The Glocalization Paradox The Impact of Globalization and

The Glocalization Paradox The Impact of Globalization and Localization on National Tourism Investment Policies Athens, October 16, 2006 Donald E. Hawkins, Eisenhower Professor of Tourism Policy George Washington University School of Business dhawk@gwu. edu, www. gwutourism. org

Using Paradoxes as Strategy Tools Statements or sentiments that are seemingly contradictory or opposed to common sense and yet are perhaps true and useful for analysis

Paradoxes are as old as humankind “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of light, it was the season of darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to heaven, we were all going the other way” 'Cretans were never anything but liars, dangerous animals, all greed and l Charles Dickens - A Tale of Two Titus 1: 12 -13 Cities

CThe Best of Times for Tourism? C World: C Travel and tourism –WTTC $1. 6 trillion, expected to grow by 4. 5% a year over the next 10 years, with double-digit growth expected from emerging regions such as China, India and Russia. C According to the UNWTO, tourism represents 40 percent of all exports of services; revenues have grown far stronger than international trade; tourism has spin-off effects on construction, agriculture, telecommunications, and employment. UNWTO claims that international tourist arrivals grew from 25 million in 1950 to 808 million in 2005—spending US $2 billion per day. One in eight of the world’s tourists choose a destination in the Muslim world, despite terrorism and bird flu “bad news”, C Greece: International arrivals increased almost 6% in 2005 to 12. 7 million reversing a decline from 2002 -04; Tourism receipts increased to 11, 000 million euros-- nearly 7% in 2005. Greece's arrivals percentage increase matched Spain, exceeded Cyprus, but fell behind Croatia’s 7% & Turkey’s 20. 38 %

DThe Worst of Times for Tourism? D World: D Natural Disasters: tsunami, hurricanes, floods, earthquakes, volcano eruptions D Terrorism & Wars: 9/11, Bali 1 & 2, Jammu, Kashmir and Mumbai, UK aircraft bombing plot/aviation response, Iraq & Israel/Palestine/Lebanon War D Health Epidemics and Pandemics: SARS, Avian Flu, Ebola, AIDS, TB, Mad Cow, Cholera, Malaria D Other Threats: oil spills, endangered species, global warming, biodiversity/cultural heritage threats, energy/water shortage, pollution, computer viruses, demographic shifts, fiscal crises, poverty, property rights, decaying infrastructure, safety/security, regime change (Thailand) D Greece: World Economic Forum’s Competitiveness Index in 2006: as in previous years, Poland remains the worst performer among the EU economies, with a rank of 48, right behind Greece 47, out of a total of 127 countries. Spain was ranked 28, Cyprus 46, Croatia 51 Turkey 63.

The Convergence of Globalization and Localization = Glocalization

Globalization n Increasing cross-border movements of goods, money, information, ideas, and people n Interdependency of people and institutions around the world, creating both opportunities and challenges C Positive—Power of brands; events -World Cup, Athens 2004 & Beijing 2008 Olympics; Diaspora D Negative-- Gap between the rich and the poor, outsourcing, job loss M Demographics! Fewer Young People; Rapid Graying; Decline of European Populations

Localization n Making a product linguistically and culturally appropriate to the destination n Transfers authority and responsibility for public functions from the central government to subordinate or quasiindependent government organizations or the private sector--“Subsidiarity” n Doing Business tracks 175 economies. Overall, Greece ranks 109 in terms of Ease of Doing Business; however substantial improvement was recorded for Registering Property (94 from 146), Dealing with Licenses (55) & Enforcing Contracts (48) n The key to investment success is also good governance

Importance of Good Governance Averages: Greece (upper bar) OECD countries (lower bar) Source: Kaufmann D, A Kraay and M Mastruzzi, 2006 Governance Matters V:

Glocalization can Improve National Tourism Investment Polices Learning from global leaders & competitors while engaging local stakeholders in the planning and implementation of tourism investment approaches: – Tourism value chains – Development policies – Competitiveness strategies – Tourism Marketing & Investment Promotion.

Tourism Value Chains Global n Visitor Experience Value Chain Pre-trip Local n Experiences--add value/$ (The Experience Economy--Pine and Gilmore, 1999); time efficiency n Make the guest experience the absolute best it can be, Hilton focuses on three core elements: (1) Post-trip Access physical enhancements to its properties; (2) an advertising campaign capturing the concept that travel should facilitate meaningful On-trip experiences and connections; and (3) development of partnerships with other market leaders that n Global visitor markets: Tourists, possess a shared philosophy of MICE market, Investment/Business, customer service and excellence. VFR/Diaspora n Proportion of $ staying in country

Tourism Development Global n Making tourism more sustainable & responsible – UNWTO/UNEP Initiatives – Tour Operators Initiative (TOI) n Eco-labeling and certification programs—e. g. Green Globe n Conservation International’s Center for Environmental Leadership n Green Market--LOHAS Local n Tourism should reduce poverty and positively contribute to economic growth-MDGs – Pro Poor Movement – WTO ST-EP – European Solidarity-FAIR programs n Impact Assessments “triple bottom line n Financial support for protected areas— Europe's Pan Parks; Prespa Lakes & Laganas Bay, Sakynthos

Tourism Competitiveness Global n Michael Porter’s “Competitive Local n Canadian Tourism Commission Diamond” provides financial support ü Importance of rivalry through a national matching fund. Product-based "clubs" enable ü Chance businesses to present a united ü Comparative advantage front in addressing issues of n Regional/multi-country trip circuits concern and to come together in and networks—e. g. World partnering alliances to achieve Heritage Routes common goals. n Leverage advantages & n Inadequate public sector budgets capabilities with enabling -need Destination Management technologies—e. g. World Organization (DMO) partnerships Heritage Alliance—UN with business and NGOs for Foundation, Expedia, UNESCO market research, product partnership. development, promotion, training, infrastructure advocacy

Tourism Marketing & Investment Promotion Global n Peace of mind-- safety and security, mitigate risk, minimize negative impacts, enabling business environment n Money savings--reduce travel cost escalation, use yield management, moderate construction costs n World Economic Forum tourism disaster response communication system for extreme events n Link tourism marketing with investment promotion strategies Local n Investor relationships--data mining, consideration cycle, project portfolio & incentives—for domestic & international equity and financing targets n Internal Marketing Focus – Multi stakeholder involvementcommunity, owners, suppliers – Delegation and trust (Ritz Carlton--Return on Customer Lifetime Value) – Human resource development—Investment not a cost – Ethical codes & behavior

Convergence is the goal! n Geotourism: Tourism that sustains or enhances the geographical character of a place—its environment, culture, aesthetics, heritage, and the well-being of its residents. n Glocalization principle: Ensure sustained market demand (globally) by protecting the product (locally) n Why? Improve performance to enhance the destination’s sustainability (locally) to achieve superior results in target travel markets (globally) n Destination Scorecard: Greece’s ratings: Corfu 57, Crete 55, Acropolis 51*; highest--Norwegian Fjords 82; lowest --Costa del Sol, Spain 41.

Conclusion n Paradoxes are strategic thinking tools leading to convergence of positions which initially may appear contradictory —but may be true! n The Glocalization Paradox can encourage more innovative national investment policies by taking risks, learning from others through active benchmarking, and using knowledge management to improve performance n Overall, Glocalization requires a holistic, “all of destination” management and marketing effort. Local solutions can lead to global successes!