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Project No. 01.2467.7-001.00

Small and Medium Enterprise Development for

Sustainable Employment Program

(SMEDSEP)

Subsector Analysis of the Tourism Industry

in Negros Occidental

February 2005

COOPERATION

Federal Republicof

Germany

epublic of the Philippines


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Prepared Written by:

Consultants

Published by:

A DTI-TESDA-GTZ Program10th Floor, German Development Center,PDCP Bank Centre Building, V.A. Rufino cor. L.P. Leviste Streets,Salcedo Village, Makati City

|

Ms. Martina Vahlhaus, Program Manager

Printed on:

/Marian Boquiren, Ivan Idrovo and Helen Valdez, SDCAsia, Inc.

The Small and Medium Enterprise Development for Sustainable Employment Program (SMEDSEP)

March 2005 - Makati City, Philippines

|[email protected] www.sdcasia.ph

[email protected]


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Subsector Analysis of the Tourism Industry

in Negros Occidental

February 2005


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Table of Contents

Page

Acronyms 2

Executive Summary 3

Section 1: Introduction 6

A. Objectives of the Study 6

B. Scope of Work 6

Section 2. Beginnings of the Focus on Tourism Development 8

Section 3. Industry Structure 10

A. Overview 10

B. Primary and Secondary Resource Bases 13

C. Tourism Services and Facilities 17

D. Enabling Support Environment: BDS/TVET 20

Section 4. Industry Performance 21A. Tourist Arrivals 21

B. Tourism Receipts 22

C. Employment 22

Section 5. Proposed Fields of Change 23

A. Product and Infrastructure Development 23

B. Promotion and Market Development 25

C. Quality and Competitiveness Improvement 26

Section 6. Proposed Program Interventions 29

A. Institutional Development/Planning 29

B. Product and Infrastructure Development 29C. Promotion and Market Development 30

D. Quality and Competitiveness Improvement 30

ANNEXES

A Food Services

B Travel and Tour Operators

C Accommodation Services

D Resorts

E Transport Operators

F Validation Workshop Summary ResultsG List of Key Informants

H Accreditation

I Classification and Standards: Hotels

BIBLIOGRAPHY

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Acronyms

ANP Association of Negros Producers

BDS Business Development Services

CDs Compact discsCOMELEC Commission of Elections

CPQI Continuous Productivity and Quality Improvement

CRS Customer Reservation System

DA Department of Agriculture

DDTVET Demand driven Technical and Vocational Education and Training

DMO Destination Marketing Organization

DOT Department of Tourism

FGD Focus group discussion

GDS Global Distribution System

GMP Good Manufacturing Practices

GTZ Deutsche Gesellschaft fur Technische Zusammenarbeit (GTZ) GmbH

HRANO Hotel and Restaurant Association of Negros Occidental

HRM Hotel and Restaurant Management

IATA International Air Transport Association

ICT Information and Communications Technology

ISO International Organization for Standardization

IT Information Technology

LGU Local Government Unit

LTFRB Land Transportation and Franchising Regulatory Board

MICE Meetings, Incentives, Conferences, and Exhibition

NAIA Ninoy Aquino International Airport

NAITAS National Association of Independent Travel Agencies

NATTO Negros Association of Travel & Tours Organization

PAGCOR Philippine Amusement and Gaming Corporation

PAL Philippine Airlines

PCCI Philippine Chamber of Commerce and Industry

PCVC Philippine Convention and Visitors Corporation

RANI Resort Association of Negros Island

SA8000 Social Accountability 8000SBS Subsector Business Service

SDCAsia Strategic Development Cooperation Asia

SME Small and Medium Enterprises

TCDC Tourism and Cultural Development Committee

TDC Tourism Development Council

TESDA Technical Education and Skills Development Authority

TVET Technical & Vocational Education and Training

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Executive Summary

• The tourism development agenda of Negros Occidental had its roots during a period of socio-economic crisis resulting from adverse conditions of the world sugar trade. Among the earlytourism related efforts and which has become an annual traditional event is the MasskaraFestival. This annual event is popular to local and foreign tourists and has helped place Bacolod,the City of Smiles, in the tourism map.

• Primary and secondary tourism resources of Negros Occidental consist of the following:

- Marine-based resources: Negros Occidental has a long coastline and boast of several naturalattractions such as white sand beaches, diving sites, and marine sanctuaries.

- Land-based resources including flora and fauna: The northern and western parts are largelylevel plains and gently rolling slopes while the remaining portion is a land of sierras of varying

elevations.

- Cultural-heritage resources: Rich culture and history of province are captured and preservedin ancestral mansions, historical monuments, buildings and churches built during the Spanishera.

- Festivals/Events: Negros Occidental is said to have the most number of festivals in thePhilippines depicting certain cultures in each of its 19 towns and 13 cities.

- Entertainment: There are a number of bars with live entertainment, video, karaoke, gamerooms and discos, with majority located in the Goldenfields Commercial Complex.

- Sports: Bacolod, the province's capital city has three challenging and world class golf courses,

making it the golfing center in the Visayas.

- Shopping: Negros Occidental is known for its innovative gifts and houseware and foodproducts.

• Tourism services and facilities in Negros Occidental consist of the following:

Accommodation 86 establishments with 10 first class and standard hotels; 23% are DOTaccredited

Food Service 1,104 food establishments in the province as of June 2004, withmajority falling under the micro scale category. Only 5 establishmentsare DOT accredited.

Travel and touroperators

48 establishments with 3 accredited by DOT; 30+ tour guides

Resorts 65 resorts --- beach, mountain, agriculture, and inland

Transport 3 airlines and 4 inter-island shipping companies servicing Bacolod route;inland transportation consisting of buses, jeepneys, taxis, and carrentals

• Main issues and challenges facing the industry are the following:

- Current downward trend in average expenditure per visitor

- The need for more effective and cohesive image, market positioning, and promotion

- The need to expand tourist season and reduce seasonality

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- Wide variances in quality of products and services as well as the need to align these to

market requirements and standards- Weak demand and supply of support services and technical and vocational training needed to

improve performance of tourism enterprises and their workforce

- The need to create industry synergy and higher level of cooperation between and amongpublic and private stakeholders within and outside the province (especially with neighboringtourism destinations).

- The need to strengthen environmental management to conserve and enhance the vitalnatural and heritage of the province, and that sustainable tourism development practices areobserved.

• Building on current public and private sector tourism development initiatives, the following arethe proposed fields of change and strategies to address the above challenges:

Product and Infrastructure Development

Development of a compelling brand and product portfolio, which meet the desire for adistinctive, authentic and uniquely Negros Occidental experience

Development of cultural, sporting, and social events that would contribute to the extension ofthe tourist season and the achievement of higher yields, improved profitability, and increasedemployment in the industry.

Improvement of tourism related infrastructure

Improvement of waste management

Promotion and Market Development

Improvement of destination marketing of Negros Occidental

Availability of tourism information at major gateway points (e.g., airports in key cities in thePhilippines, international airports in other countries) and in strategic locations within NegrosOccidental.

Development of tourism internet portal for Negros Occidental --- a well-designed full conceptone-stop tourism virtual mall that provides visitors access to information and reservation as wellas links to various tourism intermediaries.

Better use of travel agencies, tour operators, and other local/regional/international tourismintermediaries to promote and distribute Negros Occidental tourism products complemented bypublicity in appropriate media to create awareness and establish credibility within thesegments.

Quality and Competitiveness Improvement

Upgrading of existing management, marketing, and general administration courses tointernational standards and re-alignment of requirements of the everyday operations of thetourism trade.

Development and/or strengthening of local capability to deliver dualized training programs ofinternational standards and with balanced emphasis on operational and people skills for variouscompetencies required in the hospitality, travel, tour, and transport segments.

Promotion among enterprises of the implementation of a Continuous Productivity and QualityImprovement (CPQI) Program

Promotion of the effective use of information technology in improving business operations andmarketing

Promotion and development of a tourism-friendly culture across all sectors of the communitythrough public awareness and education programs

Establishment of a province-wide industry led quality seal program

•

It is proposed that program interventions be directed towards the following:

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Institutional Development/Planning

Initiate the re-organization of the Tourism and Cultural Development Committee (TCDC) or asimilar body composed of representatives of key players in the tourism sector such as ATANOand provide organizational development assistance.

