Tourism under a magnifying glass

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As the Mongolian economy is highly dependent on mining and agriculture, the government is pushing toward diversification, particularly by developing tourism. This is aimed at increasing tourists traveling to Mongolia, boost local sales, increase jobs, improve the economy, and ultimately reduce poverty. However, we haven’t seen a substantial advancement in tourism over the years as evidenced by the 2019 Travel & Tourism Competitiveness Report.

The global report scored Mongolia’s tourism competitiveness at 3.5 points and ranked the country in 93rd place out of 140 countries that were evaluated. Mongolia’s score hasn’t budged from three points over the years. The only significant achievements made since 2017 were in terms of prioritization of travel and tourism, health and hygiene, and price competitiveness in the report. It also indicated that the number of tourists coming to Mongolia surged as the country became more competitive, which underscores the need to upgrade local tourism services and its competitiveness.

Mongol Bank and the Tourism Development Center recently conducted a study on tourism in an effort to determine the current situation of the Mongolian tourism industry, identify challenges, and figure out ways to make it more attractive. The study not only assessed challenges faced by tourists traveling in Mongolia but also provided insights into the needs and obstacles for local tourism companies.

The study was based on responses of 1,436 tourists who visited Mongolia, the ma­­­­­­jority of whom were Korean, American, French, German, Japanese, Chinese, Russ­­ian and English. Almost a third of them trave­­­­led to Mon­­­golia on a vacation, while 10 percent came on a business trip, six per­­­­­­cent came to visit a family member or friend, and three percent came to study. The study also surve­­­yed 34 temporary tour companies active in Mongolia.

Pristine nature – our ‘weapon’

The number of tourists visiting Mongolia has been growing every year. Last year, 529,400 foreigners traveled to Mongolia and most of them were Chinese, Russian and Korean, according to the tourism study. Tourists from the USA, Australia, Taiwan and the Netherlands rose by five to 11 percent compared to the previous year. On the other hand, a downturn trend was observed in the number of tourists from Japan, Germany, France, and the UK.

The study first evaluated visitors’ satisfaction with their time in Mongolia. Based on surveys, 94 percent of them gave above-average score of satisfaction, with 38 percent highly satisfied and 56 percent fairly satisfied. Only five percent of respondents replied that they were disappointed with their travel and one percent was “completely disappointed”. Overall, it shows that most tourists leave with a good impression of Mongolia. 

Mongolia's pristine landscape left the biggest impression on tourists, according to the survey. Respondents said they enjoyed traveling freely across the countryside and highly commended the beauty of Khuvsgul Lake, Gobi Desert and Mongol Sand Dunes. The second most popular answer triggering satisfactory travel was the nomadic culture, particularly the warm hospitality of herders, horseback riding, milking a cow and herding livestock. The third most fascinating thing in Mongolia was found to be Naadam Festival, one of the most important holidays of Mongolia which incorporates the three manly games (traditional wrestling, archery and horse race). A number of tourists had underlined archery as an “unforgettable” experience. Other attractive points included camping in the countryside, fishing, and being able to ride a bicycle and drive a car with international driving licenses. 

On the other hand, sanitation of toilets and their scarcity were a letdown for tourists, according to the study. Traffic congestion, poor road conditions, poor internet connection and a lack of public telephones also caused difficulties for foreign travelers. A small percentage of respondents had complained about their travel program and services. Authors of the study recommended tourism companies to improve camp sanitation and hygiene, regularly change bed sheets, provide tourists better access to hot water and electricity, train staff to improve their services and language proficiency, and find better private taxi services to ensure tourists are satisfied with their stay in Mongolia. 

Taking these responses into consideration, the government and tourism companies should use Mongolia's beautiful land and nomadic culture as its leverage to attract more visitors from other countries. To ease travel convenience for tourists, the country needs to pay attention to increasing toilets, setting higher standards and improving road conditions.

Tourists spend over 2,300 USD on average

In terms of finances, the state revenue from tourism has been steadily increasing in recent years. In particular, tourism revenue hit 461 million USD in 2018 compared to 156 million USD in 2011. In other words, the tourism sector accounted for 1.5 percent of GDP in 2011 but rose to four percent last year. 

The study estimated that foreign tourists stay for 13 days in Mongolia on average. During this time, they spend approximately 2,318 USD, including flight ticket. If the international flight tickets cost 1,000 USD, each tourist would have spent around 1,300 USD, or approximately 3.51 million MNT, on services and purchases in Mongolia. 

