1.

INTRODUCTION Current forecasts continue to predict the unfettered growth of global tourism, and the

expected developmental gains for poor countries, without adequately considering the range of developmental issues that will accompany such growth. Most naive predictions also fail to recognize that pro poor benefits and development are not automatic consequences of the growth of tourism. This paper explores how tourism development can go hand in hand with development for the poor in local communities. Section I constitutes a theoretical exploration of the prospective role of the tourism industry in local economic development and how tourism businesses, in exercising Corporate Social Responsibility and sound business practice, can increase the opportunities for poor people to directly benefit from the tourism industry. Section II focuses on the issues of tourism, Corporate Social Responsibility, local economic development and pro-poor growth in Jamaica. Here the analysis is focused around studies of the impact of the accommodation sector on local economic development. A case study of one locally owned all-inclusive chain of resorts is also presented in order to ascertain the practical prospects of, and challenges to, tourism led pro-poor development in Jamaica. 1.1 The Global Tourism Industry Growth in the services sector has been identified by the international development community as one of the key targets for economic advancement in developing countries going forward (Mashayekhi and Kidane 2006). The services sector includes so-called intangible goods focusing on delivering content, attention, advice or an experience. The United Nations Conference on International Travel and Tourism of 1963 provides a generally accepted definition of tourists as temporary visitors who spend more than 24 hours in destinations other than their 1

normal place of residence, whose journey is for the purpose of holiday-making, recreation, health, study, religion, sport, visiting family or friends, business or meetings (UN 1963). According to the World Travel and Tourism Council (WTTC), global tourism including domestic tourism- is a US $3.5 trillion industry. The industry, directly or indirectly, is responsible for employing some 10 percent of the worlds workforce and contributing approximately 11.5 percent, directly or indirectly, to the Gross Domestic Product of the world economy (Jayawardena 2007 and Sharpley 2002). Prospects for continued growth in global tourism are strong, particularly for emerging markets (including China), youth travel, ecotourism and online travel services (PIOJ 2007). Although a slowdown is expected due to worsening global economic conditions, the World Travel and Tourism Council (WTTC) predicts that by 2010 the industrys contribution to world GDP will increase to 12.5 percent and employ 328 million people (WTTC 1998 in Jayawardena 2007). Indeed, global tourism is slated remain one of the fastest growing industries worldwide. 1.2 Tourism and the Caribbean Region The share of global tourism belonging to developing countries is just about 30 percent. Tourist arrivals are currently concentrated in five destinations: the United States, Italy, France, Spain and the United Kingdom respectively (Jayawardena 2007). In spite of this, growth in tourist arrivals is concentrated in developing countries. Sun, sand and sea are the dominant images in the minds of tourists who have made the Caribbean the most sought after destination for honeymoons and weddings in the world (CTO 2008). The most recent estimates from the Caribbean Tourism Organization (CTO) indicate that the region was the destination of choice for some 22.5 million tourists in 2007 - an increase of 1.5% over the previous year (CTO 2008). The 2

main markets that feed Caribbean tourism are the United States, Europe and Canada respectively (CTO 2008). Although the Caribbean1 region ranks sixth in the world in terms of tourist arrivals, the stagnation of other economic sectors renders it the most tourism dependent region in the world with industry earnings accounting for about 25 percent of the Caribbeans Gross Domestic Product (Jayawardena 2007). The main issues that present a constraint to the further development of Caribbean tourism include increasing levels of criminal activity, tourist harassment and inadequate tourism education and training by the public and private sectors (Jayawardena 2007). Hurricanes also exert a negative effect on Caribbean tourism, depressing visitor arrivals and destroying physical infrastructure. Caribbean tourism is also adversely affected by economic downturns in its main markets as well as any changes to policy that may affect travel. For example, many islands were adversely affected in 2007 by the introduction of regulations in their main market, the United States, that required all US citizens to hold a valid passport for overseas travel (JTB 2007). The Caribbeans tourism market can be grouped into five segments: cruise ship passengers, all-inclusive tourists, sun-lust tourists, special interest tourists and eco tourists. The first three segments are part of mass tourism while alternative tourism includes special interest and eco tourists. Cruise ship, passengers spend the least per capita, accounting for 10 percent of visitor expenditure yet representing for 37 percent of total tourist arrivals to the Caribbean
1

In this study, the term Caribbean refers to the members of the Caribbean Tourism Organization (CTO), the umbrella organization of the regions tourism industry. They are: Anguilla, Antigua and Barbuda, Aruba, The Bahamas, Barbados, Belize, Bermuda, Bonaire, British Virgin Islands, Cayman Islands, Cuba, Curaao, Dominica, Dominican Republic, Grenada, Guadeloupe, Guyana, Haiti, Jamaica, Martinique, Montserrat, Puerto Rico, St. Barts, St. Eustatius, St. Kitts & Nevis, St. Lucia, St. Maarten, St. Martin, St. Vincent & the Grenadines, Suriname, Trinidad and Tobago, Turks and Caicos Islands, United States Virgin Islands, and Venezuela. The Bahamas and Bermuda are included by the CTO for statistical purposes (CTO 2008).

(Jayawardena 2007). The all-inclusive hotel is the fastest growing category of accommodation in the Caribbean (Travel Watch 2006). According to Zona and Zona-Paris (1999 in Jayawardena 2007), 48 of the best 100 all-inclusive hotels are in the Caribbean. However, the all-inclusive hotel model is not popular in all Caribbean destinations as 17 of the 48 resorts are located in Jamaica alone (Jayawardena 2007). The all-inclusive model warrants special attention given its prominent position in the Jamaican tourism industry and will be discussed at length in sections to follow. The main criticism of all-inclusive tourism is that visitors may spend little time experiencing local offerings outside the hotel as most services are provided on the property. Sun-lust tourists are those who are part of the mass market of visitors arriving in the Caribbean primarily to enjoy the sun, sea and sand but unlike all-inclusive tourists they opt to stay in traditional hotels, inns or guesthouses. Although the mass tourism market in the Caribbean is predominant, alternative tourism has been gaining popularity among seasoned travellers, both within the region and internationally. Eco and special interest tourism includes sub sectors such as agro-tourism, adventure tourism, sports tourism, heritage tourism, and health tourism (Jayawardena 2007:20). Special interest tourists crave new experiences with a sense of adventure and action while ecotourism is popular among well-educated, environmentally conscious travellers with more disposable income than other categories of tourists. Alternative tourism is more conducive to a community-based development approach it offers more opportunities for the inclusion of local community members. Alternative tourism is offered as a more resource and environmentally friendly form of development. Experts suggest that alternative tourism will play an important role in the future viability of the Caribbean tourism product and as such, increased focus should be put on more fully developing this area. 4

