• PRE FINALS

Chapter 6
Ecotourism as a Business
 At the end of this chapter, you will be able to:
• Identify the basic structure and components of the ecotourism
industry
• Assess private sector businesses and stakeholder groups that
participate in ecotourism business
• Understand the limitations faced by small ecotourism
businesses as well as their potential advantages
• Explain how ecotourism is linked to the tourism distribution
system through the travel trade
• Discuss the different components of the small business sectors
of the ecotourism industry
• Analyze the state of quality control within ecotourism
 Structure of the Ecotourism Industry
Ecotourism Industry
– The businesses that directly interacts with the ecotourist to
facilitate the ecotourism experience from the planning stage
through to completion
– Segments of this industry occur in the origin, transit and
destination regions, and consist of:
• Specialized operations
• Non-specialized operations
– Ecotourist trips occur through either
• Formal package (soft ecotourists)
• Free and independent travel (hard ecotourists)
 Specialized and Non-Specialized Operations
Specialized operations are those ecotourist activities related to:
– Ecolodges
– Protected areas and other venues
– Mediating attractions (cableways, canopy walkways,
submarines)
– Local tour operators

Non-specialized operations are related to transportation

– Airlines
– Transit buses, but not the vehicles used by local tour operators
 Formal Package and FIT Travel
Formal Package
– A substantial proportion of ecotourism activity,
particularly in international travel, proceeds along with
the formal package trajectory.
– This involves mediation by travel agents, tour
wholesalers, and inbound tour operators before the use
of ecolodges/accommodation, local tour operators and
attractions in the destination arranged by these
mediators.
– Soft ecotourists are most likely to travel on a formal
package basis
FIT (free and independent travel)
– A travel where ecotourists circumvent travel agents, tour
wholesalers, and inbound tour operators for at least part of
their trip experience
– Hard ecotourists are more likely to select this alternative
circuit
– FIT ecotourists cannot avoid the formal transportation sector,
and they are more likely to take regular, scheduled flights
rather than charter flights
– Less-developed countries’ extensive informal sector
(unlicensed taxis, vendors, guides and guesthouses) supports
the FIT market
 Business Participants
The four major stakeholder groups that participate
directly in the business aspects of ecotourism are:
– Private sector
– Local communities
– Non-government organizations (NGO)
– Public sector
 Private Sector
• The main difference between specialized and non-specialized
private business, aside from the degree of focus on ecotourism,
is a matter of scale.
• Specialized private sector operations tend to be small business
often run by owners-operators.
• This sector is characterized by its volatility, with a high number
of entering and leaving the industry each year.
• Hence, there is a high disparity in the ecotourism sector
between the ideals of establishing such business and the hard
realities of the business world that affect ecotourism as much
as any sector.
The reasons for high rate of failure among small private
businesses include:
– A dominance of owners and operators with narrow,
specialized skills
– Little or no prior knowledge about running a business
– Operators become involved for emotional of lifestyle
reasons that conflict with their need to make profit
– Some are ignorant about the nature of tourism, or make
the mistake of confusing participation in ecotourism
Some reasons include:
– Have restricted client base
– Incur high fixed costs per client
– Have limited financial reserves to cope with
emergencies
– Limited ability to obtain finance
– Lack the resources to conduct or access research into
crucial areas such as market segmentation
– Greater difficulty in implementing technology that will
ensure environmental sustainability
There are also advantages with operating a small business:
– Low overhead costs
– Greater flexibility
– Ability of specialized government programs
– Family-owned businesses are further assisted by
possibility of free labor from relatives
– Locally-owned businesses have intimate knowledge of
the place that provides authenticity and enhance
visitor experience, leading to positive word of mouth
promotion
• Large businesses are becoming more visible and prevalent in
the ecotourism sector.
• Many corporations become involved in ecotourism because
they appreciate the potential business opportunities offered by
the growth of green consumerism and the soft ecotourism
market in particular
• Large businesses confers many advantages to these ecotourism
companies, including:
– Possession of numerous and diverse skills and competencies
– Enhanced capacity to innovate
– Access to capital or borrowing potential to undertake large-
scale projects, such as cableways and private protected areas
– Familiarity with and participation in the tourism
distribution system
– Control over backward and forward linkages (a large
tour operator also owns a travel agency and an
ecolodge)
– Ability to divert clients to a range of other tourism
products if problems are experienced in any
particular location, or during off-season
– Lower fixed costs per client and cheaper bulk
purchase costs
 Communities, NGO, and Public Sector
• Community-based ecotourism is a model that prevails in
peripheral regions and among indigenous people.
• Characteristics that are relevant to business include:
– A high-level of dependency upon external funding,
– Isolation from markets,
– Rudimentary or non-existent business competencies
– Decision making influenced by communal impulses as well as
hierarchical power structures based on culture and clan
associations
• Community-based operations also experience failure, although
this is often delayed or masked by external funding and other
support.
• Although environmental NGOs are best known for the
funding and other support they provide to communities,
such also participate directly through their involvement in
the formation and operation on private protected areas,
and in the provision of mainly non-profit, outbound travel
programs.
• The public sector is associated more with the
management of public protected areas and with playing a
supportive and regulatory role to the private sector and
local communities
 Business Sectors
Guidebooks
– The third most popular source of information for
ecolodge patrons after word of mouth promotion
and brochures
– Are aspects of an ecotourism business that is
seldom included in discussions of the ecotourism
industry
– They are important for the following reasons:
• It is spatially dispersed, since they can be obtained in
both the origin and the destination regions
• Guidebooks are tangible commercial products that
require a different set of marketing and management
strategies
• They are a critical information source of product
interpretation that influence the travel patterns of
ecotourists and thus serve as a gateway in the
ecotourism system
Travel agencies
– The component of the tourism distribution
system that has the most direct contact with
consumers
– Established travel agencies are now featuring
ecotourism-related tour operators and
accommodation that offer acceptable levels of
service, reputation and client intake
Tour wholesalers and operators
– A tour operator is “a person or organization
combining several elements of travel arrangements
and offering them as a product for sale at a single
price”
– Tour operators arrange and sell the products known
as package tours
• Transportation
• Insurance
• Accommodation
• Access to attractions and guided tours
– Tour wholesalers are located in origin regions
and are large companies
• Make contracts with airlines
• Arrange travel schedules
• Coordinate marketing and sales
• Organize groups
• Liaise with individual clients
– Inbound tour operators are often located in
major urban areas and/or gateways in
destination countries
• Typically market their services to tour
wholesalers
• Prepare client itineraries
• Select local businesses
• Plan programs
• Hire staff and pay applicable fees
– Local tour operators are “coalface” businesses
that mediate directly between the ecotourist
and the environmental attraction.
• Are usually small private sector businesses, or
often community-based enterprises in less-
developed countries and indigenous territories
Accommodation
– Ecolodge, a “nature-dependent tourist lodge
that meets the philosophy and principles of
ecotourism”
– Ecotourism building types:
• Indigenous structures
• Historical buildings
• Contemporary structures
• Portable and low impact structures
Sustainable Design
– When planning a new facility it is important that
the size of the facility must not exceed the
ability of the environment to sustain it.
– The long-term objective of sustainable design is
the minimization of resource degradation and
consumption on a global scale.
Environmental Designs
– Architectural designs should be integrated into the
environment in which they are constructed. They
should fulfill the visitor's expectations, often
through a spectrum of lodging options from
minimum conveniences such as tents to individual
rooms with private baths and other amenities.
– Facility designs should go beyond the basics of a
shelter to mirror the setting and meet the
requirements for visitors needs and comfort.
Interpretation
– Interpretation is critical to any ecotourism
business.
– Interpretation can enhance visitor satisfaction;
carrying capacity; and other consumer behavior.
– Five Principles of Interpretation:
• Avoid fact oriented "academic" instruction style.
• Interpretation should be enjoyable for visitors.
• Interpretation should be relevant.
• Interpretation should be organized and easy to follow.
• Focus on themes rather than simple topics or subject matter.

