A decision-making and governance framework for the renewal of tourism destinations: the case of the Canary Islands

sustainability Article A Decision-Making and Governance Framework for the Renewal of Tourism Destinations: The Case of the Canary Islands Manuel Rodríguez-Díaz 1,* and Rosa Rodríguez-Díaz 2 1Department of Economics and Business Management, Universidad de Las Palmas de Gran Canaria, 35017 Las Palmas de Gran Canaria, Spain 2Department of Financial Economics and Accounting, Universidad de Las Palmas de Gran Canaria, 35017 Las Palmas de Gran Canaria, Spain; rosa.r[email protected] *Correspondence: [email protected]; Tel.: +34-928-452-802 Received: 10 December 2017; Accepted: 21 January 2018; Published: 25 January 2018 Abstract: Tourism destinations in advanced stages of the life cycle need to update their lodging offers and infrastructures. The main problem is that new destinations are planned according to the new preferences of customers, creating critical problems in older destinations related to the architecture of the buildings, size of the rooms, dimension of lodgings, complementary offer, and infrastructures. The aim of this paper is to develop a decision-making and governance framework for the renewal of destinations in an advanced stage of the life cycle that require the renovation of the lodging offer and infrastructures in order to increase their competitiveness and sustainability. The decisions were planned and carried out in the Canary Islands by stakeholders involved in the public and private sectors. The evaluation of actions to renew the lodgings and infrastructures through special legislation, leadership, sources of financing, and investment guarantees is presented to determine the level of success obtained. Because the Canary Islands is one of the main tourist destinations in Europe, the actions and procedures presented can be used in other destinations with similar characteristics. Keywords: tourism destination; lodging; renewal; life cycle; sustainability; relational capabilities; stakeholders 1. Introduction The competitiveness of tourism destinations depends on the level of updating of the lodging offer and infrastructures, based on the new preferences of customers, the strategy of competitor destinations, and the level of leadership among the stakeholders [ 1 ]. According to Rodríguez-Díaz and Espino-Rodríguez [ 2 ], relational capabilities are fundamental to organizing and carrying out action programs designed to increase the competitiveness of the resources and capabilities of the tourism destination. The advanced stage of the life cycle of the destination is critical to deciding the best way to renew and update the main factors involved in the lodging offer [ 3 – 5 ]. The renovation of the lodging offer and tourism infrastructures has implications for the economic sustainability of the destination [ 6 – 8 ]. The governance of destinations has to develop systems and procedures in order to maintain their competitiveness, and the application of effective leadership to make stakeholders work together to achieve the same common objective is quite complex [ 1 , 2 , 6 ]. In the academic literature, few studies have analyzed the renewal of tourist destinations, and so the analysis of the practical actions that have been carried out and their results is of great interest for the effective governance of tourist destinations and scientific research [8]. Changes in competitiveness and the success of the combined actions of the partnerships require an adaptation of the skills and strategies in each stage of the life cycle of destinations [9]. The Canary Sustainability 2018,10, 310; doi:10.3390/su10020310 www.mdpi.com/journal/sustainability Sustainability 2018,10, 310 2 of 18 Islands (Spain) tourist destination has been developing for more than 60 years (it currently receives 15 million tourists per year). The Canary Islands is an archipelago in the mid-Atlantic, composed of seven main islands. From the early 1960s to the first part of the 1980s, the tourism model applied was based on non-hotel accommodations. The first hotels basically had three stars and small rooms. Only a few lodgings had five stars. Customers demanded this type of lodging; however, since the end of the 1980s and 1990s, customers began to change their preferences, increasing their bookings in hotels. The main effects were that the first tourism zones (Playa del Inglés-Gran Canaria Island, Puerto de la Cruz-Tenerife Island, Puerto del Carmen-Lanzarote Island) had old buildings with an architecture oriented toward non-hotel lodgings with few hotels, complemented by services areas concentrated in shopping centers. Santos et al. [ 10 ] established that 81% of the lodgings in the main consolidated tourist zones were built before 1995. Rodríguez-Díaz and Espino-Rodríguez [ 2 ] proposed a model to evaluate the strategy of a tourism destination, and they tested it on the Island of Gran Canaria (currently receives 4 million tourists per year). The results showed that the non-hotel (or extra-hotel) factor had a low internal strategy value and a low relational strategy value. The internal view is based on the resources and capabilities theory [ 11 – 16 ], and it determines the core competences of the destinations depending on their strengths and weaknesses. Moreover, the relational view deals with the relational capability [ 17 , 18 ], combinative capability [ 19 ], absorptive capacity [ 20 ], the integration of processes [ 21 ] or resources and capabilities of destinations [2], and the sustainability of destinations as integrative systems [22]. Rodríguez-Díaz and Espino-Rodríguez [ 2 ] proposed the rehabilitation of the non-hotel offer in the destination of Gran Canaria Island following strategic actions based on the internal and relational view, in order to obtain the destination’s sustainability. From the internal view perspective, the main action to promote is the renovation of apartment complexes, adapting them to customers’ new preferences. Furthermore, the relational view was analyzed on the basis of the integration and sustainability of this specific resource. Integration implies seeking synergies with other companies or with complementary offers, whereas sustainability is focused on the application of environmental management in lodgings. Finally, the stakeholders involved were the companies themselves, along with the different governments involved in renovation planning, and representatives of the financial industry, who would supply the economic resources needed to implement the renovation of the lodgings. Another way to analyze the relevance of a resource or capability is through its relationship with the tourism destination’s performance [ 23 – 25 ]. Rodríguez-Díaz and Espino-Rodríguez [ 8 ] carried out a study to determine the correlations between the sustainability factors, based on the resources and capabilities of the Gran Canaria Island destination and the performance of the destination and its customers. One of the factors obtained was the “extra-hotel offer”, which maintains a positive and significant relationship with the destination’s performance, but the relationship with the customer’s performance was not significant. These results showed that the non-hotel offer is perceived by stakeholders as quite important for the competitiveness and sustainability of the destination, but the need to update this offer appeared to be less decisive for customers. In this context, Rodríguez-Díaz and Espino-Rodríguez [ 8 ] (p. 12) concluded “that the renovation of the extra-hotel offer would provide a strategic advantage for the future sustainability of the destination. Furthermore, it is necessary for the renovation of this type of lodging to be linked to the image and emotional experience of the tourists, in order to maintain their level of loyalty to the destination”. Destinations can, therefore, follow the methodologies proposed by Rodríguez-Díaz and Espino-Rodríguez [ 2 , 8 ] to detect the need to renew the lodging offer and infrastructures and their impact on the destination’s results. Thus, it is possible to analyze the case presented in this paper in order to determine the actions that best adapt to the conditions of each destination to be renewed. In this context, the relational capacity in a tourist destination is determined by the degree of integration and sustainability created among the different resources, capabilities and stakeholders involved. A relational capacity can be developed when two or more resources and capacities act in such a way that their mutual benefits are enhanced through their integration. For example, if the attraction of a destination Sustainability 2018,10, 310 3 of 18 consists of sun and beaches, synergies are achieved if the destination takes advantage of creating a flow of clients toward museums, leisure, or complementary activities. Another example can be found in the different public administrations when they work independently (low relational capacity) or together (high relational capacity). Moreover, sustainability itself has a far-reaching systemic view. Therefore, actions to integrate resources and capacities must be geared towards maintaining environmental, economic, and social sustainability. A high level of relational capacity would occur when integration produces high synergies between resources and capabilities in a sustainable way, i.e., over the long term. By contrast, when synergies are weak or may affect the future competitiveness of the destination due to a loss of environmental, economic, or social quality, relational capacities are not created, and there is a risk that the destination will eventually lose its attractiveness. The renovation and adaptation of the tourism offer in order to meet the demand is a key to maintaining the competitiveness and sustainability of tourism destinations [ 6 , 26 – 34 ]. The objective of this paper is to develop a decision-making and governance framework for renewing the lodging offer and infrastructures of a tourism destination, based on the actions carried out in the destination of Canary Island. The study will demonstrate that the rehabilitation activities of non-hotel lodgings proposed by Rodríguez-Díaz and Espino-Rodríguez [ 2 ], based on the internal and relational view, have been applied, showing that the development of relational capabilities among the stakeholders involved is the only way to obtain the objective of rehabilitating the offer. In the next section, a framework is developed for the renewal of the lodging offer and infrastructures of a tourism destination, and the main actions that must be carried out by the stakeholders are proposed. Then, the evaluation of the rehabilitation implemented by the Canary Government is presented. The study ends with the main conclusions obtained from the application of the measures in the destination analyzed. 