82024 SEYCHELLES Tourism Sector Review: Sustaining growth in a successful tourism destination July 2013 Indian Ocean Islands Tourism Sector Review: Seychelles July 2013 Table of Contents: Seychelles Overview ............................................................................................................................................. 2 Section 1: Introduction to the Seychelles Study .................................................................................... 2 1.1 Background ............................................................................................................................... 2 1.2 Objective of this Assessment .................................................................................................... 3 Section 2: Overview of the Seychelles Tourism Sector .................................................................... 3 2.1 Contribution to the Economy .................................................................................................... 3 2.2 Tourism Sector Performance .................................................................................................... 4 Arrivals .............................................................................................................................. 4 Air Access .......................................................................................................................... 6 Tourism Products ............................................................................................................... 6 Accommodations ............................................................................................................... 7 Cruise Ships ....................................................................................................................... 7 Other Tourism Service Providers ....................................................................................... 8 2.3 Institutional Framework ............................................................................................................ 8 Public and Parastatals Institutions...................................................................................... 8 Private sector associations ................................................................................................. 9 2.4 Participation in Tourism Regional Integration Initiatives......................................................... 9 Section 3: Key Issues ................................................................................................................................... 10 3.1 Policy and Plan ....................................................................................................................... 10 3.2 Human Resource Development .............................................................................................. 11 3.3 Access ..................................................................................................................................... 13 3.4 Marketing ................................................................................................................................ 13 3.5 Product Development.............................................................................................................. 14 Section 4: Recommendations..................................................................................................................... 16 4.1 Policy and Planning ................................................................................................................ 16 4.2 Human Resource Development .............................................................................................. 18 4.3 Access ..................................................................................................................................... 19 4.4 Marketing ................................................................................................................................ 19 4.4 Product Development and Enhancement ................................................................................ 21 Section 5: Conclusions ................................................................................................................................ 22 Annexes ...................................................................................................................................................... 23 Annex 1 Summary of Principal Issues and Recommendations .................................................... 23 Annex 2 List of Stakeholders Consulted....................................................................................... 24 References................................................................................................................................................... 25 The Indian Ocean Islands Tourism Sector Review: Seychelles was prepared by The World Bank through the support of the Seychelles Ministry of Finance, particularly by Ms. Elizabeth Charles, Director General for External Finance Management; the Seychelles Ministry of Tourism and Culture, particularly HE Alain St. Ange, Minister of Tourism and Culture and Ms. Raymonde Onezime, Special Advisor; and the Seychelles Tourism Board, particularly Ms. Elsie Grandcourt, CEO. A full list of those consulted is attached. The team contributing to this report included Hannah Messerli, Brad Weiss, Juliana Kua, Martine Bakker, Joseph Tomatis and Patricia Rajeriarison. Seychelles ii Indian Ocean Islands Tourism Sector Review: Seychelles July 2013 List of Figures Figure 1: International Tourism Arrivals (2003-2012) ................................................................................ 5 Figure 2: Seychelles Accommodations Average Annual Occupancy Rates (2000-2011) ........................... 7 List of Tables Table 1: Tourism’s Importance to the Seychelles Economy (2011) …………………………….. ……..3 Table 2: Tourism’s Importance to the Seychelles Economy (2011) …………………………………….. 4 Table 3: 2012 Arrivals and Growth of Seychelles’ Top 10 Source Markets…………………………….. 5 Table 4: Comparison of Average Lengths of Stay………………………………………………………... 6 Table 5: International Flight Destinations and Frequencies……………………………………………… 6 Table 6: Cruise Ship Calls and Numbers of Passengers (2004-2011) …………………………………… 8 Table 7: Numbers of Licensed Tourism Operators………………………………………………………...8 Table 8: Short, Medium and Long-Term Recommendations…………………………………...………..17 Table9: Indian Ocean Island Hotel Growth Factors…………………………………………………….. 17 Seychelles iii Indian Ocean Islands Tourism Sector Review: Seychelles July 2013 List of Acronyms and Abbreviations AS Air Seychelles COI Indian Ocean Commission DMC Destination Management Company EAC East African Community NBS National Bureau of Statistics MTC Ministry of Tourism and Culture SCR Seychelles Rupees SHTA Seychelles Hospitality & Tourism Association SPTO South Pacific Tourism Organization SSTL Seychelles Sustainable Tourism Label STA Seychelles Tourism Academy STB Seychelles Tourism Board TMP Tourism Master Plan: 2012-2020 UAE United Arab Emirates UNESCO United Nations Educational, Scientific, and Cultural Organization UK United Kingdom UNWTO World Tourism Organization VAT Value Added Tax VIC Vanilla Islands Cooperation WTM World Travel Market WTTC World Travel & Tourism Council Seychelles iv Indian Ocean Islands Tourism Sector Review: Seychelles July 2013 Overview The Seychelles tourism sector today is a success story. No doubt, the Seychelles has been endowed with wonderful natural tourism assets in its beautiful beaches and mountain backdrops, but its success has also been due to good governance and strategic policy choices. With 24.8% of GDP directly attributable to tourism, the Seychelles must ensure that its tourism sector will continue to be competitive in the long-run. In that context, it will need to make difficult but critical choices about where the sector should be headed and how it should work towards that vision. SECTION 1 Introduction to the Seychelles Study 1.1 Background 1. Despite the global economic downturn of recent years, the Seychelles tourism sector has shown impressive growth both in terms of supply and demand. Indeed, Seychelles has much to attract investors and tourists alike. The principal draws are the country’s world-class beaches, with their crystalline water and lush mountain backdrops. Other factors that make Seychelles highly competitive include its excellent infrastructure, friendly people, good climate, and largely pristine environment. The tourism sector’s success is also largely attributable to strong sector stewardship that has created a solid policy framework and sophisticated marketing apparatus. 