- 1.1 Study Rationale
- 1.2 Background to Study
- 1.3 Dissertation Structure
- 1.4 Research Objectives / Questions
- 1.5 Summary
- 2.1. The Rationale for the African Tourism Industry Strategic Framework
- 2.2. The Purpose of the Strategic framework
- 2.3. Strategic Framework theories
- 2.4. Strategic framework: Analysing competitive industry structure
- 2.4.1. Porter’s competitive strategies
- 2.4.2 Resource based View (RBV)
- 2.4.3. Strategic forecasting framework
- 2.5. Background: A Conceptual Framework
- 2.6. African Tourism Industry
- 2.6.1. Determinants and obstacles to tourism growth in Africa
- 2.6.2. East African tourism
- 2.6.3. West African Tourism
- 3.1 Overall Strategic Framework Models
- 3.2 Models to Add Depth and Detail
- #title-33″ data-offset=”27481″ table-of-contents__item”>CHAPTER SUMMARY
A Strategic Analysis of the African Tourism Industry
The study looks at the African Tourism Industry in terms of strategy for development over the coming decade, with particular reference to the differences between East and West African Tourism. A number of business models including SWOT and Porter’s Five Forces are applied to generate a strategic analysis and overall framework for implementation.A key aspect in the analysis is a small conceptual model using regression analysis to forecast the future evolution of the industry over the next 10 years.
1.1 Study Rationale
This study looks at the African Tourism Industry in terms of strategy for development over the coming decade, with reference to the differences between East and West African Tourism. A number of business models including SWOT and Porter’s Five Forces will be applied to generate a strategic analysis and overall framework for implementing strategy.A key aspect in this analysis will be a small conceptual model using regression analysis to forecast the future evolution of the industry over the next 10 years.
It is useful to investigate this area as the tourism industry is currently small in Africa, but has great potential in terms of development with a large number of unique attractions. In addition, regional tourism currently dominates, and the proportion of international visitors, who tend to spend more money, is low. With African countries starting to work together to develop cross-border tourism offerings, the potential for increasing visitor numbers and wider awareness of Africa as a tourism destination is enhanced(Euromonitor International 2010). Intra-African tourism is currently a strong growth area, although advertising focus remains fixed upon attracting non-African visitors (New African 2010). In addition, tourism offers the chance to increase economic growth of individual countries in the region.Currently a rate of just over 5% growth is forecast annually between 1995 and 2020.
1.2 Background to Study
There is good potential for growth in the African tourism industry. However, any growth in tourism needs to take into account the need for sustainability. Over the last 30 years there has been an increasing demand that tourism be ‘green’ and think about the environmental impact of its activities. Sustainability is a complex area covering a number of related but distinct areas. These include understanding the consequences of climate change, and how unmanaged tourism can contribute to these; the impact upon local economies and the local people of unchecked resort development; and the need to ensure resources such as energy and water are conserved. Indeed, sustainable tourism has been already suggested as a way to shape forecasting strategy for African Tourism.
In addition, tourism is, compared to other industries, less influenced by the ‘stakeholder’ model in which the interest of other parties are taken into account when making business decisions; profitability is still the main driver (Shitundu 2003).Given the need for incorporating sustainability, there is a strong argument for turning to a stakeholder perspective. This would turn the focus away from the demands of shareholders and profits to incorporate views from all other interested parties including local businesses, chambers of commerce and other organisations, local government, community organisations and residents. All who have a legitimate interest in the way tourism develops should be consulted equally, and this should be done at the same time as representatives from commercial organisations are consulted (Budruk 2010)
In order that African tourism can provide the best outcomes for both sustainability and for all stakeholders, it is vital that it is managed within a strategic framework.Such a framework can help to develop a perspective upon the way tourism can develop, but also provide a structure whereby the developed policy can be both evaluated and improved in the future (Dumont and Teller 2005). A number of different models for strategic frameworking exist. Certain models centre on problem identification and solving. Others look at the objectives of the organisation as central. In the case of Africa, an argument could be made for basing the strategic framework around problem solving, as a central issue concerns the best way to develop tourism in a sustainable way. On the other hand, if objectives of both organisation and stakeholders are taken into account, an objective based perspective might be used.