1.3

Defining Development Development and questions of what it means and how to achieve it assumed international

relevance following World War I. Today, development remains one of the most urgent issues of our time, however no universally accepted meaning of what development means exists to date (Clarke 2002). Development has been traditionally defined in terms of growth of the economy an economy that achieves 5-7% growth in its Gross National Product (GNP) after having been static for a long time is said to have achieved development (Todaro 2006:15). The economic approach maintains that growth from the national economy will trickle down to the masses in the form of employment and other economic opportunities, creating the necessary conditions for poverty reduction and improvement in standards of living (Todaro 2006). It is a mainstream economics approach that has generally been institutionalized by the World Bank in its World Development Reports and is supported by many development economists (Clarke 2002). In their view, problems of inequality, poverty, discrimination and unemployment are secondary to getting the growth job done (Todaro 2006:16). In the 1950s and 60s, many developing countries did achieve development according to the economic definition, however, despite increases in GNP, the welfare of the masses in these countries showed little or no improvement (Todaro 2006). This experience prompted the broadening of the concept of development from a narrow focus on economics to a direct emphasis on the advancement of people. The human welfare conception of development focuses on people-centred growth and is institutionally represented by the United Nations Development Programmes (UNDP) Human Development Reports (Clarke 2002:4). The Reports define human development as a process of enlarging peoples choices...the most critical of these

are to live a long and healthy life, to be educated and to have access to resources needed for a decent standard of living (UNDP 1990:1). People-centred development economists appreciate the need for overall economic growth while understanding that on its own, growth will not necessarily improve the human welfare and life chances of the masses (Clarke 2002). Economic growth is therefore not an end in itself, but an instrument that can provide the capability to function (Sen 1998 in Todaro 2006). The tourism industrys economic benefits are measured in quantifiable terms on a national scale foreign exchange receipts, contribution to GDP, contribution to exports, tax revenue and national employment levels (Sharpley 2002). However, tourisms contribution to development for the poor cannot be measured as readily. In this study, I focus on how tourism businesses can extend opportunities from the tourism industry to the poor in a way that directly enhances their life chances and choices. The experience of development of the 1950s and 60s underlines the fact that, ipso facto, economic growth does not directly translate to improvements in the welfare of the poor. Pro poor growth can only happen when national economic growth increases the flow of income from poor peoples assets or the number of value of those assets (Roe 2006).

2. 2.1

CORPORATE SOCIAL RESPONSIBILITY AND DEVELOPMENT What is Corporate Social Responsibility (CSR)? This paper will rely on the following definition by the United Nations Conference on Trade

and Development (UNCTAD): Corporate social responsibility concerns how business enterprises relate to, and impact upon, a societys needs and goals (UNCTAD 1999:1). Corporate Social Responsibility is frequently and mistakenly equated with corporate philanthropy. The concept of Corporate Social Responsibility focuses on the operational behaviour of a company and the implications of that behaviour for the society that the company operates in (UNCTAD 1999). On the other hand, philanthropic activities are those that are external to a companys business operations. A CSR program is thus defined as a codified voluntary strategy involving operational procedures or activities through which the company pursues objectives that benefit society. The practice of Corporate Social Responsibility has become increasingly popular among corporations worldwide (Contreras 2004). Experts cite a number of factors to explain the proliferation of CSR globally. The main one has been widely identified as the need for the corporation to decrease or buffer the perceived threat to its normal operation (Contreras 2004). In a developing country context where national budgets are often strained, the corporation may also be called upon by the community to provide basic services where the state is unable to. For example several companies in Jamaica cite the need to respond to the increasing pleas of communities for health and education related services, which should be the states responsibility, as the primary reason for the creation and expansion of their CSR initiatives (Levy 2008).

2.2

Can CSR Contribute to Development? The CSR Debate The question of whether or not CSR can contribute to international development, and the

extent of such a contribution, is widely debated in the CSR and development literature. CSR expert and author Michael Hopkins argues that CSR provides a platform for business to deepen its involvement in development by making a concerted effort to improve the well-being of disadvantaged people, wherever they may be (Hopkins 2007:2). Hopkins goes on to boldly assert, CSR can untap the fortune from development (Hopkins 2007: xi). Companies, international development organizations and governments, though perhaps not sharing the extent of Hopkinss fervour, also make extensive claims regarding the benefits of CSR for development (Blowfield 2007). On the other hand, critics argue that CSR programs alter the role of business in society orienting it toward goals that are beyond the realm of its expertise. One such critic is eminent economist Martin Wolf, who argues that CSR is not only problematic but also dangerous (Wolf 2004). Wolf asserts that it is by strictly seeking out profit that business best contributes to social and economic development (Wolf 2004: 10). This view is in line with the mainstream view of development that aggregate benefits to a national economy will eventually trickle down to benefit the poor. In reality, there is scant evidence to support either Hopkins sweeping claims or those of corporations and governments on CSRs alleged benefits for development. It has proven difficult to measure the impact of CSR according to the recognized measures of the international development community (Blowfield 2007). The gap between rhetoric and reality on the developmental impact of CSR exists to a large extent because of a lack of understanding of what development entails and how to design CSR strategies for development. This paper will show 8

that, within the tourism industry, scope exists for businesses to, in executing their CSR, contribute further to local development. For CSR to effectively contribute to development, businesses should first be aware of the needs and goals of the society and then focus on how aspects of their operational behaviour can be designed to positively impact upon those societal needs.

3. 3.1

TOURISM, LOCAL ECONOMIC DEVELOPMENT AND PRO POOR GROWTH Benefits of Tourism: The Theory The tourism industry generates significant tax revenue for the Government, who, in a

developing country context, more than likely faces budget deficit issues. Tourism receipts also provide a vital source of foreign exchange for developing countries. Foreign exchange is beneficial to a developing countrys balance of payments and as a means of purchasing capital goods and other essential imports (Sinclair 1998). Perhaps most important for many countries is that tourism is a significant generator of local employment. The industry provides a crucial source of income in the form of employment for women and low-income groups who occupy a large share of tourism-related jobs (Puri 2007). Given the economic benefits of a thriving tourism industry, many developing countries target the sector as part of national development strategy. The sector is viewed as a viable focus for further development, compared to other industries, for a number of reasons. Firstly, as discussed in Section 1.1, global tourism is a growth industry. Though global tourism contributes, in an economic sense, most to the countries that need revenue least, international arrivals to the developed world have been increasing. The resulting income opportunity is viewed favourably by developing country planners (Sharpley 2002). Second, tourism is viewed as a means of redistributing wealth from rich countries to poor ones, not only by the spending of tourists but through investments in infrastructure by developed country investors. As will be further discussed below, the ownership structure within the industry will determine the proportion of tourism receipts that are actually retained since foreign-owned tourism enterprises repatriate their profits. 10

Developing countries also pursue tourism for development because it allows monetary value to be extracted from inherent national properties such as culture and natural resources and attractions. These raw materials are basically free natural resources such as sand, sea, mountains, culture etc. That is, the industry is seen to have low start-up costs (Sharpley 2002). Tourism however, requires extensive supportive infrastructure such as roads, water and sewage systems and electricity infrastructure. Where these did not previously exist, the start-up costs of establishing tourism may be very high. Finally, tourism is viewed as a favourable path to development due to its linkages and multiplier effects within the local economy, compared to other industries. Not only does tourism development require that extensive infrastructure be built, it is also a composite product involving several product and service opportunities that may be taken up by local providers. In theory, local farmers could enjoy the economic benefits of the industry by providing food to hotels and restaurants while local manufacturers could provide furniture and finishes. The local construction industry could also benefit from the industry through the erection and expansion of accommodations for tourists (Sharpley 2002). Unfortunately, as will be discussed at length in this paper, without proactive policies the potential income earning opportunities for local people and the poor may never become reality. Hunziker and Krapf were the first to show that depending on the direction of tourist flows, tourism could have both a positive and negative effect on national income (Mihalic 2002). Tourism is an expenditure-driven economic activity, that is, the consumption of tourism is at the centre of its economic measurement and it is consumption expenditure, of both domestic and international tourists, that generates national tourism income. The final economic impact of tourism on national economic growth will depend on how much was invested in tourism development by public and private investors, that is, tourism expenditure in the host country, and 11

the proportions of imported goods and services consumed by tourists (Mihalic 2002). If investment in tourism dwarfs receipts from tourism there will be a negative effect on national income while if tourists are predominantly sold imported goods and services, money will flow out of the host economy to a foreign country. The volume of outflows is determined in part by the import propensity of the host country and the ownership structure of the tourism industry and associated industries. Outflows are also determined by the maturity of the domestic industries and their ability to meet the tourism industrys needs from domestic production (Mihalic 2002). The outflows are popularly called leakages and reduce the economic and developmental impact of tourism. External payments that never accrue to the host country, such as travel agent commissions and foreign airlines also constitute leakages from the industry (Mitchell and Page 2006). Of particular note is that the net retention of tourism receipts is especially low for countries with an industry dominated by foreign investors or that have a high import propensity. Many developing countries fall into one, or both, of these categories. Tourism theory points to the indirect economic benefits that the presence of a healthy tourism industry generates in terms of widespread multipliers throughout the economy (Sharpley 2002). As mentioned in Section 1.4, travel and tourism also creates markets for, in theory at least, locals to become service providers in various areas. In addition, a thriving tourism sector spurs other economic activities such as agriculture, fisheries, crafts and the manufacture of inputs required to support the industry. The key issue is whether the stimulus of these industries is created at the local level.

