand for the tourism “product.” A DMO serves as a coordinating entity by bringing together diverse community stakeholders—from local government to trade and civic associations to individual businesses—to attract visitors to their area.
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Source: World Tourism Organization. A Practical Guide to Tourism Destination Management (2007).
DMOs also serve as information clearinghouses, convention management consultants, and promotional bodies for the community at large. They do not control the activities of their partners but bring together resources and expertise and a degree of independence and objectivity to lead the way forward. The DMO’s most critical assets are its credibility as a strategic leader in tourism destination marketing and development and its ability to facilitate industry partnerships and collaboration towards a collective destination vision.
1.6 How does a DMO differ from a Destination Management Company? A Destination Management Company (DMC) is defined as a local service organization that provides creative itineraries and logistics management based on an in-depth knowledge of the destination. While most DMO’s are established as not-for-profit organizations funded primarily by local or national governments, a DMC is a registered business that provides revenue-generating services to ensure its self-sustainability. DMCs typically have the same objectives as DMOs, with all profits used to fund conservation or community initiatives.
It is envisioned that the cluster initiative in Bocas del Toro will take the form of a Destination Management Company in order to offer reservation services to travelers. This model and its legal implications are explored further in section 2.3.
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SECTION 2. ORGANIZATION ENVIRONMENT
2.1 Analysis of the Worldwide Tourism Industry World Tourism Organization's Tourism 2020 Vision is a long-term forecast and assessment of the development of tourism up to the first 20 years of the new millennium. The United Nations World Tourism Organization (UNWTO) states that although the evolution of tourism in the last few years has been irregular, it maintains its long-term forecast for the moment. Experience shows that in the short term, periods of faster growth (1995, 1996, 2000) alternate with periods of slow growth (2001 to 2003). While the pace of growth till 2000 actually exceeded the Tourism 2020 Vision forecast, it is generally expected that the current slowdown will be compensated in the medium to long term.
UNWTO's Tourism 2020 Vision forecasts that international arrivals are expected to reach nearly 1.6 billion by the year 2020. Of these worldwide arrivals in 2020, 1.2 billion will be intraregional and 378 million will be long-haul travelers.
The total tourist arrivals by region shows that by 2020 the top three receiving regions will be Europe (717 million tourists), East Asia and the Pacific (397 million) and the Americas (282 million), followed by Africa, the Middle East and South Asia.
2.2 Analysis of the Central America Tourism Industry According to statistics from the International Tourism Organization, Central America's tourism industry has grown rapidly over the past five years, reporting a 13% increase in tourist arrivals in 2007.
It is important to stress that while uncertainty concerning the current financial crisis exists, the future looks bright for Central America destinations. Despite various negative factors, there were a number of bright spots in 2008 that are also expected to show positive results in 2009. These “bright spots” include at least 3 Central American countries: Nicaragua, Honduras, and Panama.
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Short-term prospects will vary from country to country and region to region, depending on their local economies, labor markets and consumer confidence. Some regions could start to see an earlier than expected recovery. As long as the present uncertainty prevails in markets, it is expected that some of the following relevant trends will be seen as experienced in previous crisis: • Segments such as visiting friends and relatives (VFR), repeat visitors, as well as special interest and independent travelers, are expected to be more resilient. • Destinations offering value for money and with favorable exchange rates have an advantage as price becomes an issue. • Late booking is expected to increase as uncertainty leads consumers to delay decision-making and wait for special offers. • It is more critical than ever before to work closely together in the tourism value chain—between the public and private sectors, and destinations and the travel trade.
The region needs to increase its competitiveness to sustain its growth by developing a marketing strategy around its natural assets. Central America positions itself as the prime destination for ecotourism and nature travel which is due in large part to the reputation gained by Costa Rica over the past 20 years. While Central American governments continue to be optimistic about the importance of nature tourism may play in their countries, few of them have really embrace a sustainable tourism strategy; thus, giving way to eco-projects funded by development agencies and environmental groups.
2.3 Analysis of the Panamanian Tourism Industry Of the 1,215,083 official international arrivals in Panama, 703,545 arrived via Tocumen International Airport or 58 percent of the total. According to statistics provided by Tocumen International Airport, 35 percent of these passengers were from North America and Europe while 39.4 percent were from South America. For now13 airlines operate scheduled passenger flights into Tocumen Airport and the national air carrier, COPA airlines, monopolizes the passenger traffic with a share of 66.4 percent of the total number of passenger traffic into the airport.
According to the Panamanian Tourism Authority, Panama is experiencing spectacular tourism growth; in less than a decade 2000-2008, the number of visitors has jumped from 600,169 visitors in 2000 to 1,537,000 visitors in 2008. However, this increase in the number of tourist arrivals might not be so strong as the ATP claims it to be – number of cruise passenger arrivals are included in the total number of tourist arrivals, which accounts for more than 30% of the tourist arrival numbers for 2006. However, cruise passengers are usually considered “excursionists”, as their stay in the destination is typically limited to around 6 hours.
Tourism has become a major source of export revenues and an important source of employment in Panama. The sector’s share in the total value of major exports of goods and services has risen from 13 percent in 1999 to 20 percent in 2006 and continues to grow. According to statistics provided IPAT, the tourism industry contributed $1.45
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billion dollars to the nation's economy in 2006. This amount represents 9.5 percent of Panama's total Gross Domestic Product (GDP), making it the largest single industry in the country. By comparison, in 2006 the Panama Canal generated $1.08 billion dollars in income while the total economic impact of the Colon Free Zone was a paltry $696.2 million dollars.4
According to a report from Instituto Panameno de Turismo (IPAT), $1.56 billion dollars was spent in tourism related investment in Panama between May 1995 and December 2006. Of this investment, $1.5 billion was allocated in the construction of lodging and hotel rooms. Expenditure statistics show that 86 percent of the total investment was spent in Panama City alone while just 2 percent was invested in Chiriqui and only 6 percent in Cocle (the beach hotels). Bocas del Toro (Panama's 2nd most popular tourist destination) saw less than $5 million in investment over 10 years, or just .03 percent of total expenditures.
2.4 Tourism Industry in Bocas del Toro Located at 32km from the Costa Rican border, the Archipelago of Bocas del Toro consists of six densely forested islands, scores of uninhabited islets, and the Bastimentos Island National Marine Park (Panama’s oldest marine park). The islands have maintained the charm of small-town Caribbean life and have a population of approximately 89,300 inhabitants.
Bocas' laid-back Caribbean vibe is enhanced by the archipelago’s spectacular natural setting. 70% of Bocas del Toro province is covered by dense jungles of vine tangles and forest palms. Beneath the water, an extensive coral reef ecosystem supports countless species of tropical fish while simultaneously providing sought-after surf breaks. The mainland is home to the Panamanian half of the binational Parque Internacional La Amistad. Here, primary rainforests are home to unforgettable fauna such as the elusive
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jaguar, as well as a handful of Ngöbe-Buglé settlements that are still clinging to their traditional ways of life.
Recent figures on Bocas del Toro from the Sustainable Development Strategy for Bocas del Toro (June 2008), shows that hotel rooms in the province represent 11% of total number of rooms in the country. The archipelago alone boasts a total of 105 hotel establishments (43 registered and 62 unregistered) with 893 rooms and 3,270 beds. The rest of the province provides another 24 hotel establishments with 268 rooms and 720 beds.
Tourism Demand for Bocas del Toro People come to Bocas del Toro for different reasons and with different interests. Both domestic and international, tourists may come to relax to find that island getaway, others are looking for more challenging adventures such as surfing and scuba diving; and many are expats from Costa Rica who need to renew their tourist visas by leaving the country for a few days and make a holiday of it. Generally speaking, tourism to Bocas del Toro could be segmented in two age brackets: • The 18-30 age bracket: They are young European and Americn independent travelers coming mainly from the Costa Rica border with a limited spending power and in search of night life entertainment and hard adventure activities; they tend to stay longer in the destination (more than 3 days). • The 31-60 age bracket. This age group is typically coming from Europe and the United States traveling either independently or in groups. They tend to spend more and come to Bocas del Toro to experience the natural and cultural based attractions such as snorkeling, birdwatching, wildlife observation, and indigenous ciultures.
Nature Tourism In its broadest sense, nature tourism involves experiencing natural places, typically through outdoor activities that are sustainable in terms of their impact on the environment. These can range from active to passive and include everything from scuba diving to beach experiences and wildlife viewing. In many instances a visitor may combine several of these in the one trip to Bocas del Toro.
For passive and active visitors alike, nature is also playing an increasingly important role in giving something back to people (relaxing, enriching the spirit, getting back to basics). By doing so, it is able to enhance their broader experience of a destination. And for mainstream domestic visitors, these benefits tap more accurately into nature’s deeper meaning. Nature-based experiences are intimately linked to all other aspects of the visitor’s total experience of a destination—such as food, culture, relaxation, health, escape, family needs, accommodation, transport, etc. All serve to complement each other and together form the basis of a visitor’s overall satisfaction with a destination.
