Destination Management Social Enterprises
The need for sustainable approaches in tourism is perhaps more urgent than ever. As the promises from the multiple COP summits drift out of reach and efforts to implement policies to achieve UN SDGs stutter forward, other more local efforts need to be redoubled. In the case of the tourism sector, sustainable approaches must be focused on the value chain, starting locally.
One part of the effort can be at the destination management level starting with their organisation and roles. Is their purpose to serve the accommodation owners? Do they serve the business interests only or should they serve a wider purpose? Does a destination management organisation hold any responsibility to their community beyond finding ways to increase the number of tourists and therefore revenue?
Every destination DMO has different needs and goals, but to change how tourism functions the purpose of the DMO should be changed from a marketing organisation to one that includes a mandate to respond to and assist the needs of the destination as a whole. One solution is to modify the governance of the DMO to create a social enterprise.
What are social enterprises? Simply put, they are businesses which trade for a social or environmental purpose. Social enterprises demonstrate a better way to do business, one that prioritises benefit to people and planet and uses the majority of any profit to further their mission. Social enterprises contribute to reducing economic inequality, improving social justice and environmental sustainability. In corporate terms, their vision and mission are different from either the purely for-profit private sector or government service agencies. But, just as government entities and corporations may need to be re-organised to deliver to their customers, a DMO can reassess its role and purpose, change its governing structure and become more efficient and oriented toward servicing community needs. Creating a social enterprise is one way to do that.
A constant refrain that tourism is a driver of economic wealth in many economies misses the point that the wealth derived from tourism is not generally beneficial to the community as a whole. For one thing, there is substantial leakage (the traveller spend ends up outside the community – at times outside the country). For another, the destination is not involved in the design and decision-making process. Converting a DMO to a social enterprise can help change that dynamic by refocusing on the social impacts of tourism including improving livelihoods. The goal is not to prioritize the growth of tourism at the destination, but to minimize its impact on its residents while at the same time protecting the culture and regenerating the environment. This is the core of sustainable growth and puts the needs of the community first.
Additionally, because a DMO re-engineered to be a social enterprise is a business, it will have a different set of strengths, opportunities and weaknesses that must be considered. The vast majority of social enterprises are not-for-profit which makes them vulnerable to “grant eating”, dependent on donations and fundraising efforts in order to undertake the development work which is a key part of the social enterprise. Further, many – if not most – donor organisations restrict funding by excluding administrative costs, a methodology that funds the result and not the tools to achieve the result.
The formation or restructuring of a DMO as a social enterprise can change that circular dynamic by recognizing that as a business it has the opportunity to create new income opportunities. An increase in revenue from a profit-making standpoint, which is recycled into expanding the work of the DMO social enterprise, opens contractual opportunities that did not exist if the DMO is simply a marketing entity. An independent nonprofit can build the business and make investments in destination infrastructure, training and sustainable economic growth through tourism regardless of whether government or other funding rises or falls.
Finally, the public perception of a social enterprise DMO will need to be addressed. Too often, the DMO is seen as part of government planning with no concern for the local community and is sometimes staffed at the senior level, especially in developing countries, with political appointees possessing no understanding of tourism in general and sustainable practices in particular. A destination management organisation must be built on a foundation of a community-shared vision and collaboration with all stakeholders. The major change represented by DMOs as social enterprises is the collaboration with the community and finding solutions for communities that each have unique needs.