The European market potential for community-based tourism

Community-based tourism (CBT) is a niche market in which the community benefits directly from tourism revenues. European travellers increasingly aim to travel responsibly and seek unique experiences. Germany, the Netherlands and the United Kingdom are the main markets. For you as a developing country tourism entrepreneur, community-based tourism offers many opportunities when letting travellers experience everyday life in your village. But despite the positive prospects, the CBT market is not the easiest one to step into, as it requires many skills, both related to tourism and to management and organisation.

1. Product description

Community-based tourism (CBT) refers to tourism experiences hosted and managed by local communities which generate direct economic benefits and are sustainable and responsible. CBT initiatives are managed and/or owned by the community and are for the community. Their purpose is for visitors to learn about the local culture and way of life. This form of tourism enables communities to set up their own small-scale self-managed business. A goal of community-based tourism is to achieve sustainable social, cultural, environmental and economic development in order to improve the living conditions of local people without damaging the environment. Some of the diverse benefits that community-based tourism offers communities are:

• enabling quality job creation (coordinator, local tour guide, homestay family, food department, craftmanship, sales)
• generating local economic development
• helping eco-friendly tourism development
• enabling community empowerment
• preserving the traditional values of the local community.

 Community-based tourism initiatives are usually started by an external organisation (like an NGO) or the community itself, but it could be any individual or group. SNV is an organisation that sets up lots of CBT projects. Besides initiating CBT projects, they also offer a toolkit for managing community-based tourism, to provide readers with the know-how to set up and run a programme for a community-based tourism project.

For community-based tourism to be successful, the following three criteria must be met.

• The community needs to be given training to be well prepared, since it will have a big impact on the community.
• Community members need to have the final authority.
• And finally, it has to create benefits for the community. An example is a school funded by part of the tourism profits, but it could also involve multiple entrepreneurs working together (such as guides, craftsmen, restaurants and farmers showing their work, and fishermen teaching tourists how to fish), with everyone benefiting.

Although community-based tourism can involve many elements, generally speaking there are four main categories, defined according to their length of stay and activity:

• stand-alone experiences (couple of hours, up to an entire day)
• experiences with homestay (1-3 nights)
• a tour involving multiple CBT experiences (7-14 nights)
• CBT volunteering (any duration).

Community-based tourism is related to cultural tourism, nature tourism and adventure tourism.

Figure 1: Community members of Inlé Lake in Birma show their unique way of living. Source: Wikimedia Commons

In part, community-based tourism originates from the fact that many tourists now want to travel like locals, and to immerse themselves in the culture, traditions and language of a place. As more and more people grow tired of resorts and standard holidays, there has been a shift towards wanting to see the ‘real’ side of the destinations they visit. In addition, there is a growing concern about the sustainability of the trips people take. This has resulted in tourists wanting to bring welfare to a local community without harming it.

Based on age, there are three main target groups for community-based tourism: baby boomers, Gen X individuals and millennials.

Baby boomers (born 1945-1965)

Baby boomers are the largest target group for community-based tourism. Travellers that belong to this group are looking for the trip of a lifetime and are mostly willing to pay for it. They are well-educated, travel frequently, have a good budget for travel and often like to combine authenticity with luxury. They usually travel as couples or in small groups.

Gen X (born 1965-1980)

They are looking for authenticity, but are more price-conscious. Their main motivation is to see how other people live and to give something back. They are generally well-educated and well-travelled, but because most of them have full-time jobs, they have less time than baby boomers. They usually travel as couples or as a family.

Millennials (born 1980-1995)

Their goals when travelling and engaging in community-based tourism are to learn new things, develop themselves on a personal level and support the local communities they visit. They are also well-educated, but since many millennials are students or are on a gap year, they have the smallest budgets of the three groups. They usually travel solo or in groups.

CBT tourists share many of the features of adventure tourists and free independent travellers, but a key motivation is the feel-good factor of an immersive cultural experience and making a difference to local lives. Therefore, these travellers are willing to pay more for the experience, especially when this contributes to the local community.