12

3.2

Why the benefits of tourism may not extend to poor people The direct and indirect benefits generated by the industry are said to constitute a

powerful engine for employment, poverty reduction and development (Puri 2007:3). The tourism industry may indirectly benefit poor people through taxes paid to the government who, with increased revenue, can finance welfare services and develop infrastructure that benefit the entire community, including the poor. However, there is no guarantee that increased revenue to the government produce such results. In large part, the tourism industry can spur local economic development and pro poor growth directly only to the extent that members of the community, including poor people can take up the income-earning opportunities arising from the sector. For example, if a hotel, as a matter of policy, primarily employs individuals from outside the local community or host country, the impact on the local economy is lessened. Another consideration is whether or not local people, especially the poor, are trained and possess the necessary skills to qualify for employment in the sector. Poor people in particular may not possess the human or monetary capital necessary to take advantage of the opportunities to become employees within the tourism industry. The development contribution of tourism may also be limited by the ability of the local economy to take advantage of the linkage opportunities that arise from the industry. A developing country economy may not be at the stage of maturity or have enough diversity to meet the quality or quantity requirements of the hotels on the consistent basis necessary. In addition the scale or type of tourist development might not allow for local provision of goods and services or there may not be enough investment available to finance their provision (Sharpley 2002). In such cases, tourism companies import heavily. Leakage of tourism receipts to outside

13

the host country is perhaps one of the most significant factors affecting the extent to which tourist development benefits the host country (Sharpley 2002). It is clear that the growth of the tourism sector and indeed the economic growth of the country, do not translate to an automatic improvement in the livelihoods of the poor. Strategic policies are required to ensure that the bulk of the economic gains of the industry are not concentrated in the hands of the local elite or foreign investors with little tangible benefits for the local economy and the poor who constitute it. If tourism is to be a vehicle for human development, of which economic growth is a necessary but not sufficient pre-condition, policies must ensure that the industry effectively functions as a catalyst not only at the national, but also at the local, community level (Tefler 2002).

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4.

TOURISM INDUSTRY IN JAMAICA Up to the middle of last century Cuba was regarded as the principal tourist destination of

the Caribbean (Seaga 2006). After the Cuban Revolution, development interests were sparked elsewhere and Jamaica began to establish a reputation as a vacation paradise for the wealthy and elite (Seaga 2006). Today, Jamaica is a well-known island destination with a strong brand based on cultural and physical assets that continue to enjoy strong international appeal. In the 45 years since the country achieved independence, the number of tourist arrivals to Jamaica has increased more than tenfold (PIOJ 2007). Following four years of consecutive growth, the industry recorded its best ever year in 2006 with total arrivals increasing by 15.3% to just over 3 million visitors (approximately the size of Jamaicas population) (CDB 2007). Jamaica ended the year 2007 on par with 2006 despite several setbacks, the most significant of which was the introduction of the passport requirement for US citizens. 4.1 Government Initiatives in the Tourism sector in Jamaica As a pillar of the national development strategy, the tourism industry has been the target of selected Government intervention since the 1970s (Chambers and Airey 2001). In recent years, the development of the tourism sector has become an increasingly important national priority and it is explicitly identified as a priority area of focus for Vision 2030 Jamaica: National Development Plan (PIOJ 2007). The Government has created a number of agencies under the Ministry of Tourism with responsibilities that include marketing and promotion, developing the tourism product and implementing supportive industry policy (CDB 2007). A Master Plan for Sustainable Tourism Development, developed in 2003, helps guide tourism development in Jamaica. The sector development plan recommends not only expansion of accommodation capacity, but initiatives to diversify the tourism product, increase and improve tourist attractions 15

and the strengthening of linkages throughout the economy (CDB 2007). A Tourism Enhancement Fee was instituted in 2005, charging US$10.00 to incoming airline passengers and US$2.00 to cruise ship passengers, to fund the implementation of the Master Plan (CDB 2007 and PIOJ 2007). The islands tourism industry has benefited from high levels of capital investment concentrated in hotel expansion, from both local and foreign investors (CDB 2007). The Government has undertaken wide scale infrastructural improvements to support the sector including the upgrading and expanding of the road network, national airports and ports (CDB 2007). Public investment is also being channelled toward the spatial and planning needs of the tourism sector including identifying skills and training needs, and the development of supporting infrastructure such as housing and utilities (CDB 2007). 4.2 Characteristics of the Tourism Industry in Jamaica Jamaicas tourism industry is centred around three main destination areas: Montego Bay, Ocho Rios and Negril. Development in other areas of the island including the South Coast and Portland are also taking place. The all-inclusive hotel is the main type of tourist accommodation in Jamaica (Pennicook 2006). Research from the World Travel and Tourism Council (WTTC) puts overall direct industry employment at approximately 8.2% of the labour force (2008), while estimates indicate that each direct job creates an additional 2-4 indirect jobs in the economy (Lengefeld and Stewart 2004). Together, the WTTC estimates that the tourism sector is responsible for, directly and indirectly, employing some 31% of the Jamaican labour force (WTTC 2008). The Jamaican tourism product comprises an interlinked set of services that cater to visitors and domestic travellers. A variety of public and private sector actors are involved in the 16

manufacture and provision of these services including accommodations, tourist attractions, food and beverage facilities, ground transport, in-bond shopping and arts and crafts (PIOJ 2007). The cruise ship and airline industries are crucial aspects of Jamaican tourism. In 2007, approximately 41 percent of tourist arrivals were cruise ship passengers2. These 1.1 million cruise ship visitors spent approximately U$114 million in Jamaica (JTB 2007). Although plans are now afoot to divest the national carrier, Air Jamaica was owned and operated by the Government for a number of years, at a significant loss, due to the view of its strategic importance for the national tourism sector. In 2007, tourists expenditure amounted to just over of US$1.9 billion in revenues, equivalent to 20 percent of Jamaicas Gross Domestic Product (JIS 2008). This gross

expenditure represented a 2.1% increase over the US$1.871 billion spent in 2006 (JTB 2007). The Government of Jamaica predicts growth of 14% in revenues for 2008 as plans continue for expansion of this vital, lucrative national product (JIS 2008).

Calculated from figures provided by the Jamaica Tourist Board (2007) 17

5. 5.1

TOURISM BUSINESSES, CSR and PRO POOR TOURISM IN JAMAICA Why tourism businesses in Jamaica should have a CSR Approach to Pro Poor Tourism Poverty reduction is a clear need and goal of Jamaican society, particularly in rural areas.

