The 6 branding and marketing best practices for any place looking to attract tourism investment
by Danny Cohanpour, CEO of Trove Tourism Development Advisors
Sharee Bauld and Santosh Hejmadi, Strategy & Investment Specialists, Trove Tourism Development Advisors
The COVID-19 pandemic has hit the tourism sector hard - data suggests that global FDI into tourism plummeted by 73.2% in the first half of 2020, compared to the previous year. Many look to complex financial models, stuffy workshops, or forecasting to drive tourism investment in cities, regions and nations.
However, the most critical factor that we have seen to generate domestic and foreign tourism investment in a place is branding and marketing - the ability of a place to let investors know why their investment proposition is unique, secure, and highly lucrative. For instance, with the Cambodia Ministry of Tourism, we are developing a two pronged tourism FDI investment strategy that guides a whole-of-government approach to organise and attract investment, while simultaneously building an attraction strategy of investment opportunities to enable and mobilise tourism infrastructure in Phnom Penh, Siem Reap, and other key provinces.
Trove’s Strategy & Investments team works with investment promotion agencies, tourism authorities and place organizations to attract foreign and domestic tourism investment to a place - with the ultimate goal to help the place “stand out.” Here are the key trends and best practices for any investment promotion agency, tourism authority or firm looking to attract tourism investment, as taken from Trove’s White Paper entitled “The Ultimate Branding & Marketing Guide to Attract Tourism Investment.”
Understanding tourism investment trends in 2022
In June 2022, the World Travel & Tourism Council (WTTC) published ‘Critical Factors to Attract Hotel Investment,’ a new report highlighting the importance of attracting capital investment to enable the Travel & Tourism sector’s full growth potential post COVID-19, following a 25% drop in 2020. The WTTC pushes that government and investment authorities representing places around the world must create a favourable enabling environment.
At Trove, we have seen two top new trends since 2020 in the sector. The first is around the increase in competition in the sector. While historically almost half of all tourism investments globally (46%) were made in the top ten countries of the UK, US, Germany, China and Spain, tourism FDI has been growing consistently in emerging markets including Latin America, Caribbean, Australia, the Middle East and Africa. The UAE especially leads FDI in tourism across the Middle East and Africa, accounting for 30% of all tourism FDI investments and serving as the only MEA country to feature in the top 10 global countries for FDI in tourism.
Other countries like Morocco, Israel, and Bahrain have seen sharp increases as well, with Bahrain seeing new investments from developers like Emaar Properties and Eagle Hills. Emerging markets like Malawi, for instance, have initiated public-private investments with donor funds like the African Development Bank to develop tourism investment master plans to help both map out the plan and develop a strong brand around tourism investment. The Caribbean has also seen growth in certain countries, with Barbados, St. Lucia and Jamaica focusing their efforts around promoting their places as high-value and secure investment opportunities for high-value investors in hotels, infrastructure, attractions and travel technology.
The second trend is green investments, where investors are paying increasing attention to the social and environmental footprint of the projects they assess in tourism. Tourism investments in hospitality, food and beverage, travel technology, and infrastructure remain a major driving factor in the development of a city, regional and national tourism industry and without these investments, growth is impossible.
Six branding and marketing best practices for tourism investment development
The above trends make one thing obvious. Without a strong brand and marketing strategy to complement a country’s investment strategy to attract tourism FDI, places cannot compete.
Based on our experience working with leading organisations around the world, we have outlined seven steps for any place’s tourism, investment or promotional agency when working to jump-start, pivot, or grow their tourism FDI attractiveness to high-value investors:
1. Compile all past tourism investment research and trends to understand goals and key market segments
For any place, it is imperative to develop a coherent idea of what the brand should express and what the objectives are to be reached. In order to build a strong appetite for tourism investment in your place, you need to get organized. This includes:
- Gather research, data, and consultation meetings into a draft report on past tourism investments, investors, workshops held, bid meetings organized, and surveys conducted
- Understand existing and future key markets to a destination, so that your investment best mirrors those markets
- Identify branding, promotion and marketing strategies that have been used to attract tourism FDI in the past as well as past challenges and tourism investment arrangements.
- Identify both short and long-term public-private tourism investment priorities and goals as well as current investments that might be in pipeline
- Past responsible and sustainable (or green) tourism investments in the place
- Relevant incentive packages, guidelines, tools and mechanisms
2. Document all of the reasons why the enabling environment for tourism investment will generate the best ROI for your investment
Investment authorities must document, synthesize and promote the enabling environment for tourism investment in their place, including governance, rule of law, liquidity, government aid, smart taxation, physical infrastructure, legal infrastructure and governance, safety, market access (local, regional an international), air and ground connectivity, destination planning and sustainability, innovation, digitization, workforce strength, service culture, and travel facilitation/airlift. Other economic details like allowance for foreign ownership, taxes, financial incentives, remittance details, and ability to dis-invest in the future are important. Other situational details like health and education are critical to include as highlighted and accurate data to provide to prospective investors.
We have found it useful for organizing entities to document the process of dealing with other related government bodies and business transparency as well as cost structures, ease of setting up registrations and facilities and other place-based context.
Another key factor to take into account is workforce. Training, re-skilling, and upskilling programs aimed at improving the skills and knowledge base of the industry to improve soft and hard skills are essential to not only enhancing the tourism sector’s potential for further development but also to attracting investors in understanding that their investments will be managed correctly and supported by a skilled and competitive workforce.
3. Document all of the investment opportunities and constraints in your place
Destinations that are clear and transparent on new investment opportunities in the sector in their place are the most effective in attracting high-value public and private investors. Destinations need to understand where they are falling short, especially from the perspective of the public sector where the necessary infrastructure and utilities need to be in place in order to ensure investors are confident that their investment will generate the best returns. Working together, both public and private sectors can identify and prioritise where gaps need to be filled and constraints eased.
For instance, the tourism industry in the Caribbean contributes nearly 59 billion in U.S. dollars to the region’s GDP annually. For the past ten years, the total tourism contribution to the Caribbean GDP has steadily increased, creating solid opportunities for investors. Caribbean nations are constantly aggregating and promoting investment opportunities, and other regional organizations like the Caribbean Association of Investment Promotion Agencies are aggregating investment opportunities for public consumption.
More and more destinations are integrating investors as audiences for tourism master plans as they set forward goals for 2023-2035. For years, the nation of Costa Rica has worked to create a unique value proposition for both tourism and tourism investment, focusing on sustainability as well as offering products with low environmental impact and maximum community benefit. Destinations must diversify their tourism offer and identify examples of revenue-generating investment opportunities across their tourism environment. Lastly, WTTC research suggests that governments and destinations invest in and/or encourage investment from the private sector in areas ranging from physical and digital infrastructure, medical and wellness tourism to sustainable and cultural tourism and business travel depending on the destination. Other areas that investment promotion agencies and tourism authorities can focus on include: physical infrastructure and connectivity; digital infrastructure; medical tourism; wellness tourism; business travel; sustainable tourism; nature & wildlife; cultural tourism; and adventure tourism (WTTC).
Lastly, for us, data and information on tourism consumers (travellers) in the country and region around is critical to the investment decision. The old adage “Fish where the fish are” underscores the whole investment location decision. For instance, the UAE (particularly Dubai) and Saudi Arabia are very clearly focusing on attracting high net-worth individuals from around the world to come and live there. They are also targeting a younger and more specialized work force. This new population structure is attracting companies, with businesses offering products and services to service this growing and diverse population. This new structure is attracting companies, with businesses offering products and services to service this growing and diverse population.
4. Document all of the qualities of your place’s brand and identify those that directly impact your tourism investment attractiveness
Elements like country images, safety, country pride, and culture play a major role in the on-going search for the best FDI locations by investors and investors in tourism. IPAs, tourism authorities and firms responsible for investment promotion must prioritize all of the aspects of a place brand - emotional, physical, financial, leadership, cultural, global, political - and identify those that directly impact the investor’s willingness to buy at each step of their decision-making process. Foreign investors, for example, may also be influenced by tourism images and existing destination branding so it is important to understand which characteristics of the existing tourism brand - including attractions, ease of visiting, resident sentiment towards visitors, and others -can be applied to promote investment in the sector.
Some places bundle their investment and tourism brands with the overall place brand. For instance, Costa Rica has bundled its well-established tourism brand with its lesser-known exports and foreign direct investment (FDI) opportunities which they saw strengthen the country’s international investment growth.
Other places keep tourism investment separate. For instance, UNWTO launched tourism investment guidelines for the Dominican Republic, developed with the Ministry of Tourism of the Dominican Republic and the national Export and Investment Center (PRODOMINICANA). The guide represents a new front-face for the place with key value propositions for investors, with the goal of increasing foreign direct investment in Dominican Republic.
5. Develop a key message or value statement for tourism investment
The value proposition (or key message or value statement) should include a combination of “soft” and “hard” factors. Many studies have shown that FDI decisions are affected by investors’ image of potential locations and the target countries’ reputations. For example, research on Brazilian investment in Portugal identified both typical “hard” factors as well as soft factors as having an influence on an investor’s location choice for their investment.
Place brand value propositions for tourism investment are gaining in importance, with award shows now being held to rank the best brands. The “Brand Africa | Africa’s Best Places” initiative, for example, builds on the inaugural Brand Africa Forum in 2010 which convened African and global place branding decision makers to discuss how African nations can develop a stronger brand. A main component of these awards was around investment and specifically tourism investments. Brand South Africa, for example, has a strong branding and marketing strategy for positioning South Africa’s economic competitiveness for tourism investors. Orlando, a major city in Florida, launched a business branding campaign in 2019 around FDI called ”Orlando. You don’t know the half of it.” to increase investor awareness and the strengths of calling Orlando a business location.
6. Develop a marketing strategy
Places either have an investment promotion agency or share this role across their administrative agencies including their tourism authorities, tourist boards, or other government. Focused messaging and targeting is essential by using organic and paid print, social and digital media and adopting specific promotional activities. This is more easily available to tourism and Invest promotion Authorities today than ever before. Also critical to promulgating a brand to promote tourism investment is identifying the right seminar, mission or trade show that target potential investors you have already identified. This will allow you to be assured that capital spent on these marketing activities will be worth-while and that follow-on activities, such as direct one-on-one meetings, local visitors, investor matching with local partners, and project proposal development will be possible.
Learn more about Trove Tourism Development Advisors and contact Trove’s Strategy & Investments Team to begin to get a plan together.