II.

Regulations and
Risks

Tourism Marketing
Cage Filoteo
SSC-R de Cavite
Special Interest Segments
Divers
Typically: young, male, single, regular travelers
Diving is the main motivation for travelling to the destination.
The fame of the under water world and the pristine
biodiversity are the reasons for travelling to the Philippines
Adventure Experiences
Adventure tourists want to experience remote and unexplored
areas while undertaking soft or hard adventure activities.
Shopping, Leisure and Entertainment Tourists
Shopping, Leisure & Entertainment Tourism is a relatively
young breed of tourist, who is seeking escapism,
entertainment and fun. Time may be limited, but disposable
income levels are high.
HoneyMooners
Newly weds on their honeymoon spend an important amount
of money on a dream destination. Residing in luxury resorts.
The trend goes from only passive holidays to active
experiences.
MICE
Meeting, Incentives, Congress and Events. The tourists
consuming this tourism product travel with their company to
the Philippines or are there for business issues. They expect
and demand perfect services.
Educational Tourism
Regional pupils from all ages come to the Philippines in order
to learn and improve their English language skills
Source: T&L
research,
Bird Watchers
Bird watchers are passionate about birds and wish to
experience them in their natural habitat. Mostly, Bird
Watchers are driven by the wish to see specific and rare
birds. For this they are willing to travel around the world.
Health and Wellness Tourism
Due to the high costs of medical care in the tourists home
country . This type of consumer seeks to look and feel
better, to lose weight, to slow the effects of aging, to
relieve pain or discomfort, to manage stress, or to partake
in the use of natural supplements like vitamins and
minerals to improve their health..
Culture Explorers
Search for participation in new cultural experiences,
whether they are aesthetic, intellectual, or emotional. They
find satisfaction in visiting museums, archeological sites
and experience living culture traditions and festivals
Beach Relaxation
Tourists that seek for relaxation and sun along the
Philippines beaches. In addition, activities mostly
undertaken are: fishing, scuba diving, sailing, golf, water
skiing, whale watching, windsurf, relaxation therapies, spa,
etc.
Golf Tourists
Golf Tourists are passionate about Golf. Their main
motivation is to play Golf all year round and travel to the
destination that entitle them to do so.
Identify Business Risks
Look at each
component (travel
and tourism
component), and try
to imagine what
type of risk(s) there
are in each
particular
component. What
type of legislation is
needed to buttress
those components?
Travel & Tourism Industry
Components
Accommodation (Serviced and Non- Serviced)
Transport Provisions (Road, Rail, Sea And Air)
Visitor Attractions (Natural, Heritage, Purpose-
Built And Events)
Tour Operations (Mass Market And Specialist)
Travel Agents (Retail, Business, Call Centre And
Web-Based)
Tourism Development and Promotion(Tourist Boards:
National Tourism Council Board (NTCB)
Trade Associations And Regulatory BodiesThe
Department of Tourism (DOT) ; Philippines Tourism
Authority (PTA); Philippines Travel and Tourism Council
(PTTC); The Philippine Travel Agencies Association
(PTTA)
Ancillary Services (Insurance, Car Hire and
Demand
Accommodation is
the first sector to
be covered and in
particular
HOLIDAY RENTALS
where many
owners,
managers and
other
stakeholders have
requested
assistance to deal
with regulatory
compliance and
key emerging
issues.
How are you going to
market?
Commercial accommodation (Hotels,
Resorts, Serviced Apartments, Motels
etc)
Travel agents
Tour operators
Cruise boats/ships
Adventure travel operators
Activities & Attractions
Others (as demanded)
Compliance, Security & Risk
Management
Legal and regulatory compliance
audits, plans and programs
Risk management reviews, plans and
advice
Lobbying and advocacy on law and
regulation changes
Due diligence
Troubleshooting
Identify Business Risks
Identifying and assessing potential business
threats
Risk can occur across a number of areas of
business operation, so it is important to think
broadly.
1. Inspect and assess
What are your main and regular business
activities?
Include any key services in your answer, such as
resources and staff, and things that could affect them,
such as power failures, natural disaster and illness.
Assessing your business will help you work out
which aspects you couldn't operate without.
Identify business risks
2. Review your business plan
Now that you have a few ideas about what your regular
and core business activities are, it is time to review
your business plan and think about what business
activities and essential, and what are nice to have.
If they pose a higher risk on incident or threat potential,
consider removing them from your business plan.

