developing tourism smmes in south africa: the … research/smme research...
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Acta Academica 2008 40(4): 140-165
Prof C M Rogerson, School of Geography, Archaeology & Environmental Studies, University of the Witwatersrand, P O Wits, Johannesburg 2050; E-mail: Christian. [email protected]
Christian M Rogerson
Developing tourism SMMEs in South Africa: the need to recognise differenceFirst submission: June 2007Acceptance: February 2008
The importance of small firms in tourism is increasingly recognised in international scholarship. This article aims to contribute to the scientific literature on tourism small enterprises or SMME development in South Africa. Using the results of a survey of suppliers of transport and tour services in South Africa’s backpacking industry, it is argued that policy interventions for supporting SMMEs in tourism must be differentiated and acknowledge the variations that exist within the category of tourism SMME.
Toerisme KMMOontwikkeling in SuidAfrika: die behoefte na erkenning van variasieDie belangrikheid van klein firmas in toerisme word toenemend internasionaal uitgewys. Hierdie artikel het ten doel om ’n bydrae te lewer tot die wetenskaplike literatuur wat fokus op klein toerismeondernemings, of KMMOontwikkeling in SuidAfrika. Teen die agtergrond van die uitslae van ’n opname onder verskaffers van vervoer en toerdienste in SuidAfrika se “backpacker”industrie word gere de neer dat beleidsintervensies vir die ondersteuning van KMMO’s in toerisme gedif ferensieerd moet wees en dat erkenning gegee moet word aan die variasie wat voorkom in die kategorie toerisme KMMO.
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As the tourism sector is distinguished by the massive numerical dominance of small firms, the challenges facing small enterprise development in tourism represent a critical theme in
contemporary international tourism scholarship (cf Thomas 2000 & 2004, Ateljevic & Doorne 2007).1 Until recently, the themes of entrepreneurship and small enterprise development in tourism could be described variously as “terra incognita” for researchers (Page et al 1999) or “a research lacuna that warrants further examination” (Ioannides 2003: 43). For Ateljevic (2007: 307) research on small tourism firms has been limited “by a paucity of primary and secondary data and by the challenges that the diversity of small firms presents”. In the international context, however, a scarce but growing literature is be ginning to address the characteristics and needs of small tourism firms and of how they articulate with the economy and society as a whole.2
Research on tourism entrepreneurship and small enterprises in South Africa was undeveloped until the post1994 period (Visser & Rogerson 2004). The first published work on SMMEs in the local tourism sector was that by the Land and Agriculture Policy Centre (1995), which hosted a workshop to discuss specific issues involving small entrepreneurs in tourism. Other research followed in the 1990s including that of Visser & Van Huyssteen (1997 & 1999) who pioneered work on the guest house sector as a new phenomenon in South African tourism. As the national importance of promoting and upgrading SMMEs in tourism was raised, further more detailed research has been undertaken on several issues concerning SMME development in tourism.3 This body of sectorspecific research on tourism SMMEs serves to complement other work which analyses
1 Thanks are due to Jonathan Mograbi for research assistance, to Mrs Wendy Job for preparation of Figure 1, and the comments received from two anonymous reviewers on an earlier version of this article.
2 Cf for example Dahles & Bras 1999, Dahles & Keune 2002, Goulding et al 2004, Roessingh & Duijnhoven 2004, Thomas 2004, Jones & HavenTung 2005, Ateljevic 2007, Ateljevic & Doorne 2007, Haahti 2007, Lynch & Tinsley 2007.
3 Cf Rogerson & Sithole 2001, Bourgouin 2002, Kirsten & Rogerson 2002, Rogerson 2003, Nuntsu et al 2004, Rogerson 2004a, 2004b, 2004c, 2004d, 2007a & 2007b, Saayman & Olivier 2005, Thomas 2005.
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opportunities and challenges that confront the tourism sector as a whole (Monitor 2004, DTI 2005b).
