Tunisia - Hotel Training Project

Report No. 411a-TUN Appraisal of a FILE COPY Hotel Training Project Tunisia May 23, 1974 Tourism Projects Department Not for Public Use Document of the International Bank for Reconstruction and Development International Development Association This report was prepared for officiai use only by the Bank Croup. it may not be published, quoted or cited without Bank Group authorizatioru The Bank Croup does not accept responsibility for the accuracy or completeness of the report.  TUNISIA APPRAISAL OF A HOTEL TRAINING PROJECT CURRENCY EQUIVALENTS Currency Unit . Tunisian Dinar (one dinar equals one thousand millimes> US$ 1.00 = TD 0.440 TD 1,000 . US$ 2.27 WEIGHTS AND MEASURES EQUIVALENTS 1 meter (m) 2 3.28 feet (ft) 1 square meter (m ) 10.76 square feet (ft2) 1 kilometer (km) 2 0.62 miles (mi) 1 square kilometer (km ) 0.39 square miles (sq. mi) 1 hectare (ha) = 2.47 acres (ac) l cubic meter (m3) 35.29 cubic feet (ft3) 1 cubic meter per day(m3/d) = 264 gallons per day 1 kilogram (kg) = 2.205 pounds (lb) 1 metric ton (m ton) = 2,205 pounds (lb) 1 liter (1) 5 0.22 British gallons (gal) 1 liter per second (1/sec) = 22,800 gallons per day 1 kilovolt (kV> = 1,000 volts 1 megawatt (mw) - 1,000 kilowatts ABBREVIATIONS AND ACRONYMS BDET = Banque de Developpement Economique de Tunisie COFITOUR 5 Compagnie Financiere et Touristique FRT = Federation Hoteliere Tunisienne (Tunisian Hotel Association) ILO International Labor Organization Institute = Institut Superieur de Tourisme et d'Hotellerie (located at Monastir until May 1975, then moving to new quarters at Sidi Dhrif) KfW Kreditanstalt fur Wiederaufbau ONTT = Office National du Tourisme et du Thermalisme (National Tourism and Spa Office) OTTEEFP = Office des Travailleurs Tunisiens a l'Etranger, de l'Emploi et de la Formation Professionnelle (Tunisian employ- ment office and vocational training agency) FISCAL YEAR January i - December 31  TUNISIA APPRAISAL OF A HOTEL TRAINING PROJECT TABLE OF CONTENTS Page No. SUMMARY AND CONCLUSIONS . . . . . . . . . . . . . . i i 1. INTRODUCTION. . . . . . . . . . . . . . . 2. BACKGROUND . . . . . . . . . . . . . . . . . . . . .1 A. The Economy . . . . . . . . . . . . . . . . . B. The Tourism Sector . . . . . . . . . . . . . . . 2 C. Education and Training for the Hotel Industry. . 3 3. THE PROJECT . . . . . . . . . . . . . . . . . . . . 5 A. Background . . . . . . . . . . . . . . . . . . . 5 B. Project Description . . . . . . . . . . . . . . 6 Part A. Physical Facilities . . . . . . . 6 Part B. Technical Assistance . . . . . . . 9 C. Institutional Arrangements, Administration and Management . . . . . . . . . . . . . 10 D. Project Cost . . . . . . . . . . . . . . . . . il E. Financing Plan. . . . . . . . . . . . . . 14 4. IMPLEMENTATION, PROCUREMENT AND DISBURSEMENT . . . . 15 A. Project Implementation . . . . . . . . . . . . . 15 B. Professional Services . . . . . . . . . . . . 16 C. Procurement . . . . . . . . . . . . . . . . . . 16 D. Maintenance . . . . . . . . . . . . . . . . . . 16 E. Disbursements . . . . . . . . . . . . . . . . 16 F. Financial Aspects . . . . . . . . . . . . . . . 17 5. JUSTIFICATION . . . . . . . . . . . . . . . . . . . 18 6. AGREEMENTS REACHED AND RECOMMENDATIONS . . . . . 18 This report is based on the findings of an appraisal mission which visited Tunisia in January, 1974. The mission consisted of Messrs. Christie, Vera, Bauer, Hery (consultant) and Jones (consultant). In the field, Mr. Fresco (consultant) assisted in site selection. Mr. Maffei of the Bank's Legal Department assisted the mission in legal matters.  TABLES OF CONTENTS (Cont'd) LIST OF ANNEXES, CHARTS AND MAP ANNEXES Annex I Project Description and Detailed Cost Estimates Annex II Tourism Sector Annex III : Tourism Training in Tunisia Annex IV The Education Sector Annex V Profiles of Technical Assistance Experts Annex VI Office National du Tourisme et du Thermalisme (ONTT) Annex VII Statistics on Expanded Training System Annex VIII : Outline of Administrative and Legal Steps to be taken. CHARTS Chart 1 Hotel Staffing Table Chart 2 Proposed Training Scheme Chart 3 Technical Assistance and Other Related Appointments Chart 4 : Staffing of Training Center Chart 5 Implementation, Expenditure and Disbursement Schedule MAP Map 1 : Tunisia: Existing and Proposed Hotel Schools  TUNISIA APPRAISAL OF A HOTEL TRAINING PROJECT SUMMARY AND CONCLUSIONS i. This report appraises a hotel training project designed to alleviate the acute shortage of trained hotel staff in