Analyse The Tourism Industry In Africa Tourism Essay

This section will set out the means by which the case study will be conducted. First, the models which will be used to analyse the tourism industry in Africa will be explained Subsequently, this section will look at the methodology for the regression analysis.

The models which will be used in the case study fall into two broad catagories. On the one hand, some models help define what the overall strategic framework for the African tourism industry might be, on the other, further models help formulate the best plans in more specific terms.

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Models to help formulate an overall strategic framework include Smith’s problem identification theory, Oldham, Creemers and Rebeck’s model based on organisational objectives, and Hamel and Prahalad’s contingency view of matching model to circumstance. In addition, other models such as a simple SWOT analysis or PESTEL overview can help link strategy to circumstance

Models which help generate add detail to the framework include Yoon’s ‘Structural Equation Model’ and the similar models developed first by Crouch and Ritchie and later by Dwyer and Kim based around destination competitiveness and a hierarchy of priorities.

This section of the dissertation will look in more detail at the models which will be used in the case study, briefly outlining their theory and making clear how they work.

3.1 Overall Strategic Framework Models

This section outlines models which can help formulate overall strategic frameworks, and which will be used in the case study of Africa, below. The section will look at the notion of Butler’s lifecycle planning and ‘destination visioning’. Strategic planning needs to incorporate a long term perspective, the development of a holistic, integrated plan to manage change through goal formation and also formalise a decision process around the distribution of destination resources. Such a plan should also allow quick responses to changing situations. Kotler et al have been influential in helping shape this overview of what such planning must incorporate. Strategic planning is particularly important for sustainability, as goal setting allows all stakeholders to have input into the future of the destination and help create a clear shared vision. There are, however, problems, for example the views of different shareholders with different value systems might be difficult to reconcile (Cooper 2002).

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The ‘Life Cycle’ approach offers a technique for destination management strategy and a way to incorporate a long-term perspective. By differentiating between different stages in the life of a destination, management approaches can be tailored to these stages. The notion was developed by Butler (1980), who suggested that destinations cycle through six sequential stages: exploration, involvement, consolidation, stagnation and decline / rejuvenation (see figure 1) (Dong et al 2004).

Stage

Tourist Characteristics

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Local consequences

Exploration

Visitors explorers, travel individually, irregular patterns, predominant attraction natural

Locals do not understand needs of visitors

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Involvement

Start of variation in tourist numbers, low/high season. Man made facilities appear

Residents start to dedicate resources to visitors, some advertising

Consolidation

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Visitor numbers reach plateau. Package tours.

Local economy dependent upon tourism.

Stagnation

Destination well established but loses fashion. Peak capacity reached. Tourists psychocentric

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Local economy dependent on tourism

Decline

Some destinations decline – decrease in market…

Impact on local economy as visitors decline

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Rejvenation

… others recover by changing attractions, new natural resources

Further pressure on local economy

Figure 1: Butler’s life cycle (adapted)

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It is possible to adapt the idea of the life cycle to integrate sustainable tourism with appropriate management strategies at each stage of the cycle with holistic planning (Bramwell and Lane 1993). One useful approach is ‘Life Cycle Analysis’ (Jain 1985) which combines the notion of the life cycle with Porter’s competitive position (dominant to weak). This is set out in figure 2 (Cooper 2003).

Competitive Position

Stages of Industry Maturity

Embryonic

Growth

Mature

Aging

Dominant

Fast growing

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Start up

Fast growing, leadership

Renewing

Defending position

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Defend position, Renew, cost leadership

Defend position

Focus

Renew

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Growth

Fast growth

Catch-up

Differentiate

Attain cost leadership

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Grow with industry

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Focus

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Weak

Find niche

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Turnaround

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Divest

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Figure 2: Jain’s Life Cycle Matrix (adapted from Cooper, 2003)