Poverty is a multifaceted concept having to do with both lack of income and lack of access to basic and essential services such as water, education, health services, sanitation and housing (ICRT 2004). Pro poor tourism is defined as tourism that results in increased net benefits for poor people (Roe 2006). The traditional mode of thinking on how tourism can address poverty has been focused on the trickle down effect where the benefits of tourism are expected to eventually improve the lives of the poor as gains diffuse throughout the economy. The UN Millennium Development Goals have renewed the focus on poor people while the specific commitments to halve the proportion of people living in extreme poverty by 2015 have lent an increased urgency to global poverty reduction. Pro poor tourism takes a proactive, direct approach to addressing poverty by looking at how tourism can be structured, developed and managed in order to increase the flows of income to poor people, their assets and/or their participation (Roe 2006). Tourism companies should view pro poor strategies as a social responsibility and a sound business decision contributing to the human security of poor people raises the general security of the country, which in turn enhances tourisms own security and operating environment. As with Corporate Social Responsibility, the integration of a pro poor approach by tourism businesses does not demand the compromise of profitability. For Corporate Social Responsibility to fulfil developmental objectives including pro poor growth, socially progressive values must be

18

firmly entrenched in the culture of the company. That is, CSR strategies must constitute operational behaviour of the company as opposed to add-ons far removed from daily operation and commercial interests. It follows that for PPT strategies to be successful and sustainable over the long term, they must be constituted so as to achieve commercial objectives (Ashley 2006). Without commercially successful tourism businesses and a thriving sector, the poor do not stand to benefit from tourism. The same is true for Corporate Social Responsibility and business in general CSR practices should enhance, or at the very least not undermine, the profitability of business. Tourism literature frequently points to the significant interdependence between the tourism industry and the broader social, economic and political environment in which it operates (Sharpley 2002; Seaga 2006; PPT 2006). It is on this basis that tourism companies should take a pro poor approach to doing business. Indeed, the prosperity of surrounding communities and the security of the country in general are critical to the viability of tourism companies operations. The tourism product and the quality of the tourist experience are especially vulnerable to the negative externalities that arise from underdeveloped communities and social decay.. The incidence of poverty is closely aligned with high and rising levels of crime and violence, the adoption of a pro poor approach makes social and business sense.

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6. 6.1

TOURISM BUSINESSES, LOCAL ECONOMIC DEVELOPMENT & PRO POOR GROWTH IN JAMAICA How tourism companies can take a pro poor approach to business Tourism businesses that take a pro poor approach to their operation focus on measurable

impacts on the livelihoods of poor people, rather than relying on trickledown effects and general multipliers to fulfil their corporate social responsibility. The literature speaks to minimizing leakages and maximizing linkages within the tourism sector to increase the retention of tourism receipts within the host country economy. It is true that a strongly linked and integrated tourism sector can effectively drive local economic growth, however, it is not sufficient for securing local economic development and poverty reduction. In order to ensure that the growth of the local economy translates to development for the poor, tourism companies must adopt a strategic pro poor approach to strengthening linkages within the local economy. A pro poor tourism approach requires that companies do business differently to benefit poor people, seeking to maximize local economic development and by working, wherever possible, with poor people who produce goods and services (PPT Partnership 2004). Philanthropic contributions can be useful, however they do not make the best use of the assets of the tourism sector. The most effective and sustainable Corporate Social Responsibility strategies draw upon the core competencies of the business to address targeted developmental needs within a given community. The tourism sector has the advantage of sizeable purchasing power, requirements for inputs and staffing as well as influence over a large number of tourists spending behaviour (PPTP and CTO 2006). Considerable scope exists for tourism companies to adopt a pro poor approach to how they do business, using their core capabilities to boost gains for poor people without sacrificing the profitability of their own operations. 20

The Pro Poor Tourism Partnership (PPTP), a research effort funded by the British governments Department for International Development (DFID), has recommended strategies that can be employed by tourism companies, based on extensive field work in Africa, the Caribbean and India. The PPTP strategies can be disaggregated according to three markers of poverty and underdevelopment a lack of income, diminished quality of life, and a dearth of participation and involvement in the processes that affect individual life and that of the community. Strategies that can be employed by tourism companies to improve income prospects for poor people include the expansion of employment and local wages, the expansion of business opportunities for the poor and the development of collective community income (PPTP 2004). In fact, labour is cited as the most important linkage between a hotel and the local economy (Mitchell and Page 2006:5). Pro poor employee recruitment policies, maximizing the share of local employment as well as instituting fair working conditions and benefits for employees are other pro poor, socially responsible measures that tourism businesses can integrate into their operations. Tourism businesses should also provide training and conduct other capacity improvement and management interventions that equip employees with the necessary capability to assume senior level positions (ICRT 2004). Properly designed interventions will both improve poor peoples access to tourism markets and enable them to profitably engage with those markets. Capacity building interventions though perhaps not directly income related, allow poor people to earn from tourism by upgrading their skills and improving their access to markets. In terms of expansion of business opportunities for the poor, tourism companies can adopt a pro poor approach to how they procure goods and services. With this in mind, hotels should seek, wherever possible, to develop partnerships with local people, including the poor,

21

who can supply inputs to the sector. For example, hotels should seek to source food from local farmers, laundry services, security, soft furnishings and other inputs from small and micro enterprises (SMEs) and products from local entrepreneurs for supply directly to tourists (e.g. guiding, crafts and souvenirs etc.) (PPP 2004). Sourcing food from local farmers is advantageous to both farmer and hotel and will be discussed in detail in the case study below. Hotels and resorts should also look for opportunities to work with informal tourism businesses, for example using a local taxi company to provide ground transportation for guests, or hiring local artistes for in-house entertainment (Mitchell and Page 2006). One of the benefits of the expansion of tourism is that it brings improved infrastructure to destinations: potable water, improved roads, waste management, transport, electricity and telecommunications (PPTP and CTO 2006). These infrastructural improvements can significantly enhance the quality of life for the poor, and to the extent that poverty is defined by the lack of access to these basic services, such improvements can lessen the effects of poverty. Beyond the typology of strategies outlined by the Pro Poor Tourism Partnership, tourism companies can integrate other strategies into their daily operations that may help the poor to earn from tourism. Hotels can use their ability to influence tourist behaviour to encourage guests to spend in local communities by having local information counters to provide guests with information on local taxis, entertainment venues and charities (Ashley 2006). Pro poor stakeholder behaviour in the tourism sector significantly contributes to local economic development by increasing partnerships with local entrepreneurs and ensuring that the multipliers from the industry are concentrated locally.

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6.2

Why tourism companies should take a pro poor approach to business Trends indicate that the tourism market is changing to reflect an increasingly socially,

environmentally and culturally discerning consumer (ICRT 2004). Given the strong international pressure to achieve the MDGs by 2015, a reputation for responsible business practices toward the poor and social aspects of development can constitute a significant market advantage for developers, hoteliers, resort owners and tour operators in the industry. Not only do more and more tourists concerned with the impact of their vacation, they also seek a richer, often times more authentic experience. In order to secure commercial advantage in an increasingly competitive environment, hotels must necessarily expand their traditional offerings and provide a more uniquely local experience. A diversified, local tourism product can usually best be secured with offerings from the local community and companies can work with SMEs and local people to encourage the diversification of tourism services and local products (ICRT 2004). For example, Dominica Coconut Products now supplies coconut soap to cruise ships while Earth Mother Botanicals of Barbados supplies beauty products made with locally grown herbs to prominent local hotels (PPTP and CTO 2006). The relationship between the cruise ships and the local coconut products business developed after a conversation between the proprietor and a top cruise line official. This demonstrates the importance of communication and networking between local SMEs and tourism companies. One negative experience of tourism is the extent to which it arouses feelings of exclusion in people who cannot and do not participate. If access to infrastructural improvements is restricted and enclaves are created that exclude local people, discontent will abound in local communities. Discontent, generated by envy is a prime motive for crimes against the industry as locals get even and show displeasure by sabotaging the tourism product (Seaga 2006).

