The Tourism Development Bank

This Entry has been submitted.

The Tourism Development Bank

Project Summary
Elevator Pitch

Concise Summary: Help us pitch this solution! Provide an explanation within 3-4 short sentences.

We have developed a trade facilitation platform (the Tourism Development Bank – TDB) that lets accommodation providers pay for qualified services with room nights instead of cash. The service is essentially a barter service allowing SME accommodation providers to barter rooms for services.

About Project

Solution: What is the proposed solution? Please be specific!

Room nights are the one liquid asset SME accommodation providers possess and typically 50% or more of rooms go unsold every day due to poor sales / distribution (meaning a willingness by accommodation providers to pay with rooms ..especially when cash is tight). There are three pieces to this solution which TDB has had to put in place. • First is a channel to market to be able to sell rooms which accommodation providers supply. TDB has teamed up with the WHL Group (one of the largest online accommodation sales networks in the developing world) to sell the room inventory. • Second is to develop relationships with selected service providers (i.e. reliable providers of essential service ranging from market access tools , and SME training to renewable energy service providers. • Finally, the TDB has developed a secure online platform for managing the barter trade ….accessible to the SME accommodation providers and distribution partners.
Impact: How does it Work

Example: Walk us through a specific example(s) of how this solution makes a difference; include its primary activities.

Tourism is large and is the second largest employer after agriculture in much of the developing world. Sadly however much of the investment capital from the banking sector and even the development banks has flowed only to the large and often foreign owned accommodations. Hence the benefits to local communities are diminished and money does not flow to the poorest in the community as it could (see this ODI report-- It is therefore very important that financing is directed at the SME accommodation sector. It is important not only because these businesses are locally owned and in themselves employ staff from the local community, but because of the flow on effect from SME accommodation providers sourcing virtually all their goods and services from local communities. In areas such as renewable energy secondary benefits arise in that SME accommodation providers (many of whom are off the grid) often provide anchor client incentive for small local suppliers of renewable energy to set up shop ...facilitating extension of the service to neighboring BoP households. Presently we are looking at some pilot work in India and Tanzania where local suppliers of renewable power, in the absence of local SME accommodation provider participation, will need to connect up between 200 and 500 BoP households to support the initial investment and ongoing maintenance support. One 20 room SME accommodation provider could provide the equivalent of up to 100 BoP households in terms of demand. It is conservatively estimated that financing support to 10,000 SME accommodation providers will directly support 150,000 staff and have a flow on effect to around 1.5 million people in the local community, many of them BoP beneficiaries.
About You
Tourism Development Bank
Visit website
About You
First Name


Last Name


Your Organization

WHL Consulting


, WA

About Your Organization
Organization Name

Tourism Development Bank

Organization Phone

+1 206-402-4091

Organization Address

Rm 12067 12/F New Victory House 93-103 Wing Lok St

Organization Country


Organization Type

Private Institution

The information you provide here will be used to fill in any parts of your profile that have been left blank, such as interests, organization information, and website. No contact information will be made public. Please uncheck here if you do not want this to happen..

Your solution
Country your work focuses on
If multiple countries, please list them here. If your solution targets an entire region, please select it below
Region(s) your solution focuses on:

Africa, East Asia and the Pacific, Europe and Central Asia, Latin America and the Caribbean, Middle East and North Africa, South Asia, North America.

Range of turnover in your target firms, in USD

Less than $1 Million.

Average turnover in USD of your target firm


Number of employees in your target firms

Fewer than 5, 5-24, 25-49, 50-74.

Average number of employees of your target firm


Specify the size, average and range of expected loans or investments in each target firm

$1,000 - $10,000 per client. Potential for repeat transactions.

What stage is your solution in?

Operating for less than a year

How does your proposed innovation leverage public intervention in catalyzing private SME finance?

In developing countries the TDB has a lot of work to do to establish a viable market for its services and for this it has proven essential to work with the public sector / development organisations. The set-up work the TDB needs to do involves industry workshops, audits of SME accommodation providers (to establish whether or not the product is saleable), installing online systems and locally owned travel portals to facilitate online sales (critical in turning over the room inventory pledged to the TDB) and finally locating and vetting suitable service providers …organisations we are confident will be able to add real value to SME accommodation providers. The deep sector expertise the TDB has in the SME accommodation sector and the partnerships developed allows the TDB to assess and manage risks in ways the normal financial institutions cannot.

Public sector support ranges from hands-on involvement in setting up and running explanatory workshops for the accommodation providers through to financial support to get the set-up work done. Our experience so far is that SME accommodation providers will in fact contribute to these set-up costs if they are able to pay with room nights.

