COA bares failure of tourism program that cost millions

MANILA, Philippines—Where’s the fun in this?

Travel Café Philippines (TCP), an ambitious program of the Department of Tourism to sell the Philippines as a prime destination from 2007 to 2010, not only failed to draw tourists but also incurred losses, state auditors said.

The program was set up by the DoT and the TravelnCuisine Philippines Inc. (TnCPI) through a September 2007 memorandum of agreement to promote Philippine destinations, the Commission on Audit said in its 2010 annual report.

To do this, the TCP would run a café that serves the best Philippine cuisine, coffee and other beverages; a Travel Shop offering Philippine tour packages, and a Travel Library of reference materials, and guidebooks on Philippine destinations, it said.

In exchange for the advertising mileage generated by the TCP, TnCPI was paid a monthly P200,000 promotional allowance that was later raised to P300,000 for three years, running up to P14 million as of December 31, 2010, the COA said.

The tourism program, however, miserably failed to deliver.

Based on TnCPI’s accomplishment report in 2009, only a minimal number of TCP clients and customers got interested in exploring tourist destinations, with the Travel Shop in Greenbelt, Makati, and SMX in Pasay City facilitating 129 bookings that year, including 97 by locals, COA said.

Unaudited financial statements also showed that TnCPI incurred losses all throughout the operation of the TCP, it said.

COA concluded that the TCP was not an effective marketing tool to promote the country’s tourism industry “since the intended result of encouraging a significant number of tourists, especially foreigners, was not achieved.”

“The said undertaking only wasted government resources which could have been utilized to finance worthwhile projects of the government geared toward the improvement of the quality of life of the Filipino people,” it said.

COA recommended that tourism officials discontinue the TCP and terminate its agreement with the TnCPI to avoid “further incurrence of unnecessary expenses,” and draw up a new program that would lure international visitors and increase the country’s foreign exchange earnings.

In reply to COA, tourism officials explained that TCP was a branding initiative and a tool to promote travel among locals and foreigners, whose success could not be measured by the number of actual bookings facilitated by the Travel Shop.

Its success should also be gauged by the interest to travel to the Philippines that may not have been necessarily booked by the TCP, market presence, and brand recall, it added.

COA, however, said that this assertion could not be validated by its team of auditors in the absence of a “quantifiable performance indicator and other data.” It said the evaluation was based on the number of customers and bookings reflected in TnCPI’s report.

“With the minimal number of customers and bookings, it only showed that the TCP did not create a significant impact, awareness and interest in the Philippine products and tourist destinations,” it said.

Officials of TCP said the P14 million paid by DoT to TnCPI in three years should not be treated as promotional assistance but as “advertising fees.”

If that were so, COA said that the operator of TCP should have been sourced out by the DoT through public bidding as required by the Government Procurement Reform Act, instead of just being nominated by the DoT’s food-and-beverage consultant.

“In this case the transaction arising from this contract with TnCPI is considered irregular,” COA said, even as it noted that TnCPI, which was incorporated three months before the contract signing, had no track record in operating such business.

COA asked DoT officials to explain why the officials who entered into the agreement with TnCPI without public bidding “should not be held personally liable and responsible for the payment of advertising services totaling P14 million which is considered irregular expense.”