Over the last decade, tourism,
spurred by foreign direct
investment, has evolved into a
key economic driver for many
destinations, promoting income
growth and job creation in local
economies. While global tourism has
grown rapidly, there is tremendous
future potential: international
tourist arrivals worldwide are
projected to increase about 70%
between 2013 and 2030, reaching
1.8 billion.63 Tourism currently
accounts for nearly 9.5% of the
worldwide GDP and is projected to
increase to 10.3% by 2024.64 The
hospitality and tourism sectors
have emerged as key value drivers
and differentiators in a competitive
economy, including in emerging
economies, where growth has
shifted away from goods and
products toward services, with
tourism and hospitality accounting
for a significant portion.
Competitive destinations across the globe
have recognized the value in tourism and
developed new, or enhanced existing,
destination management organizations
(DMOs) to include investment promotion
agencies (IPAs) or divisions. This is a
strategic shift that aims to drive local and
foreign investment into the destination
to improve both the product offering and
visitor experience. The most effective IPAs
act as an “investment concierge” – entities
that help foreign investors navigate local
rules and regulations, traverse bureaucracy,
access market data and research and assist
with investment opportunity identification.
Whether a hotel development, golf course
or tourism infrastructure, the IPA takes a
multi-dimensional view on the best channels
for increasing tourism — matching the
most suitable investors with tourism
needs. For investors unfamiliar with
specific destinations, IPAs effectively
reduce due diligence costs, which broaden
the pool of potential investors, while
creating a competitive and transparent
investment process.
DMOs and IPAs are generally organized as
public entities, often as a division within the
tourism or economic development ministry
or department. Recently, however, a more
public-private trend has emerged — yielding
more nimble organizations that use a
business model similar to that of a private
business, which is producing the most
effective results. The public-private
structure has proven to add technical
investment expertise, efficiencies and
flexibility to dealmaking, while reducing
political whims in the process. This structure
also enhances their ability to attract and
retain highly qualified real estate and
hospitality professionals with track records
in finance, development and acquisitions.
Effective DMOs often include leadership,
such as chief investment officers and
investment managers, both supported
by teams of analysts. By reducing
uncertainty, and consequently spurring
investment and development, these
teams create the foundation for the rest
of the DMO to promote and market the
destination. The investment division of the
DMO, the IPA, in addition to identifying
potential investment trends and tourism
investment opportunities, is responsible for
developing and maintaining strong working
relationships with current and prospective
capital partners. Additional responsibilities