2. The Seychelles economy is highly dependent upon the tourism sector, with 24.8% of GDP directly attributable to the industry. In fact, only two countries in the world have economies more reliant upon tourism (Macau and Maldives) 139. Tourism generates €232.8 million per year 140 and 25.8% of the country’s employment (second highest percentage in the world) 141. Yet, the dramatic impact of tourism on the island nation has been achieved without massive numbers of tourist arrivals. In 2012, Seychelles received 208,034 tourists 142, whereas its closest competitors Mauritius and Maldives each receive nearly a million tourists per year 143. 3. Within this context, Seychelles now faces some critical questions. Seychelles is firmly positioned as an exclusive island destination through its focus on attracting top luxury hotel brands and a limited number of high-yield tourists (who spend on average €1,334 per visit) 144. Its image is inextricably linked to a pristine environment that has been maintained through limited development. Yet large investments continue to flow in and accommodations of all sizes are being built at a rapid pace. 4. Seychelles must now make important and wide-reaching, and potentially irreversible, decisions regarding the size and scope of tourism growth over the next few decades. First, it must decide to what degree it wants to continue hotel development, especially along its coastal areas. Second, it must decide 139 WTTC (2012) Travel & Tourism Economic Impact 2012: Seychelles, WTTC, London. 140 STB (2011) Seychelles 2012-2020 Tourism Master Plan, Beau Vallon. 141 WTTC (2012) Travel & Tourism Economic Impact 2012: Seychelles, WTTC, London. 142 National Bureau of Statistics (2012a) Seychelles 2012 Tourism Statistics, Victoria. 143 UNWTO (2011) UNWTO World Tourism Barometer, March 2012, UNWTO, Madrid. 144 STB (2011) Seychelles 2012-2020 Tourism Master Plan, Beau Vallon. Seychelles 2 Indian Ocean Islands Tourism Sector Review: Seychelles July 2013 whether future growth should continue to be concentrated in the luxury market or whether it should diversify towards more mid-market options. These decisions will likely have profound effects on the country’s brand, internal competition, average yields, environmental protection, and ultimately the well- being of its citizens. 5. Following is a snapshot of Seychelles’ tourism sector in 2011. TABLE 1: TOURISM’S IMPORTANCE TO THE SEYCHELLES ECONOMY (2011) Measures Amount Number of Visitors 194,476 Revenue per Visitor US$1,463 Average Length of Stay 10.0 days Direct Contribution to GDP US$0.27 billion (24.8% of Seychelles total) Total Contribution to GDP US$0.66 billion (60.8% of Seychelles total) Direct Contribution to Employment 11,000 (25.8% of Seychelles total) Total Contribution to Employment 25,500 (59.9% of Seychelles total) Sources: WTTC (2012), NBS (2012a and 2012c) 1.2 Objective of this Review This review of the Seychelles tourism sector has been conducted as part of a larger Indian Ocean regional tourism integration study including similar reports on Mauritius, Comoros and Madagascar. Each of these provides a brief sector overview that incorporates an up-to-date analysis of the country’s tourism performance, highlights some of the sector’s key challenges, and provides a select set of recommendations for addressing such challenges. The four sector reviews serve as a foundation for a synthesis policy note that addresses tourism at the regional level. This Seychelles Tourism Sector Review was completed through a combination of desk research and a rapid assessment mission to the country to meet with tourism stakeholders from the private sector, public sector and donor community (see Annex 1 for a full list of stakeholders consulted). SECTION 2 Overview of the Seychelles Tourism Sector 2.1 Contribution to the Economy 6. Few countries in the world depend as heavily upon tourism as Seychelles, as can be seen in Table 2. In terms of GDP, 24.8% can be directly attributed to tourism. This figure rises to 60.8% when factoring in indirect and induced impacts. Tourism’s direct and total contributions to the country’s workforce are estimated at 25.8% and 59.9%, respectively 145. 145 WTTC (2012) Travel & Tourism Economic Impact 2012: Seychelles, WTTC, London. Seychelles 3 Indian Ocean Islands Tourism Sector Review: Seychelles July 2013 7. The tourism industry’s enormous impact on the Seychellois economy is, however, dampened by high levels of leakage. A value chain analysis conducted in 2010 disaggregated turnover into the following categories: gross operating surplus (35%), labor costs (20%), materials/goods (25%) and other operating costs (20%). Of the amount spent on materials/goods, the study estimated that 88% was used for imports. Similarly, 80% of the amount spent on other operating costs was used for imports. We can also assume that much of the gross operating surplus is repatriated abroad, as an estimated 60% of hotel rooms are foreign-owned 146. TABLE 2: TOURISM’S IMPORTANCE TO THE SEYCHELLES ECONOMY (2011) Percentage of Global Ranking (Relative Economic Indicator Amount Seychelles Total Contribution) 2.98 billion SCR (US$0.27 Direct Contribution to GDP 24.8% 3 billion) 7.31 billion SCR (US$0.66 Total Contribution to GDP 60.8% 6 billion) Direct Contribution to Employment 11,000 25.8% 2 Total Contribution to Employment 25,500 59.9% 5 4.40 billion SCR (US$ 0.40 Visitor Exports 33.3% 30 billion) 1.48 billion SCR (US$0.13 Capital Investment 38.4% 4 billion) Source: WTTC (2012) 8. Finally, with regards to labor costs, a significant amount is also likely repatriated given the increasing number of expatriate tourism workers, both at the management level and at the rank-and-file. An estimated 2,155 expatriates were working in the Seychelles tourism industry in 2011, representing almost 20% of jobs in the tourism sector. This figure has increased almost eight-fold from the 275 employed in 2000. Of the 2,155 now employed, 91.6% work in hotels, while 5.5% work in transport, 2% in recreation, and 0.9% in restaurants and bars 147. 2.2 Tourism Sector Performance ARRIVALS 9. Over the past decade, international tourist arrivals increased from 122,038 in 2003 to 208,034 in 2012 (see Figure 1). This represents a robust 6.3% average annual growth rate. Perhaps most impressive has been the sector’s resilience during the global economic crisis. While arrivals dropped in 2008 and 2009 (1.4% and 0.9%, respectively) they rebounded impressively the following two years (increasing by 10.8% and 11.4% in 2010 and 2011, respectively) 148. A further healthy increase of 7% was registered in 2012. 146 McEwen, D. and Bennett, O. (2010) Seychelles Tourism Value Chain Analysis, Study for STB commissioned by the Commonwealth Secretariat, October 2010. 147 STB (2011) Seychelles 2012-2020 Tourism Master Plan, Beau Vallon. 148 National Bureau of Statistics (2012a) Seychelles 2012 Tourism Statistics, Victoria. Seychelles 4 Indian Ocean Islands Tourism Sector Review: Seychelles July 2013 FIGURE 1: INTERNATIONAL TOURISM ARRIVALS (2003-2012) Source: NBS (2012a) 10. The successes of the past few years have been in part attributed to a market diversification strategy. Europe has traditionally been the dominant source market, yet its market share of over 80% (80.4% in 2005) has now dipped below 70% (69.5% in 2012) 149. Meanwhile, the Middle East and Asian market are gaining greater prominence. The Middle East market share has nearly tripled from 3.5% in 2005 to 9.5% in 2012 while the Asian market share nearly doubled from 2.7% in 2005 to 5.3% in 2012 150. TABLE 3: 2012 ARRIVALS AND GROWTH OF SEYCHELLES’ TOP 10 SOURCE MARKETS Rank Country 2012 Arrivals Growth 2011-2012 1 France 32,116 - 18.4% 2 Germany 28,101 +18.5% 3 Italy 23,208 - 1.0% 4 Russia 13,474 +52.4% 5 UAE 12,880 +51.7% 6 South Africa 12,326 +16.8% 7 UK & Ireland 11,112 -16.8% 8 Switzerland 8,409 +10.0% 9 Austria 4,673 +24.7% 10 China 4,475 +110.7% Source: NBS (2012a) 11. Some of the shifts are more dramatic when viewed at the country level—even just over the past year. While arrivals from France and UK dropped sharply (18.4% and 16.8%, respectively) in 2012, huge growth has been seen from Russia and the UAE (52.4% and 51.7%, respectively). The German speaking 149 Arrival figures are based upon country of residency rather than citizenship. 150 National Bureau of Statistics (2012a) Seychelles 2012 Tourism Statistics, Victoria. Seychelles 5 Indian Ocean Islands Tourism Sector Review: Seychelles July 2013 markets also performed very well in 2012, led in percentage growth by Austria (24.7%) but in absolute growth by Germany (4,397 additional tourists). The largest growth rate in fact came from the Chinese market (110.7%), albeit from a relatively low base figure 151. 