One Of The Latest Buzzwords Tourism Essay

One of the latest buzzwords that have come into general usage in the world of tourism is that of “Integrated Resorts”. Over the last two decades, a number of large tourist integrated resorts have been developed around the world, many of which have become highly popular holiday destinations. The growth in tourism generated by these integrated resorts has brought significant economic and social benefits to their respective countries, including increased foreign exchange earnings, direct and indirect employment. In addition, the resorts’ development has stimulated local and regional development, encouraging new local industries and international trade. The success of these integrated resorts can be largely attributed to the adoption of an integrated approach to their development, caretirl planning and implementation that took into consideration regional environmental, economic and socio-cultural factors. This kind of approach helps minimise environmental, socio-economic and marketing problems often associated with uncontrolled tourism development.

The development of integrated resorts has grown rapidly over the last two decades also as a reaction to the proliferation of unplanned beach resorts. On the supply side, many governments have increasingly turned to integrated resort developments in an attempt to improve the well-being of the local population by generating iobs and increasing income, and private investors have seen integrated resorts as a way to maximise their profits, while on the demand side, statistics are not available on the relative proportion of tourist demand for integrated resorts.

In the context of globalisation and widening international tourist markets, it is acknowledged that integrated resorts offer great opportunities to visitors for leisure, recreation and sports, but due to the difficulty in assessing the impacts that may result from the construction of an integrated resort, as plans for integrated resorts are developed by consultancy iiirms and private investors that rarely publish or divulge their ‘secrets’ before resort operation, most research has been conducted only after the construction of integrated resorts.

The notion of integrated resorts came into plrominence in Mauritius after the successful approval ofthe environmental impact assessment report and construction of Tamarina Golf, Spa and Beach Club that is the first integrated resort in Mauritius.

1.1 Tourism Industrv in Mauritius

Mauritius has considerable natural advantages as a holiday destination such as beautiful coral beaches, warm clear lagoons, colouriixl reefs, picturesque mountains, a subtropical climate, a southern hemisphere location, an atmosphere that is exotically different, yet safe and stable, and people who are friendly and welcoming. These Advantages have been exploited with attractive well run hotels with good amenities, direct and reliable air services, efficient supporting infrastructure and effective marketing as an up-market quality destination. It is therefore hardly surprising that tourist arrivals have been rising by more than 8 percent a year and the tourism industry has become one of the most dynamic sectors of the economy, accounting for 19 per cent of gross export earnings and providing employment directly and indirectly for about 50,000 people.

However, there are problems. Average spending per visitor has not been going up as fast as hoped, and there have been some signs of adverse reactions at tourist numbers and behaviour. Infrastructure constraints have developed in the form of congestion at peak times at the airport and inadequate efiluent treatment leading to deterioration in water quality in some of the lagoons_ In the longer term, there will be more general environmental constraints, in the form of limits to the capacity for absorbing ever increasing numbers of visitors in a small densely populated country with a finite length of beaches and a sensitive coastal ecology. It will be necessary in fixture to place a ceiling on the number of tourists in order to protect the environment and, indeed, the fixture of the tourism industry itself Mauritius has been very successful in attracting foreign direct investment (FDI) in the 197O’s. However there has been a decline in the growth of FDI since the mid-19S0’s, particularly in the manufacturing sector. However, FDI growth has started to pick up again since 2005, led by the tourism sector, particularly the Integrated Resort Scheme as illustrated below.

Foreign Direct Investment by Sector, 2003-2007

2003 2004 2005 2006 2007

(USD million)

Export Processing Zone 2.7 8.7 3.6 2.8 2.2

Tourism 3.4 4.2 18.2 83.0 144.0

Banking 46.0 10.9 15.4 111.0 70.0

Telecommunications 0 1.3 5 _ 9 1 .4 0. 5

Other 16.8 37.8 52.0 30.7 64.3

Total 68.9 62.9 95.1 228.9 281.0

As illustrated above, tourism has proved to be a credible alternative source of foreign currency earnings. However the country will not be able to cope with a policy of mass tourism which is unsustainable. Also the characteristic of the country, which is a Small Island Developing States (SIDS) facing special disadvantages associated with small size, insularity, remoteness and proneness to natural disasters, limits the prospect of tourism development.