Public finance is absolutely critical in frontier markets and fragile states as there is usually a high degree of risk and a significant amount of work to do till we can prove viability.

What barriers does your proposed solution address?

Asymmetry of information, Lack of collateral, Lack of financial capacity, Lack of SME access to skills / knowledge / markets, Unavailability of financial products tailored to SME needs, High transaction costs for financial intermediaries to serve SMEs, General barriers to SME development related to investment climate, Specific barriers to fragile and weak states.

If you checked any of these barriers, describe how your solution addresses them

The TDB provides access to finance which is otherwise either not available at all to SME accommodation providers, or only at very high cost. Despite the fact that tourism is the second largest industry in the developing world (after agriculture) and the largest source of foreign exchange earnings for 50 of the world’s poorest 80 countries, the formal banking sector and even the development sector regard the sector as very risky. Investments tend to flow only to high end accommodation groups like the big hotel chains, disadvantaging the SME sector. This is largely because of a lack of knowledge by the financial sector of how the industry works leading to an inability to assess whether individual SME accommodation providers and their respective investment requests are high or low risk opportunities.

The problem is exacerbated by the SME accommodation providers who lack skills in many areas and often present poorly developed investment plans to the financial institutions. In many cases the same SMEs also display a lack of understanding of how global markets work in tourism and how the investment will work to secure a sustainable future for the enterprise.

The TDB addresses all these issues; firstly in filtering out accommodation providers which do not meet basic market acceptability criteria; secondly in only supporting financing for needs which address critical needs (improved market access, reduced operating costs, improved sustainability for the long terms (e.g. by introduction of renewable energy supply; reducing water usage etc), and improved skills and finally by vetting service providers to ensure what is needed gets done.

Provide empirical evidence of your proposed solution's success/impact at present. If your project is in the idea phase, please provide evidence that speaks to its potential impact

Approximately 450 words left (2000 characters).We have spent the past 2 years building the building blocks for the TDB including the audit tools (a platform has been built to allow field auditors to collect data on market readiness in a template driven audit form which can be downloaded online to a central database for processing and benchmarking data…this system can now be used by any qualified tourism consultancy firm), building and testing the secure online barter banking facility, completing legal work on terms of use etc, and locating and vetting some service providers we could work with to test the system.
Funding from the IADB/MIF and the Business Trust of South Africa has allowed us to do this work and also start field trials in Tequila, Mexico, Ouro Preto Brazil and in the Kruger Park region in South Africa to test the willingness of accommodation providers to use the TDB to pay for services using room nights.
The pilots have been restricted to provision of market access services and acceptance so far has been around 60% with a total of 30 accommodation providers each buying an average of around US$1,000 in services using the TDB. We are now working on adding more services including energy efficiency and renewable energy services plus selected training and by the end of the 2010 year we estimate we will have concluded 80-100 transactions with an average value of $1,500.

How many firms do you expect to reach?

SME accommodation providers represent 80% of the total accommodation stock worldwide. In just two countries Brazil and India there are estimated to be 6,000 and 10,000 SME accommodation providers respectively. Given adequate public support, we estimate in 5 years 10,000 enterprises can be reached with this model around the world.

What is the volume of private SME finance you aim to catalyze?

We anticipate we will be able to service 10,000 enterprises over a 5 year period. During the 5-year period we estimate the average annual transaction value at $2,500 per accommodation provider. The year 5 transaction value through the TDB will be approximately US$25 million.

What time frame will be required to reach these targets?

We are working in a 5 year time horizon. The rate of growth for the TDB is fast however we are fortunate in that the WHL Group already has operations in over 100 countries (around 200 destinations) servicing around 8,000 SME accommodation providers. These are accommodation providers we know and for which we have sales histories and traveller feedback data. This information will allow us to move quickly in these destinations and with minimal need for public sector support other than in vetting local service providers and running workshops for the local industry.

Does your solution seek to have an impact on public policy?


What would prevent your solution from being a success?

There are two main challenges we will have in ensuring success

First we need to secure some capital to complete development work on the TDB and to complete pilots with some critical new service partners in the renewable energy, energy efficiency, training and distribution (channel management) areas. These are areas which are not within the scope of funding we have secured from the IADB/MIF and the Business Trust of South Africa and are beyond our present ability to fund in-house.

Second, we will need to secure support from the public sector (especially development organisations) to roll out the program to new destinations in much of the developing world, especially in challenged rural regions, and in many IDA countries including conflict and disaster affected countries. In this latter category tourism potential may be high however it often takes many years to build visitation (certainly our experience so far in locations like Aceh, Indonesia, East Timor and Sri Lanka).