3. Talk to other business owners, family and

friends
Discussing your ideas withfamily, friends, and your
accountant or staff members can open your mind to a
differentperspective on risks to your business.
Identify business risks
4. Think outside the box
Have there been any incidents or events in the past that had
the potential to affect your business operations, posing a
potential risk?
Think about what happened in those instances, and if you
identify any potential risks in hindsight think of what you can
do to minimize the chance of a particular incident or event
occurring again. This helps identify any risks that sit outside
the business currently.

5. Assess your current processes

Revisit all your business processes and think about any
potentially associated risks or threats.
Think about any threats to your processes and see if you can
make improvements, improving the day to day operations of
your business.
Risk Identification
Running a business can be a dangerous occupation
with many different types of risk.
Some of these potential hazards can destroy a business,
while others can cause serious damage that can be
costly and time consuming to repair.
Despite the risks implicit in doing business, CEOs and/or
risk management officers no matter the size of the
business, from small to corporate giant - can prepare for
them if they know what they are.
If and when risk becomes reality, a well-prepared
business can moderate the risk's impact.
Dollar losses, lost time and productivity and the
negative impact on customers can all be minimized.
Physical Risks
Building risks are the most common type of physical
risk. Fire or explosions are the most common risk to
a building. To manage this risk, and the risk to
employees, it's important to do the following:
Make sure all employees know the exact street address of the
building to give the 911 operator in case of emergency.
Know the location of all exits.
Install fire alarms and smoke detectors.
A sprinkler system will provide additional protection to the
physical plant, equipment, documents and, of course, personnel.
Inform all employees that in the event of emergency their
personal safety takes priority over everything else. Tell them to
leave the building and abandon all work-associated documents,
equipment and or products.
Location Risks

Among the hazards facing the location of a business are:

nearby fires,
storm damage,
floods,
hurricane or tornado,
earthquake and
other natural disasters

Employees should be familiar with streets leading in and

out of the neighborhood on all sides of the place of
business.
Keep sufficient fuel in your vehicles to drive out of and
away from the neighborhood.
 Human Risks
Alcoholism and drug abuse are major risks to personnel in the work
force.
Employees suffering from these conditions should be urged to seek
treatment, counseling and rehabilitation if necessary.
Some insurance policies may provide partial coverage for the cost of
treatment.
Protecting againstembezzlement, theft and fraud may be difficult,
but these are crimes, which occur frequently in the workplace.
A system of double signature requirements for checks and invoice
andpayablesverification can help prevent embezzlement and fraud.
Stringent accounting procedures may discover embezzlement or fraud.
A thorough background check before hiring personnel can uncover previous
offenses in the applicant's past.
While this may not necessarily be grounds for declining to hire an applicant,
placement for the new hire in a critical position in which money and cash
equivalents are used may not be judicious.
Sickness among the work force is inevitable and is always a problem.
To prevent loss of productivity, assign and train backup personnel to handle
the work of critical employees when they are absent due to illness.
Technology Risks
Power outage is perhaps the most common of technology
risks. (MICE, Sports Events, etc)
Auxiliary gas-driven power generators are a good back-up system to
provide electrical energy for lighting and other functions until utility power
is restored.
In manufacturing plants, several large auxiliary generators can keep a
factory producing until utility power is restored.

Computers may be kept up and running with high-

performance back-up batteries. (MICE)
Power surges may occur during a lighting storm, or randomly, so computer
systems should be furnished with surge-protection devices to avoid loss of
documents and destruction of equipment.
Offline and online data back-up systems should be used to protect critical
documents.

Although telephone and telecommunications failure is

relatively uncommon, risk managers may consider providing
emergency-use-only company cell phones to personnel whose
use of the phone is critical to their business. (MICE, Disasters)
Prioritizing Risk
After the risks have been identified, they must be
prioritized in accordance with your assessment of their
probability.Establish a probability scale for purposes of
risk assessment. For example, risks may be:
1. Very likely to occur
2. Some chance of occurrence
3. Small chance of occurrence
4. Very little chance of occurrence
Other risks must be prioritized and managed in
accordance to their probability of occurring.
Actuarial tables statistical analysis of the probability
of any risk occurring, and the potential financial
damage ensuing from the occurrence of those risks
may be accessed online and can provide guidance in
prioritizing risk.
Managing Risk
Insurance is a principle safeguard in managing risk, and many
risks are insurable.

Some risks are inarguably high priority, such as the risk of

fraud or embezzlement if employees handle money or perform
accounting duties in accounts payable and receivable.

When insuring against potential risks, never assume a best-

case scenario. Even if employees have worked for years with
no problems and their service has been exemplary, insurance
against employee error may be a necessity.