Hence since the economy of the country is highly vulnerable and the totnism industry having reached its carrying capacity, therefore sustainable tourism development is very instrumental. Mauritius has therefore resorted to the rejuvenation of its tourism life cycle, as this is nearing or has reached the stagnation stage, through the development of an alternative luxurious product known as ‘Integrated Resort’, as illustrated below.

This good mix of tourism and real estate development has been high on government’sagenda and has led to government’s intervention in the tourism sector with the twin objective of tourism rejuvenation and FDI increase.

1.2 Aims of study

The development of the tourism industry in Mauritius has been considered as an important economic diversification tool for the nation. Realizing the importance of the tourism industry in the economic development of Mauritius, government has initiated the Integrated Resort Scheme. Therefore the aim of this dissertation is primarily to conduct an investigation regarding development and impacts of integrated resort in Mauritius.

1.3 Objectives of study

This study purports to investigate the anticipated and current socio-economic and environmental impacts of integrated resorts in the Mauritian context. In particular, this study will aim to achieve the following objectives:

To investigate the context of integrated resort development and its aims and objectives in the development of Mauritius tourism.

To know the criticisms about the initiation of integrated resort in Mauritius.

To determine the positive impact of integrated resort in terms of society, economy and environment of Mauritius.

To know the negative impact of integrated resorts in terms of society, economy and environment of Mauritius.

To recommend guidelines for sustainable integrated resort development and minimizing negative impacts of integrated resort development.

This good mix of tourism and real estate development has been high on government’sagenda and has led to government’s intervention in the tourism sector with the twin objective of tourism rejuvenation and FDI increase.

1.2 Aims of study

The development of the tourism industry in Mauritius has been considered as an important economic diversification tool for the nation. Realizing the importance of the tourism industry in the economic development of Mauritius, government has initiated the Integrated Resort Scheme. Therefore the aim of this dissertation is primarily to conduct an investigation regarding development and impacts of integrated resort in Mauritius.

1.3 Objectives of study

This study purports to investigate the anticipated and current socio-economic and environmental impacts of integrated resorts in the Mauritian context. In particular, this study will aim to achieve the following objectives:

0 To investigate the context of integrated resort development and its aims and objectives in the development of Mauritius tourism.

0 To know the criticisms about the initiation of integrated resort in Mauritius.

0 To determine the positive impact of integrated resort in terms of society, economy and environment of Mauritius.

0 To know the negative impact of integrated resorts in terms of society, economy and environment of Mauritius.

0 To recommend guidelines for sustainable integrated resort development and minimising negative impacts of integrated resort development.

Chapter 2

REVIEW OF LITERATURE

2.1 Tourism Impact

Mauritius has built its successful up market tourism sector on a fragile and vulnerable natural resource. The growth of the tourist industry in an unplanned manner has led to the following negative impacts:

»’ High volume tourism has made an enormous impact on parts of the coast. There are plenty of examples of virtually every imaginable type of tourism impact on the environment, including the destruction of coastal wetlands and other sensitive environments, organic pollution and coastal erosion for example. Flic en Flac.

0 There are problems associated with monitonng and auditing due to institutional weaknesses. Most casual tourists bring their own equipment and are relatively self-contained, thus bringing in minimal cash into the country while making a large impact on the enviromnent for example tourists from Reunion and other islands of the Indian Ocean. y

2.2 Tourism Environmental Impacts

The natural environment is under increasing threat hom unmanaged human activities, and in assessing the impacts of tourism, it is essential to adopt a holistic view that recognises both the direct and indirect consequences of tourism activities and their intrinsic link with other sectors (Glenn Kreag 2001). Growth in the tourism sector may generate new impacts on the coastal zone but also raise the intensity of existing impacts by placing additional burdens on resources that are already overextended. For this is a feature of human settlement and not just of tomism. However, where this is exacerbated by a significant increase in the number of visitors and people employed within the industry, the tourism sector must take responsibility for providing solutions to the causes of environmental degradation. The major environmental impacts identified and theiR direct consequences on tourism development as well as impacts associated with activities that support the tourism sector are highlighted as:

* Water Resources and River Ecosystem

* Estuaries and Wetlands

* Soil Erosion and Sedimentation

* Waste Disposal and Pollution

* Coastal Erosion

* Marine Resources

* Recreational Activities

2.3 Tourism Economic Impact

In the developing world, economic impacts frequently outweigh other considerations when it comes to tourism development. The need for foreign exchange and the ease by which the industry can be developed relative to other sectors, makes tourism development a national priority (Glenn Kreag 2001), It is therefore important to have a clear understanding of the tourism industr`y’s economic impacts, particularly because not all of them are positive. These impacts are the primary impacts, employment opportunities, impacts on the labour force, inflation and the availability of essential resources and over-reliance on tourism.

2.4 Classification of Impact

There are several ways of looking at economic impacts. The following classification of impacts reflects the multi-sectoral nature oftourism:

Primary Impacts arise from the inflow of foreign cash as a result of visitor expenditure. They are fairly well recorded by banks and businesses such as airlines, hotels and restaurants. They are relatively easy to measure.

Secondary Impacts arise when the currency inflows penetrate to other sectors. This happens when the tourism industry passes some of its business on to other businesses, for instance, when an airline company contracts to provide on-board meals. Wages earned by people involved in sport services also fall into this category.

Tertiary effects arise when currency flows are not the result of tourist expenditure, but when the practise of tourism led to other opportunities. For instance, a filmmaker on holiday in Mauritius may decide to use that country as the venue for his or her next film. Or a tourist may be so enchanted with the sandy beaches and blue lagoons of Mauritius that he or she buys a bungalow.

From the above, it can be seen that the total economic impact of tourism is very hard to calculate indeed, but it would be wise to commission a thorough analysis of the tourism industry results. For instance, the high percentage of foreign workers in the tourism industry results in wages ending up going to their home countries which reduces the net benefit to the host Country.

2.5 Tourism Social and Cultural Impacts

The socio-cultural impacts of tourism are basically the consequences of either the development of the tourism industry or the presence of the tourists (and the characteristics of the tourist-host relationship) (Sharpley 1994). The table below contains a comprehensive list of these impacts, following the classification adapted from Pizam & Milman (1984), and Burdge (1994). The social and cultural impacts of tourism can be vast, and unfortunately many of them are negative. They include:

0 An intrusion of western culture into the host population. The tendency is often for local people to try to emulate westem consumerism. In new destinations, local populations are often not aware that many tourists work hard most of the year and then take time off for leisure. Instead, the tourists appear to have a lifestyle that is only enviable and the temptation to mimic them in terms of- dress or personal assets such as watches, sunglasses, etc, is great.

0 Value systems may be eroded, particularly in poor areas where tourists can be seen as an opportunity to make a fast buck. This may lead to theft prostitution, and sometimes violent crimes.

Local customs are often not respected by tourists who may be unaware or insensitive to them. It is critically important that the government and other role players make tourists aware of such issues;

Valuable cultural artefacts are olten bought by tourists, and shipwrecks are regularly plundered.

The table below show some of the main impact of tourism on a country

IDIPACTS IDF TOUllISlI

Positive Negative

Impacts on population

Population increase

(immigration, no emigration)

Immigration of seasonal workforce

(positive in case of lack of labour – negative in case of unemployment)

Presence of second home owners

(positive if involved in community life – negative if not involved)

Changes in population distribution (by age, sex, race, ethnicity)

Urbanisation of population

Changes in labour market

New jobs Seasonal jobs

New types of jobs in tourism Unskilled jobs

Increased value of knowledge, language Lack of labour in traditional sectors

skills

Economic diversification Increased economic inequality

Stimulation of underdeveloped regions I

Changes in community structure, characteristics

Income from tourism Increase in the number of temporary

residents

(not very committed)

