To assess the role of cooperatives in development of Tourism in India

Presented by

Prof. Neerja Kashive

Asst. Professor,VESIM

And

Prof. Swapnil Kshirsagar

Asst. Professor,VESIM

1. Abstract:

Tourism is an important upcoming business sector in India. Earlier it was restricted to pilgrimage

or standard places like beaches and hill stations. However of late, a lot of people are interested in

visiting offbeat places which are rarely marketed or have some unique features in them. Another

upcoming aspect of offbeat tourism is the rise in adventure tourism. The government is trying to

promote tourism in India with campaigns like ‘Incredible India’ and many other state level

promotions. However it is unable to exercise control at the grass root level. Hence much of the

offbeat tourism remains unorganized. Through this paper we would like to understand how the

implementation of cooperatives would help offbeat tourism in the country and also be a win-win

situation for all the stakeholders involved.

2. Study Problem & General Purpose of Research

Travel and tourism is the largest service industry in India. This industry provides heritage, cultural,

medical, business and sports tourism. It is expected that the tourism sector's contribution to the

country's gross domestic product (GDP) will grow at the rate of 7.8 per cent yearly in the period

2013-2023. The Indian tourism sector has been flourishing in recent years due to the improved

connectivity to and from the country. Also, a better lodging facility at the tourist destinations has

been a factor which has contributed to increase Foreign Tourist Arrivals (FTA). India's travel and

tourism industry is set to grow by about 7.3% in 2014, better than last year, but average spending

by foreigners travelling to the country could decline sharply, according to the World Travel &

Tourism Council. This year, revenue from domestic tourism is expected to grow 8.2% compared

with 5.1% a year ago, that increasing domestic travel, growth of low-cost airlines and upgrading

of airport infrastructure will be the growth drivers. In 2013, the travel and tourism industry

contributed Rs. 2,170 billion or 2% to the country's GDP. This is expected to rise to Rs. 4,350

billion in 2024. The Government of India has launched the 'Incredible India' mobile application.

The app will help tourists to seek information, besides enabling quality and reliable services from

service providers recognized by the Government of India. This app demonstrates the

Ministry of Tourism's commitment to the use of technology for service delivery

The Ministry of Tourism, Government of India has launched the new tourism brand for the Union

Territories of Daman and Diu and Dadra and Nagar Haveli, as well as released the Vision 2020

publication for Dadra and Nagar Haveli. This step by the government has been taken with a view

to help in overall economic development of these union territories.

The West Bengal government has decided to set up an eco-tourism board to project the state as a

major tourist destination. Work for developing a mega tourism project has already started in

Jalpaiguri district and plans to develop similar projects in Sylee and Kunjanagar is under

discussion.

The Tourism Ministry of India along with the state government of Maharashtra plan to create a

cultural hub on the lines of Times Square, New York. The vision behind such a cultural hub is to

provide popular entertainment as well as access to heritage and culture for the benefit of

international tourists, domestic tourists and the people of Mumbai.

The medical tourism market in India is projected to hit US$ 3.9 billion mark this year having

grown at a compounded annual growth rate (CAGR) of 27 per cent over the last three years,

according to a joint report by FICCI and KPMG. Also, inflow of medical tourists is expected to

cross 320 million by 2015 compared with 85 million in 2012.The tourism industry is also looking

forward to the E-visa scheme which is expected to double the tourist inflow to India. Enforcing

the electronic travel authorization (ETA) before the next tourism season, which starts in

November, will result in a clear jump of at least 15 per cent . Expected share of tourists by

expenditure - Domestic travelers are expected to contribute around 84.7 per cent to total tourism

revenues by 2024.

3. Rationale/Relevance of the Project

Tourism has long been identified as one of the sunrise sectors for India which can serve the dual

purpose of not only earning foreign exchange as well as the disposable domestic income but also

boosting inclusion. With its backward and forward linkages and local connect, tourism becomes

an important driver of equitable growth and prosperity offering an alternative source of livelihood,

development and growth in remote locations, preservation of local skills, enterprise development

at the micro level, and sustainable environment management. In India, while tourism is one of the

largest employers, itremains grossly underutilized as a means of creating sustainable financial

inclusion.

The concept of Cooperative Tourism aims to deliver sustainable economic development by

building the capacity of local communities to realize the potential value of their natural and cultural

heritage to create tourism enterprise opportunities through a co-operative destination management

organization model, which not only supplement incomes, but act as an incentive (or motivational

factor) to preserve local art and culture, and maintain traditional practices like architecture, cuisine,

clothing etc.