2. Renewal Framework The decision-making and governance framework to renew the lodging offer and infrastructures proposed in this study is based on experiences in the destination of the Canary Islands (see Figure 1). It is a framework based on relational capabilities [ 2 , 18 , 19 , 35 ] because the actions to be performed must be coordinated and implemented by different stakeholders from the public and private sectors [ 1 , 36 – 39 ]. In this context, Rodríguez-Díaz and Espino-Rodríguez [ 18 ] establish that the combined success of the destination and its individual companies depends on the effectiveness of the coordination and collaboration among the destination’s individual resources and capabilities, as well as its leadership and governance, implemented through close relationships among the stakeholders involved [40–43]. The framework has three parts: stakeholders involved, area of actions, and objectives related to the demand in the tourism destination, measured in terms of type of segment and the amount of income to reach. The stakeholders are divided into two areas because the public sector has specific attributions to carry out actions that differ from those of the private sector. Figure 1shows that the public and private sectors share the leadership in destinations [ 6 , 40 , 43 ]. Haugland et al. [ 35 ] (p. 269) consider that “the success of individual actors, as well as the success of the entire destination, is dependent on efficient coordination and integration of individual companies’ resources, products and service”. In this regard, Bornhorst et al. [ 39 ] (p. 572) establish that “competitive advantage requires the ability to effectively manage all components of the tourism system to ensure success is achieved”, and many destinations create a Destination Management Organization (DMO) to provide leadership in managing them. When destinations have not created a DMO, the leadership is normally carried out by the public sector in coordination with the principal stakeholders. This is the case of the Canary Islands, where leadership in managing the planning and actions is provided by the different public administrations directly involved (Canary Government, Island Government, and councils). In this context, the study of the strategic evaluation of a tourism destination carried out by Rodríguez-Díaz and Espino-Rodríguez [ 2 ] showed that the Public Administrations involved in the destination of the island of Gran Canaria have a low internal and relational view. The stakeholders reviewed consider that the different governments (state, Canary, island, council) did not develop Sustainability 2018,10, 310 4 of 18 relational capabilities because there was no collaboration or coordination between them. At the same time, the low internal view is related to the leadership capacity in the destination through the governance of infrastructures, urban planning, and legislation about the tourism sector in order to improve the competitiveness of the destination. One of the main conclusions of this study was that neither the non-hotel offer nor the governance of the destination led by the Public Administration integrated the core competences of the Gran Canaria destination. Sustainability 2018, 10, x FOR PEER REVIEW 4 of 18 In this context, the study of the strategic evaluation of a tourism destination carried out by Rodríguez-Díaz and Espino-Rodríguez [2] showed that the Public Administrations involved in the destination of the island of Gran Canaria have a low internal and relational view. The stakeholders reviewed consider that the different governments (state, Canary, island, council) did not develop relational capabilities because there was no collaboration or coordination between them. At the same time, the low internal view is related to the leadership capacity in the destination through the governance of infrastructures, urban planning, and legislation about the tourism sector in order to improve the competitiveness of the destination. One of the main conclusions of this study was that neither the non-hotel offer nor the governance of the destination led by the Public Administration integrated the core competences of the Gran Canaria destination. Figure 1. Decision-making and governance framework for the renewal of tourism destinations. Leadership is basically implemented through the governance of infrastructures, promotion of the destination, and legislation with special applications to urban planning in tourist areas [36]. Moreover, the different public administrations can take action to support investment in private renovations with special financial sources that can range from low interest rates to non-refundable grants. Another way to help companies is to offer complementary guarantees for bank loans. To the extent that many firms cannot accept the risk of investing in lodging renovation, the public sector helps companies to get the loans they need. The private sector is composed of lodging companies as the central object of the destination’s renovation. Banks supply financial resources to companies that need a loan guarantee. Tour operators have different roles in planning lodging renovations. On the one hand, they can give loans to lodging companies for the building or repairs required for the renovation of lodging complexes’ installations. On the other hand, tour operators can participate directly or indirectly in the financial guarantee of bank loans, by means of long-range commercial agreements with the tourism companies (five or ten years). These agreements are usually pledged by the banks to guarantee the payment of loans. Other companies that can participate in lodging renewals are construction companies, complementary offers, or service companies that perform certain activities such as catering, wellness, sport, and so on. As Figure 1 shows, the private sector also acts directly in the promotion and leadership of the destination [43,44]. The final objective of the renovation is to improve the destination’s image [45] by improving the image of its