During 2006 South Africa’s Minister of Environmental Affairs and Tourism emphasised the importance of ensuring “the success of smaller tourism entrepreneurs” (Van Schalkwyk 2006). Indeed, in relation to the objectives of achieving accelerated and shared growth in South Africa, the Minister highlighted that the group of SMME tourism enterprises “hold the key to translating the potential of tourism into jobs” (Van Schalkwyk 2006). Accordingly, the identification of the challenges faced by tourism SMMEs, the opportunities for enterprise development and the potential support mechanisms are critical for policy development and implementation. This article aims to contribute further to the scientific literature on tourism SMME development in South Africa. It argues that policy interventions for supporting tourism SMMEs must recognise difference and the “heterodoxy” among tourism SMMEs (cf HavenTang & Jones 2005: 355) by addressing the specific challenges of SMMEs functioning in different segments of South African tourism.
1. Existing South African literatureSeveral common challenges facing SMME development in tourism as a whole in South Africa have been isolated. Based upon the existing scholarship, a number of key issues have been identified which relate, inter alia, to market access and marketing; business management skills; access to ICT and infrastructure; skills and training; finance; regulation, and inadequate institutional support.4 In both the accommodation and touroperating sectors of tourism, large enterprises typically aim for volume and, to some degree, their dominance has the effect of “crowding out” the operation of smaller enterprises. As a result, SMMEs tend to focus on specialised market segments of tourism. In accommodation, for example, SMMEs dominate the bedandbreakfast economy, the supply of backpacker accommodation
4 Cf Bourgouin 2002, Kaplan 2004, Elliott & Boshoff 2005, Ndabeni & Rogerson 2005, Rogerson 2005a, 2005b, 2007a & 2007b, Bresler & Popova 2006, Lourens 2007, Anderson 2007.
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and the guest house subsector; newer niche segments would be the “township guest house”. Likewise, in terms of inbound travel and tour operation, SMMEs focus on specialised market segments and the creation/promotion of niche markets. Indeed, SMME operators in travel and tour are often described as “the boutiques” of the travel and leisure industry whereas the large tour operators are “the supermarkets” (Cornelissen 2005: 85).
From the existing scholarship on South Africa, however, it is clear that tourism SMMEs are not a homogeneous group of enterprises and that distinctions must therefore be drawn between the challenges and support needs of different categories of tourism SMMEs. One important line of differentiation is observed between groups of established, almost predominantly whiteowned SMMEs which operate a host of different establishments such as travel and touring companies, restaurants, small hotels, selfcatering and resorts, game farms, bedandbreakfasts or backpacking hostels, and the emerging blackowned tourism economy which is a mix of formally registered microenterprises and informal tourism enterprises (DTI 2005). Of critical policy relevance are findings that show the different sets of issues facing the more established tourism entrepreneurs as compared to the constraints that confront emerging tourism entrepreneurs. To a large extent, the dominance by mainly whiteowned SMMEs of the accommodation and travel and tour operator segments of the tourism sector in South Africa can be understood in terms of the advantages of established entrepreneurs in terms of economic, social and cultural capital.5
Another significant element of differentiation in terms of tourism SMME development relates to the differences and challenges that relate to SMMEs operating in different subsectors of South African tourism. From the findings of two recent national tourism investigations it is clear, for example, that the issues and challenges confronting SMMEs in communitybased tourism (CBT) are markedly different to those that relate to business tourism SMMEs. In examining
5 Cf Visser & Van Huyssteen 1997 & 1999, Rogerson 2005a, 2005b & 2007a, Bresler & Popova 2006.
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the potential for community/routes tourism in South Africa, ECI Africa (2006a & 2006b) identify the category of a “marginalised CBT enterprise or MCBTE which is “one that does not fall within the mainstream economy and is run by the poorest of the poor” (ECI Africa 2006a: 1). Many challenges face the upgrading of MCBTEs through CBT in South Africa, not least that most MCBTEs do not enjoy ade quate market access opportunities and cannot penetrate the established supply chain in order to reach consumers. In addition, many are unable to do so because of the small size of their offering or cost considerations of marketing, particularly to the important market segment of fully independent travellers (ECI Africa 2006a: 23). Another critical constraint is that concerning the development of routes in South Africa, “many local authorities and small businesses do not have the skills or experience to lead a process of clustering via route or destination development” (ECI Africa 2006b: v).
