Infrastructure promoting Sustainable Tourism Development
Infrastructure promoting Sustainable Tourism Development
Business Model Description
Establish and operate tourism services integrating sustainable and gender-responsive practices along with projects that close the infrastructure gap and increase availability of basic services in touristic areas for the development of sustainable, community-based and ecological tourism.
Expected Impact
Investment in sustainable tourism infrastructure will enhance environmental conservation, employment generation and cultural empowerment.
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
- Cibao Norte
- Cibao Sur
- Cibao Nordeste
- Cibao Noroeste
- Valdesia
- El Valle
- Enriquillo
- Yuma
- Higuamo
- Ozama
Sector Classification
Infrastructure
Development Need
1) According to the World Economic Forum, the country ranks 79 out of 141 countries in terms of infrastructure quality. 2) The Inter-American Development Bank estimates that the Dominican Republic needs to invest around 5% of annual GDP in infrastructure to close the gap with its regional peers (1).
Policy priority
The country established investment in infrastructure as one of its top policy priorities. Priority projects include the construction of roads, bridges, airports, ports, mass transportation systems, and power grids (2).
Gender inequalities and marginalization issues
The lack of measures to address barriers women face in the infrastructure sector, such as discrimination and harassment, lack of opportunities, education, and training, can limit the country's ability to attract and retain female workers and limit the quality and diversity of perspectives in the sector (3).
Investment opportunities introduction
The government implemented initiatives to encourage private sector participation in the financing and construction of infrastructure, including public-private partnerships and concessions.
Key bottlenecks introduction
Limited availability of financial resources constrain the country's ability to successfully implement projects.
Infrastructure
Development need
For 2021, the Territorial Equity Index indicated that in the Dominican Republic SDG 9: Industry, Innovation and Infrastructure was classified as having a high level of inequality. Where provinces such as Independencia, are with the lowest levels of development with respect to this SDG (4).
Policy priority
The National Development Strategy 2030 establishes as a priority to expand coverage and improve the quality of transport and logistics infrastructure and services, orienting them to the integration of the territory, the support of productive development and competitive insertion in international markets (5).
Gender inequalities and marginalization issues
The lack of infrastructure results in high costs for rural communities, due to the longer distances they must travel to access goods and services. This subsector promotes new businesses and hinders the efficiency of existing ones (6). Currently, the country loses 40 per cent of optimal human development due to existing gender inequalities (7).
Investment opportunities introduction
The National Infrastructure Plan prioritizes investments in the following sectors: Transport, Energy, Water and Sanitation, Solid Waste, Telecommunications, Water Resources and Irrigation, Health and Education, having a total of 1,334 investment programs and projects totaling USD 37,724 million (8).
Key bottlenecks introduction
There are funding constraints, making it difficult for the private sector to participate in infrastructure. Sustainable financing alternatives or funds guaranteed by multilateral institutions
Engineering and Construction Services
Pipeline Opportunity
Infrastructure promoting Sustainable Tourism Development
Establish and operate tourism services integrating sustainable and gender-responsive practices along with projects that close the infrastructure gap and increase availability of basic services in touristic areas for the development of sustainable, community-based and ecological tourism.
Business Case
Market Size and Environment
USD 100 million - USD 1 billion
5% - 10%
10,000 rooms in sustainable hotels
Revenue from tourism in 2022 was US$ 8,405.6 representing an increase of 47.5% compared to 2021. In 2022, more than 7 million non-residents arrived in the Dominican Republic via air and more than 1 million passengers via cruise ship (9).
The projected CAGR for the period 2023-2027 is 5.81%, and by 2027 the tourism market is expected to generate a market volume of USD$ 709 million (10).
70.96% of foreign tourists stay in hotels and the average hotel occupancy rate between January March 2023 is 79.5% (11). Despite this, the regulatory body indicates that there is a hotel room deficit of 30,000 units (12).
Indicative Return
5% - 10%
The Dominican tourism sector would be investing more than US$ 34 billion in hotel and real estate infrastructure to increase the percentage of housing availability by establishing approximately 9,026 new rooms in the market (13).
The Dominican Republic aims to reach 9 million visitors and with a trend to move from the all-inclusive business model to encourage complementary activities including the local community (14).
