1 External Environment Analysis
Fig. 1: map of KwaZulu-Natal (Africasafari.co, 2017)
The historical loaded region called Battlefields is located in the East-Coast province of KwaZulu-Natal, South Africa (Fig. 1). Surrounding provinces are: Free State, Eastern Cape, Mpumalanga and the kingdom of Lesotho.
After the province of Gauteng, Kwazulu-Natal is the largest populated province in the Republic of South Africa. KwaZulu-Natal is home to 10,69 million people, which is 19,8% of the country's total population. (Statistics South Africa, 2014).
KwaZulu-Natal is stated the most popular destination for domestic tourism. The weather conditions are ideal year-round (KwaZulu-NatalTravel&TourismGuide, 2017).
Points of Differentiation
The historical sites (Fig. 2) and museums of the Battlefields Region make visitors think of the legendary battles fought over a century ago between local Zulu's, Boers and British soldiers. The site is a magnificent yet quite sinister location to visit, since many lives were taken during the wars. Tours throughout this region is an absolute must in order to understand what happened in the shaping of both South-African and British history (South-Africa, 2017).
The province boasts great opportunities for adventure, nature, culture, and history tourism. KwaZulu-Natal is known for its astonishing nature, the Big Five and heritage seekers. Also, one could visit plenty of authentic Zulu villages (Fig. 3), where long-established traditions are shown (Kwazulu-NatalTravel& TourismGuide, 2017).
Nature seekers may crave to visit one or multiple Game Reserves in the area (Fig. 4), home to the Big Five and a great variety of bird species and other wildlife (South-Africa, 2017).
A distinctive product from the province is refined black and green tea from the Ntingwe Tea Estate (Fig. 5), located in the Nkandla District of Kwazulu-Natal. It was the first tea product produced solely for export in South Africa (Ntingwe Tea Estate, 2017).
The province of KwaZulu-Natal is properly accessible by both ground, air and overseas travel. All of the must-visit places are connected by both the N2 and N3 highway. As the Battlefield sites are located quite isolated, it is necessary for tourists to rent a car or to arrange a guided tour (Footprint, 2017).
Durban Port is the most active port throughout the whole land of Southern Africa for overseas traffic. However, accessibility to the region of the Battlefields could be considered a threat to tourism since it takes a long time to reach the region. King Shaka International Airport is the most nearby airport, from where it takes approximately 4,5 hours by car to go to Battlefields. From Johannesburg it takes 6 hours to get to Battlefields by car (GoogleMaps, 2017)
Lady Smith Airport is closer to the region of the Battlefields, but only reachable for domestic travelers. From here on, it takes around 1,5 hours to reach the sites of the Battlefields (GoogleMaps, 2017).
1.2 Scope Countries
The countries chosen as scope countries are the United Kingdom (UK) (Fig. 6), the Republic of South Africa (South Africa) (Fig. 7) and the People's Republic of China (China) (Fig. 8). In 2015, both the UK and China are listed in the top ten of overseas incoming tourism to South Africa.
The leading country for the number of incoming tourists to South Africa is the UK, with a share of 19% of the total amount. China is listed number 6 in the top 10 with a share of 3,9% (Statistics South Africa, 2015) (Fig. 9).
Furthermore, the key actors of the historical events are South Africa and the UK. Therefore it is obvious that these countries show an enlarged interest to visit Battlefields. Also, South Africa is part of the BRICS countries, the world's major emerging economies, which provides a potential tourism opportunity (Globalsherpa, 2016).
Additionally, when comparing 2015 to 2014, it is shown that all amounts of tourists visiting South Africa decreased except for travelers coming from China and the UK.
China even showed the highest growth in travelers to South Africa with an increase of 2,2% (Statistics South Africa, 2015).
In 2016, international tourists visiting South Africa enlarged again with 13% (South African Government, 2017). Strong opportunities are seen to keep attracting travelers from China and the UK.