12. The vast majority of arrivals are leisure tourists (88%), with a significant portion of them coming for weddings and honeymoons (37%). Business visitors represent only 7% of arrivals, with transit passengers accounting for 4% 152. This market profile, in addition to the remoteness of the country, contributes to an average length of stay in Seychelles that is quite high by industry standards (10.0 nights) 153, especially given the relatively small size of the destination, and has been quite resilient (the figure was 10.4 nights in 2000) 154 despite global trends towards shorter lengths of stay. TABLE 4: COMPARISON OF AVERAGE LENGTH OF STAY (ALOS) Destination Seychelles Mauritius Maldives Singapore Hong Kong ALOS (days) 10.0 9.4 7.0 3.7 3.6 Sources: NBS (2012a), Statistics Mauritius (2012), Maldives Tourism Yearbook (2012), Singapore Tourism Board (2013), Hong Kong Tourism Commission (2012) AIR ACCESS 13. In February 2012, Etihad Airways bought a 40% stake in the troubled Air Seychelles (AS). This had a major effect on air access, as it resulted in the loss of several key direct flights to Europe but also opened new routes through the Abu Dhabi hub. Seychelles is currently directly connected to eight other international destinations, as listed below in Table 5 155. TABLE 5: INTERNATIONAL FLIGHT DESTINATIONS AND FREQUENCIES Destination Carrier Frequency Dubai Emirates Airways 12 per week Doha Qatar Airways Daily Abu Dhabi Etihad & Air Seychelles 4 per week each Addis Ababa Ethiopian Airlines 4 per week Nairobi Kenya Airways 3 per week Mauritius Air Seychelles 2 per week La Réunion Air Austral 2 per week Johannesburg Air Seychelles 2 per week Frankfurt Condor Airlines 1 per week Source: SCAA (2013) TOURISM PRODUCTS 14. Seychelles’ primary attraction is without a doubt its set of picturesque beaches, often considered to be among the most beautiful in the world. Its most popular secondary attractions are snorkeling/scuba 151 ibid 152 National Bureau of Statitics (2012c) Statistical Bulletin: Visitor Expenditure Survey (Q2 2012), Victoria. 153 This is the 2011 figure given personally to the consultant by NBS. 154 STB (2011) Seychelles 2012-2020 Tourism Master Plan, Beau Vallon. 155 Seychelles Civil Aviation Authority (2013) Weekly International Schedule Statistics, January 2013. Seychelles 6 Indian Ocean Islands Tourism Sector Review: Seychelles July 2013 diving, hiking/nature walks, and sightseeing tours. The most visited sites in Seychelles are Morne Seychellois National Park, which extends from coastal mangrove through forests that lead to Mahé Island’s highest peak; Vallée de Mai, a UNESCO World-Heritage protected forest on the island of Praslin that is home to the rare coco de mer palm; and the Anse Source d’Argent, a stunning white-sand beach on La Digue Island lined with naturally sculpted granite boulders. A relatively small percentage of tourists also take part in bird watching, golf, and sailing 156. ACCOMMODATIONS 15. Land-based accommodations in Seychelles offer an estimated 4,066 rooms and 8,132 beds. Roughly 59% of the beds are located on Mahé, 26% on Praslin, 8% on La Digue, and 8% on other islands. There are an additional 1,097 beds available on live-aboard yachts 157. In 2011, the average occupancy rate for accommodations was 61%, up from 57% in 2010 158. FIGURE 2: SEYCHELLES ACCOMMODATIONS AVERAGE ANNUAL OCCUPANCY RATES (2000-2011) Sources: STB (2011), NBS (2012b) 16. It is estimated that 332 accommodations are owned by Seychellois. By law, any accommodation establishments with less than 15 rooms must be locally owned while those with 16-24 rooms must be at least 20% locally owned. There are no ownership restrictions on establishments with over 25 rooms 159. CRUISE SHIPS 17. Seychelles has been deeply affected in recent years by piracy in the Indian Ocean. In 2010, only 20 ships visited the country, which represents a third of those that visited in 2004 (See Table 6). Nevertheless, more than three times as many passengers arrived on cruise ships in 2010 (15,634) than in 2004 (5,024) 160. This reflects the larger size of cruise ships making calls in Seychelles, which is also in line with global trends. 156 National Bureau of Statistics (2012c) Statistical Bulletin: Visitor Expenditure Survey (Q2 2012), Victoria. 157 STB (2011) Seychelles 2012-2020 Tourism Master Plan, Beau Vallon. 158 National Bureau of Statitics (2012b) Statistical Bulletin: Hotel Statistics (Q2 2012), Victoria. 159 STB (2011) Seychelles 2012-2020 Tourism Master Plan, Beau Vallon. 160 Ibid. Seychelles 7 Indian Ocean Islands Tourism Sector Review: Seychelles July 2013 TABLE 6: CRUISE SHIP CALLS AND NUMBERS OF PASSENGERS (2004-2011) Year Ship Calls Passengers Passengers/Ship 2004 60 5,024 84 2005 42 6,389 152 2006 40 9,527 238 2007 38 11,115 293 2008 34 14,014 412 2009 39 19,798 508 2010 20 15,634 782 Source: STB (2011) OTHER TOURISM SERVICE PROVIDERS 18. In addition to accommodations, Seychelles has a number of other businesses that cater largely or entirely to tourists: tour operators (or DMCs), dive centers, restaurants, yachting operations, ferries, car hire companies, and taxis (see Table 7 for the number of licensed operators in each of these categories). It is important to note that most of the businesses listed below are 100% owned by Seychellois, as mandated by law. The exceptions are tour operators (must be 66.66% owned by Seychellois), some yachts/dive operators (those with 4-5 boats must be at least 51% owned while there are no restrictions on those with 6 or more), and restaurants with international cuisine (can be 100% foreign owned) 161. TABLE 7: NUMBERS OF LICENCED TOURISM OPERATORS Tour Yachting Car Hire Dive Centers Restaurants Ferries Taxis Operators Operators Companies 11 18 66 32 2 134 327 Source: STB (2011) 2.3 Institutional Framework PUBLIC AND PARASTATAL INSTITUTIONS 19. Reflecting the importance of the tourism industry to Seychelles, the Ministry of Tourism and Culture (MTC) was created in March 2012. The Seychelles Tourism Board (STB) is now overseen by MTC but continues to report to its Board, which is made up of members from the public and private sectors. As of January 2013, MTC had 40 to 45 staff and an annual budget of 27.6 million SCR (US$2.5 million) while STB had about 75 staff and an annual budget of 120 million SCR (US$10.8 million). 20. The Seychelles Tourism Academy (STA) has undergone several major changes over the years since its initial establishment in 1973. In 2007, it was renamed from the Seychelles Hospitality and Tourism Training College (SHTTC) to STA, and moved from the Ministry of Education to STB. 161 Ibid. Seychelles 8 Indian Ocean Islands Tourism Sector Review: Seychelles July 2013 PRIVATE SECTOR ASSOCIATIONS 21. The Seychelles Hospitality and Tourism Association (SHTA) was created in 2002 when the Seychelles Hotel Association merged with the Seychelles Hotel and Guesthouse Association. With a combined membership of diverse tourism stakeholders under one umbrella association, the SHTA’s primary focus is to represent the industry’s interests and ensure its sustainability. SHTA has about 140 members and two full-time staff. 22. Overall, the private sector in Seychelles is closely knit. Not surprising given the small population of Seychelles, most of the main players know each other well and have frequent opportunities for dialogue. This is also reinforced institutionally. For example, SHTA is represented on the STB Board, while several hotel general managers are represented on the STA Board. 2.4 Participation in Regional Integration Initiatives 23. Seychelles is one of the more active members of the Vanilla Islands Organization (VIO) initiative, which aims to officially launch in June 2013 with the support of the European Union. The other participating members are Mauritius, Madagascar, Comoros, Mayotte, and Réunion. VIO aims to raise the profile of the region as well as encourage more multi-country visits. Some of its priority activities will be joint trade fair representation, production of print and electronic promotional materials, advocacy for better air connectivity among its members, and the promotion of cruise tourism to the region. 