If a business relies heavily on computerized data customer

lists and accounting data, for example exterior back up and
insurance coverage are mandatory.
Prevention
The best risk insurance is prevention.
Preventing the many risks from occurring in your business is best achieved
through employee training, background checks, safety checks, equipment
maintenance, and maintenance of the physical premises.
A single, accountable staff member with managerial authority should be
appointed to handle risk management responsibilities.
A risk management committee may also be formed with members assigned
specific tasks, with a requirement to report to the risk manager.
The risk manager with the committee should formulate
plans for emergency situations such as:(1) Fire; (2)
Explosion; (3) Hazardous materials accidents or the
occurrence of other emergencies
Employees must know what to do, and where to exit the building or office
space.
A plan for the safety inspection of the physical premises and equipment
should be developed and implemented regularly, with the training and
education of personnel, when necessary.
A periodic, stringent review of all potential risks should be conducted.
Any problems should be immediately addressed. Insurance coverage
should also be periodically reviewed and upgraded or downgraded as
 Describe the Role of
Infrastructure
Crouch and Ritchie, (1999) emphasized the importance of roads as
one of tourism infrastructure
Analyzed the product in the context of comparative and competitive
advantage; emphasized that tourism planning and development not
possible without roads, airports, harbors, electricity, sewage, and
potable water
Kaul (1985) is among the first to recognize the importance of
transport infrastructure as an essential component of
successful development in that it induces the creation of new
attractions and the growth of existing ones -- This system is
responsible for connecting tourism-generating regions to
destinations
o The connection between infrastructure and tourism is emphasized in
numerous professional studies, which underline the special role of tourism
development in the infrastructures modernizing on one hand, and on the
other, its reverse direction -- the generation of multiplication effects of
infrastructure development upon tourism
Today, the infrastructure development represents a preoccupation
of the decision factors and specialists from almost all fields, for the
elaboration of detailed plans regarding the infrastructure
 Strategic Vision:
TO BECOME THE MUST EXPERIENCE DESTINATIONGOAL:
IN ASIA. An
Improvin Rapidly expand capacity of secondary international airports environmentally
g market
Expand connectivity between Philippines and its key growth and socially
access responsible
markets
and
connecti Implement a strategic access infrastructure program tourism that
vity between secondary international airports and strategic delivers more
destinations widely
distributed
Developi Implement a sustainable tourism destination infrastructure income and
program
ng and employment
marketin Develop diversified tourism products that engage local opportunities as
g communities
competiti Implement a PPP-based mandatory tourism enterprise indicated by
ve accreditation system and facilitate tourism investment and 6.6 M
tourist lower cost of business international
destinati Safeguarding natural & cultural heritage and vulnerable arrivals and
ons and groups
products
34.8 M domestic
Improvin PPP-based marketing strategy and action plan travelers
g tourism generating
institutio
Institutionalize roles and responsibilities of DOT and LGUs PhP1,759 billion
nal,
governan Develop a competent well motivated and productive in total
ce tourism workforce expenditure,
and Improve governance in the area of safety, security, and in contributing
human dealing with tourists 6.78% to GDP
resource
capacitie 20 and employing
6.5 million
Rapidly Expand Capacity Of
Secondary International Airports
Reduce congestion to
improve visitors
impression
Increase passenger
handling capacities
Prioritize:
NAIA, Mactan-Cebu,
Clark and Davao
(2011-2012)
Puerto Prinsesa, Iloilo
(2012-2013)
Laoag and Zamboanga
(2013-2014)
21
We believe that tourism is the
shortest path to inclusive growth.
Tourism provides jobs. It spurs
businesses and connects many
industries. We believe its
contribution to achieving key
advances in our economic goals for it
is truly the business of the people.
- Secretary Jimenez
Economic Resources for Travel
& Tourism
Tourism is a global force for economic and regional
development.
Tourism development brings with it a mix of benefits and
costs and the growing field of tourism economics is
making an important contribution to tourism policy,
planning and business practices.
Travel & Tourism is a truly global economic activity one
which takes place in destinations across the world, from
leading capital cities and smaller towns and villages in
rural and coastal areas, to some of the remotest points
on the planet.
It is one of the worlds largest industries, or economic
sectors, contributing trillions of dollars annually to the
global economy, creating jobs and wealth, generating
exports, boosting taxes and stimulating capital
investment.
2014 Budget
PNoy has proposed a total allocation of P31B: to
push the tourism sector and make it a
significant driver of the economy in 2014.
The budget allocated for several tourism projects
this year was P29.8B.
Allocated amount to tourism projects is
equivalent to 13.7% of the administrations
proposed national budget of P2.27T
The government is trying to attract some 6.8M
foreign visitors in 2014, some 24% higher than
this years target of 5.5M visitors. (Up to 10M by
2016!)
A government source said the P31B allocation for
the tourism sector includes projects of
Economics and Tourism
Tourism is a major industry globally and a major sector in
many economies.
According to the United Nations World Tourism
Organization over the past six decades, tourism has
experienced continued growth and diversification to
become one of the largest and fastest growing economic
sectors in the world.
The World Travel and Tourism Council (WTTC) estimate
that tourism contributed 9.2% of global GDP and
forecasts that this will continue to grow to grow at over
4% per annum during the next ten years to account for
some 9.4% of Gross Domestic Product (GDP).
Over time, an increasing number of destinations have
opened up and invested in tourism development, turning
modern tourism into a key driver for socioeconomic
progress.
 Australia
The expenditure
associated with tourism
flows makes a substantial
economic contribution to
the Australian economy
nationally, by state and
by region.
In Australia, for example,
tourism makes a direct
contribution to the economy
of $40.639M in GDP or 3.6%
of total GDP and 4.7% of total
Philippines
In the Philippines, the direct contribution of
Travel & Tourism to GDP in 2013 was
PHP472B(4.2% of GDP). This is forecast to
rise by 3.8% to PHP490B in 2014.
This primarily reflects the economic activity
generated by industries such as hotels, travel
agents, airlines and other passenger
transportation services (excluding commuter
services).
But it also includes, the activities of the
restaurant and leisure industries directly
supported by tourists.
The direct contribution of Travel & Tourism to
GDP is expected to grow by 5.6% per annum
to PHP843B (4.3% of GDP) by 2024.
In 2013, Philippines generated PHP221B In
Visitor Exports.
In 2014, this is expected to grow by 2.0%,
and the country is expected to attract
4,697,000 international tourist arrivals. By
2024, international tourist arrivals are
Much of the tourism literature today appreciates the
importance of developing tourism sustainably. An
essential element of a sustainable tourism industry is
economic viability.
Sustainability
It is sometimes forgotten that the concept of sustainability has
an economic dimension alongside its social and environmental
dimensions.
Economic efficiencies result in less use of resources with
potentially less adverse social and environmental impacts from
their use.
Tourism development is fundamentally driven by business.
However, governments play a significant role as partners in
tourism development to an extent.
The more comprehensive our understanding of the economic
issues associated with tourism is, as reflected in the decisions
made by tourism operators and policies enacted by destination
managers, the more able are economic efficiencies to be
achieved in the overall objective of sustainable development of
the industry.
 Sustainability
A report by the 1987 UN
Commission on Environment
and Development, defines
sustainable development
as meet[ing] the needs of
the present without
compromising the ability of
future generations to meet
their own needs
The definition recognizes that
successfully achieving
sustainability requires
reconciling the sometimes
competing interests of social,
environmental, and economic
issues
Methods of Controlling Risks