Soft and Hard Adventure Tourism Soft and hard adventure tourism activities comprise a subset of activities strongly associated with the natural environment and nature-based tourism. Related market
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segments include ‘adventure sports.’ Soft adventure activities commonly require a moderate level of physical involvement by participants and are less physically challenging than hard activities. Soft adventure activities available in Bocas del Toro include hiking/bushwalking, mountain biking/bicycling, camping, horseback riding, orienteering, walking tours, wildlife spotting, sea turtle and dolphins watching, and fishing. Hard adventure activities commonly involve a higher level of physical or rugged involvement or a potentially greater personal challenge for participants. The risk factor can also increase. Hard adventure activities in Bocas del Toro include caving, scuba diving, trekking, kayaking, and surfing.
2.5 S.W.O.T Destination Analysis A SWOT analysis was conducted to analyze the strengths, weaknesses, opportunities, and threats facing Bocas del Toro as a destination.
STRENGTHS WEAKNESSES ! Nature tourism (exceptional national " Lack of skilled human resources settings) " Lack of tourism information online or at ! Rich wildlife and birdlife the destination ! Bastimentos Marine National Park " Poor worker training and service quality ! Cultural diversity: Afro-Caribbean culture " Poor water and sanitation services and Ngobe Bugle Indigenous culture " Poor road infrastructure in the main ! Binational Parque Internacional La island of Bocas del Toro y other islands Amistad " Weak tourism statistics to monitor the ! Accessibility from Costa Rica number of tourists coming to the destination ! Affordability " Lack of clear regulations " Inadequate public-private dialogue " Cumbersome border customs OPPORTUNITIES THREATS ! Strengthen sustainable tourism offerings " Unplanned tourism development ! Create new packages within Bocas as well " Real estate overdevelopment as with the La Amistad region of Costa " Lack of environmental protection Rica " Limited awareness among the private ! Improve access to tourism information sector of potential negative environmental online and through a Tourism Information impacts from tourism Center at the destination ! Diversification of product offering – community-based tourism products and nature-based tourism products such as sea turtle watching tours ! Infrastructure improvement (water and sewage system) ! Extending the average length of stay
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SECTION 3. ORGANIZATION OVERVIEW
3.1 Name of the Organization The name currently used to refer to the cluster initiative is the Bocas del Toro Sustainable Tourism Alliance (Alianza Para El Desarrollo Turistico Sostenible de Bocas del Toro). Upon formal establishment of the Destination Management Company other names could be explored that evoke sustainability, such as “Bocas del Toro Green Travel” or “Authentic Bocas.”
3.2 Governance Over the past two months, tourism stakeholders have been briefed on the USAID-CCAW funded sustainable tourism cluster development initiative and its objectives. Establishing a DMO has been explored with several tourism stakeholder groups and has received a great amount of positive feedback due to the recognized need for such organization in the destination.
Management / Leadership The Bocas del Toro Sustainable Tourism Alliance (BTSTA) will need various levels of governance for participation, transparency, and oversight of this initiative. This will include a Manager to run daily operations of the DMC (focused primarily on promoting and selling tours) as well as the oversight and advisory role of a stewardship council (focused on utilizing the DMC as a mechanism to address conservation and tourism growth issues in the region).
A ‘geotourism’ stewardship council will be formed using the methodology developed by the National Geographic Society. The council’s task will be to oversee and advise the DMC through implementating the four elements of a geotourism strategy: identifying, sustaining, developing, and marketing the geotourism assets of a place. Council advice and activity should be in keeping with the interests of the communities, with good conservation and preservation practices, and with responsible economic development. The council will encourage appropriate tourism in appropriate places, and discourages inappropirate tourism in unsuitable places. Once established, the council should subscribe to the principles embodied in the National Geographic Geotourism Charter and in the geotourism definition:
Tourism that sustains or enhances the geographical character of a place—its environment, heritage, aestehics, culture, and the well-being of its residents.
As one of main objectives of the cluster initiative is to raise consensus among the several tourism stakeholders, the council members should be representatives from each of the key tourism stakeholder groups within Bocas del Toro’s tourism industry.
The chart on the following page details the broad range of categories from which the stewardship council will be comprised. Several organizations have already been
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contacted regarding serving on the stewardship council, and commitment for each of the categories will be formalized in the coming weeks.
NGS Stewardship Council Member Organization/ Organization/ Categories Business Name Business Type 1) Historic Preservation Caribbean Conservation Conservation Corporation Institute 2) Natural Conservation The Smithsonian Institute Research Center
ADESBO NGO 3) Communities BONA (Bocas Natural) NGO Community-Based 4) Indigenous Peoples and Other Cultural Tourism Minorities Bahia Honda Organization
5) Art and Artisanry Community-Based MESSI HABLADO Organization 6) Traditional Performing Arts (music, dance, theater, storytelling, reenactments, etc.) 7) Destination Management
8) Culinary, farm/restaurant programs, agritourism, slow food Reminiscence Private Farm 9) Beautification Programs (signage, architecture, landscape concerns) 10) Other Stakeholder groups emblematic of the locale Boteros Unidos Bocaterenos Boatmen Association 11) Government (tourism, planning, and environment, for example) Tranquilo Bay Lodging
La Loma Lodge Lodging 12) Private sector companies compatible with Casa Cayuco Lodging geotourism Punta Caracol Lodging Butterfly Farm/Hotel del Parque Lodging
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Operations Staff Once fully operational, it is anticipated that the DMC will need to hire two full-time staff, including a DMC Manager and a DMC Sales and Reservations Coordinator. The DMC should outsource its monthly accounting needs to a local accountant/bookeeper.
Once established, council members and hired personnel will be divided into specific work committees to efficiently allocate work responsibilities. Illustrative examples of working committees include: Marketing Committee, Micro-Project Committee, Basic infrastucture commitee, Education Committee, Environmental comittee and Cultural commitee. The establishment of committes will also help to secure the service of local volunteers willing to make a change for their committees.
The illustrative organizational structure for the Bocas del Toro Sustainable Tourism Alliance is below:
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Legal Status The Solimar team is currently assessing the legal structure of the Bocas del Toro Sustainable Tourism Alliance with the assistance of the Ballard Law Firm based in Panama City. One possibility for creating the destination management organization is to partner with an existing NGO already established in the region and working towards similar objectives. Several meetings have been held with the tourism stakeholders in Bocas del Toro to assess the existing non-profit organizations involved either in tourism or sustainable development to check if one of those could take the lead in implementing this sustainable tourism cluster initiative. The organizations identified are detailed below:
The Chamber of Tourism of Bocas del Toro is a not-for-profit association created in 2003. The Chamber of Tourism has participated in several initiatives to facilitate the accessibility of the destination notably by advocating for the harmonization of immigration customs at the Panamanian-Costa Rican border. The Chamber of Tourism played a role in promoting Bocas del Toro and facilitating bookings to tourists by setting up an information center at the Bocas del Toro airport. However, this initiative has not succeeded to be sustained and the information center is closed now.
The Chamber of Tourism membership has considerably dropped since its creation. The Chamber of Tourism once had around 20 members but has declined to only three active members at the moment. There are various reasons for explaining the loss of interest in the Chamber of Tourism. The member’s divergence on the mission and objectives of the Chamber of Tourism might be one of the reasons; the other is the organization’s legal status, which does not allow foreigners to be member of the Chamber of Tourism’s board of directors. This limitation is a barrier to involve a great number of tourism stakeholders especially giving the fact that more of the businesses are at the hands of foreigners in Bocas del Toro. For these reasons, the Chamber of Tourism in Bocas del Toro is not a recommended option.
ADESBO (Asociacion de Desarrollo Sostenible de Bocas del Toro) is a not-for-profit Organization created in 2004. ADESBO was conceptualized in 1988 with the goal to give the opportunity for its 20 members (communities, other not-for-profit organizations and local governamental institutions) to participate in the formulation, consultancy, and approbation of the Bastimentos Marine Park management plan. ADESBO’s mission is to further the preservation of the diverse and rich biodiversity of the Bocas del Toro’s archipelago and propose solutions to reduce the environmental impacts real estate development and tourism or fishery. The association currently has 20 members and is involved in the Environmental Impact Assessment in the Bocas del Toro archipelago to provide recommendations on how the impacts that tourism development could have on the natural resources. This organization is highly focused on environmental issues and not ready to take the lead on establishing a destination management organization.
BONA (BOCAS NATURAL) is an initiative led by a group of small accommodations and other stakeholders to support tourism activities—primarily in Bastimentos island. Each lodging manager is involved in supporting their surrounding community by
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promoting tours to the community and developing small community development projects. BONA accounts for six members and is currently in the legal process of establishing itself as a Non-Governmental Organization (NGO). While BONA will be an important partner of the cluster initiative, they are not recommended as a partner due to such a concentrated focus on local community development.