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Another useful approach is that of ‘Destination Visioning’. This was suggested by Ritchie (1994) as a way to address the needs of strategic planning for tourism. This approach places power in the hands of the community, including local government, residents and businesses who have a central role in creating a strategic plan for the destination. There are three key ideas involved in Ritchie’s destination visioning. First, the vision needs to bring together the views the entire community as well as other stakeholders. Second, all involved parties need to agree about the vision, and third, the vision needs to incorporate long-term development plans. Cooper (2002) elaborates a practical strategy for delivering this vision with firstly a ‘destination audit’ – the commissioning of research to look at the nature of tourism in the region currently, the second stage ‘position stagements’ for key areas including market, investment, environment, and followed by ‘visioning workshops’ – perhaps the most important element with workshops held around the area to find out the views of all community members about tourism in the area. This feeds into the next stage ‘Development of the Vision’ where results are analysed and used to prepare a development plan. Finally, this is followed by the implementation scale. While there are acknowledged difficulties with Destination visioning – for example problems in making sure all community views are gathered, and difficulties gaining agreement on some areas, it seems a useful tool for developing a sustainable tourism plan (Cooper, 2002)

The case study will also bear in mind Oldham, Creemers and Rebeck’s (2000) model based in purpose and objective, and the more contingent approach championed by both Pazstor (2001) and Hamel and Prahalad (1994).

While there has been much discussion regarding whether strategic frameworks are a useful tool for developing organizations and ventures, perhaps due to the rapid change in the business environment, it is assumed in this study that they can add value and help

formulate a better plan to deal with the future. They will be used in the case study to provide an overview for the tourism industry in Africa.

3.2 Models to Add Depth and Detail

This section sets out further models which will be used to add detail and depth to the case study by helping flesh out the overall strategic framework for African Tourism as it faces the next 10 years. Models of micro and macro environments can be useful, as are resource based views. A model by Yoon, and one based on ideas from Porter, developed by Crouch and Ritchie’s (1999) and Dwyer and Kim (2003) are also discussed.

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Many useful models look at the macro and micro environments. The macro environment equates to the external environment and involves the identification of threats and opportunities to the enterprise. Tools such as PESTEL (which looks at Political, Economic, Social, Technical, Enrivonmental and Legal issues) or STEEP (Socio-demographic, Technological, Economic, Environmental and Political influences) are useful here. Other approaches extend these analyses by including ‘international’ ‘communications’ and ‘infrastructure’ for example. The micro environment, on the other hand, looks at the immediate competitive threats to the enterprise. Here Porter’s ‘five force’ model to understand competitive position (see figure 4) is useful (The hospitality leisure sport and tourism network 2011 online)

Suppliers

STRATEGIC POSITION

Barriers to Entry

Substitutes

Buyers

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Competitive Rivalry

Figure 3: Porter’s Five Force Model

Porter’s model is based upon an economic model called ‘Structure-Conduct-Performance’ (SCP), which assumes that the structure of an organization and the industry in which it operates dictates how that organization behaves, and in turn this determines profit (performance) (Henry 2008). The model helps an organization or enterprise determine the merits of any course of action by looking at the way the five forces Porter identifies are interacting. While Porter developed the model from the point of view of organizations already operating in an area, it is also valuable for organizations or enterprises determining whether to enter a competitive environment (Henry 2008).

Another useful approach is to look at organisational resources and competencies. The ‘Resource Based View (RBV) looks in detail at the internal resources of the enterprise to work out how these can be used to gain maximum advantage. Porter’s value chain EXPLAIN concept can be used to understand these core competencies (The Hospitality, Leisure, Sport and Tourism Network 2011 [online])

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Yoon’s ‘Structural Equation Model’ concerns the perspective of stakeholders in the tourism enterprise. It sets out the relationship between five areas: tourism development impacts, environmental attitudes, place attachment, development preferences about tourism attractions, and support for destination competitive strategy. The first three are exogenous, the latter two endogenous. Residents support for any future tourism, in the model, is determined by the way they perceive various aspects of tourism. Each of four elements or dimensions influences the total tourism impact, which in turn impacts upon the support for future tourism development. Yoon’s model is based in social exchange theory, which suggests that people are more likely to take part in an exchange if they think they will benefit from the exchange and will not occur too many costs. Residents need to perceive the benefits of tourism outweighing the disadvantages in order that they give their support to future developments. The model is set out in fig 4 (Yoon et al 2001)