A strategic framework in this instance can be based upon a review of resources. This resource-based perspective allows the capacity of tourism in Africa to be seen in terms of valuable resources including physical locations, cultures and traditions. In this study a framework developed by Crouch and Ritchie (1999) will be used to shape strategic analysis. Their framework both sets out resources in broad categories and traces the relationships between them. In addition, Yoon (2002)’s development of the model allows the addition of stakeholders perspectives. One useful tool for quantifying the strategic framework is by developing a forecasting model to set out the evolution of the industry. Such a model can both maximise benefits and play down the negative impacts. Forecasts assume a continuity from past to present, and use data from the past to project into the future.
1.3 Dissertation Structure
The literature review will develop key ideas in more detail, including different theories of strategic development, and forecasting models, including limitations of such models, and justification for the model selected for this study. The current African tourism industry will also be discussed in depth, although there is relatively little study of the industry in the continent, and particularly few primary research studies. The literature review will also discuss the distinction between tourism in East and West Africa. East African perspectives emphasise sustainability, and it is gaining importance in West Africa as well. There are, however, key differences between the areas which will be elucidated. The literature review was developed on the basis of academic and industry electronic databases through key word searches.
Further sections will set out the hypotheses to be tested, which will emerge from the literature review. The methodology of the study will be set out including how data was gathered, sampling techniques, statistical modelling used and types of analysis carried out.
The results will be discussed in terms of the overall aims of the study.Any limitations of the study will be pointed out, implications for future study will be highlighted, and ways in which the study results can inform the African tourist industry will be set out.
1.4 Research Objectives / Questions
The study will address the question of ‘what is the best strategy for a coherent plan to develop tourism in Africa, taking into account the need for any such strategy to be sustainable?’. The difference between strategy for East and West Africa will be taken into account. The study aims to clarify best strategy by identifying key variables, which impact upon the likely future development of tourism in the region.
This section has given an overview of the area under investigation, the African tourist industry, which is currently underdeveloped and yet has potential to become a key destination. The structure of the following is set out, and the key research questions highlighted.
2. Literature Review
This chapter reviews previous literature and studies on the African tourism industry, the need for political, historical and social analysis of tourism and the continents accepted strengths and weaknesses. On a regional level the literature analysis of West Africa and East Africa will focus on how these regions have attempted to build on best practices related to tourism. The section will look to explore the theoretical background and context that justifies the main objective of the study, which investigates the foundations of establishing a strategic approach for forecasting the future evolution of the tourism industry. A key focus will be the acknowledgment of tourisms economic influence towards African country economies, as well as the importance of promoting sustainable tourism activities and attraction and the promotion of co-ordinated tourism development.
2.1. The Rationale for the African Tourism Industry Strategic Framework
A review of the literature agrees that the African continent has an enormous potential for tourism development (Medlik, 2002, Ankomah and Crompton, 1990). Further research articulated by Poon (1993) points to the “new tourism” and “global trend” towards “non-traditional destinations and long-haul travel.” This, he suggests illustrates “changing traveller wants in terms of destination experience,” which should provide a significant change in the places visited in Africa. However, as stated in the World Travel and Tourism Council, Africa seems to be under performing. Gauci et al (2002) explains this as a result of: “poor infrastructure, such as roads, electricity and water supplies; insufficient accommodation; unsatisfactory public health services; poor telecommunication facilities; and in a number of cases security problems.” Gauci et al also explains that difficulties with the installation of better management strategies, as well as the doggedness of actions which hinder competitiveness, have “contributed to [the] slow development of the tourism industry.”