With the assistance of the Ballard law firm, the Solimar team has identified two options for creating a new entity: (i) the creation of the affiliate of a Non-for-Profit Organization and (ii) the creation of a Corporation Limited (SA).
Not-for-Profit Affiliate Solimar has approached Sustainable Travel International (STI), a non-profit organization based in Colorado, to gauge their interest in setting up an affiliate organization in Bocas del Toro. STI’s overall mission is to support tourism sustainable development, promote responsible travel and ecotourism, as well give incentives for travelers to understand and protect the culture and the environment they are visiting. Sustainable Travel International’s Web site is becoming popular among travelers and the Bocas del Toro destination would benefit from this affiliation.
The requirements of setting up this NGO affiliate would be to have at least five members sit on the Board of Directors. One foreigner can also occupy a management position, which could help encourage foreign investors in Bocas del Toro to be involved in the management of this organization. A disadvantage for establishing the DMO as a Sustainable Travel International affiliate is timing. It usually takes between 6-12 months to complete the Panamanian legal process and register an organization as an NGO. It is expected that this process may become even lengthier given the upcoming presidential election in May 2009. The cost to legally register and establish this NGO affiliate is approximately US$1,500.
The biggest drawback when considering the options above is, according to Panamanian law, not-for-profit organizations are restricted from conducting profitable activities (such as sales of day tours or booking hotel reservations for a commission). The NGO could receive donations, however, which would be exempt of taxes.
Concession A concession represents a viable option for the DMC to operate as a for-profit company and achieve one of its primary goals—promoting and selling sustainable tourism tours in the region. With a concession structure, the Destination Management Company would operate through an existing legally registered tour operator under a contract or license where the owner of the concession would pay a fixed sum or percentage of their revenue to the DMC in exchange for the exclusive right to operate as the official tour operator company of Bocas del Toro. One of the drawbacks of this model is the tour operator would likely be based in Panama City (due to the lack of tour operators in Bocas del Toro) and the potential for revenue generation re-invested in conservation and community development is much more limited when compared to the DMC establishing itself as a tour operator.
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Corporation Limited The recommended option is to register the Bocas del Toro Sustainable Tourism Alliance as a Corporation Limited (SA). A Corporation Limited is the most commonly used legal form of a business in Panama. The legal registration process is relatively straightforward and very fast (taking around three days to complete the process). The name of the company, its commercial purpose, the amount of its initial capital, and the names of three directors (either Panamanians or foreigners) are the only pieces of information needed to register the Corporation. While the names of three directors must be included in the Articles of Incorporation, changes to these directors are permitted for a $300 fee. The cost of registering as a Corporation Limited is approximately $928.60 including the first year of tax; and $560 in annual taxes each year after.
In the event the BTSTA establishes itself as a Corporation Limited in order to facilitate bookings and sell local merchandise, a tourist license is also required by the Panamanian Tourism Authority (ATP). The requirements of obtaining a tourist license through ATP are: • The BTSTA would have to guarantee an amount of $10,000 delivered by an insurance company to obtain a license type A. The guarantee is obtained after a $5,000 deposit is realized on a bank account and $300 is paid to the insurance company; • The Manager needs a tourism degree or at least three years of management experience; • Submit CVs for all person(s) working in the office; • Three references sent by companies with which the DMC has an existing relationship; • Certificate of the capital invested in the company issued by an authorized accountant; • Copy of the official lease contract; and • Operation certificate registered through the Panamanian “Emprende System”.
Once these documents are submitted to the Panamanian Tourism Authority, an ATP official will plan an onsite visit. This process typically takes 2-3 months. Sales made by the registered company are subject to a 10% tax by the ATP.
After assessing all of the options, it is recommended that the Bocas del Toro Sustainable Tourism Alliance establish itself as a Corporation Limited and obtain a tourist license from ATP in order to facilitate bookings and sell local merchandise. Once established, it could also submit the legal documentation needed to form an NGO in Bocas del Toro. The NGO would be governed by the same stewardship council and have a mission to create local conservation strategies that can be supported from the tourism revenues generated by the DMC. From a conservation perspective, although a percentage of the DMC’s sales would be dedicated to supporting conservation, an NGO status would give the organization access to national and international funding agencies that support biodiversity protection and poverty alleviation efforts. A legal NGO status would be especially significant given the preference of many of these agencies in directly funding local organizations, rather than channeling those funds through international organizations. Additional benefits of an NGO status to tourism operations and
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conservation initiatives, as well as the synergistic linkages between the two, are numerous (as shown in the graphic below).
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SECTION 4: BUSINESS STRATEGY
4.1 Business Positioning Statement, Mission, and Objectives The Bocas del Toro Sustainable Tourism Alliance is a destination management company created to increase cooperation among local stakeholders in order to support the sustainable development of Bocas del Toro’s tourism industry while preserving the country’s natural and cultural assets and improving the lives of local residents. The Bocas del Toro Sustainable Tourism Alliance will be the most comprehensive and in- depth source for travel information related to Bocas del Toro. The automated booking system available online in addition to live travel consultation through a tourism information center will provide travelers the ability to purchase pre-packaged and customized travel experiences while also benefiting conservation in the region.
4.2 Business Model The Bocas del Toro Sustainable Tourism Alliance will provide in-depth information on the region’s sustainable tourism industry and allow travelers to consult, arrange, and purchase pre-packaged tours, accommodations, and guiding services. In addition to servicing the consumers of Bocas del Toro’s tourism products, BTSTA will also provides invaluable exposure and market access to Bocas del Toro’s tourism suppliers. The tourism information center will also sell merchandise, souvenirs and handicrafts.
There are two different markets for the products and services of the BTSTA: 1) Tourism suppliers, and 2) Travelers. The services and benefits to be offered by the Bocas del Toro Sustainable Tourism Alliance for each market are detailed below:
Services and Benefits for Tourism Businesses (note that businesses must be members to recieve these benefits) • Full page description on the new consumer-focused Bocas del Toro Web site (to be launched in the summer of 2009) enabling the promotion of the business; • Right to distribute sales brochures of their tourism facilities at the tourism information center; • Business linkages with local and international tour operators to promote sustainable tourism activities in the archipelago; • Facilitate the bookings of hotels and activities within Bocas del Toro through the tourism information center and a online reservation system; • Special distinction as a tourism business supporting sustainable tourism initiatives in Bocas del Toro; • Include business in a sales directory that will be available to visitors inside the information center and distributed to tour operators in Costa Rica and Panama City; • Opportunity to be featured in press/FAM trips; and • Monthly newsletter with DMC news and valuable market reserach findings.
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Products and Services for Tourists • Tourism Information Center to provide assistance upon the tourist’s initial arrival to the destination as well as during their stay. Adequate information about activities and accommodations will be available at the center along with a staff member to provide advice and assistance (during business hours); • Reservation capabilities (online or onsite). This reservation center will allow tourists to book their lodgings and activities once in the destination by going to Bocas del Toro Sustainable Alliance office or booking directly through the website. Special interest tours that focus on sustainability and/or benefit conservation (such as the Sea Turtle Nesting observations) are likely to be made available and promoted by the DMC; • Sales of Bocas del Toro branded merchandise (t-shirts, hats, post cards, calendars, etc.), general toiletries needed by travelers (such as sunscreen, disposable cameras, etc.), as well as local products (chocolate, local handicrafts, etc) within the Tourism Information Center.
Benefits for Community Members The local community will receive several intangible benefits as a result of the DMC’s creation: • BTSTA will serve as a unifying association for various stakeholders to have a voice in the management of tourism growth in Bocas del Toro. • Funding generated by the company will directly support conservation and community-based initiatives. • It is the only institution that both unites and integrates all stakeholders of the tourist sector of Bocas del Toro and generates opportunities for them as well as the community. • It will establish respect, credibility, competency, vision, and unity among the tourism industry.
Source of Revenues Through the USAID-CCAW program, around $13,000 in funding has been allocated through September 2009 to cover some of the start-up costs required to establish the Bocas del Toro Sustainable Tourism Alliance. Funding will be used to hire one local staff member, legally register the organization, rent an office space and purchase basic equipment (such as computers and furniture). An additional $10,000 in program funding will also be used to develop marketing materials (including print materials and the Web site).
While this initial funding will help cover inital costs, the DMC will need to begin the immediate implementation revenue generating services in order for the organization to continue after the life of the project. In exchange for the benefits and services detailed above, the Bocas del Toro Sustainable Tourism Alliance will generate the following sources of revenues achieve financial sustainability: (i) Membership fees; (ii) Commissions from the booking of tours, packages, and accommodations in Bocas del Toro; (iii) Merchandise sales.