Economic

Impact

Social

Impact

Support for Tourism

Total

Impact

Cultural

Impact

Environmental

Impact

Figure 4: Yoon’s Model

Crouch and Ritchie develop a model based on idea of competitive and comparative advantages, including human, physical and knowledge resources, capital, infrastructure, historical and cultural resources. In this model, ‘attractions’ are the basic building blocks of a destinations appeal to the public, and act as key motivators for visits. They can include cultural and natural elements. The model moves beyond merely listing advantages to incorporate a way to understand the relationships between the factors in a ‘Conceptual Model of Destination’ which looks at the micro environment (the competitive situation), the macro (global) environment, core resources and attractors for primary destination appeal elements, supporting or secondary destination appeal elements and also qualifying determinants.

Dwyer and Kim develop a model, strongly influenced by Crouch and Ritchie (Kozak and Andreu 2006), based around destination competitiveness that allows comparisons to be made between countries. They base competitiveness between destinations in terms of the various characteristics of a destination which make it desirable to visit. They also suggest that these factors can be managed in a process of ‘Destination Management’, promoting the appeal of core resources, strengthening their quality and adapting to contingent conditions (Dwyer and Kim 2003). Tourist destination attractiveness include natural resources (scenery, parks etc) and artificial resources (museums, hotels, culture). Administrative factors should increase attractiveness of basic resources and amplify their appeal. Administration should be conducted efficiently and with adaptation to contingencies (Navickas and Malakauskaite 2009). Factors form a hierarchy, with natural resources the base of a pyramid, followed by created resources, then administration. Above these levels is the need for a cohesive policy and development. This pyramid will be used to structure the case study discussion. The similarities between the two models are drawn out in figure 5:

Dwyer and Kim (‘Integrated Model’)

Crouch-Ritchie Model

Natural Resources

Cultural / Heritage Resources

Core Resources (Climate, Culture, Activities Mix, Special Events, Entertainment etc)

Supporting Factors and Resources (General Infrastructure, quality of service, accessibility of destination, hospitality)

Supporting Factors and Resources (Infrastructure, Accessibility, Hospitality, Enterprise)

Destination Management

Destination Management

Situational conditions

Destination Policy, Planning, Development

Competitive (micro) environment

Global (macro) environment

Demand Conditions

Qualifying and Amplifying Determinants

Figure 5: Dwyer and Kim, Crouch Ritchie Models (adapted from Dwyer and Kim 2003)

3.3 Regression Analysis

In addition to the tools outlined above which will be used to inform the case study, this study will also include data interrogation. Data will be collected from Africa as a whole and East and West Africa as sub regions to determine the change over time for key variables upon tourism. A regression analysis will also be included on the data. Regression analysis is a statistical technique used to predict the value of one variable when we know the values of other variables. It models the relationship between two or more variables (Cohen 2007). Simple linear regression helps identify the most representative straight line connecting two sets of variables, which multiple regression maps the relationships between more than two variables. The latter will be used in this case. (Buglear 2004).

4. Case Study: African Tourism

4.1 Overview of Africa and Tourism using Business Models and Tools

The methodology has set out a number of useful tools for analysing the resources of Africa as a tourist destination, which can be used in turn to develop an overall strategy for tourism, both in Africa overall and with references to differences between East and West. The following will discuss Africa in these terms, first using tools identified in the literature review such as PESTEL, STEEP and Porter’s Five Forces to look at Africa’s current position, and then taking a wider strategic view, again drawing upon tools and models discussed in the methodology.   While tools such as PESTEL and STEEP distinguish different areas of consideration, to some extent these divisions are artificial, and the areas overlap to some extent.