It is observed that currently most of the offerings in niche tourism areas are based on individual

private efforts, and as a consequence the socio-economic benefits often do not percolate to a large

part of the stakeholder community .This is where the cooperative model can help bridge the divide.

Rather than individual efforts being driven single-handedly, the cooperative model brings all the

aspects of a tourism product under the ambit of a cooperative structure, which not only controls

the structure and volume of tourist activity, but ensures that the entire destination is promoted

rather than fragmented independent entities

4. Literature Review

1. Cooperatives

The distinctive organization and functions of cooperatives enable disadvantaged people to achieve

viable outcomes through collaborative efforts. The Rochdale Society of Equitable Pioneers, which

was recognized as the first cooperative in 1844, was composed of workers whose appeals for salary

increase were continually rejected (Kallen, 1946). The Rochdale Cooperative successfully

alleviated the poverty of its members by improving its market bargaining power and social equality

among members. Consequently, 1,000 cooperatives were established in Britain in the next ten

years (Birchall, 1994). In 1895, the International Cooperatives Alliance (ICA) was founded in

London, with the goal of providing cooperative guiding principles and developing international

trade.

The pro-poor benefits of cooperatives can be traced back to its first establishment in1844 when

the Rochdale Cooperative helped people from the working class to overcome poverty by

minimizing their costs of living (Birchall, 1994). Birchall (2004) further achieve other Millennium

Development Goals as well. Simmons and Birchall (2008) discussed the pro-poor functions of

cooperatives from a network perspective and summarized that aggregated resources are managed

under democratic management, which is considered as a more sustainable way of development

As the application of the concept of cooperatives to tourism is a rather recent phenomenon, limited

discussions on tourism cooperatives are found in scholarly publications. The positive effect of

tourism cooperatives on poverty alleviation has been postulated by a few non-Chinese studies. In

Greece, women’s cooperatives have played an important role in developing agro tourism in

villages and in promoting the social and economic roles of women in the countryside (Iakovidou,

1997). Based on a case study in India, Verma (2006) concluded that tourism cooperatives facilitate

the

protection of ethnic culture while ensuring economic viability and a truly enriching experience

fortourists. Gorman (2010) elaborated that tourism cooperatives successfully help farmers in

remote areas to sell accommodation products to tourists.

2. Tourism Cooperative

Based on the ICA(2007) definition, the tourism cooperative can be defined as as a voluntary

association formed by persons in the tourism industry that aims to reach common economic, social

and cultural needs, as well as aspirations through a jointly owned and democratically operated

organization. Community-based tourism (CBT) has been recognized as a catalyst for rural

community development. However, delicate issues pertaining to the management and operations

of CBT have reduced the development and growth of CBT. The economic fragility of CBT has

prompted researchers to argue that, if CBT is to beprofit-oriented, then it should be run as a

business entity. This calls for a sophisticated approach to ensure its economic sustainability

(Mitchell and Hall, 2005; Hamzah and Khalifah, 2009; Baromey et al., 2011).

The significant contribution of a cooperative in promoting participatory tourism through its

community-based organization is not widely recognized (Verma, 2008;George, 2007). Despite this

shortcoming, as a CBT matures, it inevitably makes way for a broader based organization to curb

potential manipulation and increase accountability and transparency (Moeurn et al., 2008). Many

governments advocate the use of a cooperative business model as a tool to manage community

enterprises and increase economic benefits for the local people (Din, 1997; Ooi et al., 1994) as

well as eliminate power-related conflicts and poor tourism distribution among the locals (Goodwin

et al., 1998).

A community cooperative has a few advantages which other organizations lack: it utilizes a broad-

based organization that curbs manipulation bylocal elites (Verma, 2008), and strong stakeholders’

participation that nurtures community empowerment

(Aref and Gill, 2009). Empowerment through its three forms (individual, community, and

institutional) enables a local community to collaboratively manage their interests in relation to the

wildlife (Daniela, 2002) or other people-land-nature based interests. More importantly, a

cooperative can identify and provide necessary capacity building programs for the local

community involved in CBT (Bushell and Eagles, 2007).

Funded by the Scottish Government through its International Development Fund (IDF) under the

South Asia Development Programme, Yes banks project envisages establishing a scalable model

for sustainable economic development in tourism, adapted to an Indian context by applying

cooperative principles to destination management and tourism development in India.

