WHL Consulting Launches Tourism Development Bank as Solution to Finance Obstacles Faced by Small Businesses

Zachary Rozga
4 August 2010

The WHL Group has eight years of experience helping small and medium-sized enterprises (SMEs) in the tourism industry improve their competitiveness. Since 2008, WHL Consulting (a WHL Group company) has made it its specialised mission to provide services that, among other other things, really boost global market access for accommodation and tour providers.

Jan Vrsinsky takes photos of Wildsky accommodation in Bulwer, South Africa as part of the Project:Exposure fieldwork managed by WHL Consulting

SME accommodation providers in the developing world face many obstacles, but one of the biggest is access to finance. Essential (and beneficial) business buoys such as market access tools and services, and retrofits or renovations to reduce energy consumption and operating costs often go unfunded. Worse, in many parts of the developing world where WHL Consulting has undertaken projects, IF it is possible for small accommodation providers to get commercial loans, they are faced with impossible interest rates and repayment terms – as high as 27%!

Overcoming Constraints

Despite our successes, WHL Consulting believes that it will not be possible for us to continue our mission as a sustainable development organisation without addressing this key business constraint. Over the years, we have worked with development organisations, discussed with commercial banks and wooed micro-finance institutions with only limited luck. Our clients have been either too small and risky (for commercial banks) or too large and not poor enough (for micro-finance institutions and donors). So we decided to go back to the laboratory…

What we came up with to solve the access-to-finance issue (thanks in large part to organisations like IDB MIF Sustainable Tourism Cluster and the South Africa Business Trust) is our own innovative financing tool: the Tourism Development Bank (TDB).

A New Currency

The TDB is a leveraged, barter-based, payment-facilitation platform. In other words, it lets accommodation providers pay for market-access, clean-energy and other services with room nights instead of cash.

Stephen Chapman interviews Cindy - owner of Clivia Stream Lodge in Hazyview, South Africa - as a step in preparing professionally written content about the accommodation

The business model makes it possible for small properties to connect to specially selected service providers (like solar hot-water providers) and to cover the costs by allowing us to resell room inventory through TDB partners like whl.travel, a sister WHL Group company and the world’s largest online small-hotel booking platform.

Pilot tests with accommodation providers began in February 2010 in South Africa and Mexico, followed by Brazil in June 2010. The next pilot is slated for Guatemala in the fourth quarter of 2010.

A Growing Portfolio of Partners

The first program WHL Consulting created that allowed for reliance on the TDB was a bundle of marketing and market-access supports known as Project:Exposure. A critical piece of Project:Exposure is a business partnership with 360 Cities, an immersive photography platform, through which each participating accommodation provider is given a fully-spherical panoramic image that shows the true character of the property. 360 Cities sees enormous potential in the TDB and is currently in discussions to offer the facility to their global Pro Member account holders for the creation of virtual tours.

The next firm to support the TDB is E+Co, a renewable energy investment firm that is collaborating with WHL Consulting by sponsoring a “Hospitality Campus” in the new e-learning platform for SME owners known as the Invisible Schoolhouse. Lengthy discussions have also been held about using the TDB to finance energy efficiency measures and renewable energy retrofits – matching E+Co investee firms to hotels in the WHL Group network.

As part of Project:Exposure, Jan Vrsinsky takes photos that will be used in a 360 Cities virtual tour of Under-the-berg B&B in Underberg, South Africa

Room for further growth on the TDB foundation is limitless. Service providers interested in becoming partners in Renewable Energy, Channel Management and Hospitality Training (for SMEs) are encouraged to contact us.

Now You Can Help and Benefit Too

The seeds of the TDB were planted back in February 2009 and development of the technology platform started in September 2009. Since that time, collaborators from Armenia, Australia, Brazil, Mexico, South Africa, Swaziland, the United States and Vietnam have contributed to the process. The stakeholders now include development experts, finance professionals, accommodation providers, tour operators, IT specialists, destination marketers, accountants and lawyers.

There is, however, much more work to be done and many very easy ways in which you can show support. For example, to coincide with the launch of the TDB website, WHL Consulting entered the TDB into the G-20 SME Finance Challenge. Fifteen finalists will be invited to a meeting of the G-20 in November. An opportunity like this would turbo charge the rollout of the TDB. Please visit our entry and leave a supportive comment!