Damage and Loss Assessment

1. Damage and Loss Assessment The Tourism Sector J. Roberto Jovel

2. Contents • Typical effects of disasters on the tourism sector • Procedures to estimate damage and losses • Typical sources of information RJovel

3. Typical Effects of Disasterson Tourism Sector

4. Disasters and Tourism Tourism is very vulnerable to disasters of every kind and origin, due to • Exposed location of assets in vulnerable coastal areas • Seasonality of tourism demand • Volatility of tourism demand Any negative impact on tourism is reflected in • Foreign exchange earnings • Domestic employment decline • Decline in government revenues Countries where tourism sector represent high fraction of overall economic activity are still more vulnerable to disasters RJovel

5. Types of Damage Total or partial destruction of • Physical assets (buildings and facilities: hotels, restaurants, etcetera) • Equipment and furnishings • Associated environmental assets (coral reefs, beaches, etcetera) • Basic services (water and sanitation, electricity, transport and communications) RJovel

6. Bed Capacity and its Utilization Max Bed capacity RJovel

7. Types of Losses • Decline in revenues due to • Temporary non-availability of assets • Decline of tourists´ arrivals • Higher operational costs • Temporary costs of electricity, water and other services • Post-disaster promotional costs RJovel

8. Impact on Tourist Arrivals Losses RJovel

9. Procedure for Damage and Loss Assessment in Tourism

10. Procedure for Assessment • Obtain pre-disaster (baseline) information • Static baseline on assets • Dynamic baseline on tourist arrivals, seasonality and income • Develop post-disaster recovery and reconstruction forecast • Schedule of installed capacity recovery • Calendar of tourist arrival recovery • Estimate damage and losses (1 minus 2) • Estimate impact on balance of payments and on fiscal budget RJovel

11. Criteria for Estimation of Damage The replacement value of physical assets must be estimated by a civil engineer or architect, developing a typology of affected buildings The contents of the affected buildings must be estimated for each of the types of assets Damage to environmental assets and services should be estimated by environmental economist If associated services (electricity, water and sanitation, transport) are owned or provided by public enterprises or by separate private enterprises, their replacement or repair value would be estimated under other sectors RJovel

12. Criteria for Estimation of Losses For the estimation of losses it is essential that the period of reconstruction, replacement or repair of assets be accurately estimated The decline in demand or utilization by tourists of the sector´s facilities depend on: • The time required to rebuild, repair or replace physical and environmental assets, and/or • The overcoming of fear or lack of information by tourists Operating costs may increase temporarily while facilities are under replacement, reconstruction or repair RJovel

13. Post-Disaster Sector Performance Post-disaster performance must be developed through combination of • Calendar of staged recovery of bed capacity (supply) • Schedule of possible recovery of tourists arrival (demand) Recovery of bed capacity depends on • Construction sector capacity • Availability of financing for reconstruction • Bureaucratic requirements (construction permits, etcetera) Recovery of demand depends on implementation of • Information campaigns to usual tourist target groups • Promotion campaigns to new target groups RJovel

14. Balance of Payments Estimate losses in foreign exchange due to non-arrival of tourists Estimate disbursement of foreign exchange for information and promotion campaigns Fiscal Sector Estimate decline in tax revenues (tourist and sales taxes, special exemptions) Estimate cost of government participation in information and promotion campaigns Estimation of Other Effects Provide these estimates to macro-economist RJovel

15. Typical Sources of Information

16. Sources Ministry of Tourism Ministry of Planning Statistical Office Chamber of Tourism Central Bank Information Required Most recent survey on tourism sector Time series of tourist arrivals Average length of stay and expenditures Gross domestic product for tourism and subsectors Sources and Information RJovel

17. Example of Assessment:2008 Cyclone Season in Madagascar Balance of Payments effects: - 25.2 Billion Ariary Fiscal Effects: Tourist visa fees: 2,018. 2 Million Ariary Tourism VAT: 5,045.6 Million Ariary RJovel

18. Application to Kenya drought Obtain from sector authorities the following data for 2008, 2009, 2010 and 2011: • Monthly number of foreign tourists arriving in Kenya • Average length of stay and average expenditure Estimate possible decline in tourist arrivals due to drought situation (excluding other possible reasons such as security concerns, etcetera) Estimate value of sector losses including • Lower hotel and restaurant revenues • Lower amount of tourism tax revenues • Lower amounts of visa fees collected RJovel

19. Thank You !! rjovel@jovel.org RJovel