Tourism in 2012: still grim, but with green shoots
The South African tourism industry is still emerging from a difficult slump, but there is a lot that existing businesses can do to survive and catch the next wave, says Business Partners Limited Regional General Manager Chris Koen. And there are even opportunities for new ventures, provided very careful thought is given to the market.
Overall, the conditions in the tourism industry have turned from just grim, to grim with green shoots. On the one hand, the accommodation industry still suffers from an oversupply of about 100 000 beds nationally – a hangover from the World Cup frenzy combined with a number of years of easy credit before the global recession. Locally, the downturn has effected domestic tourism badly.
On the other hand, although tourism growth has slowed world-wide, it is still growing and, globally, international arrivals are set to pass the one-billion mark this year. South Africa has 12 million international arrivals per year, 8.3 million of whom are tourists, the minister of tourism, Marthinus van Schalkwyk, said recently.
But Chris says the market still has some way to go. Businesses that a few years ago had an occupancy rate of up to 80%, now struggle in the low 50s – levels where only those with low gearing and smart strategy are able to survive.
In such conditions, it helps to build and strengthen a niche. Chris mentions as an example a guest house in Bloemfontein that focuses on accommodation to people seeking the local medical services. A niche is something that must be worked at constantly, he says.
He advises tourism businesses to work on the security of their establishments, because safety concerns are right at the top of tourists’ priorities.
Not far behind on the list is the desire of tourists for local experiences. B&Bs and guest houses that build relationships with tour operators, places of interests and interesting entertainment concepts have much stronger offerings. In a market where five-star establishments are offering packages at three-star rates, it certainly helps if a small establishment has a solid “things to do close by” section on its website and in its foyer.
Even mentioning the proximity of basic facilities such as a shopping centre with a cinema can help convince a client to book your establishment.
Such integration can of course go much further than mere mentions. Mutually beneficial package deals can be arranged between widely differing tourism businesses, or even something like a medical centre and a guest house.
Chris says it is a mistake to think that business tourism is where all the action is. Leisure tourism remains many multiples bigger than business travel, and that is why it is important for tourism businesses to link in with other experiences in their areas.
He reckons that although all businesses had to trim their fees to some extent to suit the market, the best strategy in competing with the big groups that are slashing their prices is to offer personal service. It is impossible for large establishments to emulate the personal touch that a small tourism operation can offer, and many are prepared to pay a premium for feeling at home.
The worst effects of seasonal fluctuations can be softened by offering special deals in the off season, or starting a side line that complements the business in the off season. A good example is Wilfred Chivell, who complemented his highly seasonal whale-watching business with a less fluctuating shark-cage diving operation. (Featured in our October 2012 newsletter).
For a while now, websites have been a critical component of a tourism businesses’ marketing effort, and they are becoming even more important. For example, internet booking now stand at between 30% and 40% of all accommodation bookings, and is steadily growing, although a surprisingly high number of bookings are still walk-ins off the street in subsectors such as the hotel industry.
It is important for business owners to pay close attention to their businesses’ position in internet search results. This means testing search phrases much broader than simply the name of the business, says Chris. Find out where your site pops up when you type in “accommodation in (your area),” or “things to do in (your area)”. Chances are slim that you will get many results if you don’t appear at least on the first page. Another way is to ensure that your business is listed on portal-type sites such as safarinow.com and wheretostay.co.za.
But in the end, nothing beats good personal service to every customer, each one of whom may turn out to be your best marketer at a time when you need it most.