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Resentful communities can make it significantly more expensive for the industry to operate and reduce the quality of the tourist experience (Ashley 2006). Therefore, wherever possible, hoteliers and local authorities should make every effort to ensure that local people are allowed to enjoy the benefits of infrastructural improvements that come with increasing levels of tourism. Although pro poor strategies may entail medium term implementation costs, they can generate long term commercial gain for tourism companies and contribute to the long-term viability of the sector (Ashley 2006). The implementation costs of pro poor strategies can be shared by the government and private sector as a pro poor approach to tourism is not only in the commercial interest of the company but also in the national interest. 6.3 Challenges of Pro Poor Tourism Attempts to extend income-generating opportunities to the poor are not without their share of challenges. A lack of skills, low understanding of tourism, poor quality and inconsistent supply of inputs all impinge upon a tourism companys willingness and ability to do business with poor people. Interventions to address these issues are therefore needed. One issue is that hotels typically pay for goods received after 30 or 90 days, a credit arrangement that does not suit small local producers as they lack working capital. Under this arrangement, small farmers and small and micro enterprises may not be able to afford to supply hotels. In St. Lucia, the relationship between local florists and large hotels was strained due to the unsuitable nature of the credit arrangement (PPT and CTO 2006). Another structural issue for pro poor tourism is the lack of an operating market to facilitate communication between local producers and hotels (PPT and CTO 2006). Local producers may want to sell and hotels may want to buy, local artistes may want to perform and hotels may want to hire, but there is no intermediary to make the link for negotiations to take place.

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The

international

development

community

sanctions

tourisms

transformative

developmental role and there is no dearth of suggested strategies for maximizing linkages and minimizing leakages. For example, one strategy for increasing the industrys contribution to the local economy and the poor is increasing community-based tourism, for example the tour operator in the Dominican Republic that organizes tours around poor, rural areas. Former Prime Minister Edward Seaga points out that in the case of tourism in Jamaica, it is difficult to anticipate what visitors will like beyond standard offerings such as special attractions like waterfalls, entertainment related sites such as aerial rides and dolphin coves. He believes that many suggestions for increasing tourisms contribution to Jamaicas poor are nothing more than politically motivated rhetoric with no chance of practical success. 6.4 Tourism and the Problem of Crime in Jamaica Jamaica has an internationally notorious high rate of violent crime, especially homicides (Harriott 2006). However, its effect on tourism development in Jamaica is usually vastly overstated. Firstly, the rates of crimes against tourists, including violent crimes, are quite low. In 2003 only 0.0004 per cent of the 2482 million visitors to the island were victimized, while the homicide rate among visitors for the five-year period up to 2003 averaged 2.8 per 100,000 (Harriott 2006: 25). Second, empirical studies by Alleyne and Boxhill have shown that national crime rates have not had much impact on visitor arrivals in Jamaica (2003). As discussed in previous sections of this paper, tourist arrivals have continued to rise over the past ten years. Over the same period, violent crime in Jamaica has soared. Harriott suggests that tourism may be more resilient than the literature suggests pointing out that Jamaicas tourism product has indeed survived a variety of conditions including high crime rates and high levels of criminal and political violence (Harriott 2006). 25

Still, crime is a highly visible problem for the tourist industry in Jamaica and the product is sensitive to political instability and the loss of general public safety. It is safe to assume that if Jamaicas high crime problem is left unchecked, the loss of public safety will soon follow. While high crime rates have not necessarily affected visitor arrivals to Jamaica, the structure of tourism has been affected. The rising number of enclaves or safe havens for tourists, in form of the allinclusive resorts, point to the feeling of insecurity that many tourists have concerning their stay in the island. Sex, drugs and related tourisms are expected to rise as they are congruent with violent crime and have undesirable implications for the sector and society at large (Harriott 2006). Beyond national strategies to address the spiralling crime problem, the tourism industry must develop tourist specific measures to reduce tourist victimization. For example, hotels may provide a front-desk safety briefing for tourists who plan to venture on to the streets highlighting hotspots of tourist victimization (Harriott 2006).

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7.

THE ACCOMODATION SECTOR, LOCAL ECONOMIC DEVELOPMENT AND PRO POOR TOURISM IN JAMAICA In order to meaningfully grapple with the question of how tourism companies can, in

executing socially responsible and sound business practices, increase the contribution of the industry to local economic development and pro poor growth in Jamaica, I will focus on large, all-inclusive hotel operators. A focus on all-inclusive hotels is an analytically practical point of departure since large, all-inclusive hotels dominate the Jamaican tourism landscape. Therefore, a case study of how all-inclusive hotels in Jamaica can do business in a way that helps benefits flow to poor people will demonstrate how industry-wide contribution can be increased. 7.1 The All-Inclusive Concept As indicated in Section 4.2 all-inclusive hotels are the dominant type of accommodation in Jamaica. The Caribbean Tourism Organization (CTO) defines the all-inclusive (AI) concept as resorts or vacations where all or most hotel guest services are included in one prepaid package price (Pennicook 2006). The package includes airport transfers, accommodation, all food and drinks, snacks, alcoholic beverages, entertainment, sports facilities, some watersports, and gratuities. Expenses of a more personal nature such as phone calls, excursions, car hire and gifts are usually not included (Pennicook 2006). All-inclusive hotels account for the majority of room capacity within the accommodation sector with over 2.7 million rooms compared to just over 867 thousand rooms for non allinclusive accommodation (JTB 2007). Still, a variety of non-all inclusive options exist, including upscale villas, guesthouses, apartments and traditional hotels. They usually offer variations of the European Plan (EP), where the rate charged covers accommodation only or accommodation plus certain meals (Pennicook 2006). All-inclusive hotels have however enjoyed an occupancy rate 27

of upwards of 70% for each of the past five years (71.2% in 2007) while occupancy rates for non all-inclusives have seldom surpassed 40% (46.6% in 2007) (JTB 2007). The relative success of the all-inclusive model in Jamaica may be explained by a number of factors. All-inclusive hotels are usually able to deploy more resources toward local and international advertising contributing to a strong brand that attracts many visitors. Many visitors also prefer to have the advantage of knowing what the vacation will likely cost beforehand. Finally, a large number of these visitors usually return for future vacations so all-inclusives benefit from a high number of repeat arrivals. Repeat arrivals keep occupancy levels high throughout the year, compared with conventional hotels whose occupancy levels fluctuate greatly according to season (Pennicook 2006). However, it is perhaps the high incidence of crime and violence in Jamaica that largely accounts for the popularity of the all-inclusive hotel, as the safety of the islands visitors can be better assured in a controlled environment. Whatever the reasons, the all-inclusive hotel in Jamaica is king within the tourism industry. As such, how allinclusive hotels can successfully integrate a pro poor approach into their model of operation is of central importance to the success of pro poor tourism in Jamaica. 7.2 Economic Impact of All-Inclusive Hotels in Jamaica: The Debate The extent to which benefits from tourism flow to the poor is a function of the benefits that flow to the local economy; therefore, the impact of all-inclusive properties on the local economy must be analyzed. The impact of this category on the Jamaican economy is at the center of vigorous debate. One school of thought holds that the all-inclusive model has a particularly high level of leakage while also diminishing linkage opportunities within the local economy. It is said that local entrepreneurs have limited opportunity to engage with tourists and profit from their arrival in the island while further economic activity is stifled as tourists who