By contrast to communitybased tourism, the potential for SMMEs to enter the business industry supply chain was highlighted by findings that nearly 70% of event venues indicated that “they support SMMEs ‘a lot’ or ‘some’ with some 60% indicating that they would like to do more” (Grant Thornton and Prodigy Business Services 2006: 83). The support and opportunities for SMMEs relate to purchasing goods and services from them as well as the provision of training and mentoring to SMMEs. As a whole, it was concluded that “venues and planners would like to support SMMEs to a greater extent” (Grant Thornton and Prodigy Business Services 2006: 84). Nevertheless, given their general lack of understanding of SMMEs and support available to them, it is cautioned that “this interest in supporting SMMEs may not be as effective as it could be” (Grant Thornton and Prodigy Business Services 2006: 84).
This article aims to expand this existing body of scientific scholarship on tourism SMMEs in South Africa and, more specifically, to address the specific challenges of SMMEs functioning in different segments of South African tourism. In terms of the several different kinds of SMME enterprises in the contemporary South African tourism system, one of the least explored is that relating to suppliers of transportation and tour services. Overall, with the exception of
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studies by Cornelissen (2005) and Nemasetoni & Rogerson (2005), scant comprehensive research has been pursued on the enterprises, organisational dynamics or structures of this critical component of the South African tourism system. The specific task in this article is thus to analyse the core issues that confront the development of SMME suppliers of transportation and tour services in South Africa’s backpacker tourism economy.
2. Backpacker tourism and South AfricaAs defined by tourism researchers, the term backpacking
delineates the activities and products of a mobile, usually younger market segment who exhibit a preference for budget accommodation, emphasize meeting other travelers, follow an independently organized and flexible travel schedule, pursue longer rather than very brief holidays and prefer informal and participatory holiday activities (Pearce & Foster 2007).
The historical origins of the phenomenon of backpacking have been traced as far back as the days of the Grand Tour or to the days of “tramping”, a wellinstitutionalised travel pattern of workingclass youth (cf Adler 1985, Cohen 2004, Gladstone 2005).
The modern industry and global economy of backpacking is generally viewed as developing only from the 1960s and 1970s and is associated with the growing international mobility and spread of more affluent youth travellers at that time (Richards & Wilson 2004). For many analysts, the modern phenomenon of backpacking is a child of the 1980s and its birth was signalled by the establishment of the first dedicated backpacker hostels in popular destinations, for example as in 1983 at Cairns, Australia (Slaughter 2004). Over the past decade, as backpacker tourism has emerged as an important focus within international tourism scholarship, there has emerged a crosssection of investigations of backpacking in several destinations including Australia, Canada, India, Malaysia, New Zealand and Vietnam.6
6 Cf LokerMurphy & Pearce 1995, Hampton 1998, Scheyvens 2002, Lloyd 2003, Newlands 2004, Richards & Wilson 2004, Gladstone 2005, Hottola 2005, Hecht & Martin 2006, Moscardo 2006, Pearce 2006, Howard 2007, Peel & Steen 2007.
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Since the 1994 democratic transition, South Africa has become an increasingly popular destination for international backpackers (Visser 2004a, 2004b & 2005a). Nevertheless, recognition of backpacking as a potentially important highgrowth niche segment of tourism is only beginning to emerge. Within the 2002 South African Tourism (SAT) Growth Strategy, it is significant that backpacker tourism was excluded from the “growth” segments of tourism (SA Tourism 2003). The overlooking by SAT marketing campaigns of a tourism segment that holds significant potential to achieve key national government objectives has been a major point of criticism emanating from the stream of pioneer works and detailed empirical investigations of backpacking in South Africa (Visser et al 2003, Visser 2004a, 2004b & 2005a). The empirical focus of investigation in these early studies was upon backpacker accommodation providers. In this study, attention is focused upon developing a profile of the segment of backpacker transportation, travel and tour services and of the challenges that face this element of the backpacker tourism economy in South Africa. The empirical material presented in this article draws from a wider national investigation of the backpacker tourism economy of South Africa, which involved undertaking focused interviews with specialist product suppliers for backpacker accommodation and adventure tour products (ECI Africa 2006c & 2006d, Rogerson 2007c).