2. What makes Europe an interesting market for community-based tourism?

Europe offers a big community-based tourism source market on a global level. According to IPSOS, a market research company, European travellers’ willingness to enjoy homestays is basically the same as of travellers from the USA (27% versus 28%). Two out of three Europeans try to support local businesses and the local population. Europeans also tend to spend a lot of money: on average about €2,000 for their summer holiday. For long-haul destinations, this will be even more. Furthermore, a recent study held among travellers visiting the region of Yogyakarta in Indonesia showed they had longer stays than travellers from other parts of the world.

For European travellers, South East Asia is the main destination for community-based tourism. This mainly has to do with safety issues. In general, Asia is considered to be a lot safer than South America and Africa. However, this also means that competition in this market is a lot stronger.

We expect the CBT segment to increase slightly in the long term, by about 5% per year. However, with the coronavirus pandemic preventing the whole world from travelling, every tourism sector is seeing a serious decline in customers, including community-based tourism. More up-to-date information on how source countries are being struck by the coronavirus crisis and which policy applies in European countries can be found in the CBI’s article about the novel coronavirus for the tourism sector.

3. Which European countries offer most opportunities for community-based tourism?

The United Kingdom, the Netherlands and Germany have the highest demand for community-based tourism. Many travellers from these countries feel it as important to leave the beaten track and learn about new cultures. In these countries, the competition is also the strongest. France, Spain and Italy then follow in demand. Eastern European markets (like Poland and the Czech Republic) might be easiest to access, because their CBT markets are far less mature.

In this section we will discuss the main six markets. More information on Eastern European markets can be found in our study on Eastern European tourism markets.

Germany

With around 82 million inhabitants, Germany is the largest country in the EU in terms of population. Germany is also by far the largest economy in the EU and the fourth-largest economy in the world, with a gross domestic product (GDP) of €3.3 trillion (their average earnings per year give a per capita income of around €50 thousand). Due to the coronavirus crisis, the German GDP is expected to shrink by 7% in 2020, although this is predicted to rise by 5% in 2021.

In 2017, 10 million Germans travelled to developing countries. According to IPSOS, German travellers find discovering new cultures to be very important, as 37% sees exploring new cultures as an interesting aspect of their holiday. On average, they spend €2,500 on their summer holiday, which is about 25% above the European average.

Table 1: Long-haul destinations for German travellers in 2017

Destination	Percentage of long-haul trips
South East Asia	18%
North America	23%
Caribbean	11%
Africa	14%
Latin America	11%
India	8%
Middle East	5%
China	4%
Australia and New Zealand	6%

Source: Reiseanalyse, 2020

When attracting German tourists, you need to offer sufficient information. They tend to read a lot before visiting a place. Like most Europeans, they are direct in their communication, and are well known for their love of organisation and punctuality.

Table 2: Key statistics of the attitude of the Germans towards tourism

Most popular type of accommodation	If under13 nights: paid commercial accommodation such as hotel, B&B, cruise, youth hostel, etc. (54%) If 4-13 nights: paid commercial accommodation (47%)
Most frequent type of holiday	If under 13 nights: tourist services purchased separately (44%) If 4-13 nights: tourist services purchased separately (44%)
Most popular booking method	Online commercial services excl. private housing offered by individuals (28%) Through someone I know (26%) Over-the-counter at a travel agency (27%) Online commercial services – private housing offered by individuals (23%)
Most important reasons to return to the destination	Natural features such as landscape, weather conditions (44%) Quality of accommodation (33%) Cultural and historical attractions (13%)
Most important information sources for decision making	Recommendations by friends/colleagues/relatives (44%) Personal experience (39%)
Region of residence	Rural area or village (41%) Small or middle-sized town (40%) Large town (18%)

Source: EU, 2016

The United Kingdom

With a population of 66 million and a gross domestic product of €2.3 trillion, the United Kingdom is the fifth-largest economy in the world and the second largest in Europe. With a per capita income of €44 thousand, the British have less to spend than the Germans do, for example. Due to the coronavirus crisis, the British GDP is expected to shrink by 6.5% in 2020, although a 4.7% rise is predicted for 2021. On 1 February 2020, the UK left the European Union. This is causing a lot of uncertainty, as they are still in a transition period with the EU until 31 December 2020. During this period, virtually nothing will change. However, it is still unclear what will happen after 2020.