28

have already pre-paid for their entire vacation spend little additional money. The problem is compounded, critics argue, if the property is foreign-owned. Tourism Concern, a non-industry based UK watchdog, claims that in the case of foreign owned all-inclusive resorts up to 90 percent of the holiday cost leaves developing countries (Mitchell and Page 2006:5). On the other hand, the PPTP estimates that even in the most leaky of scenarios the highest leakage rates are approximately 75% (Mitchell and Page 2006:5). The difference between both estimates may be due to the biased interests of Tourism Concern, an organization whose self-declared raison d'tre is to campaign against exploitation in the global tourism industry (Tourism Concern n.d.). On the other side of the debate are those who maintain that all-inclusive hotels yield farreaching benefits for local communities and the economy in general (Pennicook 2006). This school of thought holds that all-inclusive hotels in Jamaica contribute to linkages to local agriculture, transport and manufacturing as well as provide significant levels of earnings and employment. 7.3 All-Inclusive vs. EP Style Hotels: Earnings, Employment and Other Linkages Leading Jamaican tourism expert Paul Pennicook conducted a comparative study of the impact of both types of accommodation on the Jamaican economy to illustrate the significant and positive impact of all-inclusives. The study was conducted using surveys and questionnaires on both leading all-inclusives and European Plan (EP) style hotels (2006). The participating allinclusives are SuperClubs, Sandals, RIU and Sunset chains, Couples Ocho Rios and the Holiday Inn SunSpree while the EP hotels included are the Hilton Kingston, Jamaica Pegasus, the Courtleigh and the Ritz Carlton. The following section will analyze findings from the research looking at the performance of all-inclusives by earnings, employment and linkages with local agriculture, manufacturing and transport.

29

Earnings Occupancy levels correspond with earnings, therefore it follows that, of all categories, AIs contribute the most to earnings from the accommodation sector. The most recent empirical study detailing this, a 1997 Organization of American States (OAS) Study, indicated that all inclusives earned more than all other accommodation combined (Pennicook 2006). In terms of tax revenues, all-inclusives have the potential to contribute more on a per room basis than EP hotels given the year-round occupancy levels that they enjoy. In addition, the level of resources invested in advertising campaigns by large all-inclusives supplements national marketing dollars and the promotion of brand Jamaica yields industry-wide benefits. Employment Both all-inclusive and EP hotels directly employ a large number of Jamaicans. 2000 estimates reflected this fact, indicating that the accommodation sector was responsible for some 47% of employment in the tourism sector (Pennicook 2006). 2007 numbers correspond with this finding; the entire local accommodation sector accounted for almost 4% of the overall 8.2% direct industry contribution to employment (see Section 4.2). However, compared to EP style hotels, all-inclusives employ a larger number of permanent staff due to high year-round occupancy levels (Pennicook 2006). Therefore, the AIs contribute more to employment compared with EP style hotels. In terms of local employment the Jamaica Tourist Boards (JTB) informal survey among all-inclusive and EP style hotels indicated that 90 to 100 percent of staff members were Jamaican (Pennicook 2006). Other Linkages: Agriculture, Manufacturing and Transport The all-inclusive model demands above average inputs of produce, goods and services. All-inclusives provide a guaranteed three meals as well as unlimited drinks and snacks per guest

30

each day. If a pro poor approach to procuring produce, goods, and services is employed, this consumption could represent tremendous income earning opportunity for the local community, including the poor. The JTBs informal survey among hotels indicates that all-inclusive hotels provide a major additional source of income for local suppliers due to year-round demand and higher expenditure levels for agricultural products and manufacturing, compared to their EP counterparts (Pennicook 2006). On the other hand, EP style hotels use of local foods ranges from 70 to 90% while all-inclusives, on an average, consume between 40 to 60 percent local food (Pennicook 2006). Although the AIs buy less local food in percentage terms, the volumes purchased by AIs are higher and their overall expenditure on local food much greater than EP style hotels. Based on Pennicooks research it is clear that although the percentage of local food consumed by AIs could be increased, their contribution to local agriculture and food production is sizeable. Therefore, the focus should shift from arguing against the existence of AIs (especially since the number of AIs show no sign of decreasing) to a focus on what interventions are necessary to increase the percentage of local food purchased by all-inclusives. Such a view is in line with the increasing recognition by development organizations that instead of creating sustainable tourism, a niche market by any standards, the focus should be on making existing forms of tourism more sustainable (Lengefeld and Stewart 2004). In terms of manufactured goods, EPs use 25 to 91% locally manufactured goods while local use by AIs range from 1 to 60 percent. As with food, though AIs purchase less locally on a percentage basis, their absolute expenditure on local manufactures is greater than EPs, according to the informal survey (Pennicook 2006). The accommodation sector boosts local transportation industries. According to the JTB survey, the vast majority of all-inclusive and EP employees 31

commute to work by public transportation. Because all-inclusives employ more staff on a yearround basis, the impact of AI on the local transportation sector is greater. All-inclusive hotels also spend more on utilities, gardening, landscaping, security, laundry and entertainment on a per room basis that EP style hotels. Without a doubt, the all-inclusive model demands more inputs and expends more resources than EP style accommodation. Pennicooks study demonstrates that the sheer immensity of AIs requirements and spending power means that, although on a percentage basis they consume less local goods and services than traditional hotels, their contribution to the local economy is greater. The relevant question then is whether all-inclusives can increase their consumption of local goods and services beyond what currently prevails. In the following section I take a critical look at a 2006 analysis by former Prime Minister and tourism expert Edward which concludes that there is limited scope for increase in purchases of local food and manufactures by hotels. I go on to examine how one Jamaican all-inclusive, Sandals Resorts, is contradicting Seagas conclusions by working with farmers to increase local food supply. The Sandals model represents how all-inclusive hotels in Jamaica can successfully align a pro poor agenda with commercial interests and integrate this socially responsible approach into day-today business operations. 7.4 Can AIs increase their consumption of local goods and services beyond what currently prevails? Seaga relies on data from a 1997 empirical analysis of tourism in Jamaica carried out by Pacific Analytics Inc. Though almost 10 years old at the time that Seagas paper was published, the Pacific study continues to be the only available detailed and comprehensive report of its kind 32

that is based on empirical findings. Although tourism has expanded in Jamaica since 1997, the structure of the industry has remained the same and trends continue in similar directions. Therefore, I rely on this study because of the level of detail provided regarding consumption within the accommodation sector. Unlike Pennicooks report, the study does not disaggregate hotel by category, focusing instead on the whole accommodation sector. In 1997, foreign exchange earnings were approximately JA$1.155 while imports of goods and services for direct tourism and tourism related activities amounted to some $766 million in 1997 (Seaga 2006). Net retention of earnings from tourism in Jamaica that year was thus $389 million or 34 cents on the dollar. In other words, approximately 66 cents for every dollar earned from tourism in Jamaica leaked outside of the country. Still, compared to other major export earning industries, tourism was the third highest performer in terms of net retention of earnings in 2002. The 1997 figure was used for 2002 analysis as it was assumed that for tourism, net retention of earnings would not have changed significantly over the period (Seaga 2006). It is the leakage, whereby a large share of tourism receipts flow to foreign investors that may inhibit the developmental potential of tourism. The data indicates that within the sector, the majority of imports or leakages, as a percentage of products used by hotels, fall into the follow categories: linens, towels and sheets (57%), carpets and drapes (49%) and electrical items (45%). Lesser imports include furniture and fixtures, soaps and toiletries, food and drink and advertising and promotion. Substituting local production to reduce the levels of importation in linens, carpets and drapes and electrical items is not a viable option. In a conversation with the former Prime Minister, he pointed out that Jamaican manufactures are simply not globally competitive 33

