No. 87 - March 2007
Not So Wow!
2007 Travel and Tourism Competitiveness Report

By Karen B. Bitagun, MBC Senior Research Associate

Tourism is fast in making itself an important source of growth for economies, given the contributions it generates in terms of employment and revenues from foreign exchange. Moreover, this sector is vital because of its ability to directly spur other economic activities.

For one, the influx of foreign tourists generates increased business activities for airlines, hotels, restaurants, domestic transportation, crafts, and tour guiding and other services. Secondly, increase in travel and tourism encourages governments to improve infrastructure such as better road systems, ICT network and power supply. Consequently, better infrastructure likewise directly helps to improve local residents, ICT network, power supply, and improve local residents’ quality of life. Thirdly, tourism promotes awareness in sustaining the environment and provides incentives for environmental conservation.

With this rising importance of tourism in the world economy, the World Economic Forum pioneered the Travel & Tourism Competitiveness Report. The 2007 Report explores the factors and policies propelling travel and tourism competitiveness among nations worldwide.

In coming out with world rankings, the Report established the travel and tourism competitiveness index (TTCI) which is composed of “pillars” or criteria affecting travel and tourism. The 13 pillars could be classified into three sub-indexes capturing the broad categories of (1) regulatory framework; (2) business environment and infrastructure; and (3) human, cultural, and natural resources.

This year’s topnotcher is Switzerland, a country which performed well in all areas of tourism. Switzerland is known as one of the safest and most secure countries in the world, clean and environment-friendly country, and home to six World Heritage sites. Switzerland, notably, has the best ground transport infrastructure in the world. A high-income country, Switzerland continues to give priority to tourism. Hence, it is more attractive to travelers, and in return, it reaps the holistic benefits from tourism.

Tourism and the Philippines

In the maiden Travel & Tourism Competitiveness Report, the Philippines ranks No. 86 among 124 countries around the world. Among Asian countries surveyed, the Philippines only managed to outscore Vietnam (No. 87) and Cambodia (No. 96). Indonesia and Thailand, meanwhile, are far ahead at No. 43 and No. 60, respectively.

The travel and tourism competitiveness index, the tool used in measuring success in tourism, helps readers understand why some economies flourish in travel and tourism, and why others do not. Studies have shown that strong relationships exist among a nation’s overall competitiveness, tourism, and infrastructure. Similarly, the TTCI pillars reveal the good points and bad points of the Philippines in tourism competitiveness.

According to the Report, of the three sub-indexes the Philippines appears to be weakest in terms of human, cultural, and natural resources. Its low ranking could be attributed to low quality of human resources, tertiary education, and training, workforce wellness, and pollution.

But taking a second look at the TTCI scorecard, it is in the business environment and infrastructure where the country got the lowest score of 3.1 in a scale of 7.0, although it ranked No. 79. The Philippines flunked the test across all infrastructure types: air transport, ground transport, tourism, and ICT.

The Philippines provides the best primary education. It also and has the lowest HIV prevalence in the world. Other strengths of the country lie in ease of getting a visa, price competitiveness, friendly Filipinos, number of tourist spots, and availability of airlines.

Tourism and Competitiveness

In the field of tourism, the goal is simple: attract more tourists. Each country has a unique culture to offer, and a sea of natural resources open to foreign travelers. Highly urbanized economies such as Hong Kong and Taiwan do not offer much scenic nature spots to visitors. But these countries manage to build attractions on account of its highly technological lifestyle. Meanwhile, the Philippine archipelago, endowed with natural attractions, could not entice enough foreigners, and could not compete at par with its neighbors of similar destination offerings. This just proves that travel and tourism is not all about the places to see and explore.

Asia’s top three tourism destinations in 2005 were China, Malaysia, and Hong Kong. These countries offer good transport infrastructure, and give national priority to travel and tourism.

Why did Vietnam draw more tourists in 2005 than the Philippines? It is because all things being equal, Vietnam edged the Philippines in terms of security and safety, ground transport infrastructure, and perception on tourism. Vietnam ranked No. 51 in safety and security while the Philippines was No. 96. For ground transport infrastructure, Vietnam was No. 85 while the Philippines placed No. 91. Meanwhile in terms of national tourism perception, Vietnam fared better at No.51 than the Philippines which landed at No. 83.

Promises and Potential

The Travel & Tourism Competitiveness Report highlights the industry’s distinction. “It is an industry of richness, texture, and of connections that brings together people, transcends borders, and can—if we do it right—knit the world together both in good times and bad.”

Only recently has the Philippines realized the value of tourism. Thus, the government now gives top priority to tourism—planning new ports, building more roads and train systems, and constructing additional accommodation facilities. The Philippines has to realize that it needs to open its skies since the rest of the world already benefits from this policy.

Government support to the sector is crucial in terms of putting up the necessary infrastructure, attracting investments, regulating or deregulating the industry, protecting the environment, and getting active in world tourism promotion. Once implemented, the Philippines could achieve its fullest growth potential and reap the benefit from world travel and tourism: to provide jobs, attract investments, generate revenues, and improve the lives of Filipinos, especially those in the countryside.