Management Consulting for Changemakers

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Are you putting the Social Cart before the Economic Horse?

“If every objection must be overcome, nothing will get done. Remember, it’s the economic horse that pulls the social cart.” – Chief Clarence Louie, Osoyoos Indian Band

horse-cartWhen I read this quote, I couldn’t help thinking that these words demonstrate a rare depth of understanding regarding community-based tourism development as it is applied in an aboriginal context, and that it further addresses (rather succinctly) something that is too often overlooked in the rhetoric of corporate social responsibility.

Specifically, Chief Louie clearly recognizes that tourism is a business first and foremost, and to be successful, a tourism business must frame itself within the established economic rules of engagement. It’s basic Economics 101 – income must exceed expenses, and therefore the business (community-based or otherwise) must be profitable before it can support any social, cultural, or environmental agenda.

Let me say it again: to be socially responsible, a business needs to first become financially profitable.

It sounds obvious – too obvious perhaps – but I have sat in on many community tourism development meetings where participants with the best of intentions get caught up in the logistics of how an experience might be ‘makeable’, forgetting that it also must be ‘marketable’.

What this means is that you not only need people to want your experience, you need a certain number of people to want your experience. Having sufficient access and proximity to your consumer market can be a major challenge for many rural destinations. Further, catering to the most appropriate niche within that market must also be considered carefully.

For example, with industry trends about giving back, seeking authentic culture, and choosing local experiences – the sustainable ethos of the adventure travel market is often seen as a good fit with indigenous value systems. To the extent this may be true, it’s also important to remember that the adventure travel market only represents approximately 17% of global sales. This means that by choosing to develop an adventure product in your community, you’re eliminating at least 83% of the vacationers out there right off the top, and possibly making your job of creating a marketable product that much more difficult.

To this point, arguably the most successful indigenous tourism businesses have catered to a much different clientele.

  • The Osoyoos Indian Band invested in the Nk’mip Resort, which includes vineyards, 4 ½ star accommodation, a spa, and a golf course uniquely located in the heart of Canada’s only desert;
  • until recently, Foxwoods Resort Casino was the largest in the world, owned and operated by the Mashantucket Pequot Tribal Nation in Connecticut;
  • the Inuit enterprise Makivik Corporation owns two regional airlines – which represent an average 60 percent of the costs of any travel package in northern Canada;
  • and in New Zealand, the award-winning Tamaki Maori Village has been a leader in providing ‘authentic cultural experiences’ for bus loads of tourists for more than two decades.

What ties these business models together is that they have all been built on sound business planning principles and good market research, and they all represent powerful economic engines that are being used to fund social, cultural, educational, and environmental programs for their local communities. In the words of Keith Henry, CEO of Aboriginal Tourism British Columbia, “Indigenous tourism is not about doing a different kind of business than our mainstream competitors… It’s about doing it better.”