NCE RK together with MID RK conducts market readiness analysis for transfer of state functions in the sphere of tourism in a competitive environment

On 9^th of September at the site of the National Chamber of Entrepreneurs of Kazakhstan "Atameken" were held public hearings on the transfer of the function of MID RK on "Dissemination of information about Kazakhstan and its tourism opportunities in the international tourist market, and within the state, including through national and international exhibitions and fairs in the field of tourism activity" through outsourcing in the competitive environment.

The discussion, which was held in a videoconference mode with connection of all regions, was attended by representatives of the Department of Tourism Industry MID RK and local executive bodies, tourism associations, travel agencies, hotels and tourist information centers - more than 150 people.

Opening the public hearing, the Board Member, Deputy Chairman Yuliya Yakupbaeva noted transparency of discussions and involvement of the business community in the process of transfer of government functions in the business environment, including at NCE, which will ensure the consolidation of the entire market for the benefit of the tourism industry.

In her speech, Yulia Yakupbaeva noted that of all state functions in the sphere of tourism the most ready for transmission - is the function of promotion of information about Kazakhstan at the international tourist market, and within the state. Unfortunately, Kazakhstan holds 111 place among 141 countries in the world ranking of competitiveness in the sector of travel and tourism in 2016 in terms of effectiveness of marketing activities for attraction of tourists. So far, policy on branding destinations was defined. There is no tourist brand (logo, slogan) of Kazakhstan. No official tourist portal of the country. In 2014, the state's official tourist portal www.kazakhstan.travel was designed. Although, in the search of information about Kazakhstan on Google appears www.visitkazakhstan.kz site as a national tourist site. It should be noted that state funds were allocated to the development of the site, but the funds were not allocated for the promotion of the site.

Despite periodically conducted exhibitions, roadshows, etc., there is no funding for the creation and broadcasting of promotional videos in the national and foreign media. There is no systematic promotion of Kazakhstan as a tourist destination in international TV channels aimed at an audience of millions. In world practice, virtually all successful and developing countries of the world regularly use mass communications. So, in 2013, Germany was advertised in a campaign under the slogan “Smart Germany”, China – “Made in China”, South Korea – “Advanced Technology Korea”, Bahrain – “Bahrain - Business Friendly”, Azerbaijan, Turkey and many other countries.

Currently, 4 people are engaged in promotion of the country at the Ministry of Investment and Development of Kazakhstan, and only 2-3 people at the regional level.

Analyzing the ongoing marketing activities, Yuliya Yakupbaeva noted that there is not enough funding, which is allocated by the state under the budget program "The formation of the national tourism product and promotion of it on the international and domestic market". At present this budget program provides only holding of 7 international exhibitions, 3 domestic events, the production of advertising and branding products and support of the tourist Internet resource of Kazakhstan.

For example, in 2016 Georgia allocated funds in the amount of 1.4 million US dollars for promotion of thee tourist product at target markets (Kazakhstan, Russia, Azerbaijan, Armenia, Turkey, Ukraine, Belarus, Poland, Israel, Lithuania). As a result, in recent years, Georgia has demonstrated one of the highest tourism growth rate in the world: the total number of tourist arrivals in the country increased from 1.5 million to 6 million people in 2015. Total revenues from tourism activities increased over the same period from 475 million US dollars to 2 billion US dollars, more than 20 times higher than the world average.

Given that NCE brings together all market participants, as well as a regional network, as one of the options you can consider the establishment of the National Office of Tourism (in the world practice - Destination management organization (DMO) with participation of NCE and the Ministry for Investment and Development of the RK for the following goals: the development and promotion of the brand in Kazakhstan as a tourist destination, promotion of tourist products at the domestic and international markets, development and introduction of tourist products, creation and maintenance of a single tourist website in Kazakhstan, system for information of users, etc.). The supervisory board of the organization could be represented by all the key players of the market - hoteliers, logistics, restaurateurs, tourism industry associations and trade representatives.