Investment Timeframe
Medium Term (5–10 years)
The development of sustainable infrastructure for tourism, such as hotels, resorts, and attractions, involves large-scale projects that require time to plan, build, and promote. A timeframe of 7 to 15 years allows these projects to materialize and reach their full potential.
Ticket Size
USD 1 million - USD 10 million
Market Risks & Scale Obstacles
Capital - CapEx Intensive
Market - Highly Regulated
Market - Volatile
Impact Case
Sustainable Development Need
The tourism sector has increased the use of natural resources in an expansive manner. These include energy, water, soil, increased solid waste, wastewater, among others. This use of resources increases greenhouse gas emissions and has a negative impact on the ecosystem.
Existing transportation infrastructure gaps (airports, roads and ports) and the lack of basic services do not allow for the decentralized development of tourism in the country (17).
Tourism development and income is only concentrated in the province of Altagracia, receiving 55% of visitors and represented the 57% of hotels market in 2019. This represents a need to create a diversified, more local, sustainable and resilient tourism offer (17).
Gender & Marginalisation
Low level of tourism companies offering childcare services to female and male employees.
The lack of basic services and infrastructure increases the inequality gap, reducing women's possibilities to enter the economy. Also The infrastructures designed do not respond to gender issues, creating mobility and safety problems (18).
Women and girls in tourist areas are vulnerable to human trafficking and are victims of commercial sexual exploitation (19).
Expected Development Outcome
Expansion of sustainable tourism while reducing its impact on biodiversity.
Reduce the gaps in transportation infrastructure and basic services access in the most unequal regions.
Deconcentrate tourism by encouraging and promoting local tourism in different municipalities and provinces of the country. Including cultural, green, agricultural and livestock tourism, among others.
Gender & Marginalisation
Establishment of sustainable and gender-responsive infrastructures in the tourism sector.
Eradicate human trafficking and commercial sexual exploitation in tourist areas.
Primary SDGs addressed
11.4.1 Total per capita expenditure on the preservation, protection and conservation of all cultural and natural heritage, by source of funding (public, private), type of heritage (cultural, natural) and level of government (national, regional, and local/
In 2021, the proportion of total public spending was 0.58% and the proportion of GDP was 0.13% (20).
Increase formal tourism occupancy rate from 35.3% to 41.9%. Increase the timeliness of the environmental sustainability pillar of the Travel & Tourism Competitiveness Index from 4.1 to 5.2 (2).
8.9.1 Tourism direct GDP as a proportion of total GDP and in growth rate
Revenue from tourism in 2022 was US$ 8,405.6 representing an increase of 47.5% compared to 2021 (9).
Increase the real average tourist spending per day from US$50.5 to US$60.1 (2).
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
Corporates
Public sector
Outcome Risks
Tourism and infrastructure development can cause gentrification and loss of local life due to more expensive housing and services.
The development of infrastructure to support potential tourist areas can cause environmental damage.
Gender inequality and/or marginalization risk: Increase in sexual violence in tourist areas.
Impact Risks
Failure in environmental conservation due to inadequate practices.
Increased gender inequalities and marginalization instead of being reduced.
Gender inequality and/or marginalization risk: Loss of economic opportunities for local communities.
Impact Classification
What
Increased accessibility to infrastructure for the development of sustainable tourism at the local level.
Risk
Displacement of local people and inadequate environmental conservation.
Contribution
To promote and increase sustainable and inclusive tourism
Impact Thesis
Investment in sustainable tourism infrastructure will enhance environmental conservation, employment generation and cultural empowerment.
Enabling Environment
Policy Environment
National Development Strategy 2030 creates the basic conditions that favor the synergy between public and private actions for the achievement of the Long-Term Vision of the Nation and the Objectives and Goals of said Strategy (21).
Pedernales tourism project moves forward with presidential decree 724-20 (22).
Financial Environment
Financial incentives: Foreign investors, whether natural or legal persons, have the right to remit abroad, in freely convertible currencies, without the need for prior authorization (26).
Fiscal incentives: Tax exemptions of 100% of ITBIS and other taxes applicable to investments in hotel facilities (25).