1.3 Macro Environment
1.3.1 Economic Environment
Gross Domestic Product (GDP) per capita
Fig. 10 Fig. 11 Fig. 12
The GDP per capita indicates the amount of money a person can spend on average per year. The GDP per capita in China is increasing between 2014 and 2017 (Fig. 10). This trend shows a great opportunity for potential outbound tourism of China. The GDP per capita is decreasing in the United Kingdom between 2014 and 2017 (Fig. 11). This trend indicates a threat for potential outbound tourism in the UK. The GDP per capita in South Africa between 2014 and 2016 encountered a decrease (Fig. 12). However, from 2016 onwards an increase is shown. Overall, this trend is considered as an opportunity for domestic tourism in South Africa.
Yearly Inflation rate (%)
The inflation in China increased with less than 1% between 2015-2017. This is considered an opportunity for tourism towards South Africa.
The inflation in the UK encounters unstable values with the greatest change in value between 2016-2017 (Fig. 13) of almost 2%. This is considered a threat. Figure 13 shows the increasing inflation rate in South Africa is currently approximately 6%.
The purchasing power of foreign customers will increase, which makes it more attractive for international tourists visiting South Africa. This is considered an opportunity.
Yearly Unemployment rate (%)
Fig. 14 (Statista, 2017)
China shows a stable unemployment rate of approximately 4% between 2013 and 2016 (Fig. 14). This indicates an opportunity for outbound tourism. The unemployment rate is decreasing in the UK between 2013-2016 (Fig. 14). This indicates another opportunity for outbound tourism. Fig. 14 shows that the unemployment rate in South Africa is increasing between 2013-2016. This is a threat to domestic tourism.
1.3.2 Demographic Environment
Life expectancy at birth
Fig. 15 (Statista, 2017)
Life expectancy at birth is increasing in all the scope countries (Fig. 15). The target segment of Battlefields, which mainly consists of people of mid-age, will enlarge over time (Fig. 16). This is an opportunity for tourism towards the region of Battlefields. Since seniors and mid-agers show more interest in the cultural heritage of a region (SalzburgResearch, 2017).
Fig. 16: Visitor profile of Battlefields tourists (Van der Merwe, 2014)
1.3.3 Socio-Cultural Environment
The most important tourist attraction of Battlefields is the historical sites. Therefore, heritage tourism is the main market segment to be attracted. Cultural and heritage tourism is on the rise and classified as a major growth market in the global industry (Khumalo and Sebatlelo, 2014). Figure 17 illustrates the global growth in the heritage market (Euromonitor, 2016).
Fig. 17: Size of Heritage Market (Euromonitor, 2016)
Cultural and heritage tourism shows an increase since 1994 (SouthAfricanTouristDepartment, 2012). However, the region experiences some difficulties in exploiting this segment (van der Merwe, 2014). Nevertheless, with the right improvements heritage tourism could form an opportunity.
Culture and heritage is listed in the top ten of purposes of a visit and in the top five of activities undertaken by British tourists (SouthAfricaTourism, 2010). This means majestic opportunities.
The interest in culture and heritage is also seen among Chinese travelers (ETC, 2016). Additionally, the majority of tourists enjoyed a higher education, which is the segment of interest in Battlefields. But most importantly, Chinese travelers rank the appearance of historical sites as the second most important aspect when selecting a destination (CITM, 2016). These facts combined is an opportunity.
Eco/ Nature Tourism
South Africa is famous for scenic views and wildlife. 21% Of the GDP in KwaZulu-Natal is generated by nature tourism (Aylward and Lutz, 2003). There are definitely opportunities if the right resources are developed (Rogerson, 2014).
Market research states that the UK tourism, amongst others, reflects the most stable market for eco- and nature tourism and the demand for suppliers is still expanding (CBI, 2014). This implies an opportunity.
China experiences a growing awareness for the environment. In China, the wellness industry is benefiting from the concerns about air pollution and the aging of the population (Huang and Xu, 2014). Chinese travelers highly value clean air at their holiday destination (Sung et al., 2008) (Fig. 18). This is an opportunity.
