University of Applied Sciences Stralsund
School of Economics and Business Administration

Bachelor Thesis to achieve the Degree
"Bachelor (Hons) of Business Administration
in Leisure and Tourism Management"
about the Subject

Analysis of the Chilean Tourism Market –
Products and Opportunities for the Destination Pucón and the IXth Region

Presented on 2 June 2005

by

Beate Pehlchen

Table of Contents

Table of Contents ... I
Table of Figures ... IV
List of Abbreviations ... V

1 Introduction ... 1
1.1 Subject and Objective ... 1
1.2 Approach ... 3

2 Fundamentals ... 5
2.1 The Chilean Market ... 5
2.1.1 The Historical and Political Background ... 5
2.1.1.1 Geography ... 5
2.1.1.2 The XIII Region ... 6
2.1.1.3 Short Description ... 7
2.1.1.4 History ... 10
2.1.1.5 Population ... 13
2.1.1.6 The Mapuche ... 15
2.1.1.7 Demographic Profile ... 16
2.1.1.8 The Structure of the Economy ... 18
2.1.2 Tourism Development ... 19
2.1.2.1 General Overview ... 19
2.1.2.2 Tourist Arrivals ... 20
2.1.2.3 Visitor Structure ... 21
2.1.2.4 Tourism Supply ... 22
2.1.2.5 Tourism Demand ... 23
2.1.3 Alternative Tourism ... 24
2.2 Pucón as Destination ... 27
2.2.1 Overview ... 27
2.2.2 SWOT Analysis ... 28
2.2.2.1 Definition ... 28
2.2.2.2 SWOT Analysis of Pucón ... 30
2.2.3 USP – Unique Selling Proposition ... 35

3 Benchmarking and Market Analysis ... 38
3.1 Benchmarking ... 38
3.1.1 Definition ... 38
3.1.2 Types of Benchmarking ... 40
3.1.2.1 Internal Benchmarking ... 41
3.1.2.2 External Benchmarking ... 41
3.1.3 The Use of Benchmarking in this Essay ... 43
3.2 Tourism Agencies in Pucón ... 43
3.2.1 Main Agencies ... 43
3.2.2 Overview of the Tourism Agency Ronco Track ... 45

4 Data Interpretation ... 47
4.1 Data of the Tourism Agency Ronco Track ... 47
4.1.1 Supply ... 47
4.1.2 Demand ... 48
4.1.3 Cost – Volume – Profit Analysis ... 49
4.1.3.1 Sales ... 49
4.1.3.2 Variable and Fixed Costs ... 50
4.1.3.3 Contribution Margin and Net Income ... 51
4.2 The Questionnaire ... 53
4.2.1 Target Definition ... 53
4.2.2 Kinds of the Surveys ... 54
4.2.3 Interview Rules ... 55
4.2.4 Structure of the Questionnaire ... 55
4.2.5 About the Analysis ... 57
4.3 Analysis of the Survey Results ... 58
4.3.1 Analysis of the Test Run ... 58
4.3.2 Problems and Difficulties during the Implementation ... 58
4.3.3 Single Question Frequencies ... 59
4.3.3.1 Customer Structure ... 59
4.3.3.2 Satisfaction with the Excursion ... 60
4.3.3.3 General Impression about the Agency ... 61

5 Opportunities for Pucón and the IXth Region ... 62
5.1 Eco and Cultural Tourism ... 62
5.1.2 The Growing Industry ... 62
5.1.2 Ecotourism ... 64
5.1.3 Cultural tourism ... 65
5.2 Different Aspects ... 67
5.2.1 Economic Point of View ... 67
5.2.2 Community’s Welfare ... 68
5.2.3 Development from within ... 69
5.3 Strategies and Solutions ... 72
5.3.1 IT as Solution ... 72
5.3.2 The “true” Price ... 74
5.3.3 Providing Knowledge and Financial Resources ... 75
5.4 Problem and Risks ... 78

