Future of Tourism in Africa – Keeping More Dollars in Destinations.
- Published on November 26, 2019 by Mr. Thomas Mueller of Rainmaker
The global travel, tourism and hospitality industry is changing at an ever-fast pace. The internet has completely transformed the way people book travel experiences. Newmarket players, business models and value chains have surfaced, thanks to thousands of new digital systems apps and platforms. Yet many disruptor startups retain most of the profits, costing the little guy 60-to-80 percent of their profit. The future of tourism – especially tourism in Africa – depends on yet another shift: one that keeps more dollars in destinations.
The History of Tourism in Africa
The day-to-day business of hospitality and tourism companies and authorities has become insanely and overwhelmingly complex.
But at the same time, certain areas of the hospitality and tourism industry have gotten stuck in the past, refusing to adapt to new technology. Before the disruption of startups, the travel industry wasn’t an innovative one and instead, focused most of its resources on customer experience.
Hospitality and activity providers (particularly emerging, small, medium and independent ones) as well as small independent tour operators in destinations, are overwhelmed and unable to cope with these technological changes.
In Africa, only 10 percent of the current 200,000-plus hospitality and tourism providers have a digital presence, while only 15 percent of them are using technology to operate and manage their business. This puts them at a huge disadvantage while they operate on pen-and-paper, Excel or Outlook.
If these providers can’t embrace the future of tourism in Africa to partake in the digital paradigm shift, it will continue to prevent them from creating sustainable occupancy, revenue, and profit.
As a result, local businesses have become totally dependent on the traditional and no longer sustainable value chain (such as Thomas Cook who just filed for insolvency) or global market digital value chains (such as booking.com) that now dominate the market.
Meanwhile, traveler behavior has changed entirely; their demands, wants and desires are very different today from what they were even five years ago.
The move from organized group tours to individual (FIT) travel has had a huge impact on the future of tourism for the value chain. The availability of information on the internet has had an even bigger impact, catering to the traveller’s mental model – dreaming, planning, booking, paying, experiencing and sharing.
Furthermore, the majority of travellers no longer travel for one three-to-four-week period for their annual holiday. Instead, they’re travelling three-to-five times per year on theme trips (such as wellness, golf, or city vacations).
Tourism in Africa
Many African destinations still promote what they have provided for the last 10+ years. They have not changed their offering, presentation, visibility, reputation management, and distribution to adapt to market and consumer changes. For them, the future of tourism is stuck in the past.
Today’s travellers scour the internet for months, visiting hundreds of websites, social media platforms, review platforms, online travel agents and so forth. In this dreaming and planning phase, they are in no rush. Yet when they have made their decisions and have planned their trip, their mindset shifts.
Travelers demand instant gratification when booking and paying for the trip.
This is where 85 percent of the providers in African destinations fail. The customer is ready to make their booking, but the in-destination providers are not ready. They do not enable the customer to do business with them conveniently. When the customer shifts to “instant gratification” mode, they do not want to email, send enquiry forms or even call the provider.
They want to book the trip immediately. And if they can’t book with the provider, they’ll do so with a third-party platform or worst case, stuff the trip altogether.
The growing popularity of third-party platforms has also shifted the mindset of the traveller. Third-party platforms offer brand recognition, reviews and an (albeit sometimes a false) sense of security. Should something fall through with the trip, they know exactly how to get their money refunded (as opposed to wiring money to an African tourism provider with no online presence). Many consumers also falsely believe that these platforms offer cheaper prices than booking directly with the local provider.
The Future of Tourism in Africa and Third-Party Vendors
This results in three types of losses for the destination and its hospitality and tourism businesses.
- The customer decides to give up on the Destination altogether as it is too complicated to book and opts for another destination entirely.
- The customer takes the planned itinerary and details and asks a high street travel agent to make the booking. As a result, the supplier in the destination pays 60-to-80 percent of their profit for those bookings – usually for no good reason as the customer is not genuine to this value chain and only used the travel agent out of frustration and desperation.
- The customer makes use of online travel agents. Again, the destination supplier unnecessarily pays 60-to-80 percent of their profit for those bookings.
The market power of large online travel agents with strong vision and offerings places the traditional suppliers under heavy pressure.
The Monopolisation of Consumer-Focused Products
Consumer-focused products are also entering the market, hunting for travellers. Large wholesale operators (such as TUI) in major source markets are utilizing a strategy of vertical integration.
Some have done this already for the traveller; the next step is the supplier. This will forever change the business of the traditional value chain, DMCs or inbound tour operators.
Suppliers in African destinations receive more pressure from DMCs and traditional value chains to offer lower rates and higher commissions. They are often asked for extra payments for brochure contributions, exhibitions and FAM-trips for travel companies, increasing the cost of distribution even more.
In many cases, DMCs make block bookings at large to keep out other market players by quasi-monopolizing the inventory.
Rooms not sold will often be released 30 days prior to arrival with no compensation. This is inventory that is hard to sell, as African destinations are not known as last-minute destinations.
It gets even worse when DMCs now flood the highly discounted unsold inventory to bed banks who sell them to OTAs and other distribution platforms. Without any influence from the supplier, they suddenly might appear cheaper on those platforms than the Hotel offers directly, creating a rate imparity issue out of the supplier’s control.
Future of Tourism in Africa and Sustainable Hospitality
In order to create and develop a sustainable hospitality and tourism industry in Africa, it is of utmost importance to enable hospitality and tourism providers.
The future of tourism in Africa needs to provide them with digital transformation strategy initiatives, enabling them to make use of technology to conveniently and seamlessly reach potential customers.
Education, training, awareness, and growth in African destinations is crucial for the future of sustainable tourism. This capacity-building not only affects the market and technology side; it also transforms the economic, social and ecological sustainability of hospitality and tourism in the destination.
rainmaker digital’s Mission
rainmaker’s passion is democratizing technology that previously only large organizations could afford. To us, the future of tourism is empowering African destinations and their hospitality and tourism businesses, enabling them to partake in the digital paradigm shift.
rainmaker’s VISTA Destination Network Open Platform and Ecosystem technology does exactly this.
Our Public-Private Partnership Model for Destinations and Tourism Authorities and our Freemium business model builds the basis of an inclusive Digital Transformation Initiative for the destination, aligned to the UNWTO Digital Transformation Strategy.
We develop local capacity building programs, consisting of masterclasses and training programs for visibility, reputation, communication and distribution management.
This inclusive enablement of technical and capacity-building is of utmost importance for a destination, its businesses, and people.
The future of tourism is all about keeping more dollars in the destination. It also allows for its businesses to move towards an economically, socially and ecologically sustainable tourism development as well as local prosperity, according to the UNWTO Tourism Sustainability Goals.
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