Other incentives: Residence Permits for Investment Program, through an agreement with the General Directorate of Migration, having as a prerequisite the Certificate of Registration of Foreign Direct Investment (24).
Regulatory Environment
Tourism Law 541, which establishes the legal framework for the sustainable development of tourism in the Dominican Republic, promoting the protection of the natural and cultural heritage (23).
Environment and Natural Resources Law 64-00: Establishes the regulation for environmental protection in tourism projects, guaranteeing the sustainability of investments (24).
Law No. 195-13 which amends several articles of Law No. 158-01 of October 9, 2001, on the Promotion of Tourism Development for Poles of Scarce Development and New Poles in provinces and localities of great potential. G. O. No. 10739 of December 20, 2013 (25).
Regulation No. 177-18 Organic Regulation of the National Institute of Transit and Land Transportation (INTRANT) (22).
Law No. 64-00 on Environment and Natural Resources which seeks the protection of natural resources, the reduction of their vulnerability, the reversal of recurrent losses due to improper use of the environment and natural resources (23).
Marketplace Participants
Private Sector
Local and international tourism companies such as Grupo Puntacana, Eco Adventure Hotel, Dominican Tree House Village.
Government
Ministry of Tourism, Ministry of Public Works, Ministry of Environment, Tourism Development Commission, regulatory and planning agencies.
Multilaterals
UN Environment, IDB Invest, AECID, Japan International Cooperation Agency.
Non-Profit
Environmental and conservation organizations, community support groups such as Ciudad Caracolí, Taller Artesanal Nuestra Señora de Punta Cana, Exposición de Arte Dominicano, among others.
Public-Private Partnership
Fideicomiso Pro Pedernales
Target Locations
Cibao Norte
Cibao Sur
Cibao Nordeste
Cibao Noroeste
Valdesia
El Valle
Enriquillo
Yuma
Higuamo
Ozama
References
- (1) WEF, 2019. The Global Competitiveness Report 2019: https://www.weforum.org/reports/how-to-end-a-decade-of-lost-productivity-growth/?DAG=3&gclid=CjwKCAjwrranBhAEEiwAzbhNtQLtqatLOGe5D2X8Wqg3FbaHiq1hAezZfeg-pUSfUsTRHIH3IANTshoCqNIQAvD_BwE
- (2) National Multiannual Public Sector Plan 2021–2024. https://mepyd.gob.do/publicaciones/plan-nacional-plurianual-del-sector-publico-2021-2024/
- (3) UNOPS. 2018. Género e infraestructura: más mujeres en el sector de la ingeniería. https://www.unops.org/es/news-and-stories/insights/gender-and-infrastructure-can-we-get-more-women-into-engineering
- (4) MEPYD, 2023. Equity and territorial development gaps: Dominican Republic 2021. https://mepyd.gob.do/publicaciones/equidad-y-brechas-territoriales-de-desarrollo-rep-dom-2021 5 ) Law 1-12 National Development Strategy 2030. https://mepyd.gob.do/estrategia-nacional-de-desarrollo-2030/
- (6) JOY 2010. Women in infrastructure works: promoting gender equality and rural development. https://www.ilo.org/wcmsp5/groups/public/---ed_emp/documents/publication/wcms_176254.pdf
- (7) UNDP, 2019. In DR persist the inequalities, according to the Human Development Report 2019. https://www.undp.org/es/dominican-republic/news/en-rd-persisten-las-desigualdades-seg%C3%BAn-informe-de-desarrollo-humano-2019
- (8) MEPYD & IDB, 2020. National Infrastructure Plan 2020-2030. https://mepyd.gob.do/publicaciones/Plan-nacional-de-infraestructura-2020-2030/
- (9) BCRD, 2023. Dominican Economy Report 2022. https://www.bancentral.gov.do/Publicaciones/Consulta
- (10) Statista, 2023. Travel & Tourism – Dominican Republic. https://www.statista.com/outlook/mmo/travel-tourism/dominican-republic
