Sustainable Tourism Online: Business Operations
Sustainable Tourism Online (STO) is a comprehensive online information resource in initiated by EarthCheck, delivering substantial research, data and tools within sustainability themes. STO also offers relevant information and knowledge on broader sustainability tourism topics.
Business Operations
Tourism is regarded as one of the top five employers world-wide, supporting a broad scope of tourism businesses and service providers across a number of industry sectors. In Australia, more than 90% of tourism businesses are small to medium enterprises (SMTEs); that is they have less than 100 staff. Tourism businesses, no matter what size, face a wide range of challenges in developing, operating, managing and growing their business in what is a highly competitive, rapidly changing and volatile environment.
Research undertaken by APEC in 2004 showed that the following factors are significant inhibitors to tourism business operation and development:
A lack of trained and professional workforce
A lack of entrepreneurial skills among operators
Low entry barriers – impacting on service quality, growth and business viability
Lending arrangement and taxation regimes not conducive to SMTEs
Conforming to (and supporting) sustainable regional infrastructure requirements
Inconsistent bureaucratic local authorities
A lack of government recognition of the value of tourism
A failure to recognise the potential benefits of industry clusters and collaboration
Industry fragmentation and a proliferation of membership organisations
A lack of technology and eCommerce skills
Relatively poor eReadiness and eCommerce uptake
Scattered, poorly-integrated and difficult to locate business research information
The Sustainable Tourism Cooperative Research Centre (STCRC) has invested over $260 million into sustainable tourism research over the last 12 years. One of the key themes of this research was to understand the factors that influence the ‘success’ of tourism businesses and to identify strategies for tourism businesses to address industry challenges and develop sustainable operations.
Business Growth and Development
Tourism businesses operate in a highly competitive environment. Businesses need flexibility and commitment to ensure they remain profitable. All businesses should undertake the ‘Business and Strategic Planning’ process taking into consideration where they are currently positioned in the business lifecycle. The stage of the business lifecycle influences both the strategic planning process as well as the operational side of the business. Tourism Victoria’s Tourism Excellence Module identifies the four phases of the business lifecycle:
Start-up – uncertain markets, establishing products, uncertain marketing, low/no profit, heavy management involvement in the business;
Growth – establishment of market share, expansion of product lines and or markets, sales growth, possible internal expansion to meet growth;
Maturity – levelling of sales because of increasing competition or decrease in demand. This requires new strategies to avoid;
Decline – decrease in sales and profits. If not addressed, it will end in failure.
Business Ready: Energy Efficiency
The Business Ready Energy Efficiency training program aims to develop capacity within tourism businesses to guide and drive operational efficiency efforts and commitments. Undertaking the training program will empower key personnel to make informed decisions on energy management and successfully navigate the challenges of the new carbon restrained economy.
Marketing
As a highly competitive service industry, tourism businesses face the challenge of being able to effectively reach and communicate with the visitor market and successfully generate sales. Marketing is a core function of any tourism business, however is often restricted by resource and funding availability. The marketing activities of a business should be guided by an overall ‘Marketing Plan’ and be underpinned by the business’ unique selling point and core brand values.
As identified in Tourism Victoria’s Tourism Excellence Modules, there are seven ways to drive profit in any business:
Increasing the number of leads
Increasing conversion to sales
Increasing average sales value
Increasing sales per customer – repeat visitation
Increasing the profit margin per sale
Decreasing variable cost per sale, and
Decreasing fixed overheads
The majority of these opportunities can be significantly influenced by the type of marketing strategies that a business employs. Successful business marketing should:
Be based on market research and identification of the business’ unique selling point;
Employ relevant promotional and advertising actions to influence visitor perceptions, awareness and product choice;
Employ effective sales and distribution channels to enable conversion of intention into actual visitation;
Identify and leverage cooperative marketing programs with tourism organisations and businesses to provide resource synergies and increased visitation potential;
Gaining ‘cut-through’ of the business’s marketing message through innovative, cost effective marketing tactics such as media and PR generation.
Planning
Good business planning is essential for the development and growth of any tourism business. Business planning and management is an area that has been the focus of extensive research across all industries including tourism. In Australia, the Federal Government has committed over $500 million to support small businesses, including tourism businesses. A 2010 publication from the Department of Resources, Energy and Tourism, in collaboration with the Department of Innovation, Industry, Science and Research, called Supporting Small Tourism Businesses, provides a range of information and resources for tourism industry operators on business planning, marketing, legal obligations, financing, staffing and sustainability.
Regional and State Tourism organisations have also invested in developing tools and resources to assist tourism business development and growth. Tourism Victoria’s Tourism Excellence Module identifies the 7 key steps in successful business planning and management:
Identify your strengths, weaknesses, opportunities & threats
Determine the critical success factors of your business
Develop a long term vision for the business
Translate your vision and critical success factors into key objectives
Develop the strategies, tactics and actions to achieve the objectives
Install a system to monitor and measure performance
Review, revise and improve your performance
The Sustainable Tourism Cooperative Research Centre has also developed tools and research that can support industry operators in the planning process. This section provides information for tourism businesses on the planning phase of business development including business planning, investment, financing and regulatory compliance. A range of tools and best practice case studies are also provided throughout.
Product Development
Product development, whether it be the development of new products or refreshment of existing products is the cornerstone for the success of a tourism business. Without appropriate products or services that are relevant to visitor demand a business cannot survive. Product development should be based on the findings of the ‘Planning’ process of business development, in particular the situation analysis and strategic planning phases. The planning process identifies the market potential and goals for business development and growth, while the product development phase is the implementation of specific actions for the business.
A product development plan can be developed as a guide for the successful management of the product development and implementation process. A product development plan looks at the marketing mix including product, price, place, promotion and packaging. The type of product development will depend on the stage of development of the business. The Passages to Innovation Program developed by the Canadian Tourism Commission identifies the four quadrants of product development:
Q1 – Existing Customers / Existing Products: a low risk strategy that aims to refresh existing products for the current market segments;
Q2 – New Customers / Existing Products: a medium risk strategy that looks at repositioning existing products with a new market segment;
Q3 – New Customers / New Products: a very high risk category that all new businesses start in. Extensive research and a unique selling point is required;
Q4 – Existing Customers / New Product: a high risk strategy that presents new products to existing customers that are stilled aligned with the markets needs.
Ready, Set, Go!
The National Centre for Studies in Travel and Tourism Pty Ltd (NCSTT), in partnership with the Queensland Tourism Industry Council (QTIC) has recently been awarded funding from the Commonwealth Government’s Department of Industry under its Small Business Advisory Services program Queensland Natural Disaster Assistance round to develop and deliver a simple interactive App that gets tourism businesses ready to go prior, during, and straight after a crisis. The App, entitled “Ready, Set, Go! – Building tourism business resilience in the event of a natural disaster”, is to be rolled out across the State in a series of free interactive workshops …