Ankomah and Crompton observe that Africa’s population doubled to 700 million in the post-independence period, thereby placing tremendous stress on all aspects of economic, social, cultural, environmental, as well as political development. In this context Luvanga and Shitundu (2003) argue that: “rapid growth of the tourism sector is an important instrument of poverty alleviation, the creation of jobs, the sale of goods and services, support of cultural industries and source of foreign exchange.” It is significant to observe that the elevated status given to tourism by the United Nations (UN) and the Economic Commission of Africa (ECA), which clearly supports the potential role of tourism in the economic and social development of Africa (ECA, 1999). Indeed, research and literature highlight the increasing influence of the tourism industry in Africa and illustrate that, although there are many limitations, there remains reassuring indications for the state of tourism in Africa. For example, the Tourism Vision 2020 report given by the World Tourism Organisation (WTO) estimated that there would be an annual rise of 5.5 percent in international arrivals in Africa in the years 1995 to 2020. A similar rate was forecasted for intra-African tourism. However, the study by Luvanga and Shitundu (2003) showed the alternative side to tourism: “it is a complex industry often driven by the private sector to benefit international companies rather than local economies and causing environmental degradation.” These juxtaposing opinions have seen advocates of a strategic framework (Nelson, 2007, Heath, 2003) argue that: “as tourism develops and becomes intricate it will require strategic management of the process.” By developing a forecasting model to predict future developments, the sector should make the most of potential advantages, and restrict and divert the unconstructive effects that make sure the development conforms to national policy regulations.
2.2. The Purpose of the Strategic framework
Dumont and Teller (2005) argue that a strategic framework “will help to establish, evaluate and benchmark integrated tourism policy at the local level with a view to maximising the benefits of tourism on conservation and enhancement of heritage diversity.” This interpretation indicates a strategic framework aimed at fostering a pro-active approach, facilitating impact assessment and increasing awareness of sustainability issues for the future. The purpose here is to employ a strategic framework as a tool for forecasting the future in order for the tourism industry to be prepared for what might happen. Forecasting that is based on historical information and past events. Importantly, Fayol (1949) wrote that managing means looking ahead and that if foresight is not the whole of the management it is at least a major part of it. According to Fayol, “to foresee is to assess the future and make provisions for it  plans need to have unity, continuity, flexibility and precision.” The organisation or industry must be run as if the future was foreseen. The plan of action is considered indispensable and that experience, from the past, was what determined the value of the plan. Fayol did, however, recognise that there would be unexpected events but the plan would serve as protection against such events and resulting enforced changes of course.
Predicting and preparing is, according to Ackoff (1983), the paradigm of management with predicting and forecasting being the more important. Forecasts are based on descriptions of the past and that data is fitted to a line and projected into the future. The assumption is that what has happen in the past will happen in the future. Thus, the general objective is directed at assessing the past to develop labour outputs and focusing resources and personnel to attain greater levels of performance and market competition.
At this stage of the paper it is vital to observe that there are diverse levels of strategy formulation, development and implementation, which correlate with the strategy’s objective. Alberts (2004) defines “three levels” of the strategic forecasting framework: the corporate level “where corporate goals are set, the target markets are defined and the terms and conditions of the corporate strategy are defined”; the “business unit level [.] [where] the business strategy level involves devising moves and approaches to compete successfully and to secure a competitive advantage over competitors”; the functional level, which includes “value analysis, business processes reacting to marketing, resources allocation and management and research and development.” Each level of the strategy looks to gain an edge in a market that is powered by market demands. Alberts says that this is “particularly necessary because tourism enterprises are exposed to a vibrant market where they need to survive through innovative techniques that will create a sustainable competitive advantage.” Innovative action is a main source of sustainable competition and can be established with well-structured strategies and systems.
2.3. Strategic Framework theories
There are a multitude of different business strategy formulation methods, models and theories. Smith (2001) suggests that: “the best way of formulating a strategic framework is for it to be derived from problem identification, meaning that the approaches should be problem based.” Elsewhere, Oldham, Creemers and Rebeck (2000) state that “the purpose and objectives of the enterprise [is] the foundation of the strategic formulation.” This model-orientated approach introduces a system which is based upon a flow chart system or a number of relational stages. Pazstor (2001) agrees with Hamel and Prahalad (1994), stressing: “different circumstances call for different types of strategy.” Mintzberg (1987) states that since the 1960s strategic frameworks “have had a clinical popularity with organisations” as it has gained a lost popularity, as it was unable to fulfil expectations and provide satisfactory results; namely generating money for businesses and their shareholders. Allaire and Firsirotu (1989) state: “this limited success is attributable not only to earlier poor practices but is also a function of ever rapidly increasing change of the business environment.” Significantly changing climates cause uncertainty and brings the suitability of strategic frameworks into question. Additionally, it is questioned “how to handle this ambiguity?”