6 Conclusion ... 81

References i

1 Introduction

1.1 Subject and Objective
On the economic front, tourism has the capacity to create jobs: jobs for the poor, jobs for women and young people, jobs in the indigenous communities, unskilled as well as highly qualified jobs, jobs in seaside resorts as well as in remote rural areas and in ecotourism activities. Tourism is a much more diverse industry than many others and can build upon a wide resource base. Diversity increases the scope for wide participation. Furthermore, most export industries depend on financial, productive and human capital. Indeed, tourism depends on these but also on natural capital, such as wildlife, scenery and beaches, and culture, vital assets of many developing countries in Latin America and the Caribbean. For these reasons combined, tourism should be considered as one of the important economic development opportunities available to developing countries in the region.

The United Nations declared the year 2002 as INTERNATIONAL YEAR OF ECOTOURISM. The development of ecotourism often involves precious and fragile natural resources and must be done with great sensitivity. Natural habitats have been diminishing at alarming rates and equally alarming reports are regularly published on diminishing water resources, deforestation, increases in pollution, the destruction of corral reefs and many more.

Ecotourism is a field of human activity where conservation and development can wisely and effectively be blended to achieve a mutual goal to the benefit of people and communities. This is why ecotourism should also be sensitive to local communities, their land rights, traditions, cultures and ways of life. Ecotourism in remote areas cannot be developed without the consent and active involvement of local peoples, who should become partners in the process.

For many countries like Chile, particularly in the developing world, tourism is one of the few meaningful sources of economic development and job creation. What would be the situation of countries like Cuba, Dominican Republic, Seychelles, Maldives, Vietnam and many others without tourism? Tourism can therefore play an important role in improving living standards and raising people above the poverty threshold.

Throughout this essay the example of the tourist destination Pucón and the IXth region will be used to explain the situation now and the opportunities for cultural and ecotourism. The destination is one of the famous tourism areas in Chile and well know for outdoor and adventure actitvities worldwide. Nevertheless the IXth region “Araucanía” in Chile is the area with the highest native population in this country. Moreover, its name is derived from the local native people named, "Araucanos"¹, and it is nationally known for its various amount of volcanoes, lakes, woods and hot springs. For this reason, there are five national parks and seven wild areas to protect the long list of natural resources. This region has the best opportunities for the future development of ecotourism. The main components of this thesis are:

• The tourism development situation in Chile under the consideration of the native population
• What are the strengths and weaknesses of the destination Pucón and the unique selling proposition?
• Actual offers and analysis of an agency as economy example
• Visitor structure and satisfaction with the products
• New opportunities for the destination and the IXth region which are part of the sustainable tourism development – cultural and ecotourism

1.2 Approach
For this thesis the author has been three months in Pucón during the main season and worked for the tourism agency Ronco Track. It was part of this work to understand and analyze the actual situation on the spot. More than that, it was important to collect the different point of views from the locals and to comprehend their situation in comparison to the future developments of this region.

It was not often easy to get in contact with the native population called “Mapuche” and to win their confidence as an outsider. More than that, it was complicated to show them the “real willingness” for understanding their situation and problems. Normally the tourists never get in a real conversation with the native people, than they are shy and live a secluded live. With the help of a local friend from the native people the author had the change to spend one day with a Mapuche family and to learn more about them.

The essay is self-contained and structured consecutively to finally understand the chances, the possibilities and the advantages of a cultural and ecotourism for the destination Pucón and the IXth region. Furthermore, understanding the necessary of the “development from within” is a main element to comprehend the different aspects and strategies in chapter 5.

The fundamentals in chapter 2 are giving a background to understand the coherences. The historical and political developments are important components in the Chilean tourism development and it is essential to get an overview of the whole situation for understanding the actual problems and opportunities. Furthermore the critical situation of the native people is examined in this chapter as starting point for the opportunities. How important tourists are for the destination and which basic terms and conditions are leading to the further development of Pucón will be described, before the SWOT and the USP analysis worked out.

[...]

1 Ruta de los Volcanos: available from: http://www.rutadelosvolcanes.com/about.php (as of 21-Mai-2005)