Small business enterprises must disrupt markets to survive in Tourism

“Joining the tourism sector in most African economies is still challenging for young enterprises because most of the main products are offered by established players with whom an upstart can hardly compete.

Untitled3 703x422 Small business enterprises wishing to join and successfully compete in the tourism sector in Africa to must be creative enough to disrupt the market if they are to survive, a top South Africa tourism expert has said.

Addressing a panel discussion on the survival of small business enterprises in the tourism sector in Africa at the INDABA 2016, Mmatsatsi Ramawela, the chief executive officer, Tourism Business Council of South Africa (TBCSA), said;

“Joining the tourism sector in most African economies is still challenging for young enterprises because most of the main products are offered by established players with whom an upstart can hardly compete.

Fortunately, the modern tourist has become very diverse in demands and is looking for varied experiences. Young enterprises seeking to join the industry must take advantage of these loopholes and innovate. They must come up with products that will disrupt the market to create a niche for themselves.”

INDABA is the third largest annual tourism expo in the world and the largest on the African continent. 

Held annually in Durban South Africa, the show brings together typically between 8,000 and 11,000 of Africa’s tourism leaders, policy makers, global buyers and travel media under one roof with the aim of promoting tourism as a means of economic growth and transformation on the African continent.

This year’s 37th edition of the show which has ended today at the Inkosi Albert Luthuli International Convention Centre in Durban, has seen over 5013 delegates from all over the world attend.

TBCSA is a non-profit umbrella organisation that brings together South Africa’s diverse travel and tourism sector to contribute to a competitive, responsible and inclusive travel and tourism economy.   

Disruption, according to The Harvard Business Review is a process whereby a smaller company with fewer resources is able to successfully challenge established businesses. Specifically, as the established companies focus on improving their products and services for their most demanding (and usually most profitable) customers, they exceed the needs of some segments and ignore others.

New entrants that prove disruptive begin by targeting those overlooked segments, gaining a foothold by delivering more suitable functionality – often at lower price.  Established companies chasing higher profitability in in more demanding segments, tend to ignore these upstarts.

These new enterprises then move upmarket, delivering the performance that the mainstream customers of the established companies require, without abandoning the advantages that drove their success in the first place. This sometimes forces the mainstream customers to start adopting the entrants’ offering in volume. This is disruption.   

She gave the emerging tour of South African townships where travellers do everything from home stays to bird watching in places like Soweto are a powerful example of disruptive innovation in the mainstream South African tourism business that focuses on big game and marine experiences.

Derek Hanekom, the South African tourism minister, in earlier discussion agreed that people-based experiences were ideal for new enterprises that want to join the market and disrupt.

“The world’s tourists want what we have: authentic, meaningful experiences. They still want leisure, wildlife and adventure, and they continue to come to Africa for this. But, more and more, tourists want to meet real people in their homes and communities. They want a taste of local traditions and customs. This provides opportunities for many more people from indigenous communities to become involved in tourism,” Hanekom said.

“All our attractions and facilities would stand idle without the people, the genuine people of Africa, welcoming tourists warmly, catering for their needs professionally, and sharing our culture in memorable ways,” he said

According to the Travel and Tourism Competitive Report released by the World Economic Forum (WEF) last year, African nations are well positioned to benefit from the projected 4.9% growth in the continent’s travel and tourism business that constitutes 9% of Africa’s overall economy. Small and medium enterprises are expected to be at the fore front of this growth.

Unfortunately in Uganda, like most parts of Africa, these are still grossly underdeveloped and dogged with a myriad of challenges ranging from lack of access to information to limited access to markets.

However, some African countries have made an effort to put in place essential policies that would enable them tap into this growth. These are South Africa, Botswana, Mauritius, Seychelles, Namibia, Zambia, Tanzania and Kenya.

Lessons from South Africa

Through their national Department of Tourism, South Africa has since 2000 constituted Tourism Enterprise Partnership (TEP), a successful public private partnership charged with increasing the number of available jobs by facilitating the growth, development and sustainability of small tourism businesses.

This is achieved through a number of products and services that provide hands-on, step-by-step support and guidance, ultimately leading to improved product quality, operational efficiency and market reach. 

“We are investing in our key sites, and training our people to enhance the visitor experience at these destinations. We have started fitting selected attractions with solar energy to reduce their reliance on the national grid and to lower their operational costs,” said Hanekom.

“As we build our destination, we are also adjusting our marketing efforts to keep pace with global trends.”

According to Ndabo Khoza, the chief executive officer, Tourism in Kwazulu Natal region, this year, through their Hidden GEMS programme, 70 small, medium and micro enterprises (SMMEs) have been given a chance to showcase their products and services at INDABA.

There were also workshops facilitated to provide knowledge and tools on how to access the market and grow their businesses.

South Africa leads the continent in tourism numbers and is ranked 48 globally.

Source: Newvision