Tuesday, August 26, 2008

Tourism Australia's transparency checkup


Tourism Australia's transparency checkup


The cause of transparency and good governance in travel and tourism organisations worldwide has taken a huge step forward with the publication of an Australian government audit of A$184 million worth of marketing service contracts by Tourism Australia, as well as conflict-of-interest issues among its board of directors.

Although the audit notes that TA, the country's national tourism body, has generally complied with financial regulations and that the delivery of services by its providers has been satisfactory, it faults a number of areas related to key performance indicators and evaluation of results. TA has acknowledged the findings and promised to rectify the deficiencies.

The audit should be must-reading among Asia-Pacific tourism organisations, many of which are suffering the consequences of operating in an environment with lax checks and balances and processes of accountability.

The Tourism Authority of Thailand, for example, has already been embarrassed by revelations of a US investigation into former governor Juthamas Siriwan's alleged links with funding of a film festival.

The Bangkok-based Pacific Asia Travel Association (Pata) is also facing pressure to show more transparency and accountability after media investigations uncovered numerous instances of poor governance.

The Australian audit reviewed Tourism Australia's procurement processes for selecting service providers; management of contracts; and governance framework, including planning, performance management and reporting.

It noted that TA's three major contracts consumed approximately 35% of its annual budgets of $167.8 million in 2005-06 and $158.6 million in 2006-07. It also found that there had been four internal audits and four external reviews of different aspects of the contracts since they were executed in 2005.

The audit acknowledged that TA operated in a commercial and competitive global environment and that its marketing and media contracts were fundamental to the success of its strategies.

However, it says, although the media placement and creative development contracts accurately reflected the services to be provided, they "did not include performance information that would enable Tourism Australia to evaluate the effectiveness of the services provided even though, as part of a review of the draft contracts, this was recommended."

In concluded: "Tourism Australia does not systematically evaluate the effectiveness of its projects and, currently, is unable to demonstrate what impact these projects have had on their target markets.

"The lack of evaluation also means that Tourism Australia is not identifying the factors affecting the success, or otherwise, of the projects or lessons learned that could be incorporated into future projects."

The audit noted that since July 2007, TA has improved its financial management processes and now requires expenditure for all major contracts to be authorised by the appropriate delegate when each marketing region draws against its allocated budget.

The most damning conclusions related to potential conflicts of interest, especially among the board members. As the board is composed mainly of people with expertise in tourism or hospitality, the audit said, discussions with industry players and survey responses from state tourism organisations indicated "that the perceived conflicts of interest of board members are a major risk to Tourism Australia's reputation".

It said there is also a "perception [among] stakeholders that a relationship exists between business interests, shareholdings, and board approvals and decisions.

"It is therefore important, particularly in the competitive tourism industry, that the decisions of the board are transparent and that any perceived or actual conflicts are being (and are seen to be) appropriately addressed."

The audit was sent to TA for a comment before publication. It shows that TA agreed with all the conclusions and has subsequently taken steps to tighten its financial controls, governance procedures and measures to ensure better performance indicators in marketing and advertising contracts.On the Web: http://www.anao.gov.au/uploads/documents/2008-09AuditReport02.pdf)

Imtiaz Muqbil is executive editor of Travel Impact Newswire, an e-mailed feature and analysis service focusing on the Asia-Pacific travel industry.

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