24. Many tourism stakeholders in the Seychelles, in particular within the public sector, are keen advocates of VIO participation. First, it is seen as a way to leverage the combined attractiveness of Indian Ocean neighbors to maximize the marketing impact through tourism platforms. Second, VIO could help further develop the cruise tourism market. Third, promotion of multi-country visits could help Seychelles attract new markets. This includes Chinese tourists, who generally prefer busy vacations in which they explore several countries within a week’s time. Nevertheless, some tourism stakeholders within the private sector have expressed skepticism on the benefits of regional integration. A particular concern is that less developed tourism destinations would benefit more from the activities of the VIO. 25. In the area of tourism and hospitality training, Seychelles already undertakes significant collaboration within the region. STA has MOUs with three tourism training institutions in Mauritius and five institutions in Réunion allowing for regular student exchanges. In contrast, air access collaboration has been more limited. Air Mauritius has stopped flying to Seychelles. Meanwhile, AS has expressed an interest in increasing its three weekly flights to Mauritius but is unable to do so under the current restrictive bilateral air service agreement. There are currently no direct flights between Seychelles and Madagascar or between Seychelles and Comoros. Given the critical role of access to the viability of tourism destinations, this is an unfortunate handicap and unnecessary constraint. Seychelles 9 Indian Ocean Islands Tourism Sector Review: Seychelles July 2013 SECTION 3 Key Issues 3.1 Policy and Planning 26. In addition to the Cabinet’s ratification of the Seychelles Tourism Master Plan: 2012-2020 (TMP), several other key policy initiatives affecting the tourism sector have been put into place in the past year. These include the introduction of the VAT system (15%) to replace GST (12%), a tourism marketing levy (0.5% of turnover), and a Corporate Social Responsibility levy 162 (0.5% of turnover). Additionally, the Seychelles Sustainable Tourism Label (STTL), a certification program for accommodation establishments, was officially launched and promoted at the 2012 World Travel Market (WTM) in London 163. PRINCIPAL CHALLENGES Lack of Specific Accommodations Growth Plan 27. The TMP expresses concern regarding overdevelopment of Seychelles due to estimates that the bed supply may double between 2011 and 2020. It cites several potential negative impacts of overdevelopment such as environmental degradation, reduction of destination attractiveness, increased social tensions over the use of limited resources, and reduction of operators’ yields due to increased price competition 164. Others include dilution of Seychelles’ exclusive brand and increased conflict over limited local labor supply. Industry members have also voiced serious concern over excessive development on the islands. Yet, while most tourism stakeholders’ ideas are aligned on this topic, there may not be complete consensus across all government agencies, including those that have influence in decisions regarding proposed new developments. 28. The lack of consensus can in part be attributed to the TMP’s absence of detail regarding how much accommodation growth should be permitted. The TMP does, however, recommend that carrying capacity studies be undertaken on the three principal islands. The Ministry of Land Use and Housing is currently conducting the study on La Digue, with Mahé and Praslin to follow. 29. Another key issue that has not been defined in the TMP is the type of accommodations growth that should be promoted. Currently, Seychelles’ accommodations offerings are concentrated in five-star hotels and local guesthouses, with few offerings in between. Some stakeholders have suggested a need for more four-star and three-star properties to help diversify the market, especially given the softened demand from traditional higher-end markets in Europe due to the global financial crisis and limited number of direct flights from Europe. 162 Collections from this levy are channeled into community activities for greater social good. 163 Seychelles Ministry of Tourism and Culture (2012) Seychelles Sustainable Tourism Label being promoted at WTM, Press release retrieved from http://www.eturbonews.com/32131/seychelles- sustainable-tourism-label-being-promoted-wtm 164 STB (2011) Seychelles 2012-2020 Tourism Master Plan, Beau Vallon. Seychelles 10 Indian Ocean Islands Tourism Sector Review: Seychelles July 2013 No Internationally Recognized Classification System 30. Accommodation establishments are licensed by STB but are not given a designation that indicates their level of quality. Most countries classify accommodation establishments using star ratings, yet such a system does not exist in Seychelles. On the STB website, accommodations are simply categorized as large hotels, small hotels/guesthouses, island resorts, spa hotels, marina hotels, budget holiday accommodations, luxury villas, and self-catering 165. 31. Classification systems carry various advantages. First, those aligned with international standards provide tourists with a more accurate sense of the level of accommodations being offered. This can help prevent disappointment or even claims of being misled by promotional materials. Second, it provides an incentive to accommodation owners to adhere to the system of standards upon which the classification system is based. In the case of current accommodations, a new system could stimulate key upgrades while in the case of new accommodation, the new system could help guide building design. Absence of Cruise Tourism Strategy 32. The TMP indicates that the lack of a strategy for cruise ship tourism represents one of the country’s principal tourism policy gaps. Cruise tourism was deeply affected by piracy in recent years and therefore has not been high on the government’s policy agenda. Yet, as the stability improves in Somalia and pirate attacks decrease, cruise tourism is starting to be revisited as a growth opportunity. 33. Cruise tourism can provide significant economic benefits. Not only do cruise ships pay port fees (estimated at around US$2,500 for a 2,000-person ship) 166, but cruise passengers pay a per head tax and may spend many times that amount on shopping, eating, and entertainment. In order to attract more cruise ships to call in Seychelles, a comprehensive review and strategic development plan is needed. It should discuss possible itineraries and homeports 167 as well as gaps in port and tourism infrastructure. There is also a need to have a comprehensive environmental plan. Cruise tourism, if not properly regulated, can have a highly adverse environmental impact--especially in pristine waters such as those that surround the Seychelles. 3.2 Human Resource Development 34. Jobs in the tourism sector are reasonably attractive for locals as they pay relatively well and provide opportunities for international exposure. Women and youth are generally well-represented in the Seychelles’ tourism sector. However, due to the small labor pool and long hours of hospitality jobs, turnover is high, service quality is uneven and it is rare to find locals in management-level positions in foreign-owned tourism businesses. 35. An important step towards addressing tourism sector capacity gaps was taken in 2007 with the creation of Seychelles Tourism Academy (STA). A highly experienced principal, recruited by the 165 STB (2013) Accommodations, http://www.seychelles.travel/en/plan_your_visit/accommodation.php 166 Hampton, M. and Jeyacheya, J. (2012) Tourism and Inclusive Growth in Small Island Developing States, Study prepared for the World Bank by the Center for Tourism in Islands and Coastal Areas (University of Kent), July 2012. 167 Homeports are the starting and ending points of the cruise. Seychelles 11 Indian Ocean Islands Tourism Sector Review: Seychelles July 2013 President of Seychelles, has assembled a talented staff and created a curriculum that meets both international standards and the local demands of the industry. State-of-the-art facilities, most still in the construction phase and targeted to be completed in 2013/4, include a 30-room (three-star) hotel, one luxury villa, a wellness and spa center, conference facilities, a restaurant, a bar/lounge, a language laboratory, several computer laboratories, training blocks, and dormitories for foreign students. 36. Through the establishment of close partnerships with international training institutions in Mauritius and Réunion, STA is able to pursue additional opportunities for in-class training and work attachments, both for staff and students. A partnership with the Shannon College of Hotel Management (SCHM) also allows STA’s Bachelors of Hotel Management students to complete their fourth year of the program in Ireland, giving them international exposure and recognition 168. This is starting to help fill major management gaps that are now most often filled by hiring expatriates. PRINCIPAL CHALLENGES Business Often Unable to Find Sufficient Number of Qualified Seychellois Employees 37. Most hospitality and tourism businesses would prefer to have a higher percentage of Seychellois on their staff. Perhaps most critically, the cost of hiring Seychellois is lower than hiring expatriates. Also Seychellois tend to have a very welcoming disposition and are in a better position to impart local knowledge to visitors. Yet, the local human resource pool is limited by several factors. First, is the small size of the Seychellois population (roughly 90,000). Second, many Seychellois simply are not interested in working in the industry. Two of the most commonly cited reasons are the undesirable working hours (night shifts, weekends, and holidays) and the low prestige that such work carries. 