Technical assistance to TCDC or similar structure in the review and updating of the Tourism

Master Development Plan including mentoring services during the first year of implementationAssist the TCDC in dissemination of salient points of the development plan to all stakeholders.This may be done through forums, workshops, and media publicity.

Organizational development assistance to selected tourism industry associations.

Product and Infrastructure Development

Support the establishment of a self-sustaining tourism market intelligence system.

Technical assistance to the TCDC or similar structure in the further definition of NegrosOccidental brand and positioning including its consequent adoption by the various stakeholders.

Develop local providers of product development services.

Stimulate demand for product development services and development of various schemes tomotivate tourism businesses to invest in product development

Assist in the development of advocacy campaigns for increased allocation and/or prioritizationof public infrastructure improvements (e.g., airports, roads, etc.).

Technical assistance in the development of waste management system and establishment ofpool of local experts that can assist enterprises in the set-up of their own systems.

Promotion and Market Development

Support the development of tourism internet portal for Negros Occidental.

Improve capability of existing journalists, advertising companies, web designers, multimediadesigners, graphics company, souvenir manufacturers, marketing and promotion companies, andthe like to address promotion and marketing needs of the tourism industry.

Technical assistance to the industry via the Tourism Council in the development of a marketingand communications plan.

Broker marketing agreements between tourism service establishments and travel and touroperators. Parallel to this, assist Negros-based travel and tour agencies in forging partnershipswith national and international travel intermediaries including Philippine embassies and tradeattaches.

Quality and Competitiveness Improvement

Facilitation of linkages between industry, local providers and establishments offeringinternationally recognized courses

Assistance in the development and/or customization of curricula as well as capability build-upof local training providers

Assistance to training providers in the development of various delivery and payment modalitiesto address affordability and accessibility issues

Development of local capability to deliver Continuous Productivity and Quality ImprovementProgram to enterprises. Parallel to this, stimulation of demand for program throughdemonstration of benefits and impact via pilots

Assistance to IT training institutes in the development of customized training program fortourism businesses. Demonstrate benefits of use of IT to enterprises through pilots

Marketing assistance to providers with new and/or high quality product offers

Technical assistance in the development of public awareness program designed to promoteprovince wide tourism friendly culture

Technical assistance in the development and implementation of Quality Seal program

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Section 1

INTRODUCTION

A. OBJECTIVES OF THE STUDY

The SMEDSEP Program is an integrated approach for the development of the private sector in thePhilippines with a regional focus on the Visayas. The program comprises of four components namely:

1. SME Policy/Enabling Environment for SMEs2. Business Development Services (BDS) for SMEs3. Access to Financial Services for SMEs4. Demand-driven training programs for the workforce

Using the Subsector Business Service (SBS) approach to enterprise development, SME stakeholdersof Negros Occidental identified Tourism as the pilot subsector for components 2 and 4 based on theassessment that it has the highest potentials for income and employment generation. The next stepis the subsector analysis in order to gain a greater understanding of the market players, their roles,and interrelationships in the tourism sector.

The objectives of the subsector analysis are to:

• Identify final sales markets and market segments• Identify market channels and trends within the tourism subsector• Identify the primary players of the tourism subsector, their roles, and interrelationships• Create the tourism subsector maps/value chain that describes the above• Identify constraints of the subsector and opportunities for growth of the sector

• Identify BDS and Technical and Vocational Education and Training (TVET) interventions that canaddress the tourism sector constraints

B. SCOPE OF WORK

The report has been prepared in close consultation with key players in the public and privatesectors involve in the Tourism sector in Negros Occidental. The research is qualitative rather thanquantitative.

A mission was conducted by Katja Legien sometime in May 2004 during which parameters of thesubsector study were defined. Likewise, a preliminary tourism subsector mapping was conducted bythe SMEDSEP and DDTVET component teams to identify industry groups that would be included inthe study and potential key informants. The scope of work of this study includes:

1. A profile of the tourism sector in Negros Occidental

2. A snapshot profile of the following 5 subsectors presented in the annexes in terms of: a)industry structure; b) value chain; c) human resources

• Food service• Travel agencies and tour operators• Accommodation• Resorts• Transport operators

3. Identification per subsector of the following:

• Constraints

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• Current initiatives to address constraints• Potential solutions

4. Recommendations on fields of change and BDS/DDTVET interventionsBeyond the scope of SDCAsia’s assignment is an analysis of the sector vis-à-vis supply of BDS andTVET in the market. Likewise, the report does not cover quantitative analysis of demand as well as

identification of specific features and contents of recommended BDS and TVET products. Also,given the small sample size as identified and determined by the SMEDSEP program, the reportmakes no claims of statistical relevance and relied mainly on available secondary data, which ishazy at the moment given the infant status of the sector.

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Section 2BEGINNINGS OF THE FOCUS ON TOURISM DEVELOPMENT

From the 1950s to the 80s, Negros Occidental's economy was anchored around one commodity,"sugar", which made it the country's premier sugar producer. However, when the world sugar pricesplummeted to rock bottom sometime in 1983, the economy of Negros Occidental was devastated.From that experience, Negrenses learned to diversify their economy. Although sugar still remains asthe main agricultural produce of the province with about 56% of its land area planted to sugar cane(contributing 60% of the country’s total sugar production), other profitable ventures sprouted suchas prawn and fish ponds, farms nurturing high value crops and floral species, as well as handicraftbusinesses. The province wide focus on the development of the tourism industry also started duringthis period of socio-economic crisis.

The tourism industry development agenda was received enthusiastically by both the public and

private sectors as a positive way forward. The following initiatives from the government set inmotion the development of the tourism industry:

1. Creation of the Bacolod City Tourism Office by virtue of City Ordinance No. 158 on February 7,1996. Operations started on March 14, 1997 with the appointment of a Chief TourismOperations Officer and the eventual filling up of other positions. This office attends to thedifferent tourism activities of the City.

2. Set-up of the Tourism and Cultural Development Committee (TCDC), a policy making bodycomposed of 8 government agencies and 7 private sector representatives. Under the TCDC, atourist reception desk manned by a TCDC employee has been put up at the arrival area ofPhilippine Airlines in the Bacolod Airport. This reception desk provides brochures, and othertourism related information for the tourists. Likewise, several tourism activities have beenpushed or were supported by the city government through the initiatives of the TCDC.

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3. Devolvement of the functions of the Department of Tourism (DOT) to the local government unitin accordance with the implementation of the Local Government Code in 1992. Tourism iscurrently being handled by the Economic Enterprise Development Department of the citygovernment. The Provincial Tourism and Promotion Office was created under the Office of theGovernor in 1994 followed by the city and municipal offices. In 2004, the Negros OccidentalTourism Center was established.

4. Inclusion of the promotion of Negros Occidental as a tourist destination in the 7-point agenda ofthe incumbent provincial governor.

5. Active promotion of Bacolod as a convention center outside of Metro Manila by the city andprovincial governments of Bacolod and Negros Occidental respectively. The mayor and othergovernment officials held a series of meetings with various organizations to convince them tohold their conventions in Bacolod City. Until to this date, the government provides full supportto all the big conventions held in the city.

6. Development, management, and operations of the Mambukal Mountain Resort and the PanaadTheme Park by the provincial government with support from the city government.

7. Development of the Regional Tourism Master Development Plan in 2000 with DOT Region 6 asthe lead agency.

Private sector early responses to the call for diversification to tourism consisted of the following:

1. Construction and/or renovation of hotels to improve capacity to host conferences, seminars,and related events and in anticipation of growing number of inbound tourists.

2. Opening up of historical sites and development of both natural and man-made attractions.

3. Establishment of resorts, restaurants, and other tourism related services.

4. Strengthening and promotion of cultural festivals with Masskara Festival as the most popular,biggest, and most established annual event. The Masskara Festival is a Mardi Gras-likecelebration that features masked and costumed street dancers, with fairs and carnivals. This isheld on the third week of October, and coincides with the city's Charter Day celebration.

The Masskara festival was conceived to bring back the resilient spirit of the Negrense during thesugar crisis and the aftermath of the sinking of the Don Juan ferry, a vessel carrying many ofBacolod’s prominent families. To ease their pain, local artists, civic groups and the governmentorganized a festival of smiles. Coined from the words “mass,” meaning a multitude of people,and the Spanish word “Kara,” meaning “face,” the Masskara Festival became a yearly showcaseof the city’s talents and creativity and a celebration of their enduring spirit.

