Eco-Tourism Development and Value Chains
Eco-Tourism Development and Value Chains
Business Model Description
Design, refurbish and operate guest houses, hotels, and tourism establishments with eco-tourism and green design practices, improving operational performance in energy and water efficiency as well as waste circularity. Increase local sourcing, including use of local organic food, Sea-to-Table schemes, and agricultural technology. Diversify tourism operations and experiences towards cultural and natural offerings and eco-activities such as trails and culinary tours, increasing community engagement and links with terrestrial and marine national parks.
Expected Impact
Lessen the industry-induced environmental burden on the planet and encourage the participation of local communities and actors in tourism value generation.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Seychelles: Praslin
- Seychelles: La Digue
- Seychelles: Greater Victoria
Sector Classification
Services
Development need
As per the Travel and Tourism Competitiveness Index, Seychelles lags in cultural resources and price competitiveness (4). Industries compete for scarce land and marine resources (4). External developments such as war and pandemic create a need to expand the market beyond Europe (1, 11). Adapting the sector to environmental and economic shocks contributes to SDGs 8 and 13 (5).
Policy priority
The Vision 2033 & National Development Strategy 2019-2023 aim to strengthen the tourism sector and improve sustainable practices (3, 6). Voluntary National Review (VNR) aims to implement sustainable tourism policies by 2030 (5).
Gender inequalities and marginalization issues
As the majority of the population is involved in the services sector, war in Ukraine may affect many low-income households (1). Gender disparity among the young labour force, with 54.3% of males and 45.7% of females in 2019 (5).
Investment opportunities Introduction
The government allocated about USD 220 million or 10.9 per cent of its GDP to Goods and Services (excluding tourism) for the 2022 fiscal year (9). In 2021, 182,849 tourists visited Seychelles, with a 59.2% rise year-on-year (18). Following the trend, the accommodation and food sector is projected to grow by 46% in 2022 (9).
Key bottlenecks Introduction
High youth unemployment (3) while the sector accounts for a major part of the employment. The country has a particular shortage and mismatch of skilled labour that is not addressed through available training options (4). Additionally, the sector is highly vulnerable to climate change effects (12).
Hospitality and Recreation
Development need
External factors such as the war in Europe, the largest tourism market for Seychelles, risk the recovery in tourism sector (1, 2). Many expatriates are engaged in the sector, with 22,997 Gainful Occupational Permits as of 2019 (3). The market remains traditionally-oriented (11). Only 21 out of 600 hotels are certified for Seychelles Sustainable Tourism Label (SSTL) (5).
Policy priority
Seychelles’ Marine Spatial Plan (SMSP) aims to designate 30% of her Exclusive Economic Zone (EEZ) of 1.35 million km² as marine protected areas (MPAs), empowering sustainable coastal and marine tourism activities, including nautical tourism and PPP models for co-management of MPAs. Seychelles Tourism Master Plan sets a goal to increase the targeting of emerging source markets such as from Asia (7,11, 40) .
Gender inequalities and marginalization issues
The tourism sector is dominated by big operators restricting local community involvement, including minority and disadvantaged groups. Locals are employed in menial jobs, while expatriates occupy top positions (26).
Investment opportunities introduction
The government provides marketing & promotion deductions, special rates for accelerated depreciation, and excise tax concessions for some categories (8). At the same time, the tourism sector brought in USD 228 million in revenue by the end of October 2021 (9). Moreover, 16.3% of total employment
Key bottlenecks introduction
In 2019, the government imposed a moratorium on new hotel development in La Digue until 2023 (20). High cost of electricity, which comes from Praslin (21). Sustaining repeated guest rate, which increased to 17% in 4Q of 2017. Unsustainable airline capacity: out of 2,100 seats available per day, there are 1,000 international arrivals (11).
Hotels and Lodging
Pipeline Opportunity
Eco-Tourism Development and Value Chains
Design, refurbish and operate guest houses, hotels, and tourism establishments with eco-tourism and green design practices, improving operational performance in energy and water efficiency as well as waste circularity. Increase local sourcing, including use of local organic food, Sea-to-Table schemes, and agricultural technology. Diversify tourism operations and experiences towards cultural and natural offerings and eco-activities such as trails and culinary tours, increasing community engagement and links with terrestrial and marine national parks.
Business Case
Market Size and Environment
USD 100 million - USD 1 billion
In 2022, Seychelles became the fastest-growing tourism-dependent African economy with 8.3% annual growth rate, and 332,068 tourists visited Seychelles, with a remarkable 82% increase year-on-year, approximate to pre-pandemic level. The figure practically caught up with the pre-pandemic level as the total visitors numbered 384,204 in 2019 (39).