In a study conducted by Hamzah A. and Mohamad H.N (2013) the following model was suggested

for Community-based tourism (CBT) in Malaysia.The establishment of CBT in Batu Puteh was

triggered by the changing economic landscape that severed the local people’s dependency on the

forest when the state government replaced indiscriminate logging practices to pro-conservation

/sustainable forest management practices. To alleviate the dire economic situation caused by the

loss of livelihood and income from the gazettement of the Lower Kinabatangan area where Batu

Puteh is located, a community-based tourism project was initiated by the local youths in 1997 with

the help of NGOs. This was in tandem with the latter’s conservation efforts. The local youths

called themselves Model of Economically Sustainable Community Tourism (MESCOT) members

to represent their CBT initiative. MESCOT’s goals were to create community-based ecotourism

activities On 17 July 2003, MESCOT established a community tourism cooperative named

Koperasi Pelan congan Mukim Batu Puteh Bhd or better known as KOPEL.

5. Specific Study Objectives

Research Objectives

It describes how the cooperative business model successfully created sustainable economic

benefits for its local community and reveals how the cooperative effectively managed the local

community’s economic, environmental and social interests.

Research Question

1. Is it possible to develop co-operative sustainable model for tourism industry?

2. How a tourism cooperative creates economic sustainability as well as bringing socio-cultural

and environmental benefits to its members?

6. Research Methods

The study will be conducted by taking a few models as reference and arriving at a model which

can be implemented in India. A structured questionnaire would be prepared to collect data from

all the stakeholders involved. Simultaneously qualitative data would be collected from a few

offbeat tourist locations. From the analysis of the data a model would be prepared. The model

would be tested on a pilot basis at offbeat tourist locations to understand its practical implications.

Modifications would be done to the model if required and then the final model can be presented

for implementation

Qualitative approach via the case study method will be employed to gain a deep understanding of

the phenomenon being investigated. A case study method is appropriate for this study because it

enables the involvement of various local stakeholders with varying perspectives; and the use of

multiple instruments to give invaluable insights. This approach enabled the authors to gain an in-

depth understanding of the issues at hand; address the central research questions; and revisit,

verify, and validate the findings. Key informants would be identified from the local community at

the site who were directly or indirectly involved in Co-operative Tourism.

In-depth interviews with villagers (5), Financial Institutes(5) and Service Providers tourism

cooperative (5) would be conducted.

7. Analysis

Qualitative data of service providers

We could derive the following observations on the data collected from local service providers

Most of the persons are regular service providers (food, service, transport)

Most people own their business which they run and about 80% of them have invested

their own money

They generally do not have a fight with customers

Almost all service providers don’t follow the rules or the norms. They do not follow any

safety and security measures

Most of them are part of local union which is highly unorganised. They face challenges

of corruption from local authorities, competition and issues like fuel price hike and

unavailability of resources

The local authorities help but it is not consistent

The service providers are not aware what role can the cooperatives play in societal

development. Hardly anyone is aware about what cooperatives are and what role do they

play. They were also convinced that a tourism cooperative will help them

When explained to them what cooperatives are, they showed interest in being a part of

the cooperative but wanted the local authorities to regulate it and also were keen to know

whether it is profitable to them

The service providers are willing to take loans from cooperatives if they get the loans at

less interest rates

The service providers are willing to take the initiative for forming the tourism

cooperative and feel that the tourism cooperative will help in conservation of social,

economic and environmental interests. They would like to seek the government support

in development of infrastructure and regulatory matters

Quantitative data of customers response about tourism cooperatives

Fig. 1: Gender

Fig. 2: Age

From figures 1 and 2 we understand the demographic diversity of the respondents with figure 1

stating the gender which is almost 70% males and 30% females. The age groups represented are

16-25 years (60%), 26-40 years (33%) and remaining 7% in the group 41-58. This signifies a

majority of the population is young.

Fig. 3: Marital Status

Fig. 4: Profession

From the figures 3 and 4 we can see that three fourth of the respondents are males and one fourth of

the respondents are females .Also most of the people are not working in the government sector.

Fig 5.Monthly income

Almost three fourth of people belong to the income groups below Rs.50000.This figure is important

representation showing the low income group of the respondents. From this we can infer that they

might be willing to spend less which is an important observation.

Fig 6. Mode of transport for traveling

Fig 7. Travel companion

Fig 8. Frequency of travel

From figure 6, 7 and 8 we can see that people prefer public transport for going out on vacations. They

generally travel with family and more than 75% of the people travel at least once in a quarter

Fig 9. Role of tourism cooperatives

From figure 9 we can state that the tourists or tourism customers are looking out for a complete set of

solutions from the service providers and not particularly improvement, only in one service in isolation

Fig 10. Accommodation aspects

Fig 11. Food aspects

Fig 12. Transport aspects

Figures 10, 11 and 12 denote the critical aspects of food, transport and accommodation which the

tourists seek. There is a high expectation of standardization and improvement of quality of

services.