lodgings and infrastructures [2,46–49]. Image improvement is intended to increase the income from the demand in two aspects: first, by increasing the number of tourists in the destination; and second, by modifying the target toward market segments with greater purchasing power. The Figure 1. Decision-making and governance framework for the renewal of tourism destinations. Leadership is basically implemented through the governance of infrastructures, promotion of the destination, and legislation with special applications to urban planning in tourist areas [ 36 ]. Moreover, the different public administrations can take action to support investment in private renovations with special financial sources that can range from low interest rates to non-refundable grants. Another way to help companies is to offer complementary guarantees for bank loans. To the extent that many firms cannot accept the risk of investing in lodging renovation, the public sector helps companies to get the loans they need. The private sector is composed of lodging companies as the central object of the destination’s renovation. Banks supply financial resources to companies that need a loan guarantee. Tour operators have different roles in planning lodging renovations. On the one hand, they can give loans to lodging companies for the building or repairs required for the renovation of lodging complexes’ installations. On the other hand, tour operators can participate directly or indirectly in the financial guarantee of bank loans, by means of long-range commercial agreements with the tourism companies (five or ten years). These agreements are usually pledged by the banks to guarantee the payment of loans. Other companies that can participate in lodging renewals are construction companies, complementary offers, or service companies that perform certain activities such as catering, wellness, sport, and so on. As Figure 1shows, the private sector also acts directly in the promotion and leadership of the destination [43,44]. The final objective of the renovation is to improve the destination’s image [ 45 ] by improving the image of its lodgings and infrastructures [ 2 , 46 – 49 ]. Image improvement is intended to increase the income from the demand in two aspects: first, by increasing the number of tourists in the destination; and second, by modifying the target toward market segments with greater purchasing power. The final result must be the increase in the destination’s income. The private sector receives income from sales to customers, whereas the public sector earns income through taxes. 2.1. Public Sector Simancas [ 50 ] establishes that the tourism sector is one of the private business fields where entrepreneurs are not only in favor of governmental interventionism, but they demand it. Thus, it is Sustainability 2018,10, 310 5 of 18 common for public administrations to formulate a set of policies, plans, programs, and projects that focus on the rehabilitation, redefinition, restructuration, and in some cases, reinvention, of the tourism destination. The competencies of the public administration are usually implemented through legislation promoted by the public or private sectors. In the destination of the Canary Islands, the first legal norm established by the Canary Government was passed in 1995 (Ley 7/1995) [51], marking its exclusive competence in the promotion and ordering of tourism in the Canary Islands, including the power to legislate in this area. It is important to highlight that the urban planning competencies in tourism zones are shared by the councils and governments of each of the seven islands. Table 1shows the relevant aspects addressed by the different laws passed on the Canary Islands, highlighting that this first norm (completed by Law 5/1999) [ 52 ] had the main objectives of regulating the tourism activity, setting standards for lodging rehabilitation, defining the joint administration of complexes where the property is divided into multiple small owners in order to improve their competitiveness, and controlling overbooking. Law 6/2001 [ 53 ] marked a change in the orientation of the Canary Government because it led to the control and protection of the tourism activity. Due to the excessive increase in the number of tourist beds at that time, basically in new hotels inaugurated to satisfy the new needs of customers, and taking into account that the level of demand in the following years would not increase much, the Canary Government decided on the “suspension of management instruments of natural, territorial and urban resources, as well as their implementations” (article 2 of the cited law). It only allows rehabilitation projects and the building of new lodgings with specific high-quality characteristics. The opening statement of the law emphasizes the need to contain the increase in the lodging offer while a new law with new guidelines could be written. A new law was passed in 2003 (Ley 19/2003) [ 54 ] to achieve a model of sustainable development in the Canary Islands. This law defines the guidelines for tourism organization in order to induce changes in the production and management methods of the lodging offer. The main objectives were: (a) the rehabilitation of existing lodgings as a preferred alternative to their extensive increase; (b) the increase in the lodging offer would be related to improving the value of the destination and its image; and (c) planning would favor the diversification and differentiation of the tourism offer, as well as increasing the leisure offer. However, the rehabilitation of the oldest lodgings continued to be the main objective; in reality, the