The backpacking industry in South Africa comprises three major subsegments of enterprises concerned with the supply of accommodation, transportation and tour services as well as adventure tour products, respectively. In terms of the organisation of the backpacking industry nearly all enterprises in the industry would be classed as SMMEs (ECI Africa 2006d). The industry comprises a total of 500600 formal enterprises as well as an unknown number of informal or secondeconomy enterprises (ECI Africa 2006d).
Backpacker tourism is a relatively recent phenomenon within South African tourism as it has been estimated that during 199495 less than 50 established enterprises were in operation. Currently, the industry is overwhelmingly dominated at ownership and strategic management levels by groups of white entrepreneurs (ECI Africa 2006c). Since 1990 this group of entrepreneurs have identified and
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taken up business opportunities for operating backpacker hostels, the supply of transportation and tour services and of adventure tour products. In addition, the membership and leadership of the leading backpacker tourism association is whitedominated (ECI Africa 2006d).
A small number of individual black entrepreneurs have entered all three subsegments of the backpacking industry — accommodation, travel and tour services, and adventure tour products — establishing enterprises in new market spaces, most importantly in townships. One example is Lebos backpackers, a pioneer backpacker ac com modation establishment in Soweto. Another channel of empowerment is the establishment, with government support funding, of communityowned backpacker tourism enterprises such as the Masakala Guest House at Matatiele, which is part of the Mehloding Hiking and Horse Trail. Finally, in the Eastern Cape, there are a number of examples of community equity partnerships with existing backpacker enterprises. One prominent example is the awardwinning Bulungula Lodge in which the community of the local Nqileni village owns a 40% share (ECI Africa 2006d).
Over the past five years a number of studies have addressed aspects of this particular “low budget” segment of the South African tourism economy.7 Currently, backpacker tourism is assuming growing significance in terms of contemporary strategic policy development for tourism in South Africa. Indeed, the Tourism Unit within the Department of Trade and Industry (DTI) has identified ‘backpacking and youth travel’ as one of the most promising niche sectors of the national tourism economy (ECI Africa 2006c, DTI 2007).
3. Research method In South Africa the suppliers of transportation, travel and tour services, which are primarily targeted at the backpacker market, comprise a mixed group of enterprises, including transportation providers, rental car companies, travel centres and tour providers. The research method involves a twostage process.
7 Cf Visser et al 2003, Visser 2004a, 2004b & 2005a, Visser & Barker 2004a, 2004b & 2004c, Rogerson 2007c.
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First, an audit was undertaken of the national population of suppliers of transportation and tour services to the backpacker market. Information on the numbers of specialist suppliers of transportation and tour services for the backpacker sector was obtained from an audit of national industry sources. Of greatest importance was information sourced from published guides which target the backpacker market, most notably the CoasttoCoast Guide. Other information on suppliers of transportation and tour services was obtained from Backpacking South Africa, the official industry association.
Figure 1: The location of suppliers of backpacker travel and tour services
Overall, this audit identified nearly 60 enterprises in this category. Figure 1 illustrates the spatial distribution of the operational base of these enterprises. In total, more than half of these are based in the Western Cape, which is the most significant focus for visits by
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international backpackers (Visser 2004 & 2005a, Rogerson 2007c). The Western Cape is the axis for the organisation and provision of backpacker transportation and tour services and the national ope rational base for Baz Bus — the leading backpacker ground transportation enterprise. The only other significant small clusters of backpacker transportation, travel service or tour suppliers are those operating in Johannesburg and the specialist group of tour operators, mainly based in Nelspruit, which deal with Kruger Park tours.
The second stage of the research involved interviews and a survey of specialist backpacker transportation and tour service suppliers conducted in 20052006. In total the national representative sample of interviewees was distributed as follows: 21 in the Western Cape (Cape Town 17, Stellenbosch 2, Hermanus 1, Wilderness 1), 1 in the Eastern Cape (Port Elizabeth), 2 in Mpumalanga (Nelspruit), and 1 in Gauteng (Johannesburg). The survey sought to collect information on, inter alia, the nature of entrepreneurs, their enterprises, recent business performance, and challenges facing the development of backpacker tourism in South Africa. As the survey was centred on SMME suppliers, information on the backpacker economy was collected separately from Baz Bus, the largest player in the sector. In total, the 26 surveyed enterprises represent nearly half of the entire national population of suppliers of transportation and tour services to the backpacking industry of South Africa.