4.1.1 The Political Situation

Most available information relates to the political and economic climate in Africa, and what it means for tourism.  Tourists are, for example, highly sensitive to political instability, and can fear for their personal safety. It has been suggested (Okech 2010) that only democratic countries with a respect for law and human rights can create the stability which is necessary for tourism development.

The political history of Africa is complex, with many countries facing severe political problems which have their roots in colonialism and its aftermath. The Cold War and, more recently, Globalisation, have also had an impact. However, international news coverage can lead to a skewed notion that Africa is a state of ongoing political crisis. In fact, most of the countries which make up Africa, despite problems, are not in meltdown. In addition, the 1990’s saw a movement dubbed ‘Africa’s Second Liberation’ or ‘Second Independence’ with more than 20 countries moving from authoritarian regimes to more democratic decision making.  To some extent however, countries are still marked by (Exploring Africa 2011 [online]) lack of democracy and plagued by rivalries between ethnic, religious and regional groups. Human rights abuses, corruption and authoritarian regimes still exist.   This can prove a disincentive to more main-stream tourists.

Despite these problems, Many African governments are aware of the potential of tourism. Tourism allows governments to profit financially as they gain both through taxes and indirectly through duties upon items tourists buy including drink, petrol and hotel accommodation. To this the income from foreign exchanges and tax on those employed in the tourism sector can be added (Okech 2010).  Countries are consequently  investing heavily in tourism development, attempting both to promote their countries and to redeem the image of the destination. For example, Nigeria’s Federal Capital Territory have allocated large resources to tourism (Kareen 2008).

This new focus on tourism has been further fuelled by international development agencies such as the World Bank, the International Finance Corporation, the British Department for International Development and the SNV Netherlands Development Organisation. However, investment from outside needs to be matched by government policy in order that investment can contribute to economic and social development in the most ‘joined-up’ way.   Cross-border initiatives are also increasingly important, as tourists frequently travel across a number of African countries during their stay.  The ‘New Partnership for Africa’s Development (NPAD [online] 2010), for example, sees a number of African companies join together together with a shared  recognition that tourism has great potential for economic development. Through   the ‘Tourism Action Plan’ the NPAD set out a strategy for managing this potential. The strategy encompasses including key objectives such as creating a regulatory environment, strengthening planning, improving marketing and communications, promoting research and development, formulating education and skills training, and improvements to infrastructure (Rogerson 2007).

Many individual countries have a range of strategies to boost tourism. Some offer incentives; for example Tanzania has reduced visa costs. Some governments develop incentives for industry by offering, for example, help with marketing cash subsidies, business finance or skills development.  Lack of funding is always an issue especially in countries like Africa where there are high levels of poverty, and tourism might seem less of an immediate priority.

In addition to initiatives by individual countries, there is a move towards establishing links between African countries to help tourism, as visitors often want to see more than one country. An example is a recent links between Angola and Nambia, another the ‘Peace Parks’ – trans-frontier conservation areas, parks which cross boundaries and which need joint management by governments. The Peace Park foundation was created 1997 and there are now 10 established parks. Governments are learning from more established destinations,  for example South Africa

(Euromonitor 2010)

However, it is also recognised that governments need to take pro-active approach which takes into account input from all stakeholders, and that there is a need to draft policies and through consultation with all residents. There is an equal need for planning control, investment incentives in order to include even the poorest areas in initiatives (Okech 2010). However, while this aim is clearly desirable, it has to be questioned whether African countries will be able to implement this in practice, given some history of less than fair business practices and the existence of bribery and corruption in the past. This is an under-researched area where more primary research would be welcomed.