effect of this law was very limited. At that time, the sector was going through a period of economic stagnation in which the revenues of companies were reduced. The oldest lodgings needed financing resources that they could not obtain with the expectations and means available to them. In a practical sense, this law did not develop the relational capability between public administrations and the private sector. On the contrary, the purpose was to limit the competences of the islands’ governments and councils in order to stop the building of new lodgings in the most competitive and highly demanded customer segments. With this constraint, competitiveness between Islands was controlled, avoiding a drop in prices. The next law was passed in 2009 (Ley 6/2009) [ 55 ] in the midst of the world economic crisis. The increase in unemployment and the decrease in the gross domestic product forced the Canary Government to rethink the planning of the tourism sector. The circumstances had changed, and the priority was to give a boost to the sector by simplifying administrative actions related to urban planning, removing unnecessary requirements stated in previous legislations, and acknowledging that the private sector would increase its involvement. The Canary Government had a dilemma. On the one hand, if lodging construction increased, the economy would improve, but tourism prices would drop, and companies would further reduce their revenues. On the other hand, a strategy focusing on lodging rehabilitation would affect both the building sector and the competitiveness of older lodgings. The latter was the option selected by the Canary Government, but the practical effects were only seen in the reduction of the administrative process followed in the lodging renewal. Although the Canary Government started to develop a primary level of relational capability with other administrations and the private sector, it continued to have a restrictive view of the problem and did not notice Sustainability 2018,10, 310 6 of 18 that the actions would be more integrated if they included more economic activities. The practical result was very poor because the rehabilitation process was not adopted by many lodgings. Evidently, the rehabilitation problem was too complex to be resolved by a declaration of intent in a new law. In 2012, a radical change occurred in the perspective on analyzing tourism destination renewal. The law passed (Ley 2/2012) [ 56 ] explicitly recognizes the need to carry out an in-depth analysis with the broad participation of the sectors involved and society in general. The objective was to formulate an adequate approach to organizing the main economic activity of the Canary Islands. Later, the tourism renovation and modernization laws of the Canary Islands (Law 2/2013 and the complementary Law 9/2015) [ 57 , 58 ] were approved. The most significant measure taken was the strengthening of the urban planning agreement among the public administrations involved (Canary Government, Island Governments, and councils). The process involved the development of a consensual procedure for initiatives proposed by owners of lodgings, and this was the basis for the “Planes de Modernización, Mejora e Incremento de la Competitividad” (PMMs) (Modernization Plans). These plans promoted an agile process, instead of a lengthy planning process, inserting a new management tool in tourism urban planning. At the same time, the councils involved decided to reduce the capital gains taxes on rehabilitation projects. Furthermore, the councils decided to invest all the taxes obtained from renovation projects in improving tourism infrastructures, and this was complemented by public investments in the renewal of infrastructures in the tourism zones to be rehabilitated. Therefore, the actions promoted involved the development of a relational capability between the public administrations and the private sector because all the stakeholders cooperated in pursuing a common objective. A second important measure was related to financing renewal projects. The Canary Government agreed to offer urban incentives for rehabilitation by increasing the ratios of occupancy and the buildability of the complexes to be renovated. The objective was to supply a new source of financing for rehabilitation by increasing the percentage of land occupancy allowed, in order to improve or diversify the services offered to customers. Likewise, the new orientation seeks to provide the possibility of increasing the number of rooms in order to obtain additional revenues to pay for investments in rehabilitation. In this context, for the first time, the Canary Government began to understand that legislation must supply new financing methods to carry out a true renewal of the destination. However, the Canary Government went further because it noticed that the investments needed public and private financing sources. Two main actions were performed by the public administrations. The first was to encourage public subsidies through a joint mechanism between the European and Spanish governments, applied by the Canary government. This subsidy is integrated in the Canary Island program of Regional Incentives, and the funds come from Europe, with the project providing a real improvement in the category and quality of service delivery to customers. Small and medium-size companies can achieve a subsidy of up to 55% of the total investment applied to the renovation of complexes. Sustainability 2018,10, 310 7 of 18 Table 1. Legislation passed to regulate, rehabilitate, and renew the tourism activity in the Canary Islands. Laws Relevant Aspects Law 7/1995, Tourism