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(i) Membership fees
Basic Membership A basic membership fee will be charged to businesses in order to receive the benefits listed in section 4.2.1 above. The fee structure will vary depending on the size and type of organization:
Business Type Annual Fee Hotels (more than 20 rooms) $300 Hotels (1-20 rooms) $200 Restaurants $100 Tour Providers $200 Community-Based Tourism Organizations $50 Conservation NGOs $0
To encourage businesses and organizations to join the Destination Management Company, the payment of the membership fees can be made with an in-kind payment of services in the amount of the fee. For example, a small hotel could give the DMO a voucher for 2 free room nights equivalent to $200 to cover the cost of membership. The DMC would then be able to use those services for FAM/Press trips or to sell directly to visitors to generate revenue for the organization.
World Heritage Alliance Membership World Heritage Alliance (WHA) membership is open to forward-thinking companies in the tourism and travel industry that commit to working with the UN, World Heritage Alliance members and key stakeholders to preserve World Heritage sites where the WHA is present. As part of this project, Solimar will meet with the Costa Rican members of the World Heritage Alliance to discuss potential expansion into Panama. As part of the Talamanca Range-La Amistad Reserves/La Amistad National Park, Bocas del Toro is recognized as a World Heritage site. As such, local businesses joining the Destination Management Company may also have the opportunity to join the World Heritage Alliance (WHA). This will be at a cost of the basic membership plus the membership fee for the World Heritage Alliance. Solimar is currently working with the UN Foundation, to determine if the Destination Management Company can act as a local membership agent for the WHA and potentially sharing the WHA membership revenue.
(ii) Commissions The main purpose of establishing the cluster initiative as a Destination Management Company is to enable it to sell tours, packages, and accommodations to travelers in exchange for a commission fee. Bookings will be made through both the Tourism Information Center and online through the Bocas del Toro Sustainable Tourism Alliance Internet portal.
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Recent trends show that more than 50% of hotel and tour bookings are made online. There is currently a very small online presence for Bocas del Toro. As the destination continues to experience a growth in tourists, so will the need for a consumer-focused web site. As of now, the #1 search engine result for “Bocas del Toro” is the locally owned www.bocas.com. This site serves as an online directory offering a listing of 52 hotels that can be found at destination. This site does not offer a booking functionality, and redirects tourists to the hotel’s Web site to make an inquiry or booking. Hotel members currently pay a $250 annual fee to be listed on the portal.
The Bocas del Toro Sustainable Tourism Alliance will either strengthen www.bocas.com or create a new portal to facilitate hotel and tour bookings in exchange for a 10% commission fee on total sales.
A physical tour operator presence is also very limited within the island, with no Panamanians tour operators having a local presence in Bocas del Toro. Instead, aggressive “hustlers” (typically offering the same collection of local tours at inconsistent prices) approach tourists on the streets. The establishment of an official Tourism Information Center on the main island of Colon would provide travelers a place to gather information on available activities and accommodations and speak to a sales expert without feeling pressured to book. The Tourism Information Center would offer the products of member businesses as well as new tours and packages created by the DMC at a 10% commission fee. Local “hustlers” could potentially be trained to act as commission based marketing and sales agents for the Destination Management Company.
Tourism product offerings are currently being assessed and discussions with several organizations and boatmen associations have taken place to develop new packages and modify existing routes that are currently offered to tourists.
Sea turtle tourism in particular has great potential to add value to nature tourists visiting this location. Researchers from the Florida Fish and Wildlife Conservation Commission, Florida Marine Research Institute, Caribbean Conservation Corporation (CCC) have been working with the turtles in Bocas del Toro since 1989, and this counsel is open to developing Sea Turtle observation tours that could be offered exclusively through the DMC.
Also under consideration by the project is an exclusive entry agreement to Playa Bluff, which would be signed between the DMC and the newly established turtle conservation association (led by the Smithsonian Institute and Caribbean Conservation Corporation in Playa Bluff). If this agreement is reached, the BTSTA is in a position to generate substantial revenues from the exclusive offering of this special interest tour to benefit conservation of the sea turtle population.
(iii) Merchandising In addition to revenue from membership fees and commissions, the BTSTA will generate additional income through merchandise sales. Beyond generating an additional source of revenue, this merchandise will also serve as an effective promotional tool. A selection of
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short-sleeve shirts, post cards, calendars, baseball hats, and bucket hats could feature the DMC’s logo and be made available for sale through the tourist information center as well as in hotels and restaurants throughout the islands. In addition to this branded merchandise, a small store will be established in the tourism information center to provide tourists the opportunity to purchase a number of tour-related supplies, including: bug repellent, sunscreen, disposable cameras, water/sodas, and snacks. A 100% profit margin will be applied to these items to create another important source of revenue for the DMC.
4.3 Market Segmentation The market for BTSTA’s products and services include visitors to Bocas del Toro and tourism suppliers located in the region. It is estimated that approximately 100,000 visitors travel to Bocas del Toro each year.
Recent figures on Bocas del Toro from the Sustainable Development Strategy for Bocas del Toro (June 2008), shows that the archipelago alone has a total of 105 hotel establishments (43 registered and 62 unregistered) with 893 rooms and 3,270 beds. It is estimated that 5% of annual visitors, or 5,000 people will book their accommodations either online or in person through the Destination Management Company.
From an inventory conducted by Solimar International, it is estimated that there are 15 tour operators, 40 restaurants, and 6 community-based tourism organizations within the region. It is estimated that 40% of these tourism suppliers with join the Destination Management Company, resulting in the following membership projection in year 1:
Total Number of Number of Revenue from Business Segment Businesses in Bocas Members in Membership del Toro Year 1 Fees Hotels (1-20 rooms) 80 32 $6,400 Hotels (over 20 rooms) 20 8 $2,400 Restaurants 40 16 $1,600 Tour Operators 15 6 $1,200 Community-based 6 2 $100 Tourism Organizations Total 64 $11,700
Membership is anticipated to grow at a rate of 15% per year, with 100% of members renewing in Year 2.
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Below is a list of the most commonly booked tours in the region that will be offered through the DMC:
Tours Cost Providers Tour a Bahía de los Delfines, $22/person (based on 6 people) Boatmen associations Cayo Coral, Playa Rana Roja en Bastimentos Tour a Bahía de los Delfines, $22/person (based on 6 people) Boatmen associations Cayo Coral y Punta Hospital
Tour Cayo Coral, Cayo $35/person (based on 6 people) Boatmen associations Zapatilla, Bahía de los Delfines
Tour Boca del Drago, Playa de $20/person (based on 6 people) Boatmen associations las Estrellas e Isla Pájaros (Swans Cay) y Canal de Soropta o Snyder Salt creek Hiking tours $30/person Boatmen associations
Scuba Diving $35 one tank dive Private operator
$60 two tanks dive
$225 Open Water Dive Water skiing $75/person Private operator
Sailing $60/person Private operator Naso Culture Tours $95/passenger Private operator Surf course $15 /hour Private operator
It is estimated that 5% of annual visitors, or 5,000 people will book their tours and hotels online or in person through the Destination Management Company. Using an average cost of $40 per tour per person, an average hotel cost of $75 per night, and a 10% commission fee, the DMC will generate over $28,000 in revenue from commissions per year.
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SECTION 5: MARKETING STRATEGY
5.1 Marketing Position The value proposition of the services offered by the Bocas del Toro Sustainable Tourism Alliance come from the ability to connect a growing market of travelers with information about the region’s tourism attractions and tourism providers. The DMC’s services to tourism providers are intended to both improve the DMC’s product while supporting the competitiveness and sustainable development of these businesses. The ability of the DMC to provide seamless transactions with authentic and often to difficult to reach tourism providers will translate to a product that is unmatched on the market.
The Bocas del Toro Sustainable Tourism Alliance will position itself as a leader in promoting and selling Bocas del Toro as a sustainable destination in order to increase responsible tourism, support conservation, and encourage members to join the DMC. In order to establish this position, BTSTA will display its benefits and services through a Web site as well as through other forms of promotional media—to be developed in the coming months. At the same time, Bocas del Toro’s natural and cultural attractions itself will also be advertised through marketing materials available online and in the Tourism Information Center. These materials will focus on the archipelago as a sustainable tourism destination and its offerrings of natural beauty and wildlife, gorgeous beaches, excellent surfing, diving and snorkeling, highlighting sustainable tourism suppliers.
A brand and tagline are currently being developed by the BTSTA in order to harmonize associate the image of the DMC with the many sustainable tourism offerrings of Bocas del Toro.
5.2 Marketing Strategy The success of the Bocas del Toro Sustainable Tourism Alliance will rely on its ability to attract and service its customers. Through the USAID-CCAW program, a marketing strategy will be developed in the coming months that will focus on understanding, communicating, and delivering the benefits its customers are looking for. The DMC’s tourism suppliers want to grow their businesses, and will agree to pay the membership fee as long as they believe the benefits and services of the DMC will help grow their business. Travel customers will be seeking new travel experiences and while doing so need tourism information, travel consultation, and the ability to process the transaction.