The 20052006 national survey generated a mix of quantitative and qualitative material, the latter allowing entrepreneurs a voice to “speak” to key issues that affect the backpacker industry. A recent followup investigation of 10 Gauteng backpacker transportation and tour suppliers was conducted in 2006 by Mograbi (2007) as part of an investigation of the specific role of the province in South Africa’s backpacker economy. The findings of this second survey confirm the general trends reported here, drawing particular attention to aspects relating to Gauteng.
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4. Profile of SMME entrepeneurs and enterprisesAs Cornelissen (2005: 85) points out, specialist segments and niche markets of the South African tourism economy are the domain of small, medium and microenterprises (SMMEs). In the niche of supplying transportation and tour services for backpackers all enterprises would be classed as SMMEs.
By far the largest and most significant supplier of backpacker transportation and tour services is Baz Bus, a company established in 1995 by a former qualified accountant and retired backpacker, which started operations with two buses travelling between Johannesburg and Cape Town. By 2005 this dedicated backpacker transportation enterprise had expanded to the point that it employed a total of 40 staff across South Africa with a fleet of ten 19seater semiluxury Sprinter buses with onboard TVs and videos. The Baz Bus operates a large network of connections and feeders across the country specific ally targeting the market of backpackers. The critical importance of Baz Bus in facilitating the expansion and geographical dispersal of the backpacking industry in South Africa between 19952005 must be acknowledged.8 In addition, the role played by Baz Bus in actively marketing South Africa as an international backpacker destination and of putting South Africa on the global map of backpacking must not be underestimated. Indeed, in many respects, the growth and rapid spread of the network of backpacker accommodation across much of the map of South Africa between 1995 and 2005 would not have been possible without the existence of a dedicated transport provider for backpackers (Visser 2004 & 2005a).
The Baz Bus would be classed as a mediumsized tourism enterprise. The majority of the niche transportation and tour services for backpackers would be categorised, however, as small or microenterprises. From the national survey of 25 enterprises, the following profile of entrepreneurs was disclosed. These tourism SMMEs are mostly owned by individuals (11) or families (12); only 2 partnerships or groups were recorded. In general, entrepreneurs are youthful, with the majority aged in their mid30s. The subsector is male
8 Personal communication: Interview, Baz Bus, Cape Town, 24 July 2006.
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dominated. Of the 25 interviewed businesses, only 2 are exclusively run by women; in terms of this sector the largest involvement of women in the ownership of businesses is as part of familyowned enterprises. The vast majority (23 of 25) of entrepreneurs are South African born.
The survey revealed that all owners are “handson” and actively involved in running business operations. Nevertheless, many SMME entrepreneurs operate multiple businesses (11 of 25). Only 14 interviewees were dedicated to a single business in transportation, travel or tour services. The most common linked business is the operation of a backpacker lodge or of provision of a tour service in the case of a travel centre. Among the group of Gauteng entrepreneurs there was a close relationship between the provision of accommodation services for backpackers and the running of a tour services operation (Mograbi 2007). The average length of business operation is 7.7 years. The national survey found that years of establishment ranged from 1990 to 2004 with the earliest business founded in 1990 by a partnership of two women entrepreneurs. The majority of business enterprises were founded between 1995 and 2000, the immediate years following South Africa’s democratic transition, which coincided with a boom in the national tourism economy (Rogerson & Visser 2004, Visser 2005b).
The national survey revealed that this sector of business is the domain of “opportunistic entrepreneurs”, who are identifying market niches with opportunities for growth (Rogerson 2005a). The majority of these entrepreneurs are based in the Western Cape and saw new business opportunities in the context of the growing post1994 national tourism economy and especially of the rapid emergence of international backpacker tourism within the province (Rogerson 2007c). Similar trajectories of development occurred with Nelspruitbased entrepreneurs who run specialist safaris/game tours for backpackers into Kruger Park. The backpacker travel and tour service sector in Johannesburg plays a distinctive role as it has particular links to overland Africa travel (Mograbi 2007). The entrepreneurs operating backpacker transport and tour services are drawn from many dif ferent backgrounds, including former wine farmers, teachers, entertainers, civil engineers and bankers.