38. Until recently a third factor has been training limitations. Yet, this has been largely addressed by the emergence of STA, which currently has 680 students enrolled and plans to expand to nearly 1,000 students within the next several years. Yet one major challenge for STA, and the industry at large, is that many graduates do not enter into the hospitality and tourism industry. A 2012 World Bank study on tourism in Small Island Development States estimated that 85% move to other industries 169. STA officials, however, say the figure has been dropping in light of increasing wages for Seychellois. Growing Supply of Hotels is Creating More Challenging Conditions for Businesses 39. As described in the Policy and Planning section of this review, the stock of hotel rooms is rapidly expanding in Seychelles. With a staff to room ratio estimated to be as high as 3-1 in high-end hotels, labor demands of new properties are very high 170. Inevitably, properties poach from one another. This contributes to high turnover rates, creating a strain on managers to find qualified new personnel and quickly train them. Service quality often suffers in the process while labor costs tend to increase. Additionally, such practices can create conflict among properties. 168 Seychelles Tourism Academy (2012) Affiliations, http://www.seychellestourismacademy.edu.sc/index.php?option=com_content&view=article&id=65&Itemid=60 169 Hampton, M. and Jeyacheya, J. (2012) Tourism and Inclusive Growth in Small Island Developing States, Study prepared for the World Bank by the Center for Tourism in Islands and Coastal Areas (University of Kent), July 2012. 170 STB (2011) Seychelles 2012-2020 Tourism Master Plan, Beau Vallon. Seychelles 12 Indian Ocean Islands Tourism Sector Review: Seychelles July 2013 Low Service Quality Levels among Businesses that do not Employ Trained Workers 40. Most of the larger, more high-end hotels recognize that their competitiveness depends upon having highly qualified labor capable of consistent quality services delivery, whether Seychellois or expatriate. Yet, many of the smaller guesthouses and self-catering facilities either do not value having a trained workforce or cannot afford to pay such high wages. Combined with limited in- house training capacity and the common practice of hiring family members, the service level of many such establishments is not commensurate with prices charged. Some of the larger properties feel that this may tarnish the image of the country overall and dilute its vaunted brand. 3.3 Access 41. Air connectivity is improving, particularly through upcoming frequency increases and the addition of two new routes. In March 2013, Air Seychelles will increase flights to both Johannesburg and Mauritius from two to three per week. AS has also launched a new route to Hong Kong in March--it now flies three times per week through Abu Dhabi. Additionally, an agreement with Turkish Airlines was recently signed that plans for three weekly flights from Istanbul. PRINCIPAL CHALLENGES Lack of Direct Connections with Europe 42. The recent discontinuation of AS’s direct flights from key European source markets is seen by some private sector operators as a major constraint. Many, however, recognize that the move was inevitable given the airline’s financial situation and the strategy of Etihad Airways to bring traffic through its Abu Dhabi hub. Figures from 2012 point towards the significant effect that the loss of direct flights had on arrivals from France, and UK and Ireland (see Table 3). The best numbers in Europe were achieved by Germany, which is currently the only country on the continent that has direct flights with Seychelles. The positive relationship of direct flight availability and arrivals volume from such source markets is noted by destinations around the globe. Limited Intra-Regional Air Connectivity 43. Currently, the only flights from Seychelles to other Indian Ocean islands are Mauritius- Seychelles on AS (increasing to three flights weekly) and Réunion-Seychelles on Air Austral (twice weekly). There are currently no flights that directly connect Seychelles with Madagascar or Comoros. This very much limits intra-regional tourism, both for residents as well as international tourists that may wish to travel to two or more Indian Ocean destinations during their vacation. 3.4 Marketing 44. Seychelles has established an impressive marketing apparatus that has helped drive strong performance amidst the highly competitive global conditions of recent years. STB has set up offices in France (Paris), China (Beijing), Germany (Frankfurt), Italy (Rome), UAE (Dubai), Spain (Madrid), South Africa (Cape Town), UK (London), and Korea (Seoul). It has also contracted representation in markets such as Russia and Brazil. In 2012, STB attended 16 tourism trade fairs in all key markets 171. Seychelles has also been highly successful in generating worldwide press coverage by mounting an aggressive public 171 STB (2012a) Seychelles Global Strategy Presentation 2013, Unpublished presentation delivered to stakeholders, December 2012. Seychelles 13 Indian Ocean Islands Tourism Sector Review: Seychelles July 2013 relations effort, organizing familiarization trips for foreign journalists, and hosting an ever-expanding list of high-profile events 172. Strong efforts in terms of market research, travel trade outreach, and promotional material development have also contributed to the Seychelles’ strong growth of 7% in international arrivals in 2012 173. 45. Through the new tourism marketing levy, STB estimates that it will receive an additional 30 million SCR (US$2.7 million) to add to its current budget of 120 million SCR (US$10.8 million). The new funding mechanism has been created with the understanding that STB will need to broaden its efforts in order to improve occupancy rates as the bed supply continues to rise. PRINCIPAL CHALLENGES Significant Drop amongst Traditionally Strongest Source Markets 46. International arrivals figures from 2012 show declines in what were the country’s first, second, and fourth most important source markets in 2011: France, Italy, and the UK and Ireland, respectively (see Table 3). Most alarmingly, French arrivals dropped by 18.4% while arrivals from the UK and Ireland fell 16.8% 174. These declines have been attributed to two principal factors. The first is the ongoing economic crisis that has battered Europe in recent years. The second is the loss of direct flights to these countries. Low Percentage of Repeat Visitors 47. A 2010 Tourism Value Chain study estimates repeat visits at 10-15% 175. This compares unfavorably with many other tourism destinations. For example, the corresponding figure for Mauritius is 38% 176. Repeat visitation is extremely important for destinations, as it is generally accepted within the tourism industry that attracting new tourists requires large sums of marketing money 177 while little or no money is spent to secure repeat visitors. 3.5 Product Development 48. Product diversification is important for attracting more market segments, stimulating repeat visitation, lengthening stays, and encouraging more spending. A number of Seychelles tourism stakeholders have expressed interest in bolstering heritage tourism products. With this in mind, STB and MTC are planning to support the creation of an Aldabra Atoll Visitor Centre in Mahé 178 and also help 172 The major events held in 2012 included the Eco Friendly Marathon, Carnival International de Victoria, SUBIOs, Kreol Festival, and Fet Afrik 173 National Bureau of Statistics (2012a) Seychelles 2012 Tourism Statistics, Victoria. 174 ibid 175 McEwen, D. and Bennett, O. (2010) Seychelles Tourism Value Chain Analysis, Study for STB commissioned by the Commonwealth Secretariat, October 2010. 176 The World Bank (2012a) Indian Ocean Islands Tourism Sector Review: Mauritius and Comoros, Unpublished report forming part of Regional Tourism Integration Study, August 2012. 177 To create a rough estimate of the marketing cost per tourist attracted, we could take STB’s 2012 budget of 120 million SCR (roughly US$10 million) and divide by the approximately 200,000 tourists attracted. That produces a figure of $50 for every visitor and does not even take into account the large sums invested in marketing by the private sector. 