- (11) ONE, 2023. Sectorial Statistic Report - https://www.one.gob.do/media/sbkdtbjf/boleti-n-de-estadi-sticas-macroecono-micas-y-sectoriales-2.pdf
- (12) Caraballo, J,, 2022. David Collado: DR needs 30,000 new hotel rooms to be more competitive. https://www.diariolibre.com/economia/turismo/2022/03/31/cuantas-habitaciones-hoteleras-necesita-rd/1739651
- (13) Caraballo, J., 2022. More than US$34.330 million would be invested in the Dominican tourism sector. https://www.diariolibre.com/economia/turismo/2022/06/04/mas-de-us34330-millones-invertirian-en-turismo-dominicano/1868481
- (14) Hosteltur, 2023. Dominican Republic aspires to 9 M international tourists in 2023. https://www.hosteltur.com/155041_republica-dominicana-aspira-a-los-9-m-de-turistas-internacionales-en-2023.html
- (15) ProDominicana Data Market. https://datamarket.prodominicana.gob.do/InversionExterno
- (16) Restrepo-Cadavud, P. et al., 2022. Paving the way for prosperous cities and territories: urbanization and territorial development review of the Dominican Republic. https://documents1.worldbank.org/curated/en/099630005252237339/pdf/P1727150e505db0590a27a07b39af785478.pdf?cid=lac_tt_wblac_es_ext
- (17) Decree No 269-15 National Policy for Climate Change. https://cambioclimatico.gob.do/phocadownload/SobreNosotros/MarcoLegal/DECRETO%20269-15%20POLITICA%20NACIONAL%20DE%20CAMBIO%20CLIMATICO.pdf
- (18) UNOPS, 2020. The infrastructure at the service of gender equality gender equality and empowerment women's empowerment. https://content.unops.org/publications/UNOPS-Infrastructure-for-Gender-Equality-and-the-Empowerment-of-women_ES.pdf
- (19) Tejeda, Ed. Et al., 2022. Fighting against the tide: A Study on Human Trafficking in Eleven Municipalities in the Dominican Republic in eleven municipalities in the Dominican Republic. https://pciudadana.org/wp-content/uploads/2022/03/Estudio_final_sobre_trata_de_personas.pdf
- (20) ONE, 2021. Environmental spending per year, as a proportion of total public spending and GDP 2001-2021. https://www.one.gob.do/datos-y-estadisticas/temas/estadisticas-ambientales/proteccion-gestion-y-participacion-o-accion-ambiental/
- (21) MEPyD. Estrategia Nacional de Desarrollo 2030. https://mepyd.gob.do/estrategia-nacional-de-desarrollo-2030/
- (22) Decree 724-20 which established the ProPedernales escrow fund. https://presidencia.gob.do/decretos/724-20
- (23) Tourism Law https://colegiodeabogados.org.do/index.php/bibliojuris/leyes-y-decretos/turistica-financiera-y-empresarial/1082-ley-541-organica-de-turismo-de-la-republica-dominicana-pdf/file
- (24) Law 64-00 which created the secretary of state for the environment and natural resources https://mem.gob.do/wp-content/uploads/2019/01/Ley-No.-64-00-que-crea-la-Secretaria-de-Estado-de-Medio-Ambiente-y-Recursos-Naturales.pdf
- (25) Law on the Promotion of Tourism Development for Poles of Scarce Development and New Poles in provinces and localities of great potential. https://dgii.gov.do/legislacion/leyesTributarias/Documents/Leyes%20de%20Incentivos%20y%20Fomentos/195-13.pdf
- (26) Law No. 16-95 on Foreign Investment. https://prodominicana.gob.do/wp/wp-content/themes/ceird/ceirdpdf/Ley-16-95-sobre-Inversion-Extranjera.pdf
- (27) JICA, 2020. Survey on Community Based Tourism Market in Thailand. https://www.jica.go.jp/Resource/project/thailand/025/materials/ku57pq00003u68o4-att/survey_202003.pdf
- (28) Sustainable Tourism Enterprises and their Potential Economic, Social and Environmental Impacts: Eco Adventure Hotel and Dominican Tree House Village. https://bvearmb.do/bitstream/handle/123456789/1654/Impacto%20economico%20turismo%20sostenible_WEB.pdf?sequence=1"
- (29) UNDP, 2023. Catalog of Promising Practices. https://www.undp.org/es/dominican-republic/publicaciones/catalogo-de-practicas-prometedoras