The Tourism Investment Preparedness Gap

Why attracting investment starts with understanding what stands in its way, fixing it, and making the opportunity easier to invest in.

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TL;DR

Destinations spend considerable time trying to attract tourism investment, but often less time making sure they are prepared to receive it. The Destination Investment Preparedness Assessment (DIPA) approaches this through three interconnected dimensions: Institutional Alignment, whether government, tourism organizations and communities are sufficiently aligned around the direction of development; Industry Maturity, whether the destination has the businesses, workforce, infrastructure and tourism ecosystem needed to support new investment; and the Enabling Environment, whether the policies, regulations, incentives and development processes make investment possible.

But assessment is only the beginning. DIPA is intended to identify what is standing in the way, establish what needs to change and create a practical roadmap for becoming more investable. That also means identifying the assets and opportunities worth investing in, building a credible qualitative and quantitative case for them, and making it easier for investors to understand the destination’s vision and conduct their own due diligence.

The goal is not simply to determine whether a destination is ready for investment. It is to understand what would make it more ready, what needs to happen next, and how to make good opportunities easier to invest in.

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Investment has become an increasingly important part of the tourism conversation. Destinations are looking for new hotels, attractions, experiences, transportation infrastructure, cultural assets, mixed-use districts, and other developments that can strengthen the visitor economy and support broader community goals. In emerging destinations, investment may be needed to build the tourism economy almost from scratch. In more mature destinations, it is often necessary to renew aging products, address capacity constraints, or respond to changing visitor expectations.

Yet the conversation about tourism investment tends to focus disproportionately on attraction. Destinations identify opportunities, develop investment prospectuses, create incentives, attend conferences, and approach hotel companies, developers, operators, and other potential investors. All of this can be important, but it assumes that the principal challenge is convincing someone to invest.

In my experience, there is another question that should come first: is the destination actually prepared to receive the investment it is trying to attract?

This is a distinction I have been thinking about for some time and wrote about in Tourism That Matters. A strong brand may attract visitors, but investors, lenders, developers, and operators are looking for something deeper. They want to understand the market opportunity, of course, but they also want stability, alignment, and predictability. They need confidence that the destination understands where it is going and that its systems, institutions, infrastructure, workforce, and policies are capable of supporting the investment once it is made. 

That distinction between investment attraction and investment preparedness may seem subtle, but I think it has significant implications for how destinations approach tourism development.

The Investment Preparedness Gap

There are many destinations with compelling tourism opportunities that struggle to convert those opportunities into actual investment. They may have growing visitor demand, extraordinary natural or cultural assets, available land, or obvious gaps in accommodation and experiences. On paper, the opportunity can appear relatively straightforward. The problem is that investors do not experience a destination on paper.

A hotel developer may see strong demand but encounter uncertainty around zoning or permitting. An international operator may be interested in entering a market but struggle to understand which government agency is responsible for what. A project may receive enthusiastic support from the tourism organization but encounter resistance elsewhere in government. Infrastructure may not support the area identified for development. A destination may want additional hotels while simultaneously facing a workforce shortage that makes operating those hotels increasingly difficult.

None of these necessarily means that investment should not happen. They mean that additional work may be required before it can happen successfully.

This is what I think of as the investment preparedness gap: the distance between a destination’s ambition for tourism investment and the conditions that exist to support it. Understanding that gap is useful. Closing it is where the real work begins.

If permitting is the problem, how can the process be simplified or made more predictable? If infrastructure is constraining development, which investments need to be prioritized and by whom? If the tourism industry lacks the workforce or supply chains to support new development, what capacity needs to be built first? If government agencies are pursuing different objectives, what governance or coordination mechanisms are needed to bring them together?

Too often, we respond to these challenges by increasing the effort devoted to investment attraction. We improve the prospectus, refine the investment narrative, introduce new incentives, attend another conference, or generate another list of potential projects. Those activities may produce interest, but they do not necessarily address the reasons investment is failing to move forward.

This is where I think the tourism investment conversation needs to evolve. Investment preparedness should not simply tell us whether a destination is ready. It should tell us what would make it more ready.

Looking at the Destination Through an Investor’s Eyes

One of the most useful things destination leaders can do is temporarily stop looking at their destination as tourism professionals and begin looking at it from the perspective of someone being asked to commit capital for the next ten, twenty, or thirty years. The questions become quite different.

An investor certainly wants to understand visitor demand, projected growth, market gaps, and potential returns. But they are also assessing the environment around the investment. How predictable is the regulatory system? How long will approvals take? Is the infrastructure sufficient? Can the project recruit and retain the workforce it needs? Are tourism priorities likely to survive political change? Do the agencies involved in development work together? Is there local support for the type of development being proposed?