Although the British economy is smaller than Germany’s, the British have a stronger preference for visiting developing countries. British travellers find discovering new cultures very important, as 52% see exploring new cultures as an interesting aspect of their holiday. On average, they spend €2,100 on their summer holiday. Trips to Turkey (1.6 million trips), Thailand (1.0 million) and India (1.0 million) are the most important developing country destinations. The British tend to only speak English and no other language.

Table 3: Key statistics of the attitude of the British towards tourism

Most popular type of accommodation	If under13 nights: paid commercial accommodation such as hotel, B&B, cruise, youth hostel, etc. (53%) If 4-13 nights: paid commercial accommodation (57%)
Most frequent type of holiday	If under 13 nights: tourist services purchased separately (48%) If 4-13 nights: tourist services purchased separately (50%)
Most popular booking method	Online commercial services such as tour operators and airlines excl. private housing offered by individuals (51%)
Most important reasons to return to the destination	Natural features such as landscape, weather conditions (20%) Quality of accommodation (20%) Cultural and historical attractions (14%)
Most important information sources for decision making	Recommendations by friends/colleagues/relatives (56%) Websites collecting and presenting comments, reviews and ratings from travellers (37%)

Source: EU, 2016

Netherlands

Tourists from the Netherlands show the highest willingness to travel to developing countries per capita. Based on UNWTO data, in 2017 almost one out of every five trips (18.3%) had a developing country destination. The Netherlands has a relatively large group of ‘diehard CBT travellers’. These travellers are looking for a genuine cultural experience. They want to ‘live like a local’ as much as possible and do not mind the discomfort this may cause them. In fact, too much comfort may give them the impression that the experience is not authentic. Sustainable and ethical tourism is very important to them. With a per capita income of around €50 thousand, the Netherlands is one of the richest countries in Europe. Due to the coronavirus pandemic, the Dutch GDP is expected to shrink by 7.5% in 2020, and recover by 3% in 2021.

Most Dutch prefer to purchase the services and put together their long holidays (over 13 days) themselves (61%). Most holidays are booked online via commercial services such as tour operators, airline companies, etc. (44%). The most preferred accommodation during long holidays is paid commercial accommodation such as hotel, B&B, cruise, or youth hostel (55%). The decision-making process is mainly informed by recommendations by friends, colleagues or relatives (47%).

Table 4: Key statistics of the attitude of the Dutch towards tourism

Most popular type of accommodation	If under 13 nights: paid commercial accommodation such as hotel, B&B, cruise, youth hostel, etc. (37%) or a camp site such as tent, motorhome, caravan or holiday village (34%) If 4-13 nights: paid commercial accommodation (53%)
Most frequent type of holiday	If under 13 nights: package travel excl. all-inclusive (61%) If 4-13 nights: package travel excl. all-inclusive (58%)
Most popular destination regions with developing countries	Asia and Oceania (5%) Caribbean and Central or South America (4%) North Africa and the Middle East (3%)
Most popular booking method	Online commercial services such as tour operators, airlines (44%) Online commercial services – private housing individuals (27%)
Most important reasons to return to the destination	Natural features such as landscape, weather conditions (53%) Quality of accommodation (32%) Cultural and historical attractions (31%)
Most important primary reasons to return to the destination	Natural features such as landscape, weather conditions (34%) Quality of accommodation (14%) Cultural and historical attractions (11%)
Most important information sources for decision making	Recommendations by friends/colleagues/relatives (47%) Websites collecting and presenting comments, reviews and ratings from travellers (46%) Personal experience (29%) Websites run by service provider or by destination (26%)
Region of residence	Rural area or village (43%) Small or middle-sized town (34%) Large town (23%)