Growing importance of service sector i Conflicts with second home owners

Stimulation of social, cultural life Difficulties in acquiring real estate

Increase in the value of land Increase in real estate prices s

Development of infrastructure Increase in prices, intlation

Wider opportunity for shopping Loss tiw

Improvement in the destination image ‘ Transformation of value systems

Increase in residents’ pride in their Religious conflicts

settlement l (with second home owners, with tourists)

Decrease of prejudices, disappearance of Overdependence on tourism

stereotypes, increase in tolerance

Congestion

Traiiic problems

Transformation of social stratification

(owners of totuist resources rise, owners of traditional resources fell)

Impacts on individual and family level

Increase in social mobility i Disruption of social networks

p (especially among the young and women)

i Improvement in leisure opportunities ‘ Changes in the rhythm of life

_ Meeting new people, wider social Loss of importance of liiendship

Improvement in the quality of life Increase in perception of danger

(due to increased criminality)

Language skills Xenophobia

Income hom totuism Commercialised hospitality

Improvement in attitudes toward work, Deviant behaviours (alcoholism,

politeness, manners prostitution,

I gambling, drug abuse vandalism)

Local language suppressed

Increased sexual permissiveness

Transformation of family structure

Transformation of consumer habits

Changes in housing conditions

Transformation of behaviour (demonstration effect)

Impacts on cultural and natural resources

Protection of rare resoufces of Disappearance of local habits, traditions

outstanding beauty <

Revival of local arts, crafts, cultLu’al Commercialisatknl of culture

events

Revival of local architectural traditions Littering, pollution

2.6 Conception and Development of Integrated Resort in Mauritius

Mauritius has during recent years been facing serious economic problems owing to the need to comply with free trade agreements and globalisation. This has severely affected sugar and textile exports, two major pillars of the natio al economy, and consequently our balance of payment. Despite serious economic problems, Mauritius has succeeded in realising a remarkable economic transformation due to a diversified economy resting on other pillars like financial and business services sector and that of tourism, hospitality and property development. Hence the development of the Integrated Resort Scheme can be seen as an economic strategy.

As a national strategy the Mauritian government has come along with the introduction of the IRS under the Investment Promotion Act 2000 through the Investment Promotion (Integrated Resort Scheme) Regulations 2002 in order to boost up foreign direct investment which is a necessary component in the fight to compensate for the decrease in sugar and textile income inflow. This has been a strategic attempt with the twofold objective, firstly to attract more foreign direct investment and secondly to strike a more favourable balance of payment. Hence recently Hospitality and Property Development have emerged, attracting substantial investment fiom both local and foreign investors under Investment Promotion Regulations 2007 which promotes the Real Estate Development Scheme comprising of IRS and RES (Real Estate Scheme) projects which are expected to be implemented in the next few years. The objective of the Integrated Resort Scheme (IRS) is to attract mainly high net-worth non-citizens into Mauritius by allowing them to acquire luxury villas of international standing and at the same time providing high-class amenities and facilities including golf course, marina, individual swimming pool, catering, nautical and other sport facilities and health centre within the boundaries of the integrated resort area. The acquisition of a villa for residential purposes by a foreigner under the Scheme will allow the foreigner & his family to reside in Mauritius as long as he holds the property.

Whilst the Investment Promotion Act 2000 expresses government’s political will to expand the economic sector by creating the Board of Investment, the Business Facilitation (Miscellaneous Provisions) Act 2006 enhances business opportunities

towards IRS projects. The Investment Promotion Act 2000 and Investment Promotion Regulations 2007 provide the legal framework for guidelines with regard to the implementation of these projects.