4.1.2 Economic Aspects

In terms of the economy, Africa overall has acknowledged problems including economic stagnation, international debts, deficits, rising inflation and lack of growth (Rogerson 2007).   There are some signs that the economy is slowly improving, especially in terms of international trading relations, and particularly relationships with China and India.  For example, Africa-China trade was 10.6 billion dollars in 2000, 40 billion in 2005 and rose to 107 billion in 2007. Already over 700 Chinese companies operate in sub-Saharan Africa. China has also been involved in the development of Infrastructure including roads and other transport links. Oil producing regions in Africa, for example Sudan, Nigeria and Angloa, are growing in international importance (Euromonitor 2010). International investment has doubled in size between 2004 and 2005 due largely to the trend for China and other Asian countries to increase their presence and second the improvements to African infrastructure generally and particularly to the financial infrastructure including expansions of the debt and equity markets (Nelson 2007).  In addition, Africa seems to escaped the worst of the international recession: Africa as a whole has shown higher GDP growth than the global average, with a slight rise in average spend. However, the recession still had an impact due to a decline in visitors from regions hit by downturn more severely.  Despite these favourable signs for the future,  the African economy has declined in most countries over last few years with lower standards of living and higher levels of poverty. Naturally related problems including drought and famine play a part; in addition political factors contribute to this less than favourable outlook: for example Kenya suffered a decline after political violence in 2007/8 (Euromonitor 2010).  There has been some increase in poverty levels overall,  and falls to standards of living (Okech 2010).  There exist wide diversities between the different African countries in terms of Gross Domestic Product (Kareen 2008)

Against this background, there is widespread hope that  tourism offers a way to  boost economy (Rogerson 2007). Where tourism infrastructure does currently exist, it is often foreign-owned.  There is evidence to suggest that this hope is well-founded: some countries in Africa, for example The Gambia and Ethiopia, have experienced 20% growth in tourism over the last 20 years. Rates of increase are different in different regions, but the trend is towards growth. Overall, over the same time period, Africa has been increasing its market share of the tourism industry with 60% of international tourists now visiting for leisure purposes. In 2005 Africa had the best performance for growth of international arrivals of all the world tourism organisation UNWTO’s areas.  Tourism offers opportunities to all, as the market is growing, and has tripled between 1970 and 2003 with increases set to continue (Nelson 2007).  Tourism offers particular opportunities to Africa as it is relatively poor in exportable commodities.  This is confirmed by existing research. While there is a lack of published studies in the area, those that do exist back up the idea that tourism can work for Africa. For example, Fayissa, Nsiah and Tadasse (2007) – found that tourism has contributed to the GDP and economic growth of African countries, and recommended strengthening the tourism industry for economic advantage. Other researchers writing about the benefits of tourism wider afield suggest that tourism is beneficial for economic growth particularly for developing (rather than developed) (Eugenio Martin et al 2004).  Other researchers found tourism played a positive role for the economy by increasing competition amongst providers of tourism services Krueger, 1980). In 2008, Kareen found, through analysis of panel data for 36 African countries, that tourism and economic growth are significantly related. He also suggests that tourism as an export product can be used to predict future economic growth in Africa. In addition, he suggests that there is a two-way relationship between tourism expenditure and economic growth with one feeding into the other. Higher tourism expenditure leads to higher growth, and acccalerated economic growth in turn leads to more tourism. He concludes that this relationship needs to be more widely recognised and integrated into strategy (Kareem 2008). Kareem’s study is a welcome addition to an area which currently lacks research. However, it is primarily concerned with statistical analyses of panel data, and less with discussing the implications for promoting tourism in Africa. More discussion would be welcome to clarify what his findings mean for the industry as a whole.

The negative economic impact of tourism also needs to be kept in mind. The bulk of purchases made by tourists are non-exportable. By consuming produce of interest to the local market, tourism can make these more scarce and more expensive for local people  (Kareen 2008). Mass tourism can also have a negative impact on sustainability and the environment, which will be discussed later.