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The largest group of entrepreneurs, how ever, were found to be persons who either previously worked in other travel and tour enterprises or were themselves former travellers or backpackers.
At business startup the most common source of funding is from the entrepreneurs’ own capital, a finding which is typical of tourism SMMEs in South Africa as a whole (Rogerson 2005a). Of the 25 interviewees startup capital was obtained as follows: 15 from own funds; 4 from own funds and bank, and 6 from bank finance. The major problems faced by these entrepreneurs at business startup related to competition from established tour or transportation operators, ‘getting known’ and securing access to finance. It was observed that financing was especially difficult as South African banks view tourism as high risk and are reluctant financiers of such businesses, a finding which confirms that of Saayman & Olivier (2005) relating to tourism SMMEs in general. Typically, one interviewee commented that: “banks wouldn’t give a loan to businesses operating in the tourism industry”. Among the group of transportation suppliers, a specific set of problems were encountered at business startup in respect of the excessive “red tape” concerning the grant of necessary permits for vehicles to transport tourists. This finding is confirmed in a recent national investigation conducted by SBP (2006) across the tourism industry as a whole.
The visitor market for these businesses overwhelmingly comprises international rather than domestic backpackers. Of the 25 interviewees, 20 report that international visitors represent at least 90% or more of the market. All these businesses are registered enterprises with local and provincial authorities. Although most businesses stated that there were no major problems with local or provincial government in establishing the business, several negative comments were made about long drawnout bureaucratic processes, “red tape”, little assistance from government and, in some localities a wait of 3.5 years to get zoning approval for a planned adventure centre linked to tour services.
Of the sample, 24 of the 25 enterprises could offer accurate employment information. In total, this group of enterprises provide a total of 167 fulltime and 33 parttime jobs, an average of 8.33 per enterprise. For these businesses seasonality is a key factor with the
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peak of the season for international backpacking, the summer period being busiest, and the quiet winter period. Typically, in most cases, the parttime workers are those affected by seasonality. That said, most jobs in this subsector are permanent and nonseasonal. On the basis of existing information 44% employment in these enterprises is for white employees, mostly in senior or more skilled managerial positions; the majority of job employment opportunities — 56% of the total — are occupied by black workers.
Recruitment of staff takes place by way of various channels dependent upon the nature of the employment vacancy. As a whole, 18 enterprises used wordofmouth; 10 local press; 4 existing staff; 1 an agency, and 1 enterprise recruited some of its staff via the internet. In terms of formal training of staff in tourism and hospitality, 11 of the 25 enterprises engage some employees with formal training (drivers, guides), 14 enterprises do not. Local labour recruitment occurs for the vast majority of enterprises (22 of 25 cases). In those instances where nonlocal labour is recruited it is due to the search for specialist staff with language skills, such as for Germanspeaking staff.
In terms of human resources, as a whole, 12 of 25 enterprises stated that they have problems with the skills of staff that are recruited. In particular, several point to problems in finding staff with the appropriate quality of skills. Accordingly, onthejob training is viewed as essential. The scarcity of quality staff in tour services was emphasised by complaints from smaller operators that better trained tour guides were frequently targets for being ‘poached’ by higher paying larger companies. Finally, it was observed that negligible use is made of international backpackers as shortterm, parttime or casual workers in this segment of the backpacking industry.
5. Business development and SMME challengesThe surveyed enterprises were requested to provide a broad assessment of their business performance over the previous five years and oneyear (20045) period. In addition, the sampled enterprises were asked about the major obstacles to business development as well as information on investment trends.
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The findings disclose a highly positive business performance as recorded by the SMME suppliers of backpacker transportation, travel and tour services both over a fiveyear period as well as in the previous business year. An upward and improved trajectory of business performance was evident in terms of three indicators regarding visitor numbers, business profits and levels of employment. Of the 25 enterprises, the 5year period revealed the following profile for 23 respondent enterprises (two had not been in business for 5 years): visitors up 18: same 2: down 3; business profits up 10: same 10: down 3; employment levels up 15: same 6: down 2. In the previous business year a similarly positive outlook was recorded: number of visitors up 16: same 7: down 2; business profits up 11: same 13: down 1, and numbers of employees up 9: same 15: and down for 1 enterprise.