The Finance Act 2007 introduced amendme ts to the following Acts of Parliament in order to regulate the promotion, implementation and marketing of IRS projects in Mauritius:

0 Investment Promotion Act

0 Land (Duties and Taxes) Act

0 Morcellement Act

0 Non-Citizens (Property Restriction) Act

0 Registration Duty Act

» Sugar Industry Efiiciency Act 2001

0 Environment Protection Act 2002

Here under is a list of IRS projects currently being implemented:

Solares at Flic en Flac, Villas Valriche, Les Villas Telfair, Les Salines, La Balise Marina, Domaine de l’Harmonie, Barachois villas and River Club. A few other projects have received their letter of approval recently and upon compliance to conditions laid down they will receive their IRS certificates. In some other cases the Environment Impact Assessment (EIA) report, which analyses the environmental, biophysical and social impact of a proposed development, is being scrutinised in order to ensure that the proposed development is sustainable.

The Integrated Resort Scheme provides:

» for the development of luxury residential units of international standing on freehold land of more than 10 hectares to be sold at a price exceeding USD 500,000

» high-class leisure and commercial amenities and facilities intended to enhance the residential units. These may include but not limited to, golf course, marina, nautical and other sport facilities, shopping mall, restaurant and wellness centre.

0 day-to-day management services such as security, maintenance, gardening, solid waste disposal and household services have to be provided to the residents.

0 for a social contribution in terms of social amenities, community development and other facilities for the benefit of the neighbouring community where the IRS project is implemyed/

However the following conditions concerning the eligibility for the acquisition of residential property from an IRS Company have to be complied with:

(a) a non-citizen of Mauritius

(b) a citizen of Mauritius

(c) a company registered as a foreign company under the Companies Act 2001

(d) a company incorporated under the Companies Act 2001

(e) a Société, where its deed of formation is deposited with the Registrar of Companies

(l) a trust, where the trusteeship services are provided by a qualified trustee licensed by the Financial Services Commission

It is instrumental to examine the importance and justification of the IRS in Mauritius liom a scientific point of view. Integrated resorts initiatives and development can be primarily viewed from the macro-economic perspective of foreign capital inflow (FDI) where as on the other hand they can be explained from the perspective of the market failure concept which has necessitated the rejuvenation process of the resort cycle in Mauritius.

The strong linkages of tourism and IRS with other economic sectors should be the key in realising that tourism and new products are a powerful factor for economic growth’ and employment. This can clearly be seen by the nature of tourism and permanent residence needs, that is to say, as an industry it calls for goods and services such as: transportation, food, fuel, water and electricity, crafts, tour services, entertainment, communication, etc. These linkages have always had a positive economic impact in Mauritius. Of coLu’se tourism and HKS development not only benefit the private sector

but contribute significantly to government revenues in the form of sales, business, corporate, personal, departure and of course, import levies.

2.7 The Rationale for Government Intervention in Mauritius Tourism Sector

Continuing globalization of competition has given confirmation to the market-oriented view entertained by the Mauritian government which justifies its intervention in the tourism sector by creating the integrated resort scheme to favour our export oriented strategy. It is believed that markets should be given primacy in the production and distribution of goods and services while government should provide the proper institutional infrastructure for markets to function properly. In cases of ket failure government should intervene to correct any imperfection and intervention is also justified because the more important the sector is to the economy, the greater intervention should be in order to ensure socially compatible objectives that foster sustainable development.

The public sector can “exercise varying degree of influence over the direction of tourism development by acting on both the demand side and supply side” (Akehurst et al, 1994). In Mauritius the demand management policies and the management of its supply side must be seen to go in pair with government’s macro-stabilization policy in an attempt to reach a state of equilibrium. Micro policies have to be endorsed to make markets function better. Govemmenfs political structure and the functioning of rivate institutions have to go in pair as well, Barriers and rigidities should be removed so that new projects like integrated resort development could function more

efficiently. Without appropriate macro-economic policies market-oriented projects in the tourism sector will have to struggle for survival. Thus the role of government in ensuring a better economic climate is of vital importance to improve returns in the lCOl1I`lSII1 S€CfO!`

The Mauritian government had taken actions to correct market failure in the economic and tourism sector by rntroducrng the integrated resort development that is the integrated resort scheme Market failure arises from a situation where the ‘riee market does not guarantee environmental protection and community involvement rn development process Since the tourism sector rn Mauritius rs not an integrated