primarily due to the high and rising cost of energy and other associated costs. The problem of supplying locally manufactured products to the accommodation sector is further compounded by the GoJs tourism development incentive laws allowing hotels to import Furniture, Fixtures and Equipment (FFE) materials duty-free (Invest Jamaica n.d.). In this case, even if, as suggested in the National Development Plan, the procurement process were designed to allow local suppliers to bid competitively for hotel contracts, local producers would find themselves at a disadvantage due to the relatively higher costs they face. A lack of supportive Government policy geared toward the sector does little to alleviate the challenges faced by local manufacturers. In light of the particularly difficult challenges to local manufactures, the most common strategy recommended for increasing the benefits of the industry to local economic growth is the strengthening of linkages with farmers for the supply of local food. The study found that over 96% of vegetables and starches, 90.6% of fruits and 89.7% of dairy used by the hotels are locally purchased. Similarly, local farmers supply over 80% of meat and 90% of fresh seafood used by the sector. Local production also supplies 82% of alcoholic and 94% of non-alcoholic beverages consumed within the sector. In contrast to hotels in the industry, cruise ships are not significant purchasers of local food supplies. The cruise shipping industry purchases all food in Miami as a matter of policy and may only purchase small amount of locally produced liquor, jams, jellies and spices in port. Based on the percentages of locally sourced food to the hotel sector, Seaga concludes that not much possibility exists for additional local supply as specialty imports of certain meats, seafood and liquor are unavoidable (Seaga 2006). The small percentages of food items that are not sourced locally include specialty items such as broccoli, asparagus and others that are not 34

grown locally, Seaga informed me. He went on to explain that hotels also import potatoes and rice, however Jamaica does not produce rice or potatoes in significant quantities. Jamaica does produce significant quantities of starches such yams, dasheens and green bananas, however international visitors generally do not prefer these products. Hotels cite a lack of quality and availability of locally produced goods and services as the primary constraint when procuring food from local suppliers, while price was given as a secondary explanation. In the tourism industry, quality has to do with satisfying the expectations of the visitor, therefore, hotels prefer to import goods from a foreign producer who understands the needs of the tourists and can meet them on a reliable and consistent basis. The problem, Seaga admits, is that availability of certain types of local produce results in an over-supply, followed by an under-supply, which dislocates the planning and operation of hotels. According to Seaga, the relative inefficiency of local farms, especially the smaller ones, is the main issue to overcome in terms of increasing local supply of food to the tourism industry (Seaga 2006).

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8 8.1

FROM THEORY TO PRACTICE: ALL-INCLUSIVE HOTELS IN JAMAICA The Spanish Hotels in Jamaica The group of Spanish hotels operating in Jamaica have launched the Spanish Jamaican

Foundation, a collaborative effort involving the following hotels: Bahia Principe Hotels, the Grand Palladium-Fiesta Hotel Groups, Iberostar, RIU and the Seawind Key-Fuerte Hotel Group. The Foundations website characterizes its establishment as a demonstration of the corporate and social responsibility of these majority stakeholders in the Jamaican economy (Spanish Jamaican Foundation 2007). It was expected that, given the combined financial capacity of these hotels, they would match or exceed the level of development-related support shown by locally owned properties, however to date this has not materialized. Currently, the Foundations has no active projects and have only publicly signed two Memorandums of Understanding (MOUs) with Government ministries and agencies. Under the two MOUs, the Foundation commits to enhancing cultural tourism in Jamaica as well as integrating persons with disabilities into their labour force (Spanish Jamaican Foundation 2007). Seaga, one of the Foundations Board members admitted to me that there has been very little in terms of funding of anything worthwhile. The PPRPT finds that cooperation among tourism companies can make pro poor strategies more effective as collaborative efforts create a larger range of opportunities for local sourcing and a larger pool of labour with appropriate skills from which to hire (ICRT 2004). Unfortunately, the Spanish Jamaican Foundation has not exploited such advantages. Despite public declarations, the Spanish hotels have displayed a disappointing lack of commitment to local development, especially compared to locally owned hotels and resorts. 36

That international tourism is a powerful tool for redistributing wealth from rich countries to poor countries is a claim made in development literature. However, where tourism companies are largely foreign owned, profits, except those needed to fund expansion, are repatriated to the country of their origin. As demonstrated by the Spanish hotels operating in Jamaica, foreignowned hotels also display less of a substantive CSR commitment to local development and pro poor growth. Although the leakage of funds and lack of commitment to local development dampens the poverty reducing effect of tourism, foreign-owned hotels provide a source of employment for many local persons. Tourism jobs in Jamaica are perceived to be of high quality and though net retention of tourism receipts may fall with the increasing presence of foreign hotels, the concomitant increase in employment is advantageous to the Jamaican economy and society. 8.2 Sandals Resorts International: Pro Poor Tourism in Practice

Background The Sandals Group is owned by Jamaican entrepreneur Gordon Butch Stewart and employs some 8000 people locally. The Sandals Groups includes both the Sandals and Beaches Resorts. They are large, all-inclusive hotel chains that operate in St. Lucia, the Turks and Caicos Islands, the Bahamas, Antigua and Jamaica. Both Sandals and Beaches Resorts share the same environmental management policy as well as employment and social policies. Sandals Resorts International is one striking example of how one locally owned hotel is effectively practicing its Corporate Social Responsibility to the benefit of local economic development and pro-poor growth in Jamaica. Pro poor advocates and CSR proponents laud the Sandals approach as a highly successful model of responsible tourism while Travel Watch names Sandals as the allinclusive that appears to operate at best practice levels in terms of local economic contribution 37

(Travel Watch 2006: 6). I will focus on two programs that are particularly relevant for this paper, the Sandals Farmer Programme and Sandals employee policies. In 1996, Sandals introduced the Sandals Farmer Programme designed to strengthen linkages with small, local farmers. In partnership with the Jamaican Governments Rural

Agricultural Development Authority (RADA), the Programme seeks to improve the quality, quantity, diversity and consistency of produce sold to the tourism sector (RADA 2003). Under the programme, farmers supply vegetable crops, especially leafy vegetables to the hotels. Perhaps one of the most important aspects of the Sandals Farmers Programme is the drive to get local farmers to cultivate exotic3 vegetables to meet the specialty needs of hotels and reduce hotel importation of these items. Sandals supplies the seeds for the specialty produce to the farmers up-front and receives payment from revenue generated from sales of the crops (Rhiney 2006). This project receives technical support from the Inter-American Institute for Cooperation on Agriculture (IICA) and the University of the West Indies Continuing Education Program in Agricultural Technology (CEPAT and PPTP 2004). Results and Benefits of the Programme The Farmers Programme has been highly successful since its establishment, beginning with 10 farmers supplying two hotels from five locations and by 2003 a total of 80 farmers were growing specialty vegetables and traditional vegetables for all eight Sandals hotels in Jamaica (RADA 2003). Sandals also increased their investment in the programme by 300% and farmers sales increased over 55 times from US$55,000 to US$3.3 million over the same period (PPTP and CTO 2006).