Following the pandemic, 76% of consumers are expected to be more concerned about sustainability (15). Home to endemic Aldabra giant tortoises and coco-de-mer coconut recognized by two UNESCO World Heritage Sites, Seychelles lies within the 36 biodiversity hotspots of the world, offering unique eco-tourism experiences.
21 out of 600 hotels are certified for Seychelles Sustainable Tourism Label (SSTL) which is awarded by the Tourism Department (5).
Indicative Return
15% - 20%
In 2020, Sustainable Hospitality Alliance, in partnership with IFC, surveyed as a result of which the highest percentage of respondents reported payback periods for new sustainable buildings between six and ten years (16).
Investment Timeframe
Medium Term (5–10 years)
In 2020, Sustainable Hospitality Alliance, in partnership with IFC, conducted a survey. The highest percentage of respondents reported payback periods for new sustainable buildings between six and ten years (16).
Ticket Size
USD 1 million - USD 10 million
Market Risks & Scale Obstacles
Business - Supply Chain Constraints
Capital - Limited Investor Interest
Capital - CapEx Intensive
Impact Case
Sustainable Development Need
Each year, an estimated 3,000 tonnes of food waste is produced by Hotels in Seychelles (22). Additionally, reports suggest that visitors generate 1 to 2 kg of solid waste daily (11). Furthermore, industry accounts for 29% of total national energy consumption (23).
In 2017, 38.4% of foreign labour was in the accommodation and food services industry (24). However, there is a lack of young people with the required skills or a negative attitude toward the tourism sector (24, 26). About 60% of hotel rooms in Seychelles are foreign-owned and branded (26).
Seychelles' land is prone to flooding and erosion, posing a threat to the sustainability of tourism. In addition, some of the Seychelles islands are low-lying and especially vulnerable to sea-level rise and storm surges. As a result, land is scarce, and large-scale land reclamation has occurred (25).
Gender & Marginalisation
Gender disparity in wage across the wage distribution – with men earning wages that are 9%higher than women at the 10th percentile and 19% higher at the 90th percentile (24). As private-sector tourism employs a large share of the population (34), women are significantly affected.
While tourist arrivals grow, poverty also increases. In 2013, the UN reported a high Gini coefficient of 65.8 (26). Migrant workers are employed over locals. Locals are mainly employed in menial jobs, while expatriates occupy top positions (26).
Expected Development Outcome
Eco-tourism development entails positive outcomes to the sustainable management of existing local and natural resources within the tourism industry and significantly minimises the negative impacts of traditional tourism on the environment and society (2).
Eco-tourism promotes Seychellois involvement in tourism development and supports the preservation of the cultural heritage and traditional values of Seychelles (2).
Gender & Marginalisation
Eco-tourism based on community engagement helps achieve fair distribution and retention of benefits in local areas (26). In addition, the IOA promotes female employment and contributes to economic prosperity, as 58% of households are run by women (5).
Eco-tourism helps increase local employment in the tourism sector, may reduce staff turnover, and encourages the establishment of training centres for competence development (7).
Primary SDGs addressed
8.9.1 Tourism direct GDP as a proportion of total GDP and in growth rate
23.15% in 2020 (5).
N/A
12.3.1 (a) Food loss index and (b) food waste index
12.b.1 Implementation of standard accounting tools to monitor the economic and environmental aspects of tourism sustainability
Household food waste accounts for 93 kg/capita/year, equalling 9,128 tonnes/year (19).
N/A
N/A
N/A
6.4.1 Change in water-use efficiency over time
21% in 2015 (5).
As per Seychelles Nationally Determine Contribution, by 2030, 30% of large hotels and 20% of small and medium tourism establishments must have water harvesting and recycling systems in place (38).
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
People
Planet
Corporates
Public sector
Outcome Risks
If not implemented carefully, eco-tourism projects may increase the pressure on natural habitats and wildlife that have previously not been connected for tourist purposes.
Impact Risks
Eco-tourism players may not fully appreciate the sustainability needs of people and the planet. As a result, they could engage in SDG-washing practices, limiting or even undermining the expected impact.
High-end and large foreign-owned hotels, which provide all-inclusive packages, limit the flow of income to Seychelles and undermine competition for locally-owned small-scale accommodations (26).