List all the funding sources that are required for the sustainability of this solution

First off we need an injection of working capital to complete pilot work and work on the TDB. This would ideally be via an equity stake in the TDB. In relation to the business operations in the most challenged “frontier” markets a large contribution from the public sector / development institutions will be needed to get the TDB established. We estimate we will need support for as much as 80% of set-up costs and will also need zero (or very low) interest loans to the TDB for up to 5 years to get the market working. On a per destination basis this may amount to around US$60,000 in set-up costs and loans of around US$100,000. For more developed markets, we will be looking for a mix of patient capital and loans from the private sector to fund the TDB (using rooms as collateral).

Demonstrate how your proposed solution has the capacity to graduate from dependence on public finance. What is the time frame?

It really depends on the region. In some of the emerging markets we are working in we believe we are not far off having a model which can be fully funded by the private sector. In our early pilots in these markets we have found both a large enough pool of marketable accommodations and service providers to create a market. This combined with a reasonable volume of tourists will ensure the TDB can turn over inventory quickly and reduce borrowing needs. For these markets (perhaps 50% of all markets we are working in) we see a 1-2 year time horizon to get to a point of being fully private sector financed.

The next category of markets where tourism numbers are low (e.g. post conflict countries) and / or where they are isolated and lack access to service providers (e.g. many island nations and remote or rural areas), the need for public sector financing support will likely extend to 3-5 years ….i.e. until such time as the markets have grown (in the case of conflict affected regions) or service provision has bedded down and ongoing funding is most maintenance related. This is probably another 30% of the markets we service.

Finally for truly Frontier and Fragile States, the reality is that we probably will always require some level of public support. Some of these markets are deficient in so many areas (policy, tourism infrastructure, skills, access to service industries to support etc.) that we would only undertake work which is publicly funded and ideally part of a larger tourism development plan.

Demonstrate how your proposed solution will survive a potential loss of its largest private funding source

Given that we are not hostage to any one source of funds, we are not concerned about the long term viability of the TDB. Our main concern in the short term is the capital (equity or debt) needed to complete work on the TDB system and the pilots in the energy sector etc. Our work so far has convinced us there is a market for this facility in both the developed world and in a number of emerging markets which can be fully funded from the private sector. We can however also see the huge impact this service could have in the developing world and this is why we are looking to secure some short to medium term public sector funding to help push into these markets.

Please tell us what kind of partnerships, if any, could be critical to the greater success and sustainability of your innovation

There are three main categories of partner. First, we are seeking partners in areas we have found to be areas of systemic need for SME accommodation providers. These are in market access (…. improving sales and distribution, where we work with partners such as, 360Cities, SiteMinder and others); in energy efficiency and renewable energy (energy represents up to 50% of operating costs for many SME accommodation providers in the developing world and hence we have started discussions here with groups such as E+Co and Acumen); and in training services.

Second is partners who can work in the set-up area doing SME market readiness audits, service provider audits etc. The systems are built for this but we have yet started pushing out to third party consultants.

Finally we are also seeking relationships with public sector partners / financiers to move into developing, frontier and fragile Markets.

Are there non-financial issues that could threaten the sustainability of your proposed solution?

The main non-financial threat to this business is any severe global drops in tourism (such as were experienced post Sept 11 and the Asian Bird flu crisis etc.) which might compromise our ability to sell the room inventory in a timely manner. However, we have tried to minimize this risk by setting up a caveat that the TDB has 3 years in which we can sell the inventory. This was really a measure to ensure that we can work in conflict prone areas and to mitigate against any truly global event.

Please tell us if your proposed solution aims to scale up through a high growth sector, expand immediately to multiple sectors, and/or scale up geographically

Our proposed solution is specific to the SME accommodation sector and is looking to scale geographically. We have begun early pilots in South Africa, Brazil and Mexico to build the business model, business processes and collateral. All components of the model have been built to allow rapid scaling and templated licensing agreements have been developed to allow a wide range of service providers ranging from tourism consultants to energy service companies to work with the TDB.

Added to this, the TDB is a subsidiary of the WHL Group which is the largest local-travel company in the world. The WHL Group has regional offices in Africa, Eastern Europe, Asia / Pacific, South/Central America and the Caribbean and a network of local partners on the ground in over 200 destinations in 100 countries. The Group already supports the online sales of rooms for over 8000 SME accommodation providers. This will allow the TDB to scale geographically very quickly.