Organization Law in the Canary Islands [51] âFirst general regulation of the sector. âProposes the management and promotion of the tourism sector as a strategy for the Canary Islands’ economy. âConsiders the Canary Islands as a unique tourism destination. âRegulates the tourism offer and establishes the standard for carrying out the rehabilitations. âPerforms the control of overbooking in lodgings. â States the conservation needs for the quality of lodgings through maintenance programs in order to retain the tourism category. âDefends the management unity principle of lodgings. Law 5/1999, which modifies the Tourism Organization Law in the Canary Islands [52] âModifies the way the owners and the Company have to formalize their agreement. âContinues to insist on the quality of buildings and service, establishing control mechanisms. Law 6/2001, of Urgent Measures in matters of Territorial Organization and of Tourism in the Canary Islands [53] âIts objective is to regulate the regime of the planning and the use of the ground. âIt favors the containment of the growth of the tourist accommodation offer, enhancing those actions focused on the rehabilitation or replacement of an obsolete lodging offer, without increasing its capacity. âOpts to reduce the lodging offer by encouraging its conversion into residential or complementary offer. âIt also enables exceptional selective growth for higher category hotels. âIt limits the validity of obsolete planning instruments, licenses and administrative authorizations. Law 19/2003, about the Guidelines for the General Ordering and Guidelines for Organizing Tourism in the Canary Islands [54] âIt aims to achieve a more sustainable development model for the Canary Islands. âIt defends a model that contributes to the generation of economic wealth. âIt considers tourism a vital and dynamic sector that cannot be conditioned by a slow and chained process of successive adaptations. âIt favors the increase in quality and the diversification of the lodging and complementary tourist offer. âEnables the figure of the Special Territorial Plans of Insular Tourist Planning (Planes Territoriales Especiales de Ordenación Turística Insulares). â It refers to the renovations of the existing establishment without an increase in capacity, although it allows improvement of the quality, to expand the total buildability, proposing several alternatives. âComprises the obligation to renew, within three years after its approval, the existing buildings. âIt determines the possibility of establishing more effective measures of economic, fiscal, labor and administrative incentive. Law 6/2009, of Urgent Measures in matters of Territorial Ordering for the Stimulation of the Sector and the Organization of Tourism [55] âIt is approved in the middle of the economic crisis. â It tries to give impetus to the tourism sector, addressing, among other things, the need to simplify and rationalize administrative processes in territorial and urban planning. âIt maintains the so-called tourist moratorium, although it relaxes the reclassification of land under certain conditions. âIn light of the concern that the process of renovation and rehabilitation of the lodging offer had not achieved enough support. There is an attempt to stimulate renewal and improve tourism infrastructures and lodgings through concerted actions between the public and private sectors. Law 2/2012, temporal extension of Law 6/2009 [56] â An in-depth analysis is proposed, counting on a broad participation of the sectors affected and the citizens, in general, to define what the appropriate proposal would be for organizing the main economic activity of the Canary Islands. Sustainability 2018,10, 310 8 of 18 Table 1. Cont. Laws Relevant Aspects Law 2/2013, on Tourism Renovation and Modernization of the Canary Islands [57] âIt adopts the legislative technique of configuring and recasting in a single text all the previous legislation on this matter. âIt guides the actions towards the same strategy to increase the quality of the Canary Islands as a tourist destination. â It aims to achieve greater competitiveness in the products offered and to position the Islands in a line of responsible, economic, environmental, and socially sustainable tourism, in addition to ensuring satisfactory public services. âIt aims to redirect the residential nature of tourist lodgings. â It allows construction on lands that have consolidated urban rights, through extending the rights to additional places granted as incentives for renovation, or through the implementation of high quality hotels. âEstablishes the duty of lodgings and tourist activities to maintain, conserve, and rehabilitate the buildings and facilities in accordance with the provisions of tourist regulations and planning. â Strengthens the urban agreements, as a consensual procedure for the initiatives proposed by the owners of the establishments, and favors the approval of the Modernization, Improvement and Increasing Competitiveness Plans (PMMs). âIt establishes the creation in each Island Government of a “Tourist registry of accommodations”. Law 9/2015, to correct, among others, Law 2/2013 [58] â It aims to correct different issues and/or problems, shown in the Evaluation Report of the Law 2/2013 of Tourism Renewal and Modernization of the Canary Islands, which compared the progress of the new measures and their impact on the tourism sector. Sustainability 2018,10, 310 9 of 18 The other financing source is articulated through the European Investment Bank (EIB), which offers loans by subsidizing part of the interest. The Canary Government has promoted the concession