Many companies expressed considerable enthusiasm about trends in the previous business year (2004/05). At least one car rental enterprise commented on a “tremendous increase” in its business. A trend was observed by providers of travel services that the international backpackers were shifting away from long extended tours to booking shorter duration tours. Another trend observed in relation to business profits by several firms was the development of a more competitive business environment. In terms of the winter offseason the enterprises reacted in several different ways. Transportation and tour operators sought out local corporate business, offered price discounts or simply continued to run tours often at cheaper prices but with lower volume. Other enterprises used this period to catch up on administrative work, for purposes of maintenance, or to take a holiday. In looking forward, caution was noted in terms of the impact of a strengthening rand upon international visitor numbers. Nevertheless, considerable optimism was expressed that the 2010 FIFA World Cup might catalyse a greater interest and awareness of South Africa as an international tourism destination, not least for backpacking.
In respect of marketing their business, the most significant channels of reaching the international backpackers are the internet, advertising in industry publications, especially the CoasttoCoast guide, and wordofmouth referrals. The significance of trade shows, such as Tourism Indaba, for enterprise marketing was further high
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lighted. In general, it was observed that little marketing was pursued directly at the South African consumer, not least for the reasons put forward by interviewees that “Backpackers are not South Africans” or that they represent “too small a market to warrant our interest”. In terms of the car rental enterprises it was pointed out that most domestic tourists rely upon their own vehicles rather than use rental cars. Furthermore, the tour operators pointed out that South Africans “don’t do tours”. Finally, for other companies, the absence of marketing to South Africans was explained simply: “We don’t like South African backpackers”.
The responses by entrepreneurs to questions concerning the major obstacles to business development highlight a number of important matters concerning policy. First, several interviewees drew attention to the problems they confronted in terms of the regulatory environment, in particular concerning access to vehicle permits. Typical comments included:
Vehicle permits take a long time — we can’t run vehicles.Renewing licences takes a year and without licences they have to stay in the depot which means we are losing money because buses cannot be used for tours.Difficulty of dealing with the road transportation board in terms of permits.Government red tape and bureaucracy — time spent in queues could be spent running tours.Government red tape is contradictory — they encourage the tourism industry but cut off our arms and legs to do it.
A second cluster of problems raised by these SMME entrepreneurs concerned issues of increased competition and the lack of appropriate regulation of an increasing volume of informal sector providers of transportation and tour services. The situation in Cape Town attracted special comment:
Too much competition in Cape Town.Everybody with a minibus is a tour operator in Cape Town, large numbers of which operate without permits.There are lots of flybynight operators here which is bad for reputation as a whole.
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So many tour operators are offering cheap packages with terrible service which brings down the entire area as a tourist destination in terms of quality of service.
A third set of business obstacles relate to the theme of local government’s lack of awareness or understanding of the significance of the backpacking industry and of its general overlooking of the needs of enterprises that operate in this sector. Illustrative of these obstacles were the following comments:
Council (Cape Town) needs to realise the special needs concerning backpacker enterprises.Local government does not cater for us and is not interested in us (Hermanus).
Finally, other issues that were highlighted as obstacles to business development related to the levels of petty crime and to the lack of available skilled staff for several enterprises in tour services.
In respect of investment trends during the previous 12 months, 17 of the 25 interviewees had introduced new capital to expand their business, mostly via retained earnings. The frustrations of seeking to expand transportation and tour provision were epitomised, however, by the comment made by one rental car operator that to buy any more vehicles was a difficult decision as it “takes forever to get through all the red tape”. Further investment in businesses in the immediate future was indicated by the majority of entrepreneurs in terms of their positive outlook concerning tourism markets and especially of backpacker tourism.
Finally, the sample of suppliers of transportation, travel and tour services provided information on a set of issues concerning their links with other enterprises, involvement in associations, and the impact of various government measures upon their business. Suggested recommendations were made to different tiers of government, from local through provincial to national level.
In respect of membership of associations, it was disclosed that the most common forms of membership were through Backpacking South Africa (18 of 25 interviews), through local tourism organisations and through SATSA. Uneven responses were provided by
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entre preneurs on the benefits of linking to these associations and organisations. In terms of the industry association, Backpacking South Africa, the following represent the mixed set of responses:
BSA does help us and keep us informed.It is in negotiation with government to help promote us and backpacking.Helped with marketing.Keeps you informed with what is going on in the tourism industry.Not sure if it is of any benefit at all.Membership gives you legitimacy in the industry.It is not really a good network.BSA is just talk.Red tape and pointless — don’t do anything for us.