Source: EU, 2016

France

France has the third largest population in the EU, with about 65 million inhabitants. It is also the EU’s third-largest economy and the seventh-largest economy in the world. Its gross domestic product is €2.5 trillion (2019). Due to the coronavirus pandemic, the French GDP is expected to shrink by 7.2% in 2020, but recover by 4.5% in 2021. Many French only speak French, so it is very important to communicate in French if you wish to target this market. The French have a relatively high preference for homestays, as according to IPSOS 31% see this as an interesting activity during holidays.

Whether it is a holiday longer than 13 nights or one that is shorter, packages holidays (excluding all-inclusive packages) are the most preferred holiday deal (46% and 45% respectively). So it might not come as a surprise that most holidays are purchased online, via providers such as tour operators or airlines (33%), or via websites concerning private housing (25%). The French prefer to spend their holidays with friends or relatives (long holidays 27%, short holidays 35%) or in paid accommodation such as a hotel, B&B, cruise or youth hostel. Friends, colleagues and relatives are the most important source of information when the French plan for their holidays (57%).

Spain

Spain has a population of 47 million and a per capita income of €31 thousand. Due to the coronavirus pandemic, the Spanish GDP is expected to shrink by 8% in 2020, but to recover by 4.3% in 2021. Spanish tend to prefer culture to nature, which is an important aspect when offering community-based tourism on the Spanish market. Some 56% of Spanish tourists see discovering new cultures as an important aspect of their holiday. For many Spanish tourists, it is very important that information is offered in Spanish. The Spanish also have a relatively strong interest in homestays, as according to IPSOS 22% see this as an interesting activity during holidays.

Italy

Italy has a population of 60 million and a per capita income of €30 thousand. Like the Spanish, they prefer culture to nature. The Italians have a relatively high preference for discovering new cultures, as according to IPSOS 34% sees this as an interesting activity during holidays. Italians have the tendency not to plan too far ahead.

4. What trends offer opportunities on the European community-based tourism market?

Shifting from activities to experiences

Tourists engaging in community-based tourism increasingly want a truly authentic experience, where in the past they mainly aimed for activities like hiking or canoeing. It is important for them to do something unique and learn about a different way of life. This means that such tourists actually want to engage with and participate in the local community by, for example, eating with the locals or helping to harvest food.

Growing diversity in community-based tourism

Ten years ago, there were only a limited number of options for community-based tourism. Nowadays there are many different possibilities to enjoy it and the diversity of offers is continuing to grow, especially in Asia. With this in mind, entrepreneurs must dare to distinguish themselves. This can be at the level of activities (like fishing versus hiking), or could concern the length of the stay (a one-hour visit versus a homestay lasting several days). Even though community-based tourism is generally seen as participating in a single community, it does not need to be organised in just one community. For example, The Great Himalaya Trials offers guided hikes and places to sleep throughout Nepal. The goal of this is to provide hikers a place to stay during their hike, while at the same time creating benefits for local communities that live alongside the trail.

There are two main reasons for the growing diversity of CBT projects. First, there is an increasing demand for unique experiences, for the possibility of personal growth by learning from other cultures, and for travelling sustainably. Due to community-based tourism, European travellers feel they can enhance their personal growth. Second, the number of successful CBT projects has increased, which lays a foundation for new projects but also increases the need to diversify to avoid competition.

Community-based tourism is becoming more commonplace

The CBT segment is considered less and less a niche and is becoming more commonplace. Although only very few tourists spend their entire holiday on CBT activities, these are regularly added to packaged holidays. This means that the experiences are becoming easier to sell, whether to tour operators or to free independent travellers. As there is an increasing demand for these services, the competition is increasing. The service levels offered by competitors is also increasing, which makes it harder to enter the market.

This study has been carried out on behalf of CBI by Molgo and ETFI.

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