Podcast Summary: Tackling Economic Leakage & Sustainability Grandstanding in Tourism

Podcast: The South East Asia Travel Show
Hosts: Gary Bowerman & Hannah Pearson
Guest: Ewan Cluckie (Director of Growth, Tripseed)
Date: September 23, 2024

Episode Overview

This episode explores the nuanced challenge of "economic leakage" in Southeast Asian tourism, focusing on how much tourist spending truly benefits local communities versus what is lost to outside entities. Ewan Cluckie of Tripseed returns to discuss his company’s new "Economic Distribution Disclosure" initiative — a first-of-its-kind effort to measure, disclose, and ultimately mitigate economic leakage in touring. The conversation delves into sustainability grandstanding (aka “greenwashing” and “impact washing”), the complexities of tracing economic flows, and the push for genuine industry transparency and improved ethical governance.

Key Discussion Points & Insights

1. Setting the Context: What Is Economic Leakage?

• Definition & Relevance: Economic leakage refers to the proportion of tourism revenue that does not remain in the local economy. Instead, it is lost to overseas companies, imports, or even urban centers rather than rural communities.

  • “It’s not something designed to pit locally owned businesses versus foreign owned businesses... what we’re doing isn’t protectionism or nationalism… The conversation doesn’t necessarily need to be about how much is remaining in the country, but how much is genuinely benefiting the people [companies] say it is benefiting.” — Ewan Cluckie [09:55]

• Growing Awareness: The hosts note that economic leakage is entering mainstream industry and media discourse, especially in light of overtourism and complaints from local populations about negative impacts.

  • “In destinations around the world, we’re seeing increasing amounts of frustration… they’re getting rising house prices, rising food costs, water shortages… and yet they very rarely enjoy any benefits of any meaningful significance.” — Ewan [09:51]

2. Sustainability Grandstanding in Tourism

• Problematic Claims: Many tourism businesses make unsubstantiated claims about the share of money benefiting local communities (e.g., “95% of proceeds stay local”), which lack evidence.

  • “You don’t have to dig very deep… before you can quickly determine that these sweeping claims have really no grounding in reality.” — Ewan [02:37]

• Need for Transparency: The industry is lagging in verifying socioeconomic claims compared to environmental claims (i.e., greenwashing is more commonly challenged than “impact washing”).

  • “Our economic distribution disclosure initiative aims to address this, shining a light on where money really is going.” — Ewan [03:02]

3. The Economic Distribution Disclosure Initiative

• Purpose & Philosophy:
  • “You can’t improve what you don’t measure… by actually tracking the flow of funds, we can bring honesty to these claims and push for genuine positive impact, not just marketing slogans.” — Ewan [04:13]
• Core Principles:
  • Rigorous measurement of fund flows for touring services.
  • Increased transparency—publicly sharing exactly how much spending benefits which communities.
  • Discouraging false or misleading marketing by other operators.
• Industry First:
  • “This initiative marks a first-of-its-kind in the industry, which is quite a damning statement, really. Why is that?” — Gary [05:54]
  • Many businesses are hesitant to adopt such transparency due to long-established, unproven narratives about community benefit.

4. Nuances in Measuring Leakage

• Why Zero Leakage Is Unrealistic: There are always logistical necessities (imports, taxes, operations, etc.) that result in some leakage.

  • “Even 100% locally owned travel companies are going to have some leakage… there are very often leakages that are a necessity to run the business.” — Ewan [14:24]

• Supply Chain Complexity: Many tour costs (fuel, hotels, urban-based suppliers) may not directly benefit the intended rural communities.

  • “Tour guide fees, vehicle costs… make up between 40 to 60% of tour costs… not actually benefiting the local community.” — Ewan [15:15]

5. Thailand & Regional Comparisons

• High Leakage in Thailand: Thailand’s heavy tourism dependence leads to pronounced leakage (~70% per UNEP).
  • “The more dependent a destination became on tourism… the higher leakage it was reported to have.” — Ewan [11:47]
• Regional Variance: For example, leakage in Vietnam can vary drastically by location (as low as 27% but higher in certain areas like Sapa due to external tour companies).