The question arises why do industries need forecasting strategic frameworksThe literature suggests it is to reduce future uncertainty (Linneman and Kennell, 1977). Langley adds that part of the answer is to assist organisations make better strategies through a systematic logical approach. Loasby answers the question with three responses:
To understand the future implications of present decisions in order for the organisation to get the full benefits from its present decisions.
Relevant literature pays substantial attention to developing strategic with the purpose of dealing with such variables. Comprehending the various strategic perspectives is important as it permits the holistic understanding of strategy formulation and implementation.
2.4. Strategic framework: Analysing competitive industry structure
2.4.1. Porter’s competitive strategies
We now turn to review some papers covering the topic of Porter’s generic competitive strategies, the source for much business strategy analysis. In their study Caves and Porter (1977) generalize the theory of competitive barriers to entering an industry into a theory of mobility dynamics and decision-making behaviour of both emerging and going organisations. Porter (1979) establishes the link between competitive forces and competitive strategies. Porter (1980) presents the competitive forces and generic business competitive strategies for emerging, mature, declining and fragmented industries while considering entry and exit industry barriers. In his review of Porter’s generic competitive strategies Vanhove (2005) writes that when Porter’s two basic theories of competitive advantage, that is “lower cost” and “differentiation”, are adapted to the tourist sector. Lower cost is “the ability of a firm to produce a more comparable service than its competitors.” Differentiation is “the ability to provide unique and superior value.” How does this relate to forecasting in the tourist sectorImportantly, Treacy and Wiersema (1995) note that “competitive strategy is about two things: deciding where you want your business to go, and deciding how to get there.”
2.4.2 Resource based View (RBV)
Grant (2001) states: “recently there has been a resurgence of interest in the role of the firm’s resources as the foundation for firm strategy.” This is reiterated by Hampton (2003), Lawson (2003) and Kozal and Louisa (2006), who feel that this considers an enterprise’s capacity by “assessing the levels and the potential of the enterprise to improve within the ambits of available resources.”
Collins and Montgomery (1995) present five tests that define a valuable resource:
“Inimitability – how hard is it for competitors to copy the resource A company can stall imitation if the resource is (1) physically unique, (2) a consequence of path dependent development activities, (3) causally ambiguous (competitors don’t know what to imitate), or (4) a costly asset investment for a limited market, resulting in economic deterrence.”
Competitive Superiority – is the resource really better relative to competitors?”
How does the above relate to the tourism sectorMassukado-Nakatani and Teixeria (2009) epitomise the implementation of RBV in the examination of the tourism industry and explain that “[although] tourist resources are not explicitly illustrated as a resource category in RBV, they can be considered a physical (e.g. geographical location) or an organisational resource (e.g. local traditions and culture).” He identifies tourism resources as “the most important asset for tourism development because the resources are fundamental to any public policy that aims to improve tourism activities.”
The two above frameworks have combined to produce further research in the tourism literature:
Crouch and Ritchie (1999) established a complete and complex system for tourism destination management which built upon the theoretical concepts of “competitive” and “comparative” advantages (Porter, 1990; Enderwick, 1990). These asses a wide selection of “factor endowments: human resources, physical resources, knowledge resources, capital resources, infrastructure, and historical and cultural resources.” Yet it was disputed that listing the factors that influence the destination’s competitiveness in this framework is not suitable; but it is vital to comprehend their relationships. Conceptual models for destination competitiveness can be constructed from the factors: “competitive (micro) environment, global (macro) environment, core resources and attractors for primary elements of destination appeal, supporting factors and resources for secondary elements of destination appeal, destination management and qualifying determinants” (Go & Govers, 2000). Government and chance events are considered to affect competitiveness because of the effect they have over basic determinants. Bordas (1994) helped to identify Tourism Policy as an unrelated factor to the described strategy, and encouraged the theory that critical policy must be examined in greater depth. To do this, planning and development issues which contribute to destination competitiveness and sustainability must be considered (Ritchie & Crouch, 2000).
Yoon (2002) gave exclusive attention to the viewpoint of the tourism stakeholders’ and used this to theoretically construct a structural equation model of tourism destination competitiveness. This empirically tested the interaction of relationships of five particular constructs: “tourism development impacts, environmental attitudes, place attachment, development preferences about tourism attractions, and support for destination competitive strategy, where the first three are exogenous and the latter two are endogenous.” Tourism development impact creates new jobs and working opportunities, as well as encourages investment capital. Place attachment was found to be influential over stakeholders’ development of tourism attractions. This positively affected the support for destination competitive strategy.