With better tourism services, Mongolia could boost its revenue from tourism considerably, create more jobs and diversify the economy, according to Mongol Bank and the Tourism Development Center.

Tourism policies initiated but poorly executed

The next part of the tourism report focused on tourism companies, their specialization, challenges and needs.
Reportedly, there are over 1,200 temporary tourism companies registered in Mongolia but merely 120 of them are active. There are also 370 hotels and over 300 camp sites providing services to tourists. The report suggested that the tourism industry employs around 50,000 people. 

In terms of products, out of the 34 surveyed companies, 38 percent offer tours featuring exploration of nature, nomadic culture and history of Mongolia, while 62 percent engage in either “inexpensive” tours featuring horseback riding, adventurous trips and other special type of tours for locals and foreigners, or mass overseas tours for Mongolians. When summer tourism season ends, the majority (51 percent) switch to winter tourism products, including ice festival, eagle festival, snow dog sledging and other winter adventures in the country. Slightly over a quarter of companies run foreign language training and the rest have a downtime. 

When asked why companies are unable to stably operate year-round, the most common answers were as followed:

  • Poor standards of public service providers
  • Under-developed roads and transportation infrastructure
  • Shortage of human resources and need to improve skills of human resources
  • Insufficient international flight to and from Mongolia, and their high price
  • Ambiguous and unsustainable legal environment for tourism
  • High bureaucracy
  • Delay in publication of public event schedules
  • Seasonality in tourism

A couple of companies complained that although they wish to take part in international tourism expos and fairs, they are unable to do so due to the high cost and lack of government support. Even when they acquire adequate financing, they are unable to secure a slot in the event and called on the government to help them in this area in the request section of the survey.

Improving tourism industry

Next, the study explored ways to improve the local tourism industry. As suggested by tourism companies, the Law on Tourism need to be revised, simplify license processing, make tourism camps and services compliant to relevant standards, and ensure fair competition between taxpaying companies and self-employed individuals providing tours. 

Most importantly, it stressed the need for Mongolia to pay better attention to waste management and toilet issues, which are the biggest problems tourists from developing and developed countries face during their stay in Mongolia. As mentioned before, the survey among tourists showed that travelers coming from developed countries such as the USA and the UK feel uncomfortable relieving themselves in wild like nomads or in public toilets that are scarcely found in soum centers and are oftentimes pit latrines. 

Adequate sanitation and toilets are basic necessities that can affect Mongolia's tourism competitiveness and could potentially ruin the entire trip for sensitive travelers. This brings us to the point of investing in eco-toilets to ensure they are more accessible and better consistent with sanitation standards. This might seem like a trivial matter but it’s the small things that count.

Tourism companies also raised the issue of offering discounted loans and more accessibility to government support, which would significantly help their operations and quality of services. In particular, 84 percent of surveyed tourism companies said they would like to get a long-term loan for an upgrade. Half of them said that they need a minimum of 100 million MNT financing to stabilize and expand their business. Of all surveyed companies, over a third of them sought to stabilize their operations, while another third focused on broadening its operations. 

If we look at the financial situation of tourism companies, 62 percent have discounted loans, 18 percent got ordinary loans from a bank or nonbanking financial institution, four percent borrowed money from their friends or relatives and another four percent operate with their own source of money, while 15 percent find financing through other means. 

The study indicated that 43 percent of tourism companies in Mongolia receive less than 100 customers per year, 23 percent receive between 101 and 300 customers, 20 percent receive 301 to 500 customers, and 14 percent get more than 500 customers a year. The average price of a tour package is 1,107 USD, not including flight ticket. 

Companies have the hardest time paying rent and providing wages to employees, as indicated by survey responses. Other noteworthy financial issues were identified as sudden price spikes during public holidays such as Naadam Festival, traffic congestion and off-season costs.

Conclusion

Mongol Bank and the Tourism Development Center concluded that strengthening the legal environment, setting general industry policy, ensuring sustainable operations, building the capacity of human resources, issuing permits and professional licenses are required to scale up the tourism industry. 

To enhance Mongolia's tourism competitiveness, experts advised increasing the availability of international flight tickets to and from Mongolia, setting higher standards on service providers, improve road and transportation conditions, and promote the country internationally through participation in international expos and fairs. 

With better conditions and a range of offerings, international tourists will swarm to Mongolia, especially as the country is full of unique landscapes and nature, which are becoming a rare treat in the fast-growing and urbanizing globe.

Dulguun Bayarsaikhan

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