Tunisia. ii. Between 1961 and 1972, foreign visitor arrivals in Tunisia increased from 46,000 to 780,000 and the number of hotel beds from 4,000 to 48,000. As a result of this dynamic growth, tourism has become an important sector of the country's economy. In 1972, it was the largest single source of foreign exchange, accounting for 22% of current receipts. iii. Owing to insufficient hotel training facilities, Tunisia has been unable to train the number of hotel staff required to keep pace with the rapid expansion of the hotel industry. Only 2,500 (or 15%) of the 17,000 employees in the hotel industry at the end of 1973 had received formal training and service in Tunisian hotels leaves much to be desired. iv. The proposed project would include the construction of three hotel training centers in Tunis, Hammamet and Sousse. Each training center would comprise a hotel school, a 100-bed practice hotel, student dormitories and staff housing. The project would also include 12.5 man-years of technical assistance to support development of the educational program and teacher training. v. The total cost of the project is estimated at US$12.3 million equivalent, with a foreign exchange component of US$5.6 million equivalent (46% of total project cost). Construction cost estimates are based on functional and economical accommodation schedules and current unit building costs. The balance of the funds required to finance the project, including any cost overruns, would be provided by the Government. Building contracts and contracts for the supply of furniture and instructional equipment would be awarded on the basis of international competitive bidding in accordance with Bank guidelines. vi. The facilities to be built under the proposed project would increase the capacity of ONTT-operated hotel training schools from 1,050 to 2,410 student places. This would raise  - 1Ji - the number of students trained from 14% of annual requirements for level IV hotel staff in 1974 to 63% in 1983. vii. Through its technical assistance components, the project would help rationalize the current tourismi training system. New training methods and curricula developed under the proposed technical assistance program would be applied to all hotel schools (i.e. both existing and to be built under the project) in Ttnisia and would provide teachers and students alike with a modern ancl efficient training environment. At the same time, the project would lead to important savings. Training programs would be reduced from two years' to one year's duration and the costs of training one student are estimated to decrease from US$1,900 to US$900. The operating costs of ONTT's tourism training program would stabilize at less than 1% of foreign exchange receipts from tourism. viii. The project would be managed by ONTT which has overall responsibility for the tourism sector and for the tourism infrastructure project financed in part by the Bank Group under LOAN No. TUN-858 and CREDIT No. TUN-329. The project unit (Direction des Travaux) for the infrastructure project would be expanded and would coordinate architec- tural services, prepare master lists and specifications for furniture and equipment, and organize international competitive bidding for project contracts. ONTT's Departmernt of Tourism Training would be responsible for supervising the technical assistance program and for operating the training system. ix. The project is suitable for a Bank loan of US$5.6 million equivalent for a term of 25 years, including a grace period of five years. The Bank loan would be made to the Government of Tunisia.  TUNISIA APPRAISAL OF A HOTEL TRAINING PROJECT 1. INTRODUCTION 1.01 During appraisal of the tourism infrastructure project (LOAN No. TUN-858; CREDIT No. TUN-329) in 1971, the Bank mission and the Tunisian authorities agreed t`hat one of the major constraints to development of tourism in Tunisia was the acute shortage of trained hotel staff. Accordingly, funds were included in that project to study ways of expanding and rationalizing the country's tourism training system. The study, entrusted to ILO, was completed late in 1973. 1.02 The appraisal mission consisting of Messrs. Christie, Vera, Bauer, Hery (consultant) and Jones (consultant) completed its field work in January, 1974. In the field, Mr. Fresco (consultant) assisted in site selection. Mr. Maffei, of the Bank's Legal Department, assisted the mission in legal matters. 