Dwyer and Kim (2003) constructed a system of destination competitiveness that “enables comparisons between countries and between industries within the tourism sector.” Using the key factors of competitiveness studies, which were taken from Crouch and Ritchie (1999), the model recognises the demand conditions as an important “determinant of destination competitiveness” (Dwyer & Kim). This was not mentioned by Crouch and Ritchie.
2.4.3. Strategic forecasting framework
Since this study looks to examine the anticipation of a future within tourism, we must consider the question: “what are the literature viewpoints on forecasting theories?” Chandra and Menezes (2001) write that accurate forecasts for tourism demands are essential for the development of effective strategic plans. In this regards, Brignall and Ballantine (1996) note the availability of accurate tourism has important economic consequence for various organisations involved with tourism planning and the provision of tourism products and infrastructure. They further note that given the perishable of the tourism product, the need for accurate demand forecast is even greater. Chandra and Menezes identify that among the forecasting models using multivariate techniques, multiple regression is the most used and the relevant technique for forecasting international tourism demand
Further analysis of the literature reveals that empirical economic studies in tourism has looked primarily at four key sectors:
“The economic impact of domestic/or international tourism on a local economy” (Archer, 1977; Kottke, 1988; Zhou et al, 1997; Wang, 1977; Vaughan et. al., 2000 and Saayman et al, 2000).
“Research efforts that are incorporating the explanation of tourism demand on international tourism flows” (Crouch, 1995; Coshall, 2000; and Smeral and Weber, 2000).
However, Prideaux et al (2003) observe that “given the frequent reliance of the former forecasting techniques” on previous experiences, which required explicit and tacit assumptions regarding the stability of relationships, “the ability of forecasting to generate long-term results and account for unforeseen events remains limited.” Prideaux et.al. observes that “short term forecasting may only factor in known relationships which observe trends.” Using this as the foundations for development, it provides an image of what may potentially happen should alterations arise along predictable lines. These are equilibrium and stability assumptions which are in contrast to “dynamic complexity and turbulent systems perspectives” (Laws et.al., 1998).
Many researchers (Witt and Song, 2001) recognise the boundaries of contemporary forecasting approaches, especially the problems that arise from the inability to foresee irregularities, for example drastic changes in consumer taste and demand. In order to remedy these shortfalls, researchers like Turner and Witt (2001) discovered that: “structured time series models incorporating explanatory variables produced the most accurate forecasts.” Observing relevant non-economic variables is disadvantageous to development in the future, as well as to the fluidity of their significance; this offers a great amount of problems for the forecasters. Uysal and Crompton (1985), for example, noted that: “there are a number of limitations confronting demand forecasting: ignoring supply factors, the omission of non-economic factors which may have long-term consequences and the appropriateness of variables to change.” In addition, Prideaux (2003) explains that to these variables, a selection of other non-specific crises and disasters, including “domestic and international economy and natural disasters such earthquakes, cyclones or hurricane” must be contributed. Forecasters such as Witt and song (2001) attempt to comprehend these scenarios by utilising dummy variables which accommodate the impact of “one-off” disasters such as the 1970s “oil crises.” Irregular and ambiguous obstacles remain constant challenges to contemporary forecasting.
Witt and Song (2001) agree that “a more sophisticated approach utilising time varying parameters (TVP) regression to model structural change is one solution to the problem of predictive failure encountered by causal tourism demand for forecasting models.” They express that, although TVP strategy is able to imitate a variety of shocks and could affect the association between explanatory variables and dependent variables, TVP assumes that explanatory variables are exogenous. Witt and Song (2001) further notes that: “where there is some doubt about the creditability of the latter assumption the vector autogressive (VAR) modelling approach may be more appropriate.” This is because in the VAR model every variable is treated as endogenous.
Acknowledging the limitations of contemporary forecasting theory to manage the unforeseen, Faulkner and Russell (2000) raise an alternative theory, stating that because of the “uncertainty of the unexpected, authorities need to implement policies for coping with the unexpected disruptions to tourism flows”.