Fig. 18: Awareness of the Environment (Euromonitor, 2016)
Health & Wellness Tourism
The Chinese tend to spend more on health care over the past few years (Fig. 19).
The Health and Wellness tourism industry is growing (Euromonitor, 2016). Both the UK and China show a growth in this segment. According to The Body Holiday Survey, 94% of British people pursue health & wellness when booking holidays (IMTJ, 2012). These facts combined could form an opportunity to attract tourists seeking for health and wellness facilities.
Fig. 19: Chinese Healthcare Spending (ResearchInChina, 2013)
1.3.4 Political Environment
In May 2014, the South African Department of Home Affairs introduced two new visa regulations. The new regulations were designed to prevent child trafficking and to improve the security of the tourism industry. Unfortunately, in 2014 the tourism industry of South Africa experienced its first decrease in foreign tourist arrivals since 2003 due to the new regulations.
The new visa regulations consist of:
- ‘All children under the age of 18 crossing South Africa's borders are in possession of an unabridged birth certificate, a passport and, where applicable, a visa.'
- ‘Tourists from countries requiring visas appear in person during the application process to obtain a biometric visa.'
The new visa regulations are a threat, because it takes more time and effort for tourists traveling with children.
May 22nd 2017, an act of terrorism took place in the UK. In Manchester, 22 people were killed, and more than 59 people were injured (TheDailyBeast, 2017). Because of the attack, the UK's terrorism threat level was raised to a critical level (The Telegraph, 2017).
The impact on the tourism industry is that tourists will avoid destinations where acts of terrorism have been taken place towards tourists or the tourism infrastructure. (Baker, 2017)
The rising number of terrorist attacks occurring in Europe is an opportunity for tourism towards South Africa.
1.3.5 Technological Environment
Mobile phone internet
user penetration (%)
Fig. 20 (Statista, 2017)
Between 2015 and 2017 the usage of internet via mobile phones increased in all scope countries (Fig. 20). The proposed hospitality concept in Battlefields can be attracted via the usage of social media easier and more efficient as the years flow. This trend is considered as an opportunity for marketing reasons (InternationalJournalofScienceandResearch, 2016).
1.3.6 Natural Environment
Global warming, also known as the worldwide temperature rise, is a threat to tourism to South Africa. Due to the increasing droughts and less rain fall, the province of Kwazulu-Natal has been declared a ‘'disaster zone'' (WaterResearchCommission, 2017).
Fig. 21: Average Rainfall Amount (mm.) (WaterResearchCommission, 2017)
Rainfall decreased over the last decade (Fig. 21).
In 2016, a record temperature of 45˚C was measured at Durban (Fox, 2016).
A recent expression of the severe droughts and global warming was the flooding in February 2017. KwaZulu-Natal was hit by the tropical storm named Dineo.
Floods in KwaZulu-Natal appeared in the global news again after another flooding due to more than 100mm of rainfall in a day in Durban. The rainfall occurred between 14-15 May 2017 and hundreds of citizens were evacuated from the flooded area (Davies, 2017).
This is a threat as floodings affect not only infrastructure but more important the safety of tourists visiting South Africa.
Conclusion External Environment
GDP per capita
Health and Wellness Tourism
Mobile phone penetration
Fig. 22: Macro-Environmental Trends Overview
The extensive research conducted on a macro level about the ongoing trends in the three scope countries resulted in an overview (Fig. 22). All scope countries perform considerably well on the aforementioned trends, therefore the decision is made to continue with all three countries to target marketing.
1.4 Micro Environment
The main tourism competitors of South Africa consist of Kenya and Australia (UniversityPretoria, 2015). Both countries offer a similar tourism landscape to South Africa like natural beauty and wildlife. For most South African residents international traveling is non-affordable. This provides an opportunity for domestic tourism as South Africans tend to travel more over the past few years (Euromonitor, 2013).
The most popular destinations for Chinese outbound tourists are Hong Kong followed by Macau (