1.03 The project would be a logical follow-up to the present involvement of the Bank Group in tourism in Tunisia. In addition to the tourism infrastructure project, the Bank has participated in financing tourism investments through the Banque de Developpement Economique de Tunisie (BDET). IFC has participated in hotel financing through BDET and COFITOUR; more recently, it has acquired direct partic- ipation in a large hotel and in the Sousse Nord tourism development scheme. 2. BACKGROUND A. The Economy 2.01 An analysis of Tunisia's economy appeared in the report "Current Economic Position and Prospects of Tunisia" (EMA-51a) dated August 14, 1972. 2.02 From 1961 to 1969, Tunisia's GDP grew at the rate of 5% per annum. In the next three years, the country's output increased at the high rate of 11% due primarily to the exceptional performance of agriculture and major changes in economic policy. The overall growth rate of GDP over the 1961-1972 period was 6.6% per annum. 2.03 Foreign exchange earnings from tourism have contributed substantially to support the country's rapid economic expansion. Earnings from tourism are helping to fill the deficit on trade account and in 1973 were the largest single source of foreign exchange.  -2- With good prospects for expansion, tourism should continue to strengthen the balance of payments, spur further economic growth and help reduce unemployment and underemployment. 2.04 Hotel investments follow the territorial distribution of tourism assets, most of which are along coastal areas and in the poorer southern provinces of the country. The sector should increasingly contribute to alleviating regional disparities in income and employnent. B. The Tourism Sector 2.05 In the 1960's, the jet airplane brought Tunisia and its tourism assets within easy reach of travelers from Western Europe (London, Paris and Frankfurt are within 1,100 miles of Tunis) and a tourism boom developed, at first largely confined to higher-income groups, but later, as charter flights and package tours became popular, spreading to medium-income tourists. 2.06 Between 1961 and 1972, foreign visitor arrivals in Tunisia increased at an annual rate of almost 30% from 46,000 to 780,000, a growth rate unmatched by any other Mediterranean country. In 1973, there was a 7% decrease in arrivals over 1972 and average hotel bed occupancies (Annex 2, Table 1) declined from a high of 41% in 1972 because prices had reached high levels; because of some cases of cholera; and latterly because of the impact of the energy crisis. In 1972, Western Europe accounted for 83% of total arrivals, with Germany (22%), France (20%) and the United Kingdom (18%) ranking in the top positions. The number of hotel beds increased from 3,950 in 1961 to about 55,900 at the end of 1973, concentrated mainly in the zones of Tunis, Nabeul-Hammamet, Sousse-Skanes-Monastir, and Djerba-Zarzis. 2.07 About 60% of visitors and vacationers travel on inclusive tours covering transportation, accommodation and board. These modes of travel have influenced the type of service offered by the Tunisian hotel industry. Because of the large groups involved, guest arrivals and departures have to be carefully coordinated with charter flight schedules; menus are limited for economy and to enable faster service; reservations, accounting and operating systems are simpler than in more traditional hotels. Catering as it does mainly to the middle-income group tour market, the Tunisian hotel industry has had to economize in the use of labor and employs only 0.35 persons per bed. 2.08 In 1973, employees in tourism were about 19,500 or 2% of total full-time employment in Tunisia. Indirect employment related to the tourism industry accounted for an estimated additional 19,000.  - 3 - 2.09 From 1965 through 1973, tourism was the single most important source of foreign exchange. Gross foreign exchange earnings from tourism increased from TD 1.5 million (or 2.5% of current receipts) in 1961 to TD 68.4 million (or 22.1% of current receipts) in 1972. Net foreign exchange receipts from tourism increased from about 46% of gross foreign exchange receipts in 1964 to about 70% in 1972 as a greater proportion of tourists' reauirements were met from domestic sources. 2.10 The Government is committed to the continued growth of the tourism sector. Under the Fourth Plan, it is expected that about 80,000 beds will be in operation at the end of 1976. Such a build-up of accommodation appears reasonable, despite the disappointing results of 1973. Tourism is likely to be affected in the short run by higher fuel pr