Harsh criticisms from the transportation and tour service providers were not reserved only for BSA but were also directed at the value of membership of local tourism organisations. Cape Town Tourism was singled out as a particular target of negative comment: “Cape Town Tourism is just a mess” and “It is in disarray. They are a mess and no use to anybody”.
More positive responses were made of the value of forging interbusiness links with networks of travel agencies, backpacker hostels, the Baz Bus, and adventure tour operators. In general, it was perceived that strengthening such links was of value for business development.
The relationships with different levels of government were also viewed in critical perspective. A total of 12 of the 25 sample enterprises either had applied or were in the process of applying for some support programme linked to government. However, responses to such applications were negative. For some enterprises their applications had been “lost in the post”, others had abandoned hope due to “complex procedures”, “such a paper chase”, or “too much of a mission”. Overall, the sentiment was strong that support from go vernment programmes was “very difficult to get through the pro cess”. On Government guidelines that constrain growth, the most critical issues that were highlighted are those concerning transport ation permits. The comments of interviewees spoke loudly of “getting transport
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permits faster”, “vehicle licensing”, “Department of Transport — it’s a circus”, and “Western Cape Province — access to them is so difficult and to get hold of information how to do stuff like get permits”.
Finally, the recommendations made by this group of entrepreneurs to improve the business environment and the competitiveness of these backpacking enterprises point to a number of critical issues that face the development of the backpacking economy in South Africa. In addition, they point out specific concerns and blockages concerning the regulatory environment and the critical need for both local and national governments to recognise and support the backpacking industry. In terms of recommendations for national government, interviewees drew attention to the weakness of existing marketing of South Africa as a destination for international backpackers. For example, it was observed by one interviewee: “Look at what Australia has done and follow their example”. Another respondent argued the imperative for “Improved marketing especially to USA, Australia, and New Zealand”. Other interviewees stressed the importance for South Africa to introduce a working holiday visa scheme in order to be a competitive international backpacker destination. Finally, in terms of the actions that local government might implement to support these SMME entrepreneurs the key highlighted issues related to the regulatory environment and to the importance of local government recognising the potential contribution of backpacking for local economic development.
6. ConclusionsPublic policy to promote small tourism firms is a feature of many countries, including South Africa. For effective support programmes for such firms, the international experience demonstrates that it is essential that research inform policy development (Thomas 2000 & 2004, Ateljevic & Doorne 2007).
This article examined the development and problems faced by a little researched segment of the South African tourism economy, namely small transportation and tour service providers. It is evident from the survey responses that certain of the problems that challenge
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the growth of specialist backpacker transportation and tour services are typical of those affecting tourism SMMEs as a whole. In particular, attention is drawn to regulatory issues affecting business development, lack of institutional support, crime and human resources. In addition, however, the research findings highlight several other specific issues for promotion of the South African backpacker tourism economy as a whole. Key issues that are profiled relate, inter alia, to the poor international marketing of South Africa as a backpacker destination, the lack of opportunities for working holidays in South Africa, minimal recognition of the industry’s contribution to the tourism economy, the absence of support from many local governments, and the general weakness of the leading industry association in backpacking (Rogerson 2007c).
In general, the results of this study underscore what HavenTang & Jones (2005) describe as the “heterodoxy” of small tourism firms. Policy interventions for supporting tourism SMMEs in South Africa must develop an enhanced understanding of the heterogeneity among tourism SMMEs and, in particular, recognise difference and the specific challenges of SMMEs functioning in different segments of South African tourism.
It is significant that at least within the backpacking and youth travel subsector new policy developments are recognising this situation. New proposals put forward in 2007 seek to develop specific interventions that are tailored to the separate requirements of suppliers of accommodation as opposed to travel and tour services within backpacking (Backpacking South Africa 2007). Of greatest importance is the formation of separate associations representing these different segments of backpacking enterprises to operate within an umbrella of the proposed South African Youth Student Education and Travel Confederation.
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