Impact Classification
What
Eco-tourism reduces tourism's environmental footprint and increases income generation opportunities, including for small and local actors currently excluded from the value generation.
Who
Island communities with eco-tourism potential, local business owners and employees in the tourism, restaurants and craft sectors, as well as tourists and the environment, benefit from eco-tourism.
Risk
The predominance of foreign-owned hotels in the market and the lack of credibility of enterprises in terms of sustainability and eco-practices are concerns for achieving high impact.
Contribution
In contrast to conventional tourism, eco-tourism adds to climate change adaptation efforts through responsible consumption and provides a sustainable source of income.
How Much
Increase in eco-tourism, hence adapting to the growing sustainability expectations of travellers, contributes to tourism revenue, which is expected to reach USD 277 billion by 2030 (7).
Impact Thesis
Lessen the industry-induced environmental burden on the planet and encourage the participation of local communities and actors in tourism value generation.
Enabling Environment
Policy Environment
Seychelles Tourism Master Plan Part 1 & 2, 2018: Highlight emerging issues and trends in the sector and discuss sustainable tourism in the context of Seychelles. Eco-tourism is a key target segment for the country (7, 11).
Seychelles National Development Strategy, 2019-2023: Sets tourism as one of the key intervention areas and focuses on promoting and developing an ecologically balanced natural environment, sustainable use of limited natural resources and gradual improvement of energy security (2).
Tourism Accommodation Policy (Revised), 2018: Sets standards and requirements on bed capacity, categorisation of accommodation establishments, ownership, the scope of the license, etc. (28).
Tour Operator Policy and Travel Agent Guidelines and Policy, 2015: Guides the development and operation of the sector by promoting the protection of locally licenced tour operators (with 51% of Seychellois shareholders) and licences for travel agents reserved exclusively for residents (11, 29).
Reserved Economic Activities Policy, April 2020: ensures that certain economic activities that are doable and affordable to the Seychellois investors and businesses shall remain reserved for them; the list includes accommodation of 1 to 15 rooms (36).
Financial Environment
Financial incentives: In 2020, the Government of Seychelles announced a new SCR 100 million (c. USD 6 million) Covid Relief Scheme carrying 1.5% interest via the Development Bank of Seychelles to assist MSMEs in sectors adversely impacted by the crisis with 70% unsecured loans of up to SCR 100,000 (35).
Fiscal incentives: Seychelles offers marketing and promotion deductions for the tourism sector up to 5% of the taxable income or the actual expenditure and special rates for accelerated depreciation (8).
Other incentives: A deduction allowance for the training certified by the Department of Tourism is available in 150% of the actual expenditure incurred (8).
Regulatory Environment
Tourism (Incentives) Act, 2003: Aims to attract private investment in the tourism sector, targeting high-standard projects to enhance the marketing image of Seychelles. Provides incentives for licenced accommodation, tour operators, fuel concessions, etc. (30).
Tourism Development Act, 2019: Facilitates the planning and implementing of policies related to the tourism industry, provides for the regulation and monitoring of the sector, and grades and classifies accommodation establishments (32).
Licences Regulations, 2010: Provides more transparent procedures for issuing and renewing licenses. The act facilitates yachting tourism, boat charters, tour operators and travel agents, car hire, tourist guides and others (31).
S.I. 76. - Seychelles Investment (Economic Activities) Regulations, 2022: lists hotels and other lodging services with more than 25 rooms as an activity a non-Seychellois may invest in with the requirement to conduct an Economic Needs Test (ENT) (37).
Marketplace Participants
Private Sector
Constance Ephelia, Alphonse Island Lodge, Berjaya Beau-Vallon Bay Resort & Casino
Government
Ministry of Foreign Affairs and Tourism, Seychelles Bureau of Standards, the Seychelles Tourism Department, Department of Environment
Multilaterals
UNDP, World Bank, OECD, African Development Bank, IKI, Critical Ecosystem Partnership Fund (CEPF)
Non-Profit
Seychelles Sustainable Tourism Foundation, Sustainability 4 Seychelles
Target Locations
Seychelles: Praslin
Seychelles: La Digue
Seychelles: Greater Victoria
References
- (1) UNDP. 2022. The impact of the war in Ukraine on sustainable development in Africa. https://www.undp.org/africa/publications/impact-war-ukraine-sustainable-development-africa
- (2) UNDP. 2020. An Assessment of the Socio-Economic Impact of COVID-19 in Seychelles. https://www.undp.org/africa/publications/assessment-socio-economic-impact-covid-19-seychelles
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