The highlight of the festival is the Masskara Street Dance competition where people wearingelaborate masks and garbed in colorful costumes move to the rhythm of Latin music along thestreets. This display of joviality, coordination and stamina has become popular to local andforeign tourists and has helped place Bacolod, the City of Smiles, in the tourism map.

5. Promotion of Negros Occidental through individual website initiatives, participation in nationaland international Travel Mart, and other similar activities. One annual event that has helpedput Negros in the consciousness of many of the Metro Manila residents is the annual bazaar andtrade fair organized by the Association of Negros Producers.

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Section 3INDUSTRY STRUCTURE

A. OVERVIEW

Tourism is the term given to the activity that occurs when tourists travel. This encompasseseverything from the planning of the trip, the travel to the place, the stay itself, the return, and thereminiscences about it afterwards. It includes the activities the traveler undertakes as part of thetrip, the purchases made and the interactions that occur between host and guest. In sum, it is allthe activities and impact that occur when a visitor travels.1 Tourism, therefore, involves fouroverlapping phases of consumer activity:

- Pre-travel activity: finding information, preparation of itinerary, booking the holiday or

travel arrangement, and preparation before travel

- Travel: trip to and from the destination including stops en route

- Activities at destination: may be uniform in nature or characterized by a wide range ofactivities

- Post-consumptive behaviour: processing of photographs, handing out of souvenirs, talkingabout experiences, etc.

Based on the above, it can be seen that the development of an attractive tourism product packageinvolves a diverse range of participants. Product creation in the tourism industry can be illustratedas follows:

Accommodation/

FoodTourismProduct

Service/Distribution

(Combinationof Material

Product and

Service)

Transportation (Tour Operators/

Travel Agencies)

Attractions

A tourism product involves a combination of services which deliver primarily intangible, sensual,and psychological benefits as well as some tangible benefits. As such, tourism promotion,development and growth entail province and industry wide collaboration and cooperation. In manyof the manufactured goods markets, consumers are fixed and products are mobile. In travel andtourism markets, consumers are mobile and the products are fixed. Revenues are captured whentravelers arrive at the destination. Marketing and delivery of a tourism product involve synergisticinteraction of the following six elements:2

1 Mill and Morrison, 19922 Les Lumsdom, Tourism Marketing

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1. The physical plant, such as site or natural resource, weather and infrastructure, and the

design standards applied to the built environment.

2. Service, which refers to the tasks required to meet the needs of the tourists such as in ahotel or airline facility. It is the technical element of a service provision.

3. Hospitality refers to the way in which service is provided, i.e. the something extra thatmakes a visitor feel good. It is distinct from the technical competence of service provision.

4. Freedom of choice refers to the notion that the visitor has some degree of choice in orderfor the experience to be satisfactory. It is the trigger to relaxation and allows some degreeof spontaneity.

5. Involvement refers to the underlying services marketing principle of simultaneousperformance or consumption. It involves participation and some degree of engagement.

6. The sixth dimension is the tourism product process. Resources are used to create tourisminfrastructure and intermediate processed inputs, known as tourism facilities, but this is

still a commodity. The final refinement is provided by the customer; the outcome is the‘personal experiences’ which is intangible but highly valued experiences such as recreation,business, and social contacts.

The tourism sector in Negros Occidental, as elsewhere, comprises a network of interactingcomponents, as illustrated in Figure 1. The components of the sector may be grouped as follows:

Component Description

Primary resource base Natural environment, heritage, culture, towns and villages,outdoor activity

Secondary resource base Entertainment, shopping, festivals, events, and other built

attractionsTourism facilities and services Services and facilities necessary to enable tourists to access

and enjoy the resources and products available

Infrastructure Roads, communication facilities, power and water facilities

Training and business supportservices

Business development services (BDS) and technical and vocationaleducation (TVET) for workers/employees and owners of tourismbased enterprises

Policy/enabling environment/governance

Institutional arrangements/structures, sectoral policies,community involvement and environmental management

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Figure 1. NEGROS OCC. TOURISM INDUSTRY PLAYERS

NEGROS OCCIDENTAL

SUPPLIERS

HOSPITALITY:

FOOD/BEVERAGE

NATURAL

ATTRACTIONS

MANMADE

ATTRACTIONS/EVENTS

HOSPITALITY:

ACCOMMODATION

TRANSPORT AS

TOURISM

TRANSPORTSERVICES

(NATIONAL/INTERNATIONAL

LOCAL TRAVELAGENTS

LOCAL TOUROPERATORS

EVENTS, TRAVELAND TOUR

OPERATORSELSEWHERE

TOURISMMEDIA

CONSUMERSBusiness Travellers

Leisure TravellersMix of business and leisure

BDS/TVET PROVIDERS

REGULATORY AGENCIES (ACCREDITATION, SANITATION, PERMITS, ETC.)

LOCAL GOVERNMENT/TOURISM AGENCIES/TCDC

LEGEND:Dotted lines

indicate weak

linkages

I N F R A S T R U C T U R E

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B. PRIMARY AND SECONDARY RESOURCE BASES

The strength of the appeal of a destination to tourists is, more than any other factor, linked to thequality of its primary and secondary resource bases. These resources stimulate the interest to visita destination area as well as define its image. Natural, man-made and cultural attractions providethe visitor with the essential incentive to choose a destination and are also the primary measures in

assessing the satisfaction of having visited a destination. In general, the demand for the othercomponents of tourism derives from the original stimulus that comes from the interest inexperiencing the different attractions.

he vast array of natural, secondary, and cultural resource bases of Negros Occidental provides

. Marine-based resources: Negros Occidental has a long coastline and boast of several natural

- The deep blue waters of China Seas in Southern Negros, particularly in the area of Danjugan

Tviable tourism assets that can potentially attract a diverse range of tourists if properly promotedand packaged together with quality tourism services and facilities. These tourism assets include thefollowing:

1attractions such as white sand beaches, diving sites, and marine sanctuaries. Examples of areasthat can be promoted as Diver’s Paradise are:

Island in Bulata, Cauayan

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- Sipalay Island, which has potential for

Although sustainability needs to be

A coastal resource management project,

Other places such as the Isla Puti, Sagay

. Land-based resources including flora and

- Mt. Kanlaon, which rises to an

Rural uplands, where there is potential

development based around waterrecreation, including underwateractivities and surface recreation.

assured by low-key development,consideration should be given to a smallbeach hotel and associated beachupgrading.

which in the long term seeks restorationof damaged reef areas, is beingimplemented in Sipalay and DanjuganIslands under the umbrella of aprovincial environment program calledthe Southern Negros CoastalDevelopment Program. The Philippine

Reef and Rainforest ConservationFoundation, Inc. in partnership withCoral Cay Conservation started in 2000the conduct of training on marineresource management to communities,fisherfolks, and government personnel.

-

Marine, Lakawon Island or InampuluganIsland, etc.

2fauna: The northern and western parts are

largely level plains and gently rolling slopeswhile the remaining portion is a land ofsierras of varying elevations. Tourism assetsinclude the following:

elevation of about 8,100 feet, is thehighest peak in the province, and isconsidered also be the highest incentral Philippines. Other mountainsare Mt. Mandalagan and Mt. Silay. Asidefrom beautiful sceneries, these areasboast of therapeutic hot springs,rejuvenating mountain streams, andseveral mountain climbing, hiking, andtrekking trails.

-

to capitalize on the scenic beauty ofthe Balabag highlands and thesurrounding areas. The peaks in the area hSan Carlos, Mount Kanlaon, Cebu and Bacolod) and good access is available from the Trans-Link Highway. As per the San Carlos City development plan, it is envisaged thatdevelopment would initially be built around the provision of countryside recreation,including viewpoints, walking trail and rest area provision, together with a core visitor

center.

ave exceptional viewscapes (including views of

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- Other areas are: Mambukal Mountain Resort, Patag Valley, Guintubdan, Codcod RiceTerraces, Ubong, Hagdanan, Pating Caves, etc.

3. Cultural-heritage resources: Rich culture and history of province are captured and preserved inancestral mansions, historical monuments, buildings and churches built during the Spanish era.The ancestral houses, in particular, reflect the grandiose and lavish lifestyle of the Negrense

elite during the turn of the century. Other attractions with rich cultural and industrialsignificance are the sugar mills, vintage steam locomotives, and the Sugar Museum.

4. Festivals/Events: Negros Occidental is said to have the most number of festivals depictingcertain cultures in each of its 19 towns and 13 cities, with Panaad in Negros as the Festival ofall Festivals. To date, the most popular and which has gained national prominence is theMasskara Festival. The other festivals are, more or less, popular only within the provinceand/or region.