5.3 Marketing Methods Online The travel industry accounts for the largest category of products and services sold over the Internet. According to a recent study by Jupiter Research the online travel market is expected to continue its strong growth and account for 34% of all travel spending in 2010. While the travel industry is experiencing a growth in online bookings, the Internet remains one of the greatest sources of research for travelers.
The Internet provides the opportunity for developing nations to correct imbalances in the tourism value chain where a significant percentage of tourism profits are captured by
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firms based outside the country being visited. The challenge for developing countries is to not only put in place the technology for e-tourism, but also to develop a strategy that engages the public and private sectors to work in collaboration to promote the country, while effectively processing transactions and delivering a quality tourism product to the online travel planner.
While a growing number of destination management organizations (DMOs) in developing countries have developed an online presence in the last few years, only a small share have so far been able to offer a fully fledged services web portal in the form of a destination management services (DMS) that would propose effective booking and transaction facilitiesi. A DMS is defined as ‘an IT infrastructure used by a destination organization for the collection, storage, manipulation and distribution of information in all its forms, and for the transaction of reservations and other commercial activities’.5
In addition to supporting the growth of the tourism industry through promotion and sales, a DMS provides the opportunity to facilitate communication and collaboration among tourism suppliers and establishes a mechanism to increase their competitiveness. A successful DMS will provide administrative access to suppliers through a login and password in order to update and maintain their section of the site and in some cases inventory management. This process engages suppliers and provides government and development assistance agencies the ability to deploy tourism activities such as capacity building, cluster creation, distributing market intelligence, and creating quality and sustainable tourism standards through an industry intranet attached to the DMS.
It is anticipated that this DMS and Web site could be created through the strengthening of an existing Web site (such as www.bocas.com) or as an entirely new portal.
Printed Sales Literature The DMC will need to develop two different types of sales literature. The first will be designed to communicate to the local tourism industry the background of the project and benefits of joining this cluster initiative. Careful attention should be made to communicate the public private partnership and mission to support conservation in order to gain buy-in from stakeholders.
The second type of sales literature will be focused on increasing brand awareness and communicate the tourism products and services offered by the destination to the travel consumer. Printed sales manuals (made available at the tourism information center) are recommended to easily communicate the local offerings.
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SECTION 6: OPERATIONS STRATEGY
6.1 Products and Services The Destination Management Organization of Bocas del Toro would offer services and products to both local tourism businesses and tourists to generate revenue for the organization and therefore, ensure its financial sustainability in the long run. Products and services to be offered by the DMC were reviewed in Section 4.2.
6.2 Office Location There are few options for renting office space in Bocas del Toro at the moment. Due to its role as a Tourism Information Center, the DMO should have its office space located in a visible area on one of the main streets of town. Several options have been assessed including renting an office space that will be dedicated to the tourism information center or establishing a partnership with an existing business (such as a restaurant/bar) to use a portion of their space for the tourism information center.
An office space located on Calle Tercera was identified as a potential option to serve as the tourism information center (photos of the front and back of the office are below).
The advantages of this location include: • The office space is located on the major tourist street of the main island; • The office reflects a Caribbean flavor with its lively colors; • The office is relatively small (15m2) but is large enough to accommodate one or two people and a display for promotional materials; and • The office has its own mooring space, providing options for the BTSA to offers tours directly from its docks.
While the property is currently for sale, the owners have agreed to rent this office space while it is on the market. The monthly rent for this office space is $450. The cost of using the pier located behind the office is an additional $100. In the event that the
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owners sell the property, two month’s notice will be given for the DMC to look for another office.
Another option for the DMC is to share an office space with a bar/restaurant already in operation. Such an agreement could prove beneficial for both operations: the bar/restaurant would increase its profits as tourists in search of travel information would order beverages or meals while asking for information. The advantage for the BTSTA is to have a location with long opening hours, a steady flow of visitor traffic, and a relaxed environment for tourists while asking for information and booking tours.
Rental at a reduced price could be a possibility, as such an arrangement would attract extra businesses for the partnering restaurant/bar. The Congo café (pictured right) is well located in front of J&J water taxi and is under consideration as a potential site.
Upon establishment, the BTSTA Geotourism Stewardship Council will make the final decision as to where the DMC will be located. For the purposes of this business model document, a monthly rental fee of $450 is used in financial projections.
6.3 Office Equipment Funding has been secured to purchase a limited amount of office equipment to help with the start-up of the BTSTA in its first year of operations. It is anticipated that the following office equipment will need to be purchased to set up the office:
List of office equipment materials Price Desk office and chairs $500 Computer $1,500 Printer/Copier $500 Miscellaneous Supplies $500 Total $3,000
6.4 Products and Service Fulfillment The DMC will be required to offer two separate methods to process a transaction. The first method will allow a user of the Web site to purchase the products and services in full using a secure online payment method, or a visitor of the tourism information center to pay in person. Then the DMC will pay the net rate to the supplier prior to the tourists’ arrival.
The second method will allow users to make a reservation for services but making the payment directly to the supplier at the time of product delivery. In this case the DMC will create the reservation on behalf of the traveler and then invoice the supplier at the
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end of each month for commissions that are due. This second method is necessary to accommodate customers at the tourism information center that would rather make a reservation rather then purchase the products.
DMC staff will be required to develop a business process for making both methods and facilitating payment to and collection from suppliers. This process will differ from the large hotels and tour operators to the more remote accommodations without regular access to communication or banking services. It is important that when every supplier joins the Destination Management Company, a contract is created specifically for the supplier to put in writing how this process will work.
6.5 Operation Staff The Geotourism Stewardship Council will provide the leadership needed for the Bocas del Toro Sustainable Tourism Alliance (as described in Section 3.2). In addition to the council, the DMC is anticipated to need two operational staff members, a DMC Manager and a DMC Sales and Reservations Coordinator.
The DMC Manager will play a key role in the management of this sustainable tourism cluster. His/her responsibilities will include (but are not limited to) the following:
• Promotion of the Destination Management Company at the local, national and regional level to recruit more members and become more visible to tourists; • Organize, coordinate, and implement the activities decided upon by the Geotourism Stewardship Council; • Oversee the responsibilities of the Sales Coordinator; • Collaborate with the local tourism stakeholders to organize events aiming at promoting local culture and environmental assets of the destination; • Liaise with other organizations and governmental institutions in Bocas del Toro to develop joint proposals for the development and promotion of sustainable tourism activities in the archipelago; and • Draft periodic and annual reports and presentations detailing the achievements of the DMC.
The salary for the DMC Manager is estimated at $1,500 per month. Since a requirement of obtaining a tourist license is hiring a manager with a tourism degree or 3 years of previous management experience, Solimar is exploring the possibility of recruiting a recent graduate of The George Washington University’s Masters of Tourism Administration program to fill this position.
The DMC Sales and Reservations Coordinator will play a key role in the coordination of sales and promotion for the sustainable tourism cluster. His/her responsibilities will include (but are not limited to) the following:
• Provide information to tourists on the environmental and cultural assets of Bocas del Toro as well as the tours and accommodations available on the island; • Facilitate the booking of lodgings and activities for tourists;
BUSINESS MODEL DOCUMENT FOR A DESTINATION MANAGEMENT ORGANIZATION 30
• Manage and update the Destination Management Organization’s website portal and manage online booking of hotels and activities; • Manage the order and sales of local products as well as the branded merchandise; • Promote the membership program among tourism stakeholders and ensure the collection of both membership fees and commissions; and • Manage visitor surveys to collect market research.
The salary for the DMC Sales and Reservations Coordinator is estimated at $650 per month. It is recommended that the bookkeeping responsibilities be outsourced to a local accountant for a cost of $200 per month.
6.6 Conservation Support The DMC will contribute all net profits from its operations towards supporting the costs of conservation initiatives in Bocas del Toro. Based upon the financial projections at the end of this document, the total amount to be contributed will reach over $90,000 over the next five years. The Geotourism Stewardship Council will be responsible for determining the source of the funds, based on the most critical conservation needs and threats.
6.7 Future Services In the future, the Bocas del Toro Sustainable Tourism Alliance may publish a printed travel publication intended to communicate travel news, stories, and cultural events related to Bocas del Toro. The publication will serve as a mechanism to increase the DMC’s brand awareness and Bocas del Toro as a travel destination. The publication also would provide an additional revenue stream by selling advertising to tourism suppliers of the industry.