A well-developed literature typified by Sonmez and Graete (1998); Lepp and Gibson (2003); Ritchie (2004); Gunn, (2002); and Inskeep (1991) recognise that there exists a great variety of events which exist outside of the research of predictions, that standard forecasting techniques can be expected to yield. One the other hand, Prideaux (2003) notes that: “tourism literature has not begun to investigate the rich range of techniques developed in the risk management literature.” However, this could potentially surrender models, frameworks and theories which could aid tourism forecasters and planners, and help them to manage unforeseen disasters and events.
This, therefore, raises the question: where does this leave the study of forecasting within the tourism industryFaulkner (2001) notes that if change is slow and ordered, predictable forecasting “may yield a high degree of accuracy. On the other hand, where events follow the normal course of history and exhibit a tendency to sudden, large-scale instability and unpredictability, forecasting loses its potency and an alternative form of prediction is required.”
2.5. Background: A Conceptual Framework
Conceptual frameworks and theory are “typically based on combining previous literature, common sense and experience” (Eisenhardt, 1989). A look at the literature reveals a tendency towards sustainable tourism as a forecasting strategy for African tourism. The theory of sustainable development is described as “the central challenge of our times” (Wheeler, 2002) and “the issue of the twenty-first century” (Harrison, 2000). Jabareen (2004), even goes so far as to describe it as “one of the pervasive icons of modernity.” Yet, despite the attention it receives, the implementation of sustainable development in practice has been extremely poor given the continued decline of environmental quality measures on a global scale (Millennium Ecosystem Assessment, 2005). Numerous reasons can be put forward for this situation including vagueness of the term (Mayumi and Gowgy, 2001) and disagreement over what should be sustained (Sachs and warner, 1997). In an effort to clearly define the indicator selection process, attempts to construct frameworks were made, arranging the development and selection process. Indicator sets and monitoring frameworks are constructed from “indicator/measures” which are chosen an ad hoc manner (Waldron and Williams, 2003). White et al. explain that: “a conceptual framework allows for the coherent and consistent selection of indicators.” Therefore, it can be seen that the indicator selection process is value laden. It is left to be considered: should the stakeholder opinion alter over the importance attached to various definitions of a “good indicator” such as: assuming the trade-off between cost and complexity; the very objectives chosen; and the baseline and the benchmark data. Therefore, the explicit strategy framework permits a “transparent, responsive and robust process for indicator selection.”
2.6. African Tourism Industry
Naude and Saayman (2004) identify that “the economic dimensions of tourism to Africa, and specifically the determinants of the demand for Africa as a tourist destination are neglected in the economic research literature.” Lim (1997) “looked at over 70 studies of international tourism demand, although these did not look in any extensive detail at African nations. Eilat and Einav (2003) argue that this is a flaw in contemporary international empirical literature on tourism demand”: the deficiency of “rigorous panel data analysis.” The deficiency of suitable empirical studies on tourism to Africa has contributed towards the “limited policy guidance” to the sector, as stated by Christie and Crompton (2001).
Naude and Saayman (2004) further go on to explain that “so far most research on tourism demand and international flow of tourism have focused mainly on explaining tourism demand and flows in developed countries, with little reference to developing countries and even less to explaining tourism in Africa.” This discovered that literature tends to pay more attention towards the affect of the exchange rate and income on tourism receipts, and does not look to explain “country-specific determinants” of tourism arrivals
2.6.1. Determinants and obstacles to tourism growth in Africa
At this point in the paper it is important to ask: “Why do different nations invite greater levels of tourism than others?” It is a question that has been asked by various researchers of the tourism industry, and has been used as the basis for a wide variety of studies since the 1970s. Crouch (1994) explains that: “responsiveness of demand for international travel varies, depending upon the nationality of the tourist and the specific destination involved.” It can be seen, therefore, that “demand-elasticity for international tourism” alters “depending on the country-of-origin and country-of-destination.” Crouch (1995) concludes that “the demand for tourism is a function of the tourist’s country of origin, since cultural differences affect travel behaviour.”