There are three main techniques for

managing and controlling risk. These are:
1. Finance the business and its operations to
cater for risk, and absorb the consequences
and cost of risk in its profitability,
2. Organize the business and its operations in
such a way as to eliminate risk as much as
possible; and
3. divert or spread the risk, for example,
through insurance.
1. Absorb the Risk

Absorbing a risk is one management technique

appropriate to certain types of risks. Typical pure
risks which fall into this category are the normal
fluctuations in market prices of products,
changes in international currency rates, and
increases in labor costs, etc.
However, absorbing risks requires positive action on
the part of management and not simply acceptance
that the enterprise can withstand the loss should it
occur.
In view of the high risk category (volatility) of
the travel and tourism industry, it is important to
have a business plan and management strategy,
which anticipates absorbing certain risks.
2. Organization, Industrial Standards, and Codes of Practice

Managing and controlling risks are the

responsibility of the industry as a whole.
This is brought about by individuals
recognizing the specific responsibilities
within their own particular branch of the
industry, and by professional associations
and groups of individuals working together
to improve organization, to set appropriate
standards, and to adopt codes of practice.
3. Divert the Risk

Most of the risks identified and analyzed by

managers for his enterprise can be reduced by
varying degrees, yet few can be entirely
eliminated. Thus, they have the option to absorb
these risks themselves or to divert them.
Insurance
An important option available to the manager is
to insure the welfare of his products/services
against the risk. This is one of the well-used and
practical techniques for handling risk.