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SECTION 7: FINANCIAL PROJECTIONS
7.1 Major Assumptions The following major assumptions were made to complete the financial projections for the Bocas del Toro Destination Management Company:
Revenues • 40% of tourism businesses in Bocas del Toro (including hotels, tour operators, restaurants, and community-based tourism organizations) will join as members of the DMC in Year 1; • 5% of 100,000 visitors (5,000 people) travelling to Bocas del Toro each year will use the Tourism Information Center and/or Web site to make reservations in Year 1; o Half of these visitors (2,500 people) will utilize the booking service for 1 tours and another half of these visitors (2,500 people) will utilize the booking service for hotels; • 65% of annual visitors to Bocas del Toro arrive during the high season and 35% arrive during the low season; • 40% of those 5,000 clients (2,000 people) will purchase an average of $15 worth of merchandise in Year 1; • Membership, bookings, and merchandise sales will grow at a rate of 15% each year; • 100% of DMC members will renew their memberships in Year 2.
Expenses • The DMC will be legally registered in Panama as a Corporation Limited and obtain a tourist license from the Panamanian Tourism Authority in order to sell tours and merchandise; • The DMC will also establish itself as a non-for-profit organization; • A 10% tax (applied by the Panamanian Tourism Authority) will be applied to the sale of tours and hotels; • A 5% ITBM tax will be applied to the sale of merchandise; • Fixed and variable costs will increase at a rate of 10% each year; • The DMC will rent the Calle Tercera office space for a cost of $450 per month; and • Two full-time staff members (a DMC Manager and a Sales/Reservation Coordinator) will be hired for a combined salary expense of $2,150 per month.
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7.2 PROFIT AND LOSS MODEL BOCAS DEL TORO DESTINATION MANAGEMENT COMPANY PROJECTED SCENARIO YEAR ONE 2009 2010
High Low Low Low Low High High High High Low Low High Season Season Season Season Season Season Season Season Season Season Season Season Key Inputs TOTAL July Aug Sept Oct Nov Dec Jan Feb Mar April May June Notes / Assumptions NUMBER OF NEW DMC MEMBERS Hotel (1-20 Rooms) 32 4 4 4 3 3 3 3 2 2 2 1 1 Based on 40% of 80 small hotels joining during year 1 Hotel (over 20 Rooms) 8 2 1 1 1 1 1 1 - Based on 40% of 20 large hotels joining during year 1 Restaurants 16 2 2 2 2 1 1 1 1 1 1 1 1 Based on 40% of 40 restaurants joining during year 1 Tour Operators 6 2 1 1 1 1 Based on 40% of 15 tour operators joining during year 1 Community-Based Tourism Orgs 2 1 1 Based on 40% of 6 CBTOs joining during year 1
NUMBER OF ANNUAL VISITORS 100000 10,833 5,833 5,833 5,833 5,833 10,833 10,833 10,833 10,833 5,833 5,833 10,833 Based on 65% of annual arrivals during the high season and 35% during the low season NUMBER OF BOOKINGS Number of tours booked 2500 270 145 145 145 145 275 275 270 270 145 145 270 Based on selling 1 tour to 2.5% of travelers to Bocas Number of hotel rooms booked 2500 270 145 145 145 145 275 275 270 270 145 145 270 Based on selling 1 hotel night to 2 5% of travelers to Bocas
REVENUE NET SALES TOTAL July Aug Sept Oct Nov Dec Jan Feb Mar April May June Notes / Assumptions Membership Fees Hotel (1-20 Rooms) $ 6,400 800$ 800$ 800$ 600$ 600$ 600$ 600$ 400$ 400$ 400$ 200$ 200$ $200 annual membership fee Hotel (over 20 Rooms) $ 2,400 600$ 300$ 300$ 300$ 300$ 300$ 300$ -$ -$ -$ -$ -$ $300 annual membership fee Restaurants $ 1,600 200$ 200$ 200$ 200$ 100$ 100$ 100$ 100$ 100$ 100$ 100$ 100$ $100 annual membership fee Tour Operators $ 1,200 400$ 200$ 200$ 200$ 200$ -$ -$ -$ -$ -$ -$ -$ $200 annual membership fee Community-Based Tourism Orgs $ 100 50$ -$ 50$ -$ -$ -$ -$ -$ -$ -$ -$ -$ $50 annual membership fee Commission Fees -$ -$ Tour Bookings $ 10,000 1,080$ 580$ 580$ 580$ 580$ 1,100$ 1,100$ 1,080$ 1,080$ 580$ 580$ 1,080$ Assumes average tour cost of $40 per person Hotel Bookings $ 18,750 2,025$ 1,088$ 1,088$ 1,088$ 1,088$ 2,063$ 2,063$ 2,025$ 2,025$ 1,088$ 1,088$ 2,025$ Assumes average hotel cost of $75 per night Merchandise Sales $ 30,000 3,250$ 1,750$ 1,750$ 1,750$ 1,750$ 3,250$ 3,250$ 3,250$ 3,250$ 1,750$ 1,750$ 3,250$ Assumes $15 average purchase from 40% of clients
Total Revenue$ 70,450 8,405$ 4,918$ 4,968$ 4,718$ 4,618$ 7,413$ 7,413$ 6,855$ 6,855$ 3,918$ 3,718$ 6,655$ Combined membership, commission & merchandise sales
EXPENSES VARIABLE COSTS TOTAL July Aug Sept Oct Nov Dec Jan Feb Mar April May June Notes / Assumptions Merchandise Costs (for resale) $ 15,000 1,625$ 875$ 875$ 875$ 875$ 1,625$ 1,625$ 1,625$ 1,625$ 875$ 875$ 1,625$ Based on 100% profit margin on merchandise sold
Total Variable Costs$ 15,000 1,625$ 875$ 875$ 875$ 875$ 1,625$ 1,625$ 1,625$ 1,625$ 875$ 875$ 1,625$
Gross Profit/Loss $ 55,450 6,780$ 4,043$ 4,093$ 3,843$ 3,743$ 5,788$ 5,788$ 5,230$ 5,230$ 3,043$ 2,843$ 5,030$ Gross profit before fixed costs Gross Profit Margin 79% 81% 82% 82% 81% 81% 78% 78% 76% 76% 78% 76% 76% Gross profit margin before fixed costs
FIXED COSTS TOTAL July Aug Sept Oct Nov Dec Jan Feb Mar April May June Notes / Assumptions Salary Expenses $ 25,800 2,150$ 2,150$ 2,150$ 2,150$ 2,150$ 2,150$ 2,150$ 2,150$ 2,150$ 2,150$ 2,150$ 2,150$ $1,500/month for Manager, $650/month for Coordinator Accountant/Bookeeping Expense $ 2,400 200$ 200$ 200$ 200$ 200$ 200$ 200$ 200$ 200$ 200$ 200$ 200$ $200/month for local accountant Local Travel Expenses $ 2,400 200$ 200$ 200$ 200$ 200$ 200$ 200$ 200$ 200$ 200$ 200$ 200$ $200/month in boat/taxi expenses for local travel Phone / Internet $ 900 75$ 75$ 75$ 75$ 75$ 75$ 75$ 75$ 75$ 75$ 75$ 75$ $75/month for phone/internet expense Marketing and Web site Maintenance $ 4,000 400$ 400$ 400$ 400$ 400$ 400$ 400$ 400$ 400$ 400$ $400/month beginning in Sept (after end of CCAW program) Rent $ 5,400 450$ 450$ 450$ 450$ 450$ 450$ 450$ 450$ 450$ 450$ 450$ 450$ Assuming rental of Calle Tercera office location Office Supplies $ 1,200 100$ 100$ 100$ 100$ 100$ 100$ 100$ 100$ 100$ 100$ 100$ 100$ $100/month for general office supplies Depreciation (from fixed assets) $ 450 38$ 38$ 38$ 38$ 38$ 38$ 38$ 38$ 38$ 38$ 38$ 38$ Direct from fixed assets sheet Gas / Electricity $ 600 50$ 50$ 50$ 50$ 50$ 50$ 50$ 50$ 50$ 50$ 50$ 50$ $50/month for gas and/or electricity expense Total Fixed Costs$ 43,150 3,263$ 3,263$ 3,663$ 3,663$ 3,663$ 3,663$ 3,663$ 3,663$ 3,663$ 3,663$ 3,663$ 3,663$