6. Governance, Tax Ethics, and Industry Resistance

• Pushback: Sensitive issues (profit shifting, tax evasion, abuse of labor laws) cause some industry discomfort, leading to criticism in private.
  • “The businesses that are taking advantage of this and acting in exploitative… ways, they’re not going to like the fact that we keep talking about it…” — Ewan [17:36]
• Tripseed’s Stance: Committed to transparency regardless of industry backlash, focusing on all stakeholders, especially communities.

7. Methodological Challenges & Public Disclosure

• Supply Chain Data: Gaining accurate breakdowns from further-along supply chains (e.g., hotels, fuel) is a work in progress, often relying on new partnerships or justified assumptions.

  • “Hotels have been among the most challenging aspects… fuel for vehicles… significant not just because of opaqueness, but because they sit among the largest portions of tour costs…” — Ewan [19:39]

• Methodology to Be Open Sourced:

  • “We’ve got no intention to profit off this work, but… it can have a much wider and broader impact if it’s adopted by other companies.” — Ewan [26:19]
  • The framework will be released under Creative Commons, possibly with requirements for destination-level reporting and attribution to avoid misuse (“impact washing”).

8. Benefits for Partners & Customers

• Trust & Informed Choice:
  • “This approach will result in establishing far more trust with those who partner with us and allow consumers… to make more informed travel decisions.” — Ewan [21:41]
• Early Reception: Interest from universities, large organizations, and the possibility of industry working groups and global applications.
  • “We have received a lot of interest from people wanting to get involved… all the way to large private sector organizations, some of which were quite surprising…” — Ewan [22:46]

9. Scaling Up & Next Steps

• Future Phases: Tripseed will continue refining its calculations, publish broader corporate and tax disclosures (phase two), and attempt to “crack the hotel challenge” for complete coverage (phase three).
  • “Phase two will see us publishing our corporate disclosure... Phase three will come once we’ve cracked the hotel challenge. This is the biggest barrier for us right now…” — Ewan [28:51]
• Global Vision: Long-term goal is for global uptake and industry-standardization for comparable reporting.
  • “A greater level of standardization is necessary to make a genuine impact… Otherwise... it all becomes a bit meaningless.” — Ewan [24:12]

Notable Quotes & Moments

• On Sustainability Grandstanding:
  • “You don’t have to look very far to see this kind of sustainability grandstanding… but you also don’t have to dig very deep… to see these claims have really no grounding in reality.” — Ewan Cluckie [02:37]
• On Transparency:
  • “You can’t improve what you don’t measure.” — Ewan Cluckie [04:12]
• On Corporate Pushback:
  • “I can only sympathize with it so much. I’m afraid it’s for them to choose which side of history they want to be on… business as usual or doing everything within their power to improve things for everyone.” — Ewan Cluckie [18:40]
• On Open Sourcing the Methodology:
  • “We’ve got no intention to profit off this work, but I do feel it’s important that all the team’s hard work doesn’t sort of go unrecognized. So we would look to require attribution from anyone adopting it.” — Ewan Cluckie [26:19]

Timestamps for Key Segments

• [01:13] Weather and flooding in northern Thailand – Chiang Mai/Chiang Rai context
• [01:58] Why launch the disclosure initiative & context behind Tripseed’s approach
• [03:56] How the disclosure works and why transparency matters
• [05:54] Why is this initiative a first in the touring industry; industry reluctance
• [08:17] What is economic leakage? Impacts on communities & over-tourism
• [11:47] Why leakage is so pronounced in Thailand, and how SEA countries compare
• [14:18] Is zero economic leakage realistic? Nuances & inevitabilities
• [16:57] Ethical governance, tax, and industry pushback
• [19:39] The complexity of calculating leakage (supply chain obstacles)
• [21:41] What’s in it for customers/business partners?
• [22:46] Early reactions and potential for industry adoption
• [24:12] Expanding and standardizing globally; UN collaboration context
• [26:19] Why open-source the methodology and conditions for adoption
• [28:51] Next phases: full corporate and hotel impact, tax disclosure

Takeaways

Tripseed, through its Economic Distribution Disclosure, is challenging tourism industry norms by demanding evidential backing for community-impact marketing, spotlighting economic leakage, and committing to open, phased, and transparent reporting on tourism’s real economic impact. This move has sparked interest and some discomfort in the industry but aims to foster genuine, measurable progress for local beneficiaries and a wider shift in global tourism ethics and practices.