One particularly important area of the economy and the impact of tourism is in the area of employment. Tourism is labour intensive, and creates a large amount of jobs including guides, interpreters, positions in travel, hotel vacancies, catering and entertainment, cultural and sports jobs. In addition it boost a number of jobs in the informal economy including prostitution and drugs.   Currently, tourism provides between 2 and 6% of jobs in Africa, with women representing 50% of the workforce.   While tourism offers the potential for increased employment, there are a number of problems to be negotiated. Current employment opportunities tend to be low or unskilled, and the infrastructure is lacking with little job security, little formal training or employee development, and few prospects for career development or personal improvement. Factors such as these cause a demoralised workforce and can impact upon productivity. In addition employment is seasonal with most travel taking place in the northern hemisphere Winter, and with a quieter period between April to August.. This particularly effects beach destinations including Kenya in East Africa and Gambia in the West.  Many employees lose their job in low season. A further problem is that the concept of tourism is not universal. Many people in Africa, especially those in the more remote villages, do not understand the idea, and therefore fail to see the opportunities for employment and economic enhancement  (Kareem 2008).

Economic considerations cannot be seen in isolation however. It should be noted that poverty, which is rife in Africa, is not just about income. It forms a complex two-way relationship with disease, literacy, the environment, education, access to justice, disempowerment and infant death (Okech 2010)

4.1.3. Other Factors

While politics and economics are perhaps the most important factors to consider in devising a tourist policy for Africa, other factors play a part. One currently important socio-economic factor is the growth of interest in and demand for eco-travel, sustainability and ‘pro-poor’ tourism.  Interest in these areas have been worldwide, as people have become increasingly aware of the consequences of mass market tourism. While it can bring economic advantage to tourist destinations, there are also many negative consequences including damage to the region environmentally, displacement of people, cultural upheaval, and (through foreign ownership) funds not benefiting local people. The original focus of sustainable tourism was upon protecting the environment, for example native species and bio-diversity were damaged by construction of hotels, roads and similar, but this focus has widened. The remit now includes social, economic and cultural facets, and encompasses varied areas including the ‘greening’ of the industry by a new focus upon waste management and energy efficiency, protection of all resources from the environment to local cultures, the awareness of the importance of involving local communities in initiatives, and ‘pro-poor’ measures (Kandari and Chandra 2004).  

Africa’s environment is one of the key attractions for visitors, as it has many areas of natural beauty and interest (Spenceley 2008). Key natural attractions include Victoria Falls in Zimbabwe, Okavango Delta in Botswana and the Namib Desert in Namibia (Bennett et al 2001). However, there are other issues which impact upon these natural attractions, and which make incorporating a sustainable perspective into tourism strategy imperative.  Parts of Africa are subject to severe climatic conditions, and the natural attractions are also threatened by human action, for example the destruction of the rain forest and savanna, and changes to the levels of bio-diversity amongst plants and animals. These environmental issues have led to political and cultural changes, for example as early as 1977 Gambia formulated the Banjal Declaration as a response to loss of wildlife. This aimed to protect biodiversity, conserve existing resources and ensure that species do not become extinct (Weaver 2001)

Despite the relatively small size of the tourism industry in Africa currently, there has been widespread recognition of the need to promote sustainable development in the industry. The World Bank, for example, is committed to sustainable management in Africa in order to ‘Enhance Livelihoods’, ‘Protect People’s Health’ and ‘Reduce People’s Vulnerability’ to environmental risks. The African Region Environmental Strategy (ARES) also makes the support of environmentally oriented tourism a priority (World Bank 2001)

Pro-Poor tourism is a fairly recent concept, which aims to ensure that revenue flows back go grass roots levels and entrepreneurs (Kareem 2008).  Pro-poor tourism is an initiative which hopes to increase benefits to poor locals from tourism, and tries to integrate these economic benefits in a way which will reduce poverty long-term. It characterizes an approach rather than a product or sector. It relates to ‘sustainable’ tourism, and they have areas in common, but pro-poor tourism is different, with a higher focus upon poverty.  Many African countries are characterized by high levels of poverty, and there is a consequent need for strategy to incorporate pro-poor measures into tourism (Ashley et al 2001). Pro-poor tourism also helps the tourist fee

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