178 Thome, W. (2012b) “SIF Announces Plans for Aldabra House”, Blog posting, 12/18/2013, http://wolfganghthome.wordpress.com/2012/12/18/sif-announces-plans-for-aldabra-house/ Seychelles 14 Indian Ocean Islands Tourism Sector Review: Seychelles July 2013 upgrade the Mission Lodge in hopes of it joining Al Aldabra on the UNESCO World Heritage List 179. MTC is also interested in attracting investors to build new attractions such as an aquarium, underwater restaurant, and floating restaurant. PRINCIPAL CHALLENGES Limited Products to Encourage Tourism Expenditures and Increase Local Impact 49. Tourism can have an important economic impact on destinations when visitors spend money on local accommodations, sightseeing, shopping, food, transport, and entertainment. In Seychelles today, the majority of tourist expenditures go to accommodations (69.0%), which are predominantly foreign owned. Much less is spent in areas reserved for local businesses. Only 1.2% of the tourist expenditures go to taxis, 5.8% for organized excursions, 1.4% for boat fares, and 3.7% for souvenirs 180. This reflects the limited number of product options for tourists. The lack of local spending is one of the causes of such a high leakage factor, as discussed earlier in the “Contribution to the Economy” section. This leakage is further exacerbated by what appears to be limited financing options for local SMEs, with interest rates starting at 14%. Limited Range and Scale of Products Catering to Cruise Tourists 50. Cruise tourists can spend significant sums of money in destinations, if given interesting options for sightseeing, shopping, food, entertainment, and other activities. Research from the Caribbean indicates that they, in fact, spend more on heritage activities than land-based tourists 181. Currently, however, there are a limited number of shopping and entertainment opportunities that are easily accessible from the port in Victoria, and few that would be able to cater to an influx of a few hundred to even a thousand cruise tourists arriving at a destination at the same time. 179 Seychelles Ministry of Tourism and Culture (2012) Seychelles Tourism Companies Will Stand Behind the Re- development of Mission Lode Slave Ruins at Sans Soucis on Mahé as Bid for UNESCO is Prepared, Press release retrieved from http://www.forimmediaterelease.net/pm/8262.html 180 McEwen, D. and Bennett, O. (2010) Seychelles Tourism Value Chain Analysis, Study for STB commissioned by the Commonwealth Secretariat, October 2010. 181 Hampton, M. and Jeyacheya, J. (2012) Tourism and Inclusive Growth in Small Island Developing States, Study prepared for the World Bank by the Center for Tourism in Islands and Coastal Areas (University of Kent), July 2012. Seychelles 15 Indian Ocean Islands Tourism Sector Review: Seychelles July 2013 SECTION 4 Recommendations182 TABLE 8: SHORT, MEDIUM AND LONG-TERM RECOMMENDATIONS Policy Area Short-Term Medium-Term Long-Term Policy and • Build commitment, enable • Develop a new national tourism Planning improved communication strategy including a revised growth and assure coordination plan between the public and • Prepare and implement a private sectors comprehensive and integrated physical and environmental plan • Create a cruise tourism development plan Human Resource • Explore options to retain • Increase support for public Development skilled workers funded TTI’s Access • Solve air access: develop a • Pursue opportunities to revised air strategy and operating improve intra-regional model connectivity Marketing • Conduct detailed market research • Develop a marketing and on current and potential source promotion plan for specific markets markets and tourism products Product • Explore additional tourism Development products 4.1 Policy and Planning SHORT-TERM Define and Implement Caps on the Amount and type of Accommodations Growth 51. The MTC should develop an unambiguous accommodations development plan that addresses not only the amount of acceptable growth, but also itemizes and prioritizes the types of accommodations. More specifically, the development plan should include the following: • Number of new establishments and rooms that may be built per year on each island • Range of number of type of rooms that should be built within the various accommodations categories (i.e. five-star hotels, guesthouses, etc) • Specific areas where no new development should be allowed • Ceilings on number of rooms per establishment 182 Recommendations are divided into three categories: short term, medium term, and long term. Short term initiatives are recommended to begin implementation should begin within the next year. Medium term initiatives are those whose implementation should begin between one and two years from the current date. Long term initiatives are those that would likely commence after two years, although earlier implementation should not be precluded. Seychelles 16 Indian Ocean Islands Tourism Sector Review: Seychelles July 2013 • Specific environmental and or aesthetic criteria not already incorporated into the EIA and licensing process 52. Throughout the development of the plan, MTC should hold a series of tourism stakeholder events in order to form consensus around the plan’s provisions. Decisions must be carefully weighed, trying to find a balance between interests in boosting occupancy rates and yields of current properties, generating more employment and tax revenues from new properties, and protecting Seychelles’ exclusive brand. Environmental and social concerns must also be heavily considered. The accommodations plan should be endorsed beyond MTC, ideally at the Cabinet or Parliament- level, to ensure that there is buy-in at higher levels of the government. 53. In examining the amount of acceptable growth, it may be useful to compare Seychelles’ level of accommodation development with that of what many consider to be its two closest competitors: Mauritius and Maldives. Both have more than four times as many international arrivals and over three times as many hotel rooms (see Table 8). Yet before racing to catch up with them, Seychelles should take into consideration several factors. Mauritius has a population nearly fifteen times larger than that of Seychelles, has an area more than four times that of Seychelles, and is considered by some to have lost its competitive advantage in the higher-end market due to overdevelopment in recent years. Maldives has more than four times the population of Seychelles but more importantly, has had the luxury of being able to promote largely independent accommodation developments given that it has over 1,000 individual islands 183. TABLE 9: INDIAN OCEAN ISLAND HOTEL GROWTH FACTORS Factors Seychelles Mauritius Maldives Population 90,024 1,313,095 394,451 Size (km²) 455 2,030 298 Coastline (km) 491 117 644 Islands 115 6 1137 Hotel rooms (2011) 8,132 24,698 26,401 Tourism arrivals (2011) 194,476 964,642 931,000 Sources: Hampton, M. and Jeyacheya, J. (2012); Maldives Ministry of Tourism, Arts, and Culture (2012); NBS (2012a); STB (2011); The World Bank (2012a) Create a Cruise Ship Tourism Strategy 54. Given the significant economic impact that cruise tourism may bring to regions, Seychelles should work with other members of the VIO to explore how to take advantage of this growing market. Similar to what has been done by the South Pacific Tourism Organization (SPTO) 184, it would be highly recommended to create an Indian Ocean Cruise Tourism Development Strategy. It should include suggestions on potential itineraries (with possible homeports), existing port and 183 Hampton, M. and Jeyacheya, J. (2012) Tourism and Inclusive Growth in Small Island Developing States, Study prepared for the World Bank by the Center for Tourism in Islands and Coastal Areas (University of Kent), July 2012. 184 South Pacific Tourism Organization (2007) South Pacific Cruise Shipping Development Strategy, Study commissioned and sponsored by ProInvest, December 2007. Seychelles 17 Indian Ocean Islands Tourism Sector Review: Seychelles July 2013 tourism infrastructure development, environmental and social impact mitigation, increasing linkages with local businesses, and marketing of the region to cruise ship operators. MEDIUM-TERM Create National Classification System, Perhaps as Part of Regional Initiative 55. MTC has indicated that the creation of a classification system is one of its top priorities for the next few years. Such a system should help guide tourists when selecting accommodations while providing incentives for improvement to the industry. Given the wide range of accommodations in Seychelles, it will be critical to create a comprehensive system that goes beyond a standard star-rating system for hotels. It should also include categories that incorporate smaller properties, including those that refer to themselves as “boutique hotel”, “guesthouse”, “inn”, “villas”, “resort”, “residences”, “chalets”, “bungalows”, “holiday apartments”, and “self-catering” 185. 