At presentations was presented the positive experience of these organizations in such major tourist destinations in the world as German Convention Bureau, Azerbaijan Convention Bureau and the Moscow Convention Bureau. As an additional funding of the organization, it is proposed to introduce a tourist fee on a hotel guest for each day of stay (in the world - bed tax). As a rule, the fee is not the United States more than 1-2 USD and does not put a burden on businesses, as the hotels only accumulate these funds.

"We need today to discuss four issues: whether we need a special organization to promote tourism; in what form (PPP, public or private); the pros and cons of these forms; do we need or not a tourist fee", - Yuliya Yakupbaeva put the question to the participants.

 Chairman of the Committee of Tourism Industry NCE RK Asanbaeva R. noted the need to establish such an organization: "We've already had the Agency for Tourism and the Committee of the tourism industry and even the Ministry of Tourism, also, I'm sure there are image videos, which are gathering dust on the shelves and not moving. Marketing - it's only 10% of the work. The main thing here is promotion. To hold an exhibition - this is important, but more important to invite foreign partners to b2b meetings to conclude agreements. I also fully agree that it is necessary to introduce the tourist fee. Many countries have introduced this practice long time ago, and that money can be a great help in the promotion of tourism in Kazakhstan. Institutional reforms are also important".

Acting Director of the Department of Industry Tourism MID RK Kairat Sadvakasov also noted the need to transfer this state function in a competitive environment: "In general, the transfer of state functions is required. We have considered the options of entering into a service contract with the involvement of investors, or the transfer of this function in the quasi-public sector. As the Republican DMO (under the Ministry (like JSC “KAZNEX”) with the possible participation of NCE in PPP format)".

Director of the Kazakhstani Tourist Association Rashida Shaikenova also confirmed both the fact of the transfer of state functions and the creation of DMO, "The fact that a number of state functions will be transferred to the competitive environment – is certainly a good thing. As for DMO - clearly, an organization with the state participation in PPP format is required. Today we see how active the regions have become in the development and promotion of its tourist potential, but no one would come in a particular region, if we do not position the country as a whole. We support the need to introduce the tourist fee”.

During the discussion, representatives of the travel market have discussed various options for the tourist fee. So, Asia Nazarova, Director of Absolute Hotel Astana noted that "tourism fee or bed tax - is not an innovation, it is the experience of advanced countries and the normal practice abroad. This is the contribution of each visitor to the development of tourism".

The President of ULE "Capital Tourism Association" Rysty Karabaev is also in favor of the proposals under discussion: "Those who have passed foreign training in the field of tourism, have seen the work of DMO in practice. The foreign experts, who were involved in the development of system plans for tourism development in the Republic of Kazakhstan, noted that the work of such an organization requires serious financial investments -  4-5 million USD at the initial stage. No one allocates such funds here. But we must understand that without a certain cost it is impossible to obtain the effect".

The National Association of the tourism industry in the face of President Gaukhar Zhenisbek also supported the creation of DMO in the PPP format and the introduction of the tourist fee. At the same time, it is proposed to consider other options for PPP in addition to DMO involving NCE RK.

Local executive bodies also joined the discussion. So, Shynarbek Batyrkhan, head of the department of tourism of Akmola region, said: "Not only business supports the creation of DMO, but also public authorities. In preparation for the Expo, foreign partners are surprised that Kazakhstan has no National Tourism Office. We need to work together so that Kazakhstan can become more accessible worldwide in terms of tourism. I think that a tourist fee will be effective, but it requires changes in the law. Besides the tourist fee, I would suggest to consider the introduction of resort cards or tourist certificates".

In closing the discussion, the moderator Yuliya Yakupbaeva said: "All necessary changes will be made. Now we are forming a package of proposals for consideration by the working group chaired by the First Deputy Prime Minister. I would like to summarize that, in general, everything speaks in favor of the creation of DMO in the PPP format. And the details have still to be discussed".

The transfer of certain state functions in the competitive environment is envisaged by the plan of the nation "100 concrete steps", for implementation of which was established a special commission in January of this year.