Coshall (2000) indicates that: “there are many financial, perceptual. Cultural, social and environmental factors that could be used to try and explain international tourism flows.” The independent study that generated the information on which these findings are founded was compiled from looking at the tourism demand in first world countries, with only small reference given to developing nations. Kester, (2003) and Gauci et.al. (2002) argue that certain factors not included in previous studies need to be identified. For example, Christie and Crompton (2003) put forward the view that the greatest obstacle to Africa’s tourism sector growth “is its lack of price and quality competitiveness.” Kester argues the view that the major obstacles to tourism arrivals in Africa are “insufficient air transport, a deficiency in facilities and accommodation, lack of image and poor perceptions, poverty, disease and conflict.” Gauci et.al. (2003) discuss the problems facing tourism in these areas, such as underdeveloped public health services or fears for personal safety. Eilat and Einav (2003) find that “political risk has a significant impact on tourism demand in both developed and developing countries.”
Naude and Saayman (2003) make the identification that: “given the challenges facing Africa and the need for sound policy advice for promoting tourism, it seems more appropriate to identify the long-run determinants of tourist arrivals.” Naude and Saayman note that the uses of fixed effects estimator “allows the pick up of short-term effects since it focuses on time series components of data.” Naude and Saayman (2003) used “cross-section data and panel data for the period 1996–2000 to identify the determinants of tourism arrivals in 43 African countries, taking into account tourists’ country of origin.” The findings greatly indicate that “political stability, tourism infrastructure, marketing and information, and the level of development at the destination” are key determinants of travel to Africa. Typical “developed country determinants” of tourism demand, for example the amount of income within the origin nation, the cost of travel, are not as important in comprehending and clarifying the demand for Africa as a tourism destination. It is advised that “attention should be given to improving the overall stability of the continent and the availability and quantity of tourism infrastructure.”
The review of the literature on forecasting analysis suggests that any future strategic framework must include the above factors to gain substantial weight when the aim is to develop relevant forecasting models in the African context.
2.6.2. East African tourism
Much of the strategic framework in the literature for east Africa tends to encapsulate sustainable development based on conservation. For example, this was the purpose of Nelson’s (2007) study on strategic frameworks for east Africa, which covered the countries of Kenya, Tanzania and Mozambique. The analysis was to create a basis for development and promoting forms of tourism that contribute to biodiversity/conservation in eastern Africa in line with the World Wide Fund for Nature’s (WWF) global mission and objectives. Another study on eastern Africa by Mugo (2006) also focused on the strategic framework for conservation. The study used situation analysis to devise a strategic framework to link related initiatives that were being undertaken in the region by national governments and international agencies. This included the Eastern African Ecoregion strategic framework, which focuses on coastal and marine conservation issues.
What about the application of regression based strategic frameworks in the East African literatureAn example is the study by Summary (1987), which looked at tourism in Kenya between 1963 and 1982. The study concentrated on the variable that tourism was one of the top three domestic exports during the period and aimed to influence tourism demand and policy makers in planning growth strategies. The results of the study indicated multivariable regression analysis has limited usefulness in identifying the significant factors which influence tourist’s decisions. Summary notes that data problems and multicollinearity caused unsuitable results in one case, while model specification appears to be a problem in another. The author concludes that quantitative studies should be supplemented by quantitative analysis in order to for Kenyan policy makers to make optimal decisions.
2.6.3. West African Tourism
Ige and Odulara (2008) write that the “increasing importance of sustainable tourism has become imperative to West Africa as a regional economic community.” A review of the literature focuses on the factors that explain growth. For example, models developed by Barro and Sal-I-Martin (1991) and Mankiw, Romer, Weil (1992) introduces “the concept of conditional convergence” and permit the analyst to consider the various nuances of different nations, for example the level and development of technology. Ige and odulara (2008) note that “most of the empirical studies have used a cross-sectional analysis, although with a growing availability of panel data, and the development of econometric techniques has been used widely to prove hypothesises.” A review of the literature brings up a study by Ige and Odulara (2008) which examined the influence of tourism on the West African economy by utilising pooled data on ten West African nations in the years 2000 to 2004. Studies showed that tourism certainly is influential in West Africa. This could be explained as the tourism destinations in West African economies are usually located within the “commercial nerve centres” which greatly affect the economic prosperity and, therefore, explaining the reasons for the regression. The findings also indicate that the influence of tourism must not be overlooked within climates of sustainable management of tourism to attain the maximum advantage of topical relevance to West African macro economic performance. This means that the economic performance in West Africa may be improved by proper tourism development policies which encourage openness with a lot of importance placed upon the liberalisation policy. The results of the model showed that for West African nations, the development of the tourism industry has seen greater economic development during the period 2000 to 2004. Thus, Ige and Odulara (2008) conclude that “West Africa needs to strategically harness its tourism potential in order to improve its economic performance.”