These vegetables are not traditionally grown in Jamaica. Other exotic vegetables include yellow & red sweet pepper, table tomatoes, red cabbage, cantaloupe and yellow squash. 38

The Santoy Farmers Co-operative is one by-product of the multi-sectoral partnership for local supply of exotic vegetables to Sandals hotels (Rhiney 2006). By encouraging farmers to form a co-operative, Sandals encourages small farmers to pool resources, which not only reduces their vulnerability to external shocks, but also allows them to meet the quantity requirements of large, all-inclusive hotels. The co-operative also allows formalizes the linkage between small producer and large hotel, a structure, as outlined earlier in the paper, that is needed to facilitate their relationship. The intervention by Sandals is pro poor and facilitates local economic development as it enables small, poor farmers to engage in production and earn income in spite of significant working capital constraints. To further address the primary challenges facing farmers, RADA is conducting training in Group Farming and Marketing in the areas of Cooperative Management, Group Dynamics and Strategic Marketing i.e. Producing for Specialized Markets (RADA 2003). RADA has also developed printed quality standard leaflets for 8 specialty crops4, to help farmers meet hotel quality requirements (RADA 2003). As part of the Sandals Farmers Programme, farmers visit Sandals hotels to see how their produce is being used and why Sandals standards for quality are so important (PPTP and CTO 2006). Challenges faced by the Programme The main challenges faced by farmers and Sandals hotels are production and sales related. A lack of consistent water supply constrains production and results in low quality, inconsistent supply of produce to the hotels. To counter this problem the Government and hotel sector have distributed water tanks while a planned irrigation system is in the works in one
4

Cantaloupe, sweet pepper, cauliflower, broccoli, yellow squash, zucchini, table tomatoes and sweet corn 39

parish. Another production related issue is the lack of proper packaging on the part of small, often poor farmers whose capacity to invest in production is low. Farmers and hotels alike complain of the problem of over-supply followed by under supply described in the previous section. In some cases, inadequate communication between the farmers and the hotels was to blame for supply issues and RADA is addressing this issue by ensuring that information on available crops, and their volumes, is supplied to hotel purchasers two weeks in advance of their readiness. Another issue faced by farmers is the credit period traditionally used by hotels in payment for orders. As described in Section 6.3, this is a significant problem for poor farmers who lack sufficient cash flow to maintain regular operations while awaiting payment from hotels. Overcoming the Main Challenges to Increasing Local Supply of Food Seaga maintains that there is little scope for increasing local food supplies to hotels in Jamaicas tourism industry. His analysis is based on the premise that locally sourced foods already account for a high percentage of food purchased and the remaining requirements for specialty foods must be satisfied through importation. However, the Sandals Farmers Programme clearly demonstrates that Jamaican farmers can be successfully trained and encouraged to produce these exotic vegetables to satisfy the needs of hotels. Such programmes should be established by more hotels in Jamaica and as an increasing number of farmers engage in specialty food production, hotels will be able to source more food locally. Quality and quantity requirements are two other commonly cited issues with purchasing food from local farmers for hotels. Bringing the latest technology available to bear on production is an excellent prospect for farmers in terms of satisfying both quality and quantity requirements. One venture capitalist, Richard Khouri, has introduced hydroponics production to lettuce, tomatoes and bell peppers (Seaga 2008). The hydroponics farm involves an elaborate greenhouse 40

in which air temperature is regulated and nutrition fed into the roots of the plants, which are suspended in a nutrient solution. The process is regulated by a computer and sees yields up to 78 times greater than the national average for lettuce, 32 times greater for tomatoes and 30 times greater for bell peppers (Seaga 2008). Since the relative inefficiency of small farms is cited as one main obstacle of increasing local supply to hotels hydroponics technology holds significant promise for deepening linkages between local agriculture and the tourism industry. It is a hightech agricultural model that will require significant investment, however its development is in the national interest and in the social and business interest of tourism companies. Sandals Employee Policies Sandals Resorts also has a pro poor approach to employment within its hotels. For example, the Sandals Montego Bay hotel operates the START programme, which offers training positions to youth from the nearby low-income community of Flanker. The positions include training on aspects involved in running the resort, from catering to scuba instruction (PPTP and CTO 2006). Graduates of the training programme automatically become part of a placement programme developed by Sandals, in which they are either directly employed by Sandals or given recommendations for placements with nearby participating hotels (PPTP and CTO 2006). The investment by Sandals in staff development is substantial by any means. Line staff receives 120 hours of training valued at US$85 per year while the hotel has spent an additional US$5 million per year for training centres and higher education for staff (Lengefeld and Stuart 2006). A study of all-inclusives across the Caribbean, found that untrained recruits to Sandals could achieve salaries of between US$450 and US$900 per month through career progression (PPTP and CTO 2006) while the hotel also maintains generous employee benefits. The Sandals 41

Group contributes to pension plans and provides comprehensive health and life insurance plans for employees. The hotel also provides meals and transport free of cost to employees (Lengefeld and Stuart 2006). Additionally Sandals employees enjoy job security, a major concern for employees in the tourism industry due to its seasonal nature half of the persons interviewed in two hotels in Negril had worked for Sandals for between 3 to 12 years (Karammel 2006).

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9.

PROSPECTS FOR TOURISM-LED GROWTH FOR THE POOR IN JAMAICA Jamaica is a lower middle-income country with a population of 2.682 million and a GDP

per capita (purchasing power parity) of $7,700 at the end of 2007 (STATIN and CIA 2008). Robust, sustained economic growth has eluded Jamaica and estimates indicate that some 14.8 percent of Jamaicas almost 3-million person population survives on less than $2 per day (CIA 2008). The Human Poverty Index (HPI) is perhaps a more illuminating measure of poverty as takes into account non-income dimensions of poverty including a short life, lack of basic education and lack of access to public an private resources. The HPI, developed by the UNDP, compares 103 developing countries. Jamaica is ranked 34, which is high compared to other islands in the region including Barbados (which is ranked 1) (UNDP 2007). High levels of poverty and criminal activity are closely related, and Jamaica suffers from one of the highest murder rates in the world. Poverty in Jamaica is chiefly a rural problem (DFID 2007). Herein lies the crucial significance of tourism, as it is the most active sector in providing jobs in rural areas where they are desperately needed. Therefore, the tourism industry is uniquely positioned to affect poverty in Jamaica if the correct policies are implemented. For example, up to half of the employees interviewed at two Sandals hotels in Negril reported that working for Sandals had enabled them to not only support their immediate family, but in many cases members of their extended family as well (Karammel 2006). Also, 70 St. Elizabeth farmers who participate in the Sandals Farmer Programme earn US$7200 per month from the sale of watermelon and cantaloupe to one Sandals resort in the area, representing an income of US$100 per farmer enough to keep one family above the poverty line (Lengefeld and Stewart 2006).

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9.1

Pro Poor Tourism and Local Economic Development in Jamaica: Recommendations 69% of poor people in Jamaica live in rural areas and are unemployed or underemployed

(DFID 2003). Tourism is well placed to be a viable sectoral strategy for reducing poverty in Jamaica because, with proper policies, hotels can address the lack of economic opportunities in rural areas, low quality skills training and lack of access to basic infrastructural services. Although the all-inclusive model has been criticized for locking local poor people out of tourism, Sandals proves that poor people can be successfully integrated into the all-inclusive operation. The Sandals Group presents an excellent model for doing businesses in a way that allows poor people to reap opportunities from tourism development. It must be noted that the pro poor approach of the Sandals Group is seamlessly integrated with profitable business operation. All hotels, including EP style hotels, can adopt various elements of Sandals pro poor policies outlined in this paper to increase their contribution to pro poor development. Government agencies like RADA demonstrate how successful public-private partnership can be in executing programmes to deepen local linkages and improve the livelihoods of the poor. The Government of Jamaica should continue to pursue partnerships of this nature, while providing industry-wide support through infrastructure upgrading, national marketing and facilitating partnership with local industries. Pro poor growth and local economic development should be the priority CSR objective for tourism companies operating in Jamaica. These days, its everyones business.

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