of these types of loans through private financial entities. Another characteristic of these European loans is the inclusion of a public guarantee for all or part of the credit given by private banks to tourism companies. In conclusion, combined and integrated actions led by the public administration to renew the lodging offer are the only way to achieve practical results. This means that the development of relational capabilities is the path to the successful rehabilitation of destinations. When the Canary government finally understood that legislation is not sufficient to carry out rehabilitation projects because they are complex and have different stakeholders, rehabilitation started to be a successful reality. When the Canary government applied actions in all the related aspects, the results began to appear. In this context, the public administrations, tourism sector, financial sector, and other companies, such as tour operators, building and service companies, and complementary offers, were involved. Likewise, the Canary government intensified public investments in improving tourism infrastructures and promoted campaigns to improve the the destination’s image. This special legislation was only applied for a limit period of time, and currently the common administrative urban planning process is applied with severe consequences. The legal bureaucracy keeps renewal or innovative tourism projects from being carried out because, in many cases, urban planning in tourist towns can take more than 10 years. 2.2. Private Sector The Canary Islands is a tourism destination with a high demand, receiving more than fifteen million tourists per year, with an average occupancy of 9.75 nights per client in non-hotels and 8.39 nights in hotels per client [ 59 ]. It is a destination focused basically on sun and beach tourism, but it is diversifying its offer in other segments (sport, golf, rural tourism, cultural). This destination has 1168 lodging non-hotels that represent about 22% of the total offer in Spain in this category (see Table 2). The island with the largest number of non-hotel complexes is Gran Canaria, with 435, followed by Lanzarote (190), Tenerife (188), and La Gomera (159). With regard to the hotel offer, the island with the greatest number of lodgings is Tenerife (234), whereas Gran Canaria has 154, Fuerteventura 84, and Lanzarote 72. Table 2. Number of lodgings in the Canary Islands by island in 2016 [60]. Categories Islands Hotels Non-Hotels Total Number % Number % Number % Lanzarote 72 27.48% 190 72.52% 262 14.70% Fuerteventura 84 51.85% 78 48.15% 162 9.09% Gran Canaria 154 26.15% 435 73.85% 589 33.05% Tenerife 234 55.45% 188 44.55% 422 23.68% La Gomera 30 15.87% 159 84.13% 189 10.61% La Palma 27 21.60% 98 78.40% 125 7.01% El Hierro 13 39.39% 20 60.61% 33 1.85% Total 614 34.46% 1168 65.54% 1782 100.00% Taking into account the structure of the lodging offer by island, Table 2shows that Gran Canaria and Lanzarote have more non-hotels (73.85% and 72.52%, respectively) than hotels (26.15% and 27.48%, respectively. Moreover, the islands of Tenerife and Fuerteventura have a more balanced structure because hotels represent 55.45% and 51.85%, respectively, and the percentage of non-hotels is 44.55% and 48.15%, respectively. Table 3shows that there were 427,354 tourist beds in the destination in 2016. Analyzing the number of beds by island, the greatest number is in Gran Canaria island (140,956), followed by Tenerife (136,269). Another important characteristic of the destination is that the percentage of non-hotels and hotels is similar (50%) because in the initial stage, the non-hotel offer was more important than the Sustainability 2018,10, 310 16 of 18 and image. It is very important to recognize that the investments carried out in infrastructures have represented practical and tangible actions. Therefore, when Rodríguez-Díaz and Espino-Rodríguez [ 2 ] evaluated the internal and relational view of the public administrations in the Gran Canaria destination, they demonstrated that the stakeholders considered had the lowest scores. These authors pointed out that it was important for the leadership of the destination, the public administrations, to start to collaborate with each other in rehabilitating and increasing the competitiveness of the destinations. Today, it has been shown that the only actions that have been successful in the Canary Islands have been carried out in the development of relational capabilities among the different public administrations involved, as well as the creation of a close relationship between the public and private sectors. Future research should examine the possibility of reapplying these initiatives, but as an integrated whole, with the possibility of simplifying the bureaucratic process of urban planning and the concession of council building licenses, thus increasing the number of tourism firms interested in renovation. Moreover, it would be very interesting to confirm the need to develop relational capabilities to carry out renewal programs in other destinations, taking into account the different types of actions proposed in the framework presented in this study. Author Contributions: The authors have contributed equally in the research design and development, the data analysis and the writing of the paper. The authors have read and approved the final manuscript. Conflicts of Interest: The authors declare no conflict of interest. References 1. Sheehan, L.R.; Ritchie, J.R.B. Destination stakeholders: Exploring identity and salience. Ann. Tour. Res. 2005 , 32, 711–734. [CrossRef] 2. 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