From the research it is important to note strategic frameworks are essential in developing tourism forecasting models but as stated by Crouch (2007) “destinations vary enormously and countries compete for different market segments in tourism, and so it is more meaningful to compare countries by market segment.” Indeed, it can be considered that the elements which may have a significant influence within one particular segment may be less significant in another.
3. Case Study – Methodology
This section will set out the means by which the case study will be conducted. First, the models that 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 categories. 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.
Models to help formulate an overall strategic framework include Smith’s (2001) problem identification theory, Oldham, Creemers and Rebeck’s (2000) model based on organisational objectives, and Hamel and Prahalad’s (1994) 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 add detail to the framework include Yoon’s (2001;2002) ‘Structural Equation Model’ and the similar models developed first by Crouch and Ritchie (1999) and later by Dwyer and Kim (2003) 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 (Cooper 2002) 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).
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).
Figure 1: Destination cycles through six sequential stages. Source: Butler (1980)
StageTourist CharacteristicsLocal consequences
InvolvementStart of variation in tourist numbers, low/high season. Man made facilities appearResidents start to dedicate resources to visitors, some advertising
ConsolidationVisitor numbers reach plateau. Package tours.Local economy dependent upon tourism.
StagnationDestination well established but loses fashion. Peak capacity reached. Tourists psychocentricLocal economy dependent on tourism
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).
Figure 2: Jain’s Life Cycle Matrix (adapted from Cooper, 2003)
Competitive PositionStages of Industry Maturity
Start upFast growing, leadership
Defending positionDefend position, Renew, cost leadershipDefend position
DifferentiateAttain cost leadership
Change with industryFind and retain niche
Grow with industry
Grow with industryFind and hold niche
Grow with industryRetrench
Grow with Industry
Grow with industryHarvest
Grow with industryTurnaround
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.
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, Environmental 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).
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])
Yoon’s ‘Structural Equation Model’ (2001) 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).
Crouch and Ritchie (1999) 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:
Figure 5: Dwyer and Kim, Crouch Ritchie Models (adapted from Dwyer and Kim 2003)
Dwyer and Kim (‘Integrated Model’)Crouch-Ritchie Model
Cultural / Heritage ResourcesCore 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 ManagementDestination ManagementSituational conditionsDestination Policy, Planning, DevelopmentCompetitive (micro) environmentGlobal (macro) environmentDemand ConditionsQualifying and Amplifying Determinants
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).
3.4 Section Summary
This section has examined the methodology to be used in this study. Tools and models for strategic planning were discussed, as well as additional models which can be used to add depth. To summarize the tools to be used, Butler’s (1980) lifecycle planning allows a long-term perspective on African tourism to be taken, a perspective which is currently missing. By combining this with Porter’s competitive positioning, Jain’s (1985) model suggests how this strategic position can be combined with an awareness of the rest of the tourism market. Ritchie’s destination visioning can also inform strategy by allowing all stakeholders to have a say in how tourism should develop in their area. In addition to tools which help develop a wide-reaching perspective, a number of tools for detailed analysis are useful. These include PESTEL, which allows key factors in the market environment to be isolated, and Porter’s ‘Five Forces’, which provides a way of seeing the industry in terms of competitive position. Dwyer and Kim (2003), and Crouch and Ritchie (1999), also suggest a useful model specific to the tourist industry. Finally, regression methodology was looked at.
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 Organization. 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 with a shared recognition that tourism has great potential for economic development. Throughthe ‘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.
Overall, Africa’s political situation has meant it has been at a disadvantage in tourism terms in previous years. Not only are countries hampered by undemocratic governments and have to deal with challenges such as poverty and disease which mean there is less money to boost tourism, but Africa’s difficulties mean that it can be avoided by travelers who assume it is too unstable and poverty-stricken to be a good holiday destination. However, there are signs that governments are recognizing the potential of tourism to improve Africa’s finances, and also working across country boundaries to strengthen their approach.
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 escape 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 favorable 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 f