56. The classification system should be based on internationally recognized standards, but also reflect the specific context in which they are operating. While finding a balance between these objectives can be challenging, a good solution could be to create a regional classification system. In the case of the Indian Ocean islands, this could work well given that the destinations operate within a fairly similar context. A regional classification system would help instill confidence among travel agents and tourists and tour operators who could then easily compare accommodations across the region. Such a system is now being implemented across the East African Community (EAC). A common set of standards has been agreed upon and graders from all five Member States have now been trained 186. 4.2 Human Resource Development MEDIUM-TERM Provide Training to Those Already Working in the Industry 57. Having a highly qualified workforce involves both training future workers as well as those already in the industry. While STA is doing a commendable job of training future workers, there have been few efforts to build the capacity of current hospitality and tourism workers. Many of the larger hotels and more established tourism businesses have workers that have been trained by formal institutions, experienced in-house trainers, or both. Yet many workers in smaller establishments have typically not had such opportunities. 58. It has been suggested that small establishments may not be willing to provide time for workers to attend training courses, even if offered at no cost. However, some businesses have indicated that they would indeed value such courses if they were relatively short and flexible in their delivery schedule. For example, a three-day customer service course might be delivered partially over the weekend or one day per week for three successive weeks. To identify which courses to offer, a basic skills and knowledge gap analysis should be conducted. To deliver the courses, some of STA’s more than 50 lecturers could be utilized—particularly between semesters. In some cases, industry professionals may also be called upon to deliver short courses. 185 STB (2013) Accommodations, http://www.seychelles.travel/en/plan_your_visit/accommodation.php 186 There are still a number of regional integration initiatives upon which EAC members have not agreed. Yet, given the clear benefits of a unified classification system, this was one of the first initiatives to be implemented. Seychelles 18 Indian Ocean Islands Tourism Sector Review: Seychelles July 2013 59. While flexible timing and demand-based course selection should help arouse interest among small business owners, additional incentives for workers (and even owners) to attend courses could be created. One possibility could be to include worker training among criteria used for accommodation classification schemes. Similarly, it can be included among criteria for being promoted by STB under the Seychelles Secrets brand. 4.3 Access MEDIUM-TERM Explore Opportunities for Direct Flights to Paris 60. There appears to be two possibilities for a new Paris-Seychelles route. The first would be for Air Austral, which flies between La Réunion and Paris twice daily, to route through Seychelles for a few of those flights. Such an arrangement was nearly put in place before AS entered into partnership with Etihad. There is optimism among some tourism stakeholders that discussions could be resurrected. Second, France’s XL Airways is said to have expressed initial interest in flying the Paris-Seychelles route. This possibility should also be pursued vigorously. LONG-TERM Pursue Opportunities to Improve Intra-Regional Air Connectivity 61. Seychelles has unsuccessfully sought permission to operate daily flights to Mauritius, which would be able to operate an equal number of flights under the proposed agreement. The Indian Ocean Commission (COI), which has a stated interest in facilitating intra-regional travel, could help facilitate an agreement on the matter. Additionally, the idea of encouraging the formation of a regional low-cost air carrier has been suggested. Support for such an endeavor should be critically assessed, given the potential benefits for participating countries. 4.4 Marketing SHORT-TERM Continue Efforts to Diversify Source Markets 62. Seychelles’ tourism growth of 7% in the face of major declines in its traditional source markets is largely attributed to its strong outreach in emerging markets. Several of these markets are worth discussing in more detail. In 2012, the source market that saw the largest increase in arrivals (from 8,840 to 13,494) was Russia 187. Russian tourism arrival figures from the close competitors to Mauritius and Maldives confirm the strong growth potential of the market 188. In Mauritius, Russian arrivals in 2011 were 12,224, nearly double the figure from 2010. In Maldives, 2011 Russian arrivals increased to 63,936 after average annual growth of 26% over the last five years 189. 63. The number of Chinese visitors to Seychelles in 2012 grew a staggering 110.7%, but from a low 2011 baseline figure of 2,124 190. Upon examining statistics from Mauritius and Maldives, it is 187 National Bureau of Statistics (2012a) Seychelles 2012 Tourism Statistics, Victoria. 188 2012 international arrival figures are not yet available for Mauritius and Maldives 189 The World Bank (2012a) Indian Ocean Islands Tourism Sector Review: Mauritius and Comoros, Unpublished report forming part of Regional Tourism Integration Study, August 2012. 190 National Bureau of Statistics (2012a) Seychelles 2012 Tourism Statistics, Victoria. Seychelles 19 Indian Ocean Islands Tourism Sector Review: Seychelles July 2013 clear that the Chinese market is far from reaching its potential in Seychelles. In 2011, the 15,133 Chinese tourists that visited Mauritius represented year-on-year growth of 98.9% 191. In Maldives, China became the country’s largest source market in 2010. In 2011, it sent 198,655 tourists to the island nation 192. Not surprisingly, STB is planning to open an office in Shanghai 193 in the near future. 64. Other markets that appear to have strong growth potential are the large and growing expatriate communities in Africa and the Middle East. These markets can easily reach Seychelles with direct flights of less than five hours from Johannesburg, Nairobi, Addis Ababa, Dubai, Abu Dhabi, and Doha. In the case of Africa, little marketing has been done and potential visitors are likely deterred by the perception of high prices. Special packages could be created to entice them to visit, especially during low or shoulder season MEDIUM-TERM Create New Initiatives to Increase Repeat Visits 65. To address the low repeat visitation rates, STB has indicated an interest in creating a destination loyalty program. The idea gained support from the private sector during a marketing strategy meeting in December 2012. While details have not been elaborated, one proposed element is the creation of a “Seychelles Pass” through which points can be earned by spending money on transportation, attractions, and accommodations 194. 66. Such a loyalty program could provide its members with both prestige and cost savings. Prestige could come through preferential tickets to shows and festivals such as Carnival, hotel and airline upgrades (in partnership with Air Seychelles and the private sector), a special members-only event, and branded materials (such as luggage tags and apparel). Costs savings could apply to a wide range of products and services in Seychelles. 67. Repeat visitation could also be increased by offering special low or shoulder-season packages for select markets. These could include cruise passengers (who are only able to get a quick taste of the island), business tourists (who may have limited time to see the islands during their visit), and those who have come for special events. It could also apply to the many tourists who come for weddings or honeymoons. This market tends to be more price-sensitive and would need some inducement to make a return trip for anniversaries or a “second honeymoon”. In order to create the cost-saving packages, close private sector collaboration would be needed. Undertake Joint Marketing of the Region 68. All countries in the region would greatly benefit from more prominent positioning of the Indian Ocean islands in the global tourism market. Fortunately, a mechanism to promote the region has been created in the form of VIO. Applying lessons learned and best practices from the Caribbean and South Pacific Islands, VIO should be able to help raise the profile of its members’ tourism 191 The World Bank (2012a) Indian Ocean Islands Tourism Sector Review: Mauritius and Comoros, Unpublished report forming part of Regional Tourism Integration Study, August 2012. 