Net Profit/Loss $ 12,300 3,518$ 780$ 430$ 180$ 80$ 2,125$ 2,125$ 1,568$ 1,568$ (620)$ (820)$ 1,368$ Net profit after fixed costs Net Profit Margin 17% 42% 16% 9% 4% 2% 29% 29% 23% 23% -16% -22% 21% Net profit margin after fixed costs 7.3 Statement of Cash Flows BOCAS DEL TORO DESTINATION MANAGEMENT COMPANY Y E A R O N E Year 1 Total July Aug Sept Oct Nov Dec Jan Feb Mar April May June BEGINNING CASH BALANCE $ - $ 1,466 $ 6,192 $ 6,367 $ 6,293 $ 6,119 $ 7,765 $ 9,411 $ 10,506 $ 11,600 $ 10,726 $ 9,652 $ - CASH RECEIPTS Membership Fees $ 2,050 $ 1,500 $ 1,550 $ 1,300 $ 1,200 $ 1,000 $ 1,000 $ 500 $ 500 $ 500 $ 300 $ 300 $ 11,700 Booking Service $ 3,105 $ 1,668 $ 1,668 $ 1,668 $ 1,668 $ 3,163 $ 3,163 $ 3,105 $ 3,105 $ 1,668 $ 1,668 $ 3,105 $ 28,750 Merchandise Sales $ 3,250 $ 1,750 $ 1,750 $ 1,750 $ 1,750 $ 3,250 $ 3,250 $ 3,250 $ 3,250 $ 1,750 $ 1,750 $ 3,250 $ 30,000 Total Cash Available $ 8,405 $ 6,383 $ 11,159 $ 11,085 $ 10,911 $ 13,531 $ 15,178 $ 16,266 $ 17,361 $ 15,518 $ 14,444 $ 16,307 $ 70,450 CASH PAYMENTS Start Up Costs SA Registration Fees and Taxes $ 979 $ 979 NGO Registration Feeds $ 1,500 Insurance Costs $ 300 $ 300 Office Equipment $ 3,000 $ 3,000 Initial Marketing Materials/Web site Development $ 10,000 $ 10,000 Total Start Up Costs $ 15,779 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 15,779 Variable Costs Merchandise Costs $ 1,625 $ 875 $ 875 $ 875 $ 875 $ 1,625 $ 1,625 $ 1,625 $ 1,625 $ 875 $ 875 $ 1,625 $ 15,000 Total Variable Costs $ 1,625 $ 875 $ 875 $ 875 $ 875 $ 1,625 $ 1,625 $ 1,625 $ 1,625 $ 875 $ 875 $ 1,625 $ 15,000 Fixed Costs (Annual) Salary Expenses $ 2,150 $ 2,150 $ 2,150 $ 2,150 $ 2,150 $ 2,150 $ 2,150 $ 2,150 $ 2,150 $ 2,150 $ 2,150 $ 2,150 $ 25,800 Accountant/Bookeeping Expense $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 2,400 Local Travel Expenses $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 2,400 Phone / Internet $ 75 $ 75 $ 75 $ 75 $ 75 $ 75 $ 75 $ 75 $ 75 $ 75 $ 75 $ 75 $ 900 Marketing and Web site Maintenance $ - $ - $ 400 $ 400 $ 400 $ 400 $ 400 $ 400 $ 400 $ 400 $ 400 $ 400 $ 4,000 Rent $ 450 $ 450 $ 450 $ 450 $ 450 $ 450 $ 450 $ 450 $ 450 $ 450 $ 450 $ 450 $ 5,400 Office Supplies $ 100 $ 100 $ 100 $ 100 $ 100 $ 100 $ 100 $ 100 $ 100 $ 100 $ 100 $ 100 $ 1,200 Depreciation (from fixed assets) $ 38 $ 38 $ 38 $ 38 $ 38 $ 38 $ 38 $ 38 $ 38 $ 38 $ 38 $ 38 $ 450 Gas / Electricity $ 50 $ 50 $ 50 $ 50 $ 50 $ 50 $ 50 $ 50 $ 50 $ 50 $ 50 $ 50 $ 600 Total Fixed Costs $ 3,263 $ 3,263 $ 3,663 $ 3,663 $ 3,663 $ 3,663 $ 3,663 $ 3,663 $ 3,663 $ 3,663 $ 3,663 $ 3,663 $ 43,150 Other Costs Panamanian Tourism Authority Tax (10%) $ 311 $ 167 $ 167 $ 167 $ 167 $ 316 $ 316 $ 311 $ 311 $ 167 $ 167 $ 311 $ 2,875 ITMB Tax (5%) $ 163 $ 88 $ 88 $ 88 $ 88 $ 163 $ 163 $ 163 $ 163 $ 88 $ 88 $ 163 $ 1,500 Total Other Costs $ 473 $ 254 $ 254 $ 254 $ 254 $ 479 $ 479 $ 473 $ 473 $ 254 $ 254 $ 473 $ 4,375 TOTAL CASH PAID OUT $ 21,139 $ 4,392 $ 4,792 $ 4,792 $ 4,792 $ 5,766 $ 5,766 $ 5,761 $ 5,761 $ 4,792 $ 4,792 $ 5,761 $ 78,304 CASH BALANCE $ (12,734) $ 1,992 $ 6,367 $ 6,293 $ 6,119 $ 7,765 $ 9,411 $ 10,506 $ 11,600 $ 10,726 $ 9,652 $ 10,546 $ (7,854) LOANS TO BE RECEIVED $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Local/National Government Funding $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - USAID-CCAW Marketing Materials Funding $ 10,000 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 10,000 USAID-CCAW Office Set-up Funding $ 4,200 $ 4,200 $ - $ - $ - $ - $ - $ - $ 8,400 ENDING CASH BALANCE $ 1,466 $ 6,192 $ 6,367 $ 6,293 $ 6,119 $ 7,765 $ 9,411 $ 10,506 $ 11,600 $ 10,726 $ 9,652 $ 10,546 $ 10,546 7.4 Income Statement BOCAS DEL TORO DESTINATION MANAGEMENT COMPANY Y E A R O N E Year 1 Total July Aug Sept Oct Nov Dec Jan Feb Mar April May June REVENUE NET SALES Membership Fees $ 2,050 $ 1,500 $ 1,550 $ 1,300 $ 1,200 $ 1,000 $ 1,000 $ 500 $ 500 $ 500 $ 300 $ 300 $ 11,700 Commissions $ 3,105 $ 1,668 $ 1,668 $ 1,668 $ 1,668 $ 3,163 $ 3,163 $ 3,105 $ 3,105 $ 1,668 $ 1,668 $ 3,105 $ 28,750 Merchandise Sales $ 3,250 $ 1,750 $ 1,750 $ 1,750 $ 1,750 $ 3,250 $ 3,250 $ 3,250 $ 3,250 $ 1,750 $ 1,750 $ 3,250 $ 30,000 Net Sales $ 8,405 $ 4,918 $ 4,968 $ 4,718 $ 4,618 $ 7,413 $ 7,413 $ 6,855 $ 6,855 $ 3,918 $ 3,718 $ 6,655 $ 70,450 VARIABLE COSTS (COGS) Merchandise (for resale) $ 1,625 $ 875 $ 875 $ 875 $ 875 $ 1,625 $ 1,625 $ 1,625 $ 1,625 $ 875 $ 875 $ 1,625 $ 15,000 Total Variable Costs $ 1,625 $ 875 $ 875 $ 875 $ 875 $ 1,625 $ 1,625 $ 1,625 $ 1,625 $ 875 $ 875 $ 1,625 $ 15,000 GROSS PROFIT Gross Profit $ 6,780 $ 4,043 $ 4,093 $ 3,843 $ 3,743 $ 5,788 $ 5,788 $ 5,230 $ 5,230 $ 3,043 $ 2,843 $ 5,030 $ 55,450 EXPENSES FIXED COSTS (ANNUAL) Salary Expenses $ 2,150 $ 2,150 $ 2,150 $ 2,150 $ 2,150 $ 2,150 $ 2,150 $ 2,150 $ 2,150 $ 2,150 $ 2,150 $ 2,150 $ 25,800 Accountant/Bookeeping Expense $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 2,400 Local Travel Expenses $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 200 $ 2,400 Phone / Internet $ 75 $ 75 $ 75 $ 75 $ 75 $ 75 $ 75 $ 75 $ 75 $ 75 $ 75 $ 75 $ 900 Marketing and Web site Maintenance $ - $ - $ 400 $ 400 $ 400 $ 400 $ 400 $ 400 $ 400 $ 400 $ 400 $ 400 $ 4,000 Rent $ 450 $ 450 $ 450 $ 450 $ 450 $ 450 $ 450 $ 450 $ 450 $ 450 $ 450 $ 450 $ 5,400 Office Supplies $ 100 $ 100 $ 100 $ 100 $ 100 $ 100 $ 100 $ 100 $ 100 $ 100 $ 100 $ 100 $ 1,200 Depreciation (from fixed assets) $ 38 $ 38 $ 38 $ 38 $ 38 $ 38 $ 38 $ 38 $ 38 $ 38 $ 38 $ 38 $ 450 Gas / Electricity $ 50 $ 50 $ 50 $ 50 $ 50 $ 50 $ 50 $ 50 $ 50 $ 50 $ 50 $ 50 $ 600 Total Fixed Costs $ 3,263 $ 3,263 $ 3,663 $ 3,663 $ 3,663 $ 3,663 $ 3,663 $ 3,663 $ 3,663 $ 3,663 $ 3,663 $ 3,663 $ 43,150 OPERATING PROFIT $ 3,518 $ 780 $ 430 $ 180 $ 80 $ 2,125 $ 2,125 $ 1,568 $ 1,568 $ (620) $ (820) $ 1,368 $ 12,300 OTHER COSTS
NET PROFIT BEFORE TAXES $ 3,207 $ 613 $ 263 $ 13 $ (87) $ 1,809 $ 1,809 $ 1,257 $ 1,257 $ (787) $ (987) $ 1,057 $ 12,300 TAXES Panamanian Tourism Authority Tax (10%) $ 311 $ 167 $ 167 $ 167 $ 167 $ 316 $ 316 $ 311 $ 311 $ 167 $ 167 $ 311 $ 2,875 ITBM Tax (5%) $ 163 $ 88 $ 88 $ 88 $ 88 $ 163 $ 163 $ 163 $ 163 $ 88 $ 88 $ 163 $ 1,500 NET PROFIT AFTER TAXES $ 2,734 $ 359 $ 9 $ (241) $ (341) $ 1,330 $ 1,330 $ 784 $ 784 $ (1,041) $ (1,241) $ 584 $ 7,925 NET PROFIT MARGIN 11% 7.5 Five-Year Income Projection BOCAS DEL TORO DESTINATION MANAGEMENT COMPANY Based on 15% annual increase in sales volume and Year 1 Total Year 2 Total Year 3 Total Year 4 Total Year 5 Total 10% annual increase in fixed & variable costs REVENUE NET SALES Membership Fees $ 11,700 $ 13,455 $ 15,473 $ 17,794 $ 20,463 Tour Sales $ 28,750 $ 33,063 $ 38,022 $ 43,725 $ 50,284 Merchandise Sales $ 30,000 $ 34,500 $ 39,675 $ 45,626 $ 52,470 Net Sales $ 70,450 $ 81,018 $ 93,170 $ 107,146 $ 123,217 VARIABLE COSTS (COGS) Merchandise (for resale) $ 15,000 $ 16,500 $ 18,150 $ 19,965 $ 21,962 Total Variable Costs $ 15,000 $ 16,500 $ 18,150 $ 19,965 $ 21,962 GROSS PROFIT Gross Profit $ 55,450 $ 64,518 $ 75,020 $ 87,181 $ 101,256 EXPENSES FIXED COSTS (ANNUAL) Salary Expenses $ 25,800 $ 28,380 $ 31,218 $ 34,340 $ 37,774 Accountant/Bookeeping Expense $ 2,400 $ 2,640 $ 2,904 $ 3,194 $ 3,514 Local Travel Expenses $ 2,400 $ 2,640 $ 2,904 $ 3,194 $ 3,514 Phone / Internet $ 900 $ 990 $ 1,089 $ 1,198 $ 1,318 Marketing and Web site Maintenance $ 4,000 $ 4,400 $ 4,840 $ 5,324 $ 5,856 Rent $ 5,400 $ 5,940 $ 6,534 $ 7,187 $ 7,906 Office Supplies $ 1,200 $ 1,320 $ 1,452 $ 1,597 $ 1,757 Depreciation (from fixed assets) $ 450 $ 495 $ 545 $ 599 $ 659 Gas / Electricity $ 600 $ 660 $ 726 $ 799 $ 878 Total Fixed Costs $ 43,150 $ 47,465 $ 52,212 $ 57,433 $ 63,176 OPERATING PROFIT $ 12,300 $ 17,053 $ 22,809 $ 29,748 $ 38,080 TAXES Panamanian Tourism Authority Tax (10%) $ 2,875 $ 3,306 $ 3,802 $ 4,373 $ 5,028 ITBM Tax (5%) $ 1,500 $ 1,725 $ 1,984 $ 2,281 $ 2,624 NET PROFIT AFTER TAXES $ 7,925 $ 12,021 $ 17,023 $ 23,094 $ 30,428 NET PROFIT MARGIN 11% 15% 18% 22% 25%
