IFC recognizes tourism's contribution to economic development primarily through the support of hotel investments, although IFC also finances private sector tourism infrastructure and other tourism activities. As of June 2000, IFC had invested in about 168 tourist oriented projects in 72 countries. Tourism investments typically account for 3-4 percent of IFC’s portfolio in U.S. dollar volume. IFC’s tourism portfolio is quite diverse with respect to geographic location, hotel type, size, and form of IFC involvement. The projects range from small tented camps in Africa to large high-rise hotels in Asian cities. Because IFC is committed to investing in environmentally and socially sound projects, all IFC tourism investments are evaluated with sensitivity to relevant environmental and social issues as well as commercial viability.
IFC’s presence ensures that hotel projects conform to the Environmental and Social Policies and Guidelines established by the World Bank Group. While these guidelines deal primarily with siting issues, waste treatment and disposal, relocation, and health and safety concerns, depending on the project’s scope and location, a number of environmental issues may be addressed and an environmental audit or assessment required. IFC provides ongoing monitoring for environmentally sensitive projects.
Moreover, because IFC is committed to financing environmentally and socially sustainable projects and because new approaches to tourism - such as ecotourism and cultural tourism - are becoming increasingly popular, IFC has a particular interest in promoting such investments. Though individual projects tend to be small, they foster the principles of sustainable development where their demonstration effect can be significant. Several IFC tourism investments feature nature or cultural heritage and include the adoption of environmentally friendly practices.
Going forward, IFC has an opportunity to participate more broadly in environmentally sustainable tourism activities and related biodiversity objectives. Specifically, as an executing agency of the Global Environment Facility (GEF), IFC can channel GEF funds in private sector projects toward the sustainable use and protection of global biodiversity components. For example, the IFC/GEF Small and Medium Enterprise (SME) Program has invested in several ecotourism developers and tour operators with a commitment to furthering biodiversity objectives in their operations. In addition, IFC and GEF may co-invest in commercial tourism projects with components linked to the preservation or sustainable management of global biodiversity. IFC has several such projects in its pipeline, though these projects often involve significant development work to come to fruition.
Sustainable Tourism Project Highlights
In Tanzania, IFC invested with the Aga Khan Fund for Economic Development (AKFED) to develop four safari lodges or tented camps oriented toward wildlife viewing.
In Zambia, IFC invested in a small-scale ecotourism lodge. Construction is largely of local wood and thatch, and guests can view game either from the lodge’s safari vehicles or on foot, accompanied by an experienced guide.
IFC has a long history of supporting the rehabilitation and upgrading of landmark hotels. In Warsaw, Hanoi, and Maputo, IFC invested in hotels that needed to be reinvigorated when national economies opened up and existing accommodation was inadequate. Given the historic importance of these hotels, the investments helped preserve a country’s cultural heritage, becoming a source of pride for the city and attracting both leisure and business travelers.
IFC’s investment with AKFED in a hotel in Zanzibar rehabilitated two derelict historic buildings in the Old Stone Town into an attractive hotel, helping attract other private sector support for the renovation of the historic district after years of neglect.
Ecotourism
Ecotourism directly links the growth in nature-oriented recreational travel (including leisure, adventure, and educational activities) to pristine areas and the preservation of their biodiversity. Some ecotourism projects allocate a percentage of their profits of land to help preserve natural habitats (e.g. forests and coral reefs) and are designed to minimize negative impacts on biological resources. Ecotourism is a small but growing part of the world nature tourism market (which includes all outdoor, nature-based tourism). There are no reliable figures available for nature-based tourism or ecotourism and estimates range widely (depending upon the definition and source). In Latin America, for example, potential centers of ecotourism in Latin America include Argentina, Ecuador, Costa Rica, and Brazil. Some Latin American governments are adopting policies to promote ecotourism. In addition, ecotourism societies, non-governmental organizations and governments are developing guidelines to ensure the uniform development of the industry. Examples of projects include: hotel developments in Brazil in the Atlantic forest area, the Amazon, and the Pantanal which are tied to preserving adjacent ecologically sensitive land or aquatic resources and which can serve as a base for regional tourism activities such as forest visits and the viewing of rare orchids, plants and birds; and smaller ecotourism hotels in Peru, Argentina (Patagonia), and Ecuador.