192 Maldives Ministry of Tourism, Arts, and Culture (2012) Tourism Yearbook 2012, Male. 193 STB already has an office in Beijing. 194 STB (2012a) Seychelles Global Strategy Presentation 2013, Unpublished presentation delivered to stakeholders, December 2012. Seychelles 20 Indian Ocean Islands Tourism Sector Review: Seychelles July 2013 offerings and increase the overall size of the region’s global market share. Additionally, VIO can promote packages through which visitors would visit two or more of the regions’ islands. This effort would be aided by better and less expensive air connectivity within the region and could also see a boost from more political stability in Madagascar. 4.5 Product Development and Enhancement SHORT-TERM Explore Avenues to Increase Local Participation in the Tourism Industry 69. The limited local integration into the tourism value chain is widely acknowledged, yet efforts to address the issue have been limited. Several tourism stakeholders indicated that the problem is not necessarily the quality of tourism product, but the lack of a fully-controlled supply chain. One example is the lack of refrigerated trucks for the delivery of perishable goods. Another important issue is the lack of financing options for local SMEs that want to expand into tourism. Further study is needed to determine whether existing bottlenecks could feasibly be removed so as to increase the local impact of tourism businesses. MEDIUM-TERM Create Opportunities and Incentives for Tourists to Support Local Businesses 70. The value chain analysis 195 offered several interesting proposals for stimulating local spending. For example, the “Soutien aux Seychelles” (or “Support Seychelles”) program provides recognition and promotion of hotels and restaurants that use local produce. Additionally, a loyalty program could provide rewards for buying locally. Another approach to capture local business offerings would be to launch a registry website that allows wedding guests to pre-purchase boat trips, excursions, meals, and other local products for those who will be coming to Seychelles for their honeymoon. 71. Finally, MTC has indicated that it will be building an esplanade in Victoria to accommodate cruise ship tourists that visit Seychelles. This provides an ideal opportunity for local businesses to take advantage of this lucrative market. It will also allow tourists to have friendly interactions with Seychellois and encourage return visits. 195 McEwen, D. and Bennett, O. (2010) Seychelles Tourism Value Chain Analysis, Study for STB commissioned by the Commonwealth Secretariat, October 2010. Seychelles 21 Indian Ocean Islands Tourism Sector Review: Seychelles July 2013 SECTION 5 Conclusions 72. Seychelles is widely hailed as a tourism success story. The country has been particularly effective in creating a policy framework that is both business and environment-friendly, nurturing a strong public- private partnership, attracting press attention through annual events, establishing a market-driven training academy, and diversifying its source markets. 73. Yet no country can be complacent in today’s ultra-competitive tourism marketplace. Seychelles must continue to innovate in its efforts to attract tourists within the shifting landscape of global markets. It must also work harder to convince tourists to return. To achieve this, it must constantly work to improve the tourist experience. This will include encouraging the creation of new tourism products and ensuring that tourism stakeholders provide the level of service expected of a world-class destination. It is also critical to create more opportunities for Seychellois to become integrated into the sector, which deepens the tourist’s experience while ensuring more money stays in the local economy. 74. Marketing efforts will continue to play an important role in Seychelles’ success. In some cases, such efforts should be aimed at markets best reached through regional cooperation. Joint promotional efforts, particularly in emerging markets, can be done in a cost-effective manner through VIO. Cruise tourism also has significant room for growth, but potential will only be realized through strategic improvements across the region. Also, multi-country packages can be an important mechanism to attract new markets, but will require improved air connections among Indian Ocean countries. 75. None of the recommendations mentioned above is as important as ensuring the protection of the natural resources that have made Seychelles such a highly desirable destination. Hence, policy decisions which the Seychelles will soon make about the growth of the industry are far reaching and crucial. In essence, Seychelles must decide at which point positive impacts of growth cease to outweigh negative impacts such as environmental degradation, diminished aesthetic appeal, local labor force saturation, reduced returns to businesses, and decreased levels of satisfaction among Seychellois. Seychelles 22 Indian Ocean Islands Tourism Sector Review: Seychelles July 2013 Annexes Annex 1: Summary of Principal Challenges and Recommendations Principal Challenges Recommendations Policy and Planning • Lack of specific accommodations growth plan High Priority • No internationally recognized classification • Define and implement caps on amount and type system of accommodations growth • Absence of cruise tourism strategy • Create cruise ship tourism strategy Medium Priority • Create national classification system, perhaps as part of regional initiative Human Resource Development • Businesses often unable to find sufficient Medium Priority number of qualified Seychellois employees • Provide training to those already working in the • Growing supply of hotels is creating more industry challenging conditions for businesses • Low service quality levels among businesses that do not employ trained workers Access • Lack of direct connections with Europe High Priority • Limited intra-regional air connectivity • Pursue opportunities to improve intra-regional air connectivity Medium Priority • Explore Opportunities for Direct Flight to Paris Marketing • Significant drop amongst traditionally High Priority strongest source markets • Continue efforts to diversify source markets • Low percentage of repeat visitors • Undertake joint marketing of the region Medium Priority • Create new initiatives to increase repeat visits Product Development and Enhancement • Limited products to encourage tourism High Priority expenditures and increase local impact • Explore avenues to increase local participation in • Limited range and scale of products catering tourism industry to cruise tourists • Create opportunities and incentives for tourists to support local businesses Seychelles 23 Indian Ocean Islands Tourism Sector Review: Seychelles July 2013 Annex 2: List of Stakeholders Consulted Name Position Organization Public Sector HE Alain St. Ange Minister Ministry of Tourism and Culture Ms. Raymonde Onezime Special Advisor Ministry of Tourism and Culture Mr. Bertrand Belle Permanent Secretary for Economic Ministry of Finance Policy and Planning Ms. Elizabeth Charles Director General-External Finance Ministry of Finance Management Ms. Elsia Grandcourt CEO Seychelles Tourism Board Ms. Laura Ah-Time CEO National Bureau of Statistics Mr. Michel Mellie Principal Statistician National Bureau of Statistics Mr. Gilbert Faure CEO Seychelles Civil Aviation Authority Ms. Florence Marengo Senior Air Transport Officer Seychelles Civil Aviation Authority Mr. Robert Denousse Director Operations Seychelles Investment Board Mr. Flavien Joubert Principal Seychelles Tourism Academy Ms. Ginny Elizabeth Forecasting & Analysis Branch Ministry of Finance Economist Ms. Penny Belmont CEO Small Business Financial Agency HE Joel Morgan Minister Ministry of Home Affairs and Transport Mr. Raymond St. Ange Security Consultant Ministry of Home Affairs and Transport Private Sector Mrs. Germaine Michaud Secretary General Seychelles Chamber of Commerce and Industry Ms. Daniella Payet Alis Board Member Seychelles Hospitality & Tourism Association Ms. Louise Ah-Koon Administrative Manager Seychelles Hospitality & Tourism Association Mr. Cyril Coco Managing Director Cat Coco Mr. Marc Schumacher General Manager Hilton Northolme Mr. Ken Choo General Manager Berjaya Beau Vallon Bay Mr. Cramer Ball CEO Air Seychelles Mr. Alan Renaud General Manager Corporate Affairs Air Seychelles Mr. Peter Smith Director of Sales & Marketing Eden Island Mr. Jean-Marc Michel General Manager Kempinsky Hotel Ms. Cecile Howardson General Manager Hotel Chez Maston (La Digue) Seychelles 24 Indian Ocean Islands Tourism Sector Review: Seychelles July 2013 References Hampton, M. and Jeyacheya, J. 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