The enabling environment matters because it effectively establishes the rules of the game. Transparent investment policies, understandable permitting processes, appropriate infrastructure, workable land-use regulations, well-designed incentives, and political and fiscal stability all reduce uncertainty. When these systems are unclear or contradictory, even attractive opportunities become more difficult to finance and deliver. 

The same applies to the tourism industry itself. A destination may have significant demand while lacking the workforce, supply chains, product diversity, service standards, industry networks, or supporting infrastructure required to absorb substantial new development. Even high-traffic destinations can have underlying weaknesses in industry maturity that need to be addressed alongside investment attraction. 

This is why I increasingly believe that tourism investment should be viewed as a system, rather than simply as a collection of projects.

Three Dimensions of Investment Preparedness

To make this more practical, I developed a framework in Tourism That Matters for assessing investment readiness. I have since evolved that thinking into the Destination Investment Preparedness Assessment (DIPA), which looks at the conditions for tourism investment across three interconnected dimensions. 

Institutional Alignment considers whether destination leadership, government agencies, communities, and other organizations share sufficient agreement about the direction of tourism and their respective roles in delivering it. Complete agreement is neither realistic nor necessarily desirable, but investors need reasonable confidence that different parts of the system are not working against one another.

Industry Maturity examines the sophistication and capability of the tourism ecosystem itself, including its products, workforce, infrastructure, businesses, supply chains, data, innovation, and ability to adapt. New investment rarely operates independently of this ecosystem. Its viability is influenced by what already exists around it.

Enabling Environment considers the policy, regulatory, financial, and infrastructure conditions that facilitate or frustrate investment. This includes permitting, zoning, incentives, utilities, transportation, investment support, environmental and social safeguards, and the broader stability required for long-term capital commitments.

The value comes from considering these dimensions together. A destination may have strong leadership alignment but an enabling environment that makes projects difficult to execute. Another may have a highly capable tourism industry but fragmented institutions. Another may have attractive incentives and streamlined approvals but lack the workforce or tourism ecosystem necessary to support the developments it hopes to attract.

Each situation requires a different response.

From Assessment to Action

Understanding a destination’s level of preparedness is useful, but a score on its own does very little. The real value comes from understanding why the score looks the way it does and what can realistically be done to improve it.

This is where the assessment needs to move from diagnosis into strategy. The gaps identified across institutional alignment, industry maturity, and the enabling environment can be translated into a practical set of interventions, each with different levels of urgency, complexity, responsibility, and time required to implement.

Some may be relatively straightforward. An investor may simply need a clearer point of contact within government, better information about the development process, or access to a more coherent pipeline of tourism opportunities. Others may require considerably more work: reforming zoning, simplifying permitting, investing in infrastructure, strengthening workforce development, improving access to financing, modernizing incentives, or creating new mechanisms for coordination across government.

The point is not to solve every weakness before pursuing investment. Few destinations could. It is to understand which gaps genuinely constrain investment, which can be addressed relatively quickly, which require longer-term structural change, and which risks investors may simply need to understand and account for in their decisions.

The result should therefore be more than an assessment. It should be a roadmap for becoming more investable.

For a national or regional organization, that roadmap can also help sequence investment geographically. Different communities may have similar tourism potential but very different levels of preparedness. Some may be positioned to move immediately. Others may have compelling opportunities but require targeted capacity building first. Still others may need more foundational work before significant tourism development makes sense.

This is also why the assessment itself should be both analytical and participatory. Community engagement can reveal local ambitions and concerns. Interviews with government, industry, and investors can expose gaps in alignment or institutional capacity. Document review and benchmarking can test perceptions against policy and evidence. Repeating the process over time can then show whether the destination is actually becoming more prepared. 

The objective is not simply to identify where opportunity exists or where weaknesses remain. It is to understand what needs to happen for that opportunity to become viable, who needs to make it happen, and in what sequence.

Making Investment Easier

There is another part of investment preparedness that is easy to overlook. Even when the underlying conditions are strong, destinations should make it as easy as reasonably possible for investors to understand the opportunity, evaluate it, and determine whether it warrants further consideration.

Too often, destinations stop at identifying a list of potential projects. A hotel site is available. A waterfront could be redeveloped. A cultural asset needs investment. A district has been identified for tourism growth. These may all be legitimate opportunities, but an investor still has to piece together why the opportunity matters, how it fits within the destination’s broader direction, what demand exists, what other development is planned around it, and ultimately whether there is a credible path to return. A prepared destination should be able to tell that story much more clearly.

That begins with the broader vision. Investors should be able to understand where the destination is going, what kind of tourism economy it is trying to build, which areas or experiences it wants to develop, and how individual opportunities fit within that direction. From there, the destination can identify the existing and potential assets that are most likely to support that vision while also presenting a viable commercial opportunity.