– Off-site Interpretation: guidebooks, Internet, promotional

materials
– On-site Interpretation: self-guided walks/cars, visitor guidelines
and guided tours.
Mediating Attractions
– Refers to built structures or
devices that allow ecotourists
to visit normally inaccessible
natural attractions through
means that are attractive or
novel in their own right.

These devices may be wholly or partially located in protected

areas, and further classified as fixed or mobile.

Cableways and canopy walkways = fixed mediating

attractions
Submarine tours = mobile mediating attractions
 Quality Control

• An on-going concern in the ecotourism industry is the

variability of quality control in the many businesses
associated with the industry.
• With many new business start-ups every year, quality
control has been difficult to maintain.
• Quality control relates to satisfying the tourist and
conducting business in an environmentally and socio-
culturally sustainable way.
Codes of Conduct
– Codes of conduct for visitors should be written in a
friendly way to encourage the visitors cooperation.
– It should be visually attractive, informative and
educational.

Visitor Guidelines
– Are an important tool in reducing visitor impacts.
– Guidelines are used to inform and educate visitors about
appropriate behavior to protect sensitive ecological and
cultural settings.
– Visitor guidelines are cost-effective and have a significant
impact on visitor management.
Certification-based ecolabels
– Ecolabels are methods to standardize the promotion of
environmental claims by meeting set criteria, developed by a
third party with impartial verification. 

Nature Tourism: Tourism in a natural area that leaves minimal impact

on the environment.
Ecotourism: Tourism in a natural area that offers interesting ways to
learn about the environment with an operator that uses resources
wisely, contributes to the conservation of the environment and helps
local communities.
Summary