SECTION 8: ACTION PLAN AND RECOMMENDATIONS
8.1 Short Term Plan (2009)
2009
ACTIVITY FEB MAR APR MAY JUNE JULY AUG SEPT OCT NOV DEC Prepare a business model document for the Bocas del Toro Sustainable Tourism Cluster x Obtain letters of commitment from members to serve on the Geotourism Stewardship Council x x Obtain support of tourism stakeholders to support the creation of the DMC x x Invite tourism stakeholders to a National Geographic Geotourism Workshop x Convene workshop to increase DMC awareness x Conduct required procedures to legally establish DMC x x Interview candidates and select a Sales and Promotion Coordinator for the DMC x x
Rent DMC office space x Procure necessary equipment to set up DMC office x Develop marketing materials for new and existing tourism packages x x x x x Recruit business members to join DMC x x x x x x x x x Collect content and photographs from the members to populate on Web site x x x x x Design and create Web site portal for Bocas del Toro x x x x x Develop marketing and branding outreach strategy x x Implement marketing and branding strategy, including the development of marketing materials x x x x x x x x Design merchandise based on the brand to be sold in Tourism Information Center x x x x x x x Conduct training sessions to build local capacity x x Launch Web site portal for Bocas del Toro x x
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8.2 Long Term Plan (2010-2015) The Bocas del Toro Sustainable Tourism Alliance is envisioned to become a strong alliance able to encourage collaboration, participation and the inclusion of public and private tourism stakeholders in activities that will help to position Bocas del Toro as a leading sustainable tourism destination. The alliance will have an active role in developing strategic partnerships with national and international players to promote the destination and achieve the objectives as described in this business model document.
The long-term plan for the BTSTA should include the following goals:
• Consolidate Bocas del Toro’s image as a sustainable tourism based destination; • Implement a strong branding message and marketing strategy; • Develop private-public partnerships to sustain conservation & tourism activities; • Help strenghen business linkages at the destination; • Help create and promote an exciting mix of nature and culture-based products available in Bocas del Toro; • Organize culinary, cultural and environmental annual events that highlight the uniqueness of Bocas del Toro; • Increase the display of local handicrafts by supporting micro-enterprise business development; • Support the implementation of capacity building programs and increase the skills of the local labor force through training programs; and • Support conservation through revenues generated by the DMC. 8.3 General Recommendations In addition to the detailed recommendations described in this business model document, a list of general recommendations is included below that should serve as priorities for the initial launch and operation of the Bocas del Toro Sustainable Tourism Alliance:
1. The Bocas del Toro Sustainable Tourism Alliance’s stewardship council should meet regularly (at least monthy, possible more frequently upon initial creation) to ensure successful luanch and operations of the DMC. 2. BTSTA should stay true to the mission of enhancing biodiversity conservation, natural resource protection, and sustainable economic growth.
3. Before setting objectives for the next annual plan, BTSTA staff should consult both active and supportive members of DMC and seek their approval on the activities they would judge as priority. 4. BTSTA should make sure to keep their members engaged and active. As an incentive, BTSTA should develop strategic partnerships with international tourism stakeholders to provide assistance to local tourism busineses on improving their market access. 5. Through the tourism information center, the BTSTA should carry out a visitor tourism survey to collect valuable data on tourist’s satisfaction and expectations. This survey would allow to monitor how the destination is perceived and measure
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the level of impact of BTSTA activities each year years. Access to the visitor survey data should also be used as an incentive for businesses to join as members of the BTSTA. The survey could cover the following questions:
a. Visitor profile – Age bracket, country of residency, average stay, spending power, entry point (Costa Rica anor Panama), means of transportation (air or road and boat). b. Travel motivation- for which reasons have they chosen Bocas del Toro as their holiday destination? c. Tourism offering – do the tourism products and services available match their expectations? Which tours/activities are in demand? d. Level of Satisfaction – has the destination exceeded their expectations? If so, what do they appreciate the most about the destination, otherwise, what needs to be improved? 6. BTSTA should actively seek to develop strategic partnerships with other Destination Management Organizations in Latin American Countries to exchange information and learn about benefits and services offerred by other DMO’s.
7. BSTSA should continusously propose new tourism packages to encourage repeat visitation and increase the length of stay.
8. BSTA should organize familiarization (FAM) trips to promote the destination to international tour operators and media.
9. BSTSA should increase cooperation with the Costa Rican government to increase the coordinated, transnational promotion of the La Amistad World Heritage Site.
10. Liaise with the Panamanian Tourism Authority to receive support to participate in the most important regional travel fairs.
11. Ensure Web site is updated with the most current general and business-related content to ensure good results on search engine queries.
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RESOURCES
Destination Market Association International (DMAI) - www.destinationmarketing.org
International Culinary Tourism Association (ICTA) – www.culinarytourism.org
Harrill, Rich. Fundamentals of Destination Management and Marketing. Lansing : Educational Institute of the American Hotel and Lodging Association, 2005.
ICT and Tourism for Development - Background Paper by the UNCTAD secretariat. United Nations Conference on Trade and Development September 20, 2005
Jamieson, Walter. Community Destination Management in Developing Economies. Binghamton: The Haworth Hospitality Press, 2006.
World Tourism Organization. A Practical Guide to Tourism Destination Management (2007).
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