The next step is to build the case for those assets from both a quantitative and qualitative perspective. That may include visitor demand, accommodation performance, market gaps, projected growth, access, demographics, comparable developments, infrastructure plans, development costs, potential revenue, incentives, and other indicators of commercial viability. But numbers alone rarely explain an investment. Investors also need to understand why the opportunity makes sense in this particular place: what makes it distinctive, how it strengthens the destination, what other assets or investments surround it, how it fits with community priorities, and why the timing may be right.

This is where investment preparedness begins to connect directly with investment facilitation. A destination should not expect an investor to discover the entire case for investing on their own. If the destination believes an opportunity is important enough to pursue, it should have done enough work to explain why.

This does not mean the destination should attempt to perform an investor’s due diligence for them. Investors, developers, lenders, and operators will conduct their own analysis, test assumptions, build financial models, assess risk, and ultimately decide whether the opportunity meets their investment criteria. Nor should a destination present speculative assumptions as certainty simply to make an opportunity appear more attractive.

The role of the destination is to make that due diligence easier to begin and easier to navigate. Relevant information should be accessible. Development processes should be understandable. Data should be credible. Key contacts should be clear. Questions should be answered efficiently. Where information is unavailable or uncertainty exists, that should be understood rather than obscured.

There is value in this even before a single investment is secured. A destination that can articulate its tourism vision, identify the assets and opportunities that support it, provide credible qualitative and quantitative evidence for their potential, and help an investor navigate the path from initial interest through due diligence sends an important signal.

It demonstrates that the destination has done its homework and, perhaps more importantly, that it understands what serious investment requires.

What Role Should the DMO Play?

There is also a broader implication for destination organizations. Investment attraction has traditionally been associated with economic development agencies, investment promotion organizations, and different levels of government. Those organizations should continue to play central roles. A DMO is not a planning department, a development bank, or a permitting authority. But destination organizations often possess something particularly valuable: a relatively complete view of the visitor economy.

They understand visitor demand, destination positioning, accommodation performance, experiences, air access, seasonality, industry needs, and increasingly resident sentiment. They also tend to sit at the intersection of government and the private sector. That gives them an important role in helping connect tourism ambition with the realities of development.

The opportunity is not necessarily for DMOs to become investment agencies. It is for them to help ensure that tourism investment is aligned with the destination’s strategy, identify the conditions preventing desired investment from moving forward, and convene the organizations capable of addressing them.

In some cases, that may mean advocating for infrastructure. In others, it may mean working with government on regulatory barriers, helping industry address workforce shortages, coordinating stakeholders around priority development areas, improving the evidence available to investors, or simply making sure that everyone involved understands what the destination is trying to achieve.

DMOs can also play an important role in helping translate the destination’s tourism strategy into an investment proposition. They can help identify which assets or opportunities best support the destination’s long-term vision, provide the visitor and market intelligence needed to build the case for them, and work alongside economic development and government partners to make those opportunities easier for investors to understand and evaluate.

This matters because private investment is not simply something that happens to a destination. It shapes the destination. Hotels, attractions, districts, transportation systems, cultural facilities, and visitor experiences influence where people go, where economic activity occurs, who benefits from tourism, and ultimately what the place becomes.

The objective should therefore not be to attract as much investment as possible. It should be to create the conditions for the right investment to succeed.

Preparing Before Promoting

Tourism destinations will require substantial investment over the coming decades. New destinations will need infrastructure and tourism products. Mature destinations will need to renew aging assets. Climate adaptation, transportation, workforce housing, technology, accessibility, and changing visitor expectations will all require capital. Much of that investment will need to come from, or be delivered in partnership with, the private sector.

Destinations should absolutely become better at identifying opportunities, developing business cases, communicating their investment narrative, and building relationships with investors. But those efforts should sit within a broader understanding of preparedness.

Sometimes the most useful investment strategy may not begin with an investor roadshow. It may begin with a permitting process that needs to be simplified, an infrastructure gap that needs to be addressed, a workforce program that needs to be created, a disagreement between agencies that needs to be resolved, or a conversation with the community about what kind of development it actually wants.

Once those gaps have been identified, the work cannot stop with the assessment. Someone has to determine what can be changed, what should be prioritized, who needs to be involved, and how the destination moves from its current level of preparedness toward the conditions required for investment to succeed.

And once the destination has done that work, it should make the opportunity as easy as possible for investors to see. The vision should be clear. The priority assets should be identifiable. The qualitative and quantitative case for investment should be credible. The information required to begin due diligence should be accessible. And the path through the destination’s development and investment ecosystem should be understandable. The investor will still need to decide whether the opportunity is right for them. That is their job.

The destination’s job is to make sure that a good opportunity does not fail simply because the place was not prepared to support it, explain it, or help an investor navigate it.

None of this is particularly glamorous. But it is often the work that determines whether investment ultimately happens.

Every destination wants investment. The more useful questions may be: how prepared are we for it, what is standing in the way, what are we going to do about it, and how easy are we making it for investors to say yes?