Tourism investors need government assurances

Macau Sar, China (PRC) Investors in tourism projects are more likely to open their wallets if governments supply assurances along with electricity, water and telecom facilities.

Speakers addressing a session of the 54th PATA Annual Conference in Macau, Wednesday said that financiers not only analyse the economical viability of the tourism business plan, but also political stability, the economic growth rate, the enforcement of contracts and the protection of property rights. President, World Travel and Tourism Council Jean-Claude Baumgarten, told delegates that a lack of project financing for entrepreneurs has become a serious bottle-neck in the development of travel and tourism industry in Asia Pacific.

Baumgarten said: "The key component to financing tourism projects is the public-private partnership. Although tourism is largely a private-sector driven business, the government's role is indispensable. It is crucial to create a favourable environment to attract private investment in tourism projects, by putting in basic infrastructure - electricity, water and telecom facilities."

He said it was imperative for the government to give incentives and high visibility to the investment as part of a strong policy commitment to tourism development. Managing Director, Hong Kong Research CLSA Amar Gill, said that tourism supplies cash flow, growth and high-return. "If the environment is right, the capital will flow. However, it is important to have a sexy theme for a tourism project, as well as making it commercially viable."

Managing Director, Leisure Industry, The Royal Bank of Scotland, Richard Price, said that financiers realise the importance of sound environmental practice.

Financiers also consider issues such as the ability and willingness of the project managers to maintain the attractiveness of the facility.

Director, DB Real Estate Asia, Deutsche Asset Management in Hong Kong Robert Byrne, said that in order to make a decision on project finance, the financiers will look not only at the economical viability of the tourism business plan, but also the political stability, economic growth rate, enforcement of contract and protection of property right issues.