Fig 13.Unique services that can be offered by Tourism cooperatives

From figure 13 we can interpret that sightseeing is of top priority in terms of unique services

offered. People believe that locals know the place very well and might be able to show some key

places of tourist interests.

Fig 14-a. Perception of people regarding tourism cooperatives

Role in

development

of tourism

Enhancement of

accommodation

facilities

Enhancement

of food

services

Enhancement

of transport

facilities

Fig 14-b. Perception of people regarding tourism cooperatives

Fig 14-c. Perception of people regarding tourism cooperatives

From figure 14.a, b, c we can see that people perceive that forming of cooperatives in tourism will help

enhancement of services and lead to better facilities for the tourists. It will also help devlop the local

wellbeing and empower local people. People believe that government and social support will help

setting up and running these institutions. Also, Most of the people have shown interest in being part of

the tourism cooperative

Enhancement

of hygiene and

cleanliness

Compete with

private players

Offer unique

services in

tourism

Help in

community

development

Government

should support

tourism

cooperative

Will help in

managing

environment

sustainability

Will help in

giving better

customer

experience

Will be

profitable in

long term

8. Working Models

Tourism cooperative as a base to state and national tourism

development

• Forming micro level tourism associations/cooperatives

• Doing pilot project of implementing the cooperatives and reviewing the progress

• Creating nexus of cooperatives/associations

• Supporting state and national government in tourism development

• Displaying information and links to websites

Indian tourism

Nexus of tourism cooperatives

Local/micro level tourism cooperatives

Functional model of tourism cooperative

9. References:

Aref, F. and Gill, S.S. (2009), “Rural tourism development through rural cooperatives”, Nature

and Science, Vol. 7 No. 10, pp. 68-73.

Baromey, N., Rith, S. and Yokohari, M. (2011), “Enhancing sustainability through the building of

capabilities: analysis of community-based ecotourism development in Cambodian protected

areas”, in Hamzah, A. (Ed.), Conference Proceedings, 3rd World Ecotourism Conference,

Sihanoukville, Cambodia, pp. 1-19.

Birchall, J. (1994), Co-op: The People’s Business, Manchester University Press, Manchester.

Birchall, J. (2004), “Cooperatives and the millennium development goals”, available at:

www.ilo.org/public/english/support/lib/resource/subject/coop/birchallbook Bushell, R. and

Eagles, P.A. (2007), “Benefits beyond boundaries: tourism and protected areas”, in Bushell, R.

and Eagles, P.A. (Eds), The Vth World Parks Congress, CABI Press, Oxfordshire, UK and

Cambridge, MA.

Daniela, B.R. (2002), “Capacity building for co-management of wildlife in North America”,

Human Dimensions Research Unit Department of Natural Resources Cornell University, New

York. HDRU Series 02-2, available at: w2.dnr.cornell.edu/hdru/pubs/

HDRUReport02-2.pdf (accessed 30 November 2012).

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involvement”, in Cooper, C. and Wanhill, S. (Eds), Tourism Development – Environmental and

Community Issues, John Wiley & Sons, West Sussex.

George, B.P. (2007), “Alleppey tourism development cooperative: the case of network advantage”,

The Public Sector Innovation Journal, Vol. 12 No. 2, pp. 1-10.

Gorman, C. (2010), “Garden tourism in Ireland an exploration of product group – co-operation,

links and relationships”, unpublished PhD thesis, Department of Geography, Trinity College

Dublin, Dublin.

Goodwin, H., Kent, I., Parker, K. and Walpole, M. (1998), Tourism, Conservation and Sustainable

Development: Case Studies from Asia and Africa, available at:

http://pubs.iied.org/pdfs/7786IIED.pdf (accessed 28 November 2012).

Hamzah, A. and Khalifah, Z. (2009), Handbook for Community Based Tourism: How to Develop

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Iakovidou, O. (1997), “Agro-tourism in Greece: the case of women agro-tourism co-operatives of

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Moeurn, V., Khim, L. and Sovanny, C. (2008), “Good practice in Chambok community-based

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Sabah, Kota Kinabalu, Institute of Development Studies, Sabah.

Verma, S. (2006), “Promoting peace through tourism: a role for co-operatives”, The nternational

Journal of Co-operative Management, Vol. 3 No. 1, pp. 54-59

.

Verma, S.K. (2008), “Cooperatives and tourism: an Asian perspective”, National Cooperative

Union of India, available at: http://torc.linkbc.ca/torc/downs1/india%20cooperatives.pdf.

A Brief Report on Tourism in India, Corporate Catalyst (India) Pvt. Ltd, January 2015

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