With millions of cockfighting afficianados in the Philippines, domestic tourism may alsocapitalize on the popularity of Negros Occidental as the “Home of the Champions”. To date, itis known as the breeding ground of ‘champion’ fighting cocks but it may also be possible tobuild a tourism marketing storyline along this favorite pastime of many Filipinos.

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5. Entertainment: There are a number of bars with live entertainment, video, karaoke, gamerooms and discos, with majority located in the Goldenfields Commercial Complex. CasinoFilipino is also located within the same complex.

Negros Occidental is also famous for its Kabataang Silay Performing Arts and Rondalla Ensemble.

These Young Cultural Ambassadors of Silay bring out the best of Philippine Visayan and ruralfolk dances and music. The Teatro Amorseco has been voted twice as the Best in CulturalPresentation in the Philippine Travel Mart.

6. Sports: Bacolod, the province's capital city has three challenging and world class golf courses,making it the golfing center in the Visayas. It also has various sports and fitness facilities withinthe metropolis. It also has the biggest bowling lane in Visayas.

The province was the host of the Centennial Palaro in April 1998 which paved for theconstruction of the Panaad Park and Stadium (Negros Occidental Sports and Recreational Park)in a 20-hectare land surrounded with fully grown eucalyptus trees. Its main stadium and openbleachers could seat 15,000 spectators. The entrance to the stadium serves as the stage forPanaad activities. It has a rubberized "Regupol" track oval. Across the stadium are tennis courts

and an olympic-sized swimming pool featuring a touch pad, electronic timer and camera track.

7. Shopping: Negros Occidental is known for its innovative gifts and houseware and food products.The most popular landmark of Bacolod City is the Association of Negros Producers (ANP)Showroom, a one-stop showcase of handicrafts and food products. The Showroom has beendeclared by the Bureau of Domestic Trade Promotions (an agency under the Department ofTrade and Industry) as the top trade house in the country.

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C. TOURISM SERVICES AND FACILITIES

1. Accommodation

Category No. of Establishments No. of DOT Accredited Establishments

De Luxe Hotel 0 0

First Class Hotel 3 2

Standard Class Hotel 7 5

Economy Hotels 5

Tourist Inns 3

Pension Houses 5

Apartels

76

TOTAL 86 20

The accommodation establishments in Negros Occidental can be characterized as follows:

• Establishments operate as independents (i.e., not part of a nationwide or international chain ofhotels/lodging facilities). The bigger hotels are owned by corporations while smallerestablishments are generally single proprietorship or family owned and usually managed andoperated by the owners and immediate family. There is one government-owned hotel, theCasino Filipino Hotel, which is operated by PAGCOR and also houses the casino facilities.

• 48% are located in Bacolod and the rest are scattered in other cities and in major destinationareas.

• Only the first class and standard class hotels have the capabilities to host conventions andmeetings. Services of the smaller establishments are limited to the basic room and bath. Exceptfor the apartels, all of the establishments offer serviced type of accommodation services.

• First class and standard class hotels generally have more than 50 rooms. For the rest of the 76establishments, the average number of rooms is 10 with majority non-airconditioned.

• Only 23% of the establishments are accredited by the Department of Tourism (DOT). Many ofthe accommodation establishments do not see the need for accreditation while others are waryof investment costs to implement the necessary changes to meet requirements/standards vis-à-vis non-fiscal incentives offered by DOT to accredited establishments. This may be an indicationthat majority of the establishments are not confident that they have met and complied withthe minimum standards set by DOT.

Non-fiscal incentives to accredited establishments consist of: a) membership to PhilippineConvention and Visitors Corporation (PCVC) and inclusion in its marketing and promotionalprograms; issuance of DOT identification cards to bonafide employees; b) technical/security/

facilitation support or assistance; and, c) endorsement to embassies and travel tradeassociations for utilization of establishment's facilities and services. Additional incentives toaccommodation establishments are: a) endorsement to the Ninoy Aquino International Airport(NAIA) and other international airport for issuance of access passes to qualified personnel; b)endorsement to the Commission on Elections (COMELEC) for exemption from liquor ban duringelection related events; and c) endorsement to the Department of Agriculture (DA) forimportation of meat and meat products.

• Reservation and booking of rooms in first class and with some standard hotels may be made via:a) travel and tour operators – either from website or face-to-face; b) direct booking to thehotel – either phone, in-person, and fax. For individual travelers, rates are generally lowerwhen made via the internet and travel agencies rather than through direct booking with thehotel. None of the hotels have websites capable of accepting reservations.

• Business travels and conventions represent majority of the total revenue mix.

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2. Restaurants/Food Service Establishments

Negros Occidental is one of the provinces in the Philippines known for its great local cuisine. It isparticularly popular for sugar-based food items, delicacies, the chicken “inasal” (roasted chicken),and grilled seafood such as the tiger prawns. Special attractions include the following: a) the Pala-pala market and similar establishments where customers can buy fresh produces and seafood and

ask the establishments to cook these: b) establishments where customers can catch their own fish ---‘cook and eat what you catch’; c) grilled food and native ambiance; and d) “eat all you can”establishments.

Negros Occidental abounds with restaurants of various types. Upscale specialty restaurants as wellas modest alfresco set-ups serve Negrense, Filipino, continental, and oriental cuisines. Popularburger, pizza, and other fastfood outlets are also found in Negros Occidental. Based on DTIregistration database, there are 1,104 food establishments in the province as of June 2004, withmajority falling under the micro scale category. Only 5 establishments are DOT accredited.

3. Travel Agencies and Tour Operators

Travel ServiceEstablishments

No. of Establishments No. of DOT-Accredited

Travel agencies 38

Tour operators 5

Travel and tour agencies 5

3

Tour guides 30+ 1

Travel agencies and tour operators in Negros Occidental are generally micro scale enterprises. Abigger percentage of the clients of travel agencies are the outbound travelers. Tour operators, onthe other hand, cater mainly to inbound tourists.

Interviews seem to indicate that tour operators have stronger linkages with the local tourismindustry than the travel agencies. To date, there are six tour packages being offered, namely:Bacolod City Tour, Negros Sugar Tour, War Memorial Tour, Victoria Milling Company Tour, SteamEngine Tour, Transportation Tour, Golf Tour, and the Annual Negros Cultural Tour (the longestrunning cultural tour in the country). Popular stop-overs include the ANP showroom andrestaurants where almost always tour operators earn some commissions. Pick-up points are usuallythe bigger hotels (first class and standard hotels).

It is more likely for travel agencies to have some relationships with the bigger hotel establishmentsrather than with the pension houses, tourist inns, and economy hotels. It is, however, claimed thatcommissions given by Negros-based hotels are lower compared to same establishments elsewhere.Hotels, on the other hand, refer their clients needing ticketing services to the travel agencies thatthey have some informal working relationships. First class and standard hotels also have business

arrangements with Metro Manila based travel and tour operators.

4. Resorts

According to key informants, there are 65 resorts 3 of various categories based on location ---mountain, beach, inland/agricultural. Majority of the establishments though are beach resorts.Resorts range from low to high end.

5 of the resorts are government-owned. One resort is said to have been accredited as a conventionfacility. Some of the resorts have combined lodging, meeting facilities, souvenir shops and an arrayof amenities and activities as a means of expanding clientele. The bigger resorts also offer off-siteexcursions for guests.

3 No directory of resorts

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5. Transport Services

Bacolod City is the gateway to Negros Occidental. It is 50 minutes from Manila and 30 minutes from

Cebu by plane. There are three airlines servicing the Bacolod route, namely: Cebu Pacific,Philippine Airlines, and Air Philippines. These airlines have tie-ups with selected hotels (first classto standard hotels) in the form of discounts, earned mileages, package rates, etc.

Airline Hotels with Tie-ups Offer

Cebu Pacific Sugarland Hotel Discounted RatesMileage

Philippine Airlines L’Fisher Hotel, Bacolod ConventionPlaza, Natures Village Resort

Air Philippines Casino Filipino Hotel, Royal Am ReiHotel

Bacolod City is also accessible by boat through the following routes: a) from Manila – 20 hours; b)from Iloilo – 1 hour by fast boats and 2 hours by bigger boats; and c) from Cebu. The province hassix seaports dominated by 4 inter-island shipping lines namely: Negros Navigation and William,Gothong & Aboitiz; and Sulpicio Lines, Inc. and West Visayan Shipping Company. The first twoprovide cargo & passenger services while the latter two provide cargo service only. By land fromCebu, Bacolod City is approximately 7 hours.

Transportation within the province is mainly by land through its road networks connecting its 19municipalities and 13 cities. Airconditioned and metered taxis are numerous within the city. Publicutility jeepneys are the common mode of transportation. For long distance and inter-towntravel, air conditioned and ordinary buses are among the options. Car rental services are alsoavailable with rates depending on the type of vehicle and distance traveled. Information for car

rental services is available at majority of the first class and standard hotels or via tour operators.

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D. ENABLING SUPPORT ENVIRONMENT: BDS/TVET

Tourism is a ‘people industry.’ Development of the skills base of the province and furthercultivation of the inherent hospitable nature of the people to match changing and complexrequirements of tourists would be critical to accelerating the growth of the tourism industry and toproviding good employment prospects for Negros Occidental residents. As a service industry, the

quality of the tourism experience is largely dependent on the inputs of wide range of people whointerface with the visitor. The challenge facing many of the tourism businesses is to ensure thatprocedures and delivery mechanisms are in place to ensure a consistency in the standard of servicewhich the customer receives.

More work is still needed though to convince establishments of the importance of investing in skillsfor improved profitability and success. Only a few of the companies have a structured training planand human resource development budget. Barriers to pursuit of skills and knowledge upgradingtend to be cost-related, the lack of local supply of relevant support services, and, for smallercompanies, ‘time out of the business’ is an issue. Likewise, the high proportion of part-time andseasonal workers requires cost and time to hire, retrain and re- orient new staff on-the-job whileattempting to maintain "seamless" customer service. Although some initiatives have been initiatedby the chamber and associations in bringing in training services closer to the industry, on-the-jobtraining will likely remain a leading training delivery method in the tourism sector. It is perceivedas being less expensive, easier to control, more flexible and permits the implementation ofcustomized in-house programs.

To date, the tourism sector is already experiencing problems in the recruitment and retention ofsuitably skilled managers and middle management staff. Bigger companies hire managers fromoutside of the province. This, in one way or another, suggest the need to look into match oftraining and education services available in the province vis-à-vis the demands of the industry inrelation to market requirements.

Other internal factors that would impact tourism development in the area would include:

•

The degree to which the Negros tourism businesses would be able to improve its ability andcapability to develop world class tourism products with a specific local identity that wouldappeal to various market segments and be competitive with other destinations

• Success in inculcating throughout the industry a culture of quality and improved productivity

• Improving the capability of industry to undertake regular market research and access marketinformation

• Marketing cohesiveness and effectiveness in attracting visitors to the province

• Improvement of environmental protection and compliance to ensure sustainable tourism

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Section 4INDUSTRY PERFORMANCE

A. TOURIST ARRIVALS

• Based on the 2002 tourism data from the National Statistics Coordination Board (NSCB), NegrosOccidental ranked 14th among all provinces in the Philippines in terms of number of inboundtourists with a market share of 1.57%.

Top 15 Province/City: Inbound Tourists, 2002 (excluding Metro Manila)

No. of Inbound TouristsProvince/City

(Destination) Foreign

TravelersOverseasFilipinos

DomesticTravelers

Area Total

% toPhil.Total

Ranking

Cavite 97,897 0 1,924,168 2,022,065 18.77% 1

Laguna 1,157,857 6,695 43,455 1,208,007 11.21% 2

Baguio City 36,760 5,337 1,140,593 1,182,690 10.98% 3Cebu City 285,820 963 549,588 836,371 7.76% 4

Davao City 49,341 7,450 374,563 431,354 4.00% 5

Quezon 1,616 570 324,729 326,915 3.03% 6

Aklan 78,877 2,410 235,005 316,292 2.94% 7

Cagayan 13,008 0 289,855 302,863 2.81% 8

Cagayan de Oro 8,218 637 262,156 271,011 2.52% 9

Camiguin 5,066 425 204,283 209,774 1.95% 10

Iloilo Province 10,646 6,212 190,922 207,780 1.93% 11

Zambales 65,828 4,432 136,391 206,651 1.92% 12

Ilocos Norte 44,910 38 134,362 179,310 1.66% 13Negros Occidental4 14,244 2,385 152,736 169,365 1.57% 14

Batangas 9,209 4,154 155,877 169,240 1.57% 15

NATIONWIDE TOTAL 2,144,536 66,265 8,562,147 10,772,948

% TO NATIONWIDE 19.91% 0.62% 79.48%

Source: National Statistics Coordination Board

• Of the 169,365 inbound tourists in 2002, 8.41% were foreigners and the rest were Filipinotravelers. In the nationwide totals, foreign travelers comprised 19.91% of the total number ofinbound tourists. Negros Occidental ranked 13th in terms of number of foreign travelers, with a0.66% market share.

• In terms of Filipino inbound tourists in 2002, Negros Occidental ranked thirteenth among allprovinces, with a 1.80% market share. Among Western Visayas provinces, Negros Occidentalranked third with Aklan and Iloilo in the first and second ranking respectively.

• In 2003, number of tourist arrivals in Negros Occidental increased by 40%. According to theNegros Occidental Tourism Promotion and Development Division, over 112,000 local and foreigntourists visited the province in the first four months of 2004, which is more than last year’sarrivals of the same period.

• Peak months are from January to June and September to November. Average hotel occupancyrate is from 40% to 50% which is lower than Metro Manila (average occupancy rate – 68%).

4 Data from the Negros Occidental Tourism Center indicated a total of 183,088 tourist arrival for 2002

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Meetings, Incentives, Conferences, and Exhibition (MICE) market has significantly improvedoccupancy rate and the overall tourism arrivals in the province.

B. TOURISM RECEIPTS

• Aggregate tourist receipts in 2003 increased by 26.31% over 2002 figures. However, averageexpenditure per tourist decreased from PhP 14,936 in 2002 to PhP 13,474 in 2003.

Distribution of Western Visayas Tourist Receipts by Province, 2002-2003

Amount (in PhP thousand)Province

2002 2003

% Growth Change

Aklan 5,814,522.35 6,602,637.09 13.55

Antique 131,717.08 247,183.20 87.66

Capiz 484,641.57 488,777.84 0.85

Guimaras 2,011,695.46 2,148,651.79 6.81

Iloilo 3,819,702.85 3,946,732.15 3.33

Negros Occidental5 2,529,574.22 3,195,016.54 26.31

Western Visayas 14,791,853.53 16,628,998.61 11.12

Source: Department of Tourism – Region 6

C. EMPLOYMENT

• Among the different subsectors in the tourism industry, the hotels generate the highest numberof employment.

Type of Establishment Est. No. of Establishments Ave. No. of Employees

Accommodation, 50 rooms and above 10 30 – lean ; 112 - peak

Accommodation, less than 50 76 10 – lean; 23 - peak

Tour operators/Travel agencies 48 2 to 3

Resorts 65 5 to 20

5 Data from Negros Occidental Tourism Center indicated total tourist receipts of PhP 534,250,764 for 2002 andPhP 833,033,558 for 2003 based on PhP 2,918/person average daily expense.

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Section 5PROPOSED FIELDS OF CHANGE

Main issues and challenges facing the industry are the following:

1. Current downward trend in average expenditure per visitor

2. The need for more effective and cohesive image, market positioning, and promotion

3. The need to expand tourist season and reduce seasonality

4. Wide variances in quality of products and services as well as the need to align these to marketrequirements and standards

5. Weak demand and supply of support services and technical and vocational training needed toimprove performance of tourism enterprises and their workforce

6. The need to create industry synergy and higher level of cooperation between and among publicand private stakeholders within and outside the province (especially with neighboring tourismdestinations).

7. The need to strengthen environmental management to conserve and enhance the vital naturaland heritage of the province, and that sustainable tourism development practices are observed.

Building on current public and private sector tourism development initiatives, the followingstrategies are proposed to address the above challenges:

A. Product and Infrastructure Development

Negros Occidental has the tourism assets to potentially attract increasing numbers of visitors in thefollowing tourism circuits: a) ecotourism; b) sand, sea, and resorts: c) cultural tourism; and d) MICEmarket. The challenge for the industry is to package these assets in a way that makes NegrosOccidental a desirable, affordable, and year-round ‘must-visit’ destination.

Recommended Fields of Change and Improvement

1. Development of a compelling brand and product portfolio, which meet the desire for adistinctive, authentic and uniquely Negros Occidental experience

a) Brand development and market positioning

The current marketing slogan “Sugar and More” may need to be re-assessed as to its ability tocapture the interest and imagination of potential visitors. It is effective for those who may beinterested to know more about the sugar industry but this is a very limited market. NegrosOccidental needs to develop a distinctive market position and a brand that can compete withmany other destinations, some of which will be offering similar experiences and packages.There must be a consistency among the various offerings and it should be this positioningstatement that should guide this consistency.

Effective positioning will require the projection of a number of appeals which will act asmotivators for particular market segments. Prerequisites in the development of an effectivepositioning and brand are the following:

- Development of an understanding of how people perceive Negros Occidental as a

destination, including its natural and built environment, culture, its quality of serviceand value for money

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- Analysis of market and consumer trends

- Identification of the most viable market segments and choosing the most efficient means ofcommunicating with those target markets

The destination positioning and brand should be reflected in everything that Negros Occidentalas a tourist destination does or stands for --- not only its promotion, but also the policies andprocedures, employee attitudes, customer relations, complaint handling, and the various otherdetails that combine to make the tourism experience. It is necessary that the positioning isreflected back to the provincial tourism development plan.

b) Product development plan formulation

To bring about concerted, focused, and coordinated product development efforts within theindustry, the province needs an updated tourism development plan which is aligned to itsdesired market positioning and, more importantly, upheld and shared by all stakeholders bothin the government and private sectors. Review and strengthening of tourism productdevelopment plan would involve the following: a) identification of key products; b) assessment

of their scale of opportunity; c) determination of resource requirements and actions needed tomaximize potential and develop specific product differentiation factors that the tourismindustry can introduce and sustain as marketing proposal; and d) packaging of the variousproducts into full concept tourism packages. The plan should also outline the ways in whichprivate and public sector organizations can coordinate resources to develop and promote adestination.

c) Product portfolio development

Most of the responsibility for the development of needed products and services for the targetedmarkets and market segments will be on the private sector. It is, therefore, necessary that theyare equipped with the necessary product development know-how and skills as well as possessan in-depth understanding of the market requirements and standards. Inputs from design

consultants capable of developing products and services with a specific local identity wouldaccelerate the development process.

2. Development of cultural, sporting, and social events that would contribute to the extension ofthe tourist season and the achievement of higher yields, improved profitability, and increasedemployment in the industry.

This will primarily pertain to the development and expansion of the activity product base bybuilding on the resource foundations already in place. The industry should introduce innovativemechanisms and activities that would encourage visitors to spend more money while in NegrosOccidental and/or prolong their stay.

Lifestyle researches indicate a growing interest in events and festivals together with anincreasing incidence of events becoming a prime motivator for travel. In many cases, touristsare looking for more ‘content’ in their holidays. Cultural activities, for example, can beeffective in attracting high-yield tourists as has been the experience of the province with theMasskara Festival. The province has to stage more events particularly during the lean season.These events can help to differentiate the various tourism products, encourage repeat visitsand reduce the ‘been here, seen that’ syndrome. Traditional festivals and events in thedifferent municipalities should be better promoted for these provide excellent focus on theareas’ culture and traditions.

Events, whether of cultural, sporting, and social themes, should enhance the desired image ofNegros Occidental as a tourist destination and, ideally, with national and international appeal.

Similar to the Masskara Festival, these events should have a champion as well as adequateorganization and marketing management resources. These should also be attractive to potentialsponsors. Combination of activities such as mixing sports activities with each other, with special

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events, cultural pursuits or gourmet foods are becoming popular in many major tourismdestinations.

3. Improvement of tourism related infrastructure

An integrated public infrastructure network with convenient transfers between different modesof transport is important to support growth of tourism and deal with increasing customerexpectations. Improvement of the airport and the roads should be among the priorities of theprovince. The poor state of the roads in some areas has an impact on the condition of thevehicles used and, therefore, on customer satisfaction and on costs in the part of transportoperators.

There is also the need to further develop and upgrade accommodation and convention facilitiesand services including expansion of geographic spread parallel to niche market developmentinitiatives (e.g., bed and breakfast accommodations showcasing Negrense hospitality in a home-stay environment, enhancement of the ‘sense of place’ or element of creative flair in hotels andconvention facilities, etc.).

4. Improvement of waste management

The province has to step up efforts to protect, conserve, and manage the environment.Province wide promotion and implementation of waste management would be of primaryimportance, as anything less will undermine the desired positioning of Negros Occidental as atourist destination. With growing customer awareness of the value of good environmentalpractice in relation to waste management, Negros Occidental has an opportunity to gain acompetitive advantage.

B. Promotion and Market Development

Although the province has been quite successful in penetrating the MICE market, awareness ofNegros Occidental as a tourist destination is still low both in the domestic and internationalmarkets. Generally, marketing is fragmented. Individual promotions and advertising are undertakenby hotels, resorts, attractions, event organizers, local government, and DOT to draw people to thecity. In many of the establishments, main focus of marketing activity is publicity at the point ofarrival. The need to have coordinated promotional activities is imperative if a clear image is to beportrayed of the province. Parallel to this, Negros Occidental must market itself aggressively andconsistently to ensure that: 1) the province is at the forefront of a potential visitor’s mind as itcompetes for attention with an increasing number of alternatives; and 2) interest is translated intofirm bookings and sales. Two critical factors, therefore, that the Negros Occidental tourismindustry has to address in its promotion and marketing activities are:

- How to effectively communicate the range, appeals and experience value of the destinationor product (message and medium)

- How to achieve effective distribution of a product meeting a wide range of individual demands

Recommended Fields of Change and Improvement

1. Improvement of destination marketing of Negros Occidental

a) Use of market intelligence and consumer feedback in the preparation of communication andpromotional plan as a means of improving quality of info content and the relevance ofinformation to targeted markets. Generic destination awareness campaigns should gradually

shift to featuring a range of motivations and allied leisure and business products.

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small enterprises; and ensuring that increases in sales are achieved on the basis of value-addedstrategies rather than competing on price (low price offer).

Access to continuous education, skills upgrading, and training at all levels are critical bases forgrowth. However, to date, market for business development services and vocational education inNegros Occidental is weak, both in terms of supply and demand. Training and business development

services providers tend to lag behind developments in the industry. On the other hand, demand andwillingness to pay for support services and training are generally weak. The current skills gap is feltboth at the management and specialized operational levels. Specifically, the following are theidentified skill gaps across the five subsectors:

- The lack of management and marketing skills- The need for closer realignment of operational skills to market standards and needs- The need for multi-skilling while still being a specialist- The lack of adequate skills in information technology- The need to enhance people and customer care skills- The lack of work readiness of recent graduates

Performance of tourism businesses can further be improved through better knowledge, expertise

and customer care. To ensure that quality of businesses and their workforce would not be acontinuing constraint to the growth of the industry, the following measures are recommended:

Recommended Fields of Change

1. Upgrading of existing management, marketing, and general administration courses tointernational standards and re-alignment to requirements of the everyday operations of thetourism trade. This can be effectively carried out through partnerships between industry – localacademe – schools elsewhere offering internationally recognized courses.

2. Development and/or strengthening of local capability to deliver dualized training programs ofinternational standards and with balanced emphasis on operational and people skills for variouscompetencies required in the hospitality, travel, tour, and transport segments. Franchising

arrangements and/or affiliation with internationally recognized providers may be among theoptions that can be pursued by local providers.

3. Promotion among enterprises of the implementation of a Continuous Productivity and QualityImprovement (CPQI) Program.

CPQI focuses on capacity building and works with enterprises through a sequence of supportservices to improve production processes and business performance. Specific objectives of theprogram are:

- To facilitate improvements in organizational abilities in one or various function areaswithin the enterprise that will enable it to significantly increase its productivity as wellas transform orientation from inspector-based to individual worker-based qualitycontrol improvements

- To introduce and facilitate adoption of quality management elements and sociallyresponsible practices under the ISO and SA8000 standards

- To facilitate the adoption and implementation of environmental management systemswithin the context of business growth and profitability

Methodology at Enterprise Level: “Learning by doing/Mentoring” through the involvement anddevelopment of the capacity of all personnel and subcontractors of the enterprise. This has tobe done in collaboration with external BDS providers who will support the process andimplementation of solutions/corrective actions.

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4. Promotion of the effective use of information technology in improving business operations andmarketing.

There is a need to motivate hotel and tourism enterprises in Negros Occidental to useinformation technologies and information networks. The system of information technologies(SIT) in the tourism industry includes the following: computerized reservation systems,

teleconferencing, video text, videos, video brochures, computers, management informationsystems, airline electronic information systems, electronic funds transfer systems, digitaltelephone networks, smart cards, satellite printers, and mobile communications. The increasinguse of the Internet for destination marketing, direct sales and bookings has given rise toelectronic tourism markets and, at present, tourism is among the important applicationdomains in the World Wide Web. The rapid diffusion of information technologies throughout thetravel and tourism industry is expected to improve the efficiency of production and the qualityof services provided to consumers, and to generate increasing demand for new services.

5. Promotion and development of a tourism-friendly culture across all sectors of the communitythrough effective public awareness and education programs.

Much of the enjoyment of a trip comes from casual contacts that the visitor has with local serviceproviders and residents. It is, therefore, important for each Negrense to fully embrace tourism.Public awareness and education programs on customer orientation would help enhance the

inherent hospitable nature of Negrenses and put into action the city’s slogan “City of Smiles.”

6. Establishment of a province-wide industry led quality seal program

Uptake for accreditation in Negros Occidental, has been relatively low with less than 10% of thecompanies currently DOT-accredited. Companies generally felt that accreditation is not thatimportant nor does it provide the business perceived advantages. In addition, there is a lowconsumer awareness of what a DOT accreditation means (e.g., difference between a DOT-

accredited and non-DOT accredited establishment). Some measures to strengthen the currentaccreditation system would be the following:

- Enhancement of value of DOT accreditation both for consumers and tourism enterprisesthrough inclusion of standards/criteria meaningful and relevant for both parties andaligned to international accreditation system.

- Re-engineering and streamlining of the accreditation processes to make it more effectiveand efficient for businesses.

- Improvement of incentives for accredited establishments

- Effective promotion of accreditation program both to enterprises and consumers

Introduction of changes to the DOT accreditation would take quite some time. An alternativewould be to establish an industry led quality seal program. In a quality seal program, public andconsumer recognition are given to those businesses that strive to maintain and improve ethicaland professional standards that are set and agreed to by the industry itself. In many of thetourism quality seal programs abroad, the system provides businesses with a tool to measureand improve their business performance over time. It also involves documenting systems ofmanagement and operations in order to ensure that they are able to consistently supply thegoods and services advertised. In turn, the quality seal system provides clients and industrycolleagues with an assurance that participating businesses are committed to professionalismboth in business operations and delivery of service. The quality seal program, as can be gleaned

from experiences of other countries, can be a powerful tool in encouraging the development ofeach participating enterprise in the Negros Occidental tourism industry as well as an effectivemarketing tool.

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Section 6PROPOSED PROGRAM INTERVENTIONS

A. Institutional Development/Planning

1. Initiate the revitalization of the TCDC or similar multi-sectoral organizations like ATANO andprovide organizational development assistance.

2. Technical assistance to TCDC or similar multi-sectoral organizations like ATANO in the reviewand updating of the Tourism Master Development Plan including mentoring services during thefirst year of implementation

3. Assist TCDC or similar multi-sectoral organization like ATANO in dissemination of salient pointsof the development plan to all stakeholders. This may be done through forums, workshops, andmedia publicity.

4. Organizational development assistance to selected tourism industry associations.

B. Product and Infrastructure Development

1. Support the establishment of a self-sustaining tourism market intelligence system. This may beoperated by TCDC or a local research company. Program support should be directed towardsthe development of an efficient and cost-effective means of:

- Locating/identifying information sources and needed information- Translating and applying these information materials to the context of SMEs- Packaging and disseminating these information to SMEs

2. Technical assistance to TCDC in the further definition of Negros Occidental brand and

positioning including its consequent adoption by the various stakeholders. Assistance may be inthe following areas:

- Research and development- Support to market launching of revitalized brand- Support to development of phased-in campaign directed to enterprises (buy-in) and to

target markets

3. Develop local providers of product development services. Technical assistance may consist of:

- Technology and knowledge transfer/training- On-the-job training: program supported providers work with a pilot group of enterprises

(preferably, the more progressive and influential entrepreneurs)- Assistance in the development of financial sustainability schemes vis-à-vis affordability of

services- Assistance in development of markets for services

4. Encourage existing tourism enterprises to invest in product development via:

- Workshops on best practices and on current tourism product trends including envisionedproduct development directions of the whole tourism industry

- Exposure to working with professional design consultants. This can be part of the on-the-job training of local providers under the initial tutelage of international consultants.Results of these pilots disseminated to encourage similar initiatives from other tourismenterprises.

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- Broker agreements with finance institutions to provide soft loans for productdevelopment projects of tourism businesses parallel to establishment of linkages withlocal product development providers trained/supported by program

5. Assist in the development of advocacy campaigns for increased allocation and/or prioritizationof public infrastructure improvements (e.g., airports, roads, etc.).

6. Technical assistance in the development of waste management system and establishment ofpool of local experts that can assist enterprises in the set-up of their own systems.

C. Promotion and Market Development

1. Support the development of tourism internet portal for Negros Occidental. Assistance may bedirected towards the following:

- Technical expertise: concept, content, and technology- Development of financial sustainability schemes- Development of promotional campaign (directed to potential users of services)

2. Improve capability of existing journalists, advertising companies, web designers, multimediadesigners, graphics company, souvenir manufacturers, marketing and promotion companies,and the like to address promotion and marketing needs of the tourism industry. Technicalassistance may consist of the following:

- Skills upgrading- Development of services/Revitalization of existing services- Development of delivery and payment schemes to make services more accessible and

attractive to target clients- Pilots: local providers work with selected group of enterprises as part of the on-the-job

training as well as to validate benefits of services. If successful, results of pilots can beused as part of the promotional campaign for the services

3. Technical assistance to the industry via the Tourism Council in the development of a marketingand communications plan. This may also be part of the on-the-job training of programsupported local promotion and marketing providers.

4. Broker marketing agreements between tourism service establishments and travel and touroperators. Parallel to this, assist Negros-based travel and tour agencies in forging partnershipswith national and international travel intermediaries including Philippine embassies and tradeattaches.

D. Quality and Competitiveness Improvement

a) Facilitation of linkages between industry, local providers and establishments offeringinternationally recognized courses

b) Assistance in the development and/or customization of curricula as well as capability build-upof local training providers

c) Assistance to training providers in the development of various delivery and payment modalitiesto address affordability and accessibility issues.

d) Development of local capability to deliver Continuous Productivity and Quality ImprovementProgram to enterprises. Parallel to this, stimulation of demand for program throughdemonstration of benefits and impact via pilots.

e) Assistance to IT training institutes in the development of customized training program fortourism businesses. Demonstrate benefits of use of IT to enterprises through pilots.

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f) Marketing assistance to providers with new and/or high quality product offers

g) Technical assistance in the development of public awareness program designed to promoteprovince wide tourism friendly culture.

h) Technical assistance in the development and implementation of Quality Seal program.

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Annex A

FOOD SERVICES ESTABLISHMENTS

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Table of Contents

Section 1. Industry Structure 3

A. Players and Relations in the Subsector 3

B. Products and Services 6

C. Markets 7

Section 2. Value Chain 9

Section 3. Human Resources 14

Section 4. Constraints and Potential Solutions 17

A. Management/Organization 17

B. Human Resources 18

C. Technology/R and D 18

D. Inputs 19

E. Market Access/Marketing 20

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Section 1INDUSTRY STRUCTURE

A. PLAYERS AND RELATIONS IN THE SUBSECTOR

1. Food Service Establishments

•

The food service industry in NegrosOccidental is characterized by nationaland international chains as well asindividual small and micro businesses.Bacolod City abounds with restaurants,most of which offer Negrense cuisine. Asof June 2004, there are 1,104 DTIregistered food service establishmentsranging from full-service restaurants toself-service/fast food establishments.

These establishments include fine diningrestaurants, specialty and theme restaurants, fast food outlets, canteens, eateries, and foodcourts.

Restaurant Industry Definition based on the PSIC

PSIC Code Description

98101 Restaurants and Cafes

98102 Refreshments and Ice Cream Stands,Kiosks, and Counters

98103 Day and Night Clubs

98104 Cocktail Lounges and Bars Operation

Source: National Statistics Office

• Restaurant business is relatively easy to enter particularly the low-end segment consisting ofcarenderias and eateries as well as snack stalls. In Negros Occidental, there are more mid-low tolow end establishments than upscale and fine dining restaurants. Set-up and operations ofmedium end and upscale full-service restaurants though entail both high labor costs and capital.Exit barriers are relatively high for this particular segment primarily because the foodequipment is quite expensive and their use is also specialized.

• Upscale and fine dining restaurants are generally owned and located in first class and standardhotels The bigger hotels in Bacolod City generally have two restaurants: a) an upscale formalrestaurant; and b) casual coffee-type restaurant.

• The full-service category is dominated by grill/buffet type and casual dining restaurants. Theserestaurants usually offer Negrense and Filipino cuisine. Many of these restaurants have aFilipiniana theme.

• Popular special attractions in Negros Occidental include the following: a) the Palapala marketand similar establishments where customers buy the fresh produce and ask the establishments tocook these; and b) establishments where customers catch their own fish --- ‘cook and eat whatyou catch’. A trend in the restaurant industry rapidly gaining popularity is the ‘eat-all-you-canbuffets’, which are offered at reasonable prices.

•

In the outskirts, many of the food service establishments are the carenderias and a few specialtyand themed eating places. Considered as ‘top of the line’ food service establishments in therural areas are the restaurants in the resorts. Likewise, resort restaurants are almost always theonly ones with capacity and capability to cater to functions and events.

• Fast food establishments include giants such as Jollibee, McDonalds, Pizza Hut, etc. The fastfood chain outlets are located mostly in Bacolod with a concentration in the malls. In the fastfood segment, Jollibee remains at the top. Chowking remains the Number 1 and undisputedChinese restaurant in the country (and most likely also in Negros Occidental) in terms of salesand total number of branches nationwide.

• Capital investments particularly for franchises can range anywhere from PhP 100,000 to PhP 30million. A Jollibee franchise in the Philippines reportedly ranges from P15 million to P30 million,

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depending on the store size and model. A usual store is roughly 350 square meters. US firmshave a very strong presence in the Philippine food franchising industry.

• Domestic and international food chains and franchises facilitate transfer of technology to thelocal restaurant industry. Training, marketing, and distribution channels are arranged by thefranchisor. They provide training of potential employees and employ strict quality control

systems. Likewise, prior knowledge and experience are not required of franchisees sincefranchisor provides the new entrant fully developed management and production systems. Inone way or another, the rise of shopping malls in Negros Occidental eases the entry of newrestaurants and fast food outlets particularly in terms of promotion and establishing its presencein the market.

• International and national fast food chain outlets pose serious competition for single-unit foodservice establishments. Aside from the fact that these are massively advertised, they have alsothe added advantage of being able to provide better service and quality products at prices atpar or sometimes lower than that of similar products.

• Of the 1, 104 restaurants, only 5 are accredited by DOT. Application for accreditation byrestaurants follows the same procedure and requires the submission of general requirements as

discussed under the hotel subsector and detailed in Annex H. Restaurants need to submit thefollowing in addition to the general requirements: food and beverage prices/menu;comprehensive general liability insurance; and fire safety inspection certificate. In the sameManila.

Accredited restaurants enjoy the additional following incentives specific to restaurants: 1)Endorsement to COMELEC for exemption from liquor ban during election related events; and 2)Endorsement to the DA for importation of meat and meat products on top of the benefitsaccorded to all accredited establishment.

• Unity and mutual cooperation among restaurants are being promoted, albeit intermittently andon an adhoc basis, by the Hotel and Restaurant Association of Negros Occidental (HRANO). Theassociation has also conducted some training courses aimed at upgrading and professionalizing

the industry.

2. Relations with Input Suppliers/Backward Linkages

Restaurant Industry Backward Linkages

Rank1 Industry

1 Slaughtering and meat packing

2 Rice and corn milling

3 Ocean, coastal, and inland fishing

4 Meat and meat products processing

5 Wholesale and retail trade

6 Canning and preserving of fruits and vegetables

7 Vegetables

8 Flavoring extracts, mayonnaise, and food coloring products

9 Soft drinks and carbonated water

10 Cutlery, handtools, general hardware

11 Coffee roasting and processing

12 Coconut

13 Electricity

1 Based on value (PhP)

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Restaurant Industry Backward Linkages

Rank1 Industry

14 Malt and malt liquors

15 Noodles

16 Eggs

17 Miscellaneous food products

18 Fruits and nuts

19 Roots and tubers

20 Aquaculture and other fishery activities

21 Others

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The biggest suppliers of the food service industry are the slaughtering and meat packing, riceand corn milling, and ocean, coastal, and inland fishing subsectors.

•

Suppliers of food produce have substantial influence over pricing of goods and servicesespecially in the fast food industry because of the limited supply or lack of substitutes. Majority

of the respondents indicated that a significant volume of the food supply is sourced outside ofthe province for any or all of the following reasons: a) local supply of inferior quality; b) noavailable supply; and c) volume of local supply not sufficient.

A restaurant owner, for instance, indicated that he sources blue marlin from General Santos,oysters from Roxas and scallops from Victoria. Another respondent claimed that they sourcelettuce from Baguio through a supplier because the lettuce from Kanlaon is not as good. A caféshop owner-respondent says he source 90% of coffee beans from either Batangas or Cavitethrough a coffee roaster based in Manila and only 10% locally because the local supply is minimal.Other products being sourced from Cebu and Manila are meat, frozen food, and importedingredients.

• Majority of the food service establishments buy their vegetables mostly on a daily basis. Factors

that affect choice of suppliers are prices, substitution of raw materials, freshness, andconsistent quality. Commissaries, particularly of fastfood chains and hotel restaurants, demandvegetables to be of the right variety, size, form, and quantity, and free from damages frominsects or mishandling. During lean months or off-season, quality and price inconsistency aremore pronounced.

• Hamburger chains have the highest demand for lettuce (iceberg), salad tomatoes for theirsandwiches, potato fries, white and red onions, bell peppers --- all of which are medium to highvalue vegetables.

Chinese dishes require herbs and spices such as onions, garlic, ginger, kuchay, celeries, brocolli,young corn, bell peppers, etc., which are mostly high value vegetables. Restaurants catering tothe high-end Chinese market require their vegetables to be of superior quality. Filipinorestaurants require vegetables for “pinakbet, sinigang, kare-kare, nilaga, or tinola,” which aregenerally low to medium priced vegetables. Seafood specialty restaurants require herbs andspices.

Generally, hotels with restaurants require high value fruits and vegetable crops and herbs andspices. Their volumes are not as big as that of supermarkets but they follow strict qualitystandards. There is also the general preference for imported vegetables. Credit terms extend toas long as 30 days.

• In many cases, relationships with local suppliers and suppliers from Cebu and Manila (meat,frozen food, coffee, imported ingredients) have been established and maintained informally.These suppliers are already familiar with the quality requirements of the establishments.

Formal contracts cover the transactions with big companies supplying food and beverage items.

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In some cases, exclusive contracts bind the relationships. Payments to local suppliers are on acash basis while terms are agreed upon in the contract with bigger establishments.

• Suppliers of food items from Cebu or Manila ship the materials either by air or water,depending on the shelf life of the items. Perishable goods are transported by air.

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Purchase of equipment, furniture and fixtures are usually one-time investment with very slowupgrading during the lifetime of the establishment particularly for the micro businesses.Equipment purchasing decisions depend on the type of establishment. For example, localsingle-unit restaurants particularly the micro businesses would usually just require basic foodservice and kitchen equipment, with price as the main criterion. Establishments that are partof international and national chain have the relatively more sophisticated equipment.

Restaurant owners use both local and imported equipment, furniture, and fixtures. Twoproblems though with the locally made equipment are the lack of after-sales service and thedifficulties in sourcing spare parts.

• Among medium and high end restaurants as well as chain food establishments, the ambiance ofthe place is given much emphasis. For chain establishments, design and layout are usually

provided by the franchisor. For individual restaurants, it is usually the owner and/or themanager who decides on the interior decoration. The bigger and more progressive companieshire the services of a designer. Atmospherics2, nowadays, are built with the restaurant concept,which has an immediate sensory impact on customers.

3. Relations with Other Tourism Establishments/Forward Linkages

• Relationship between restaurants and hotels, event organizers, travel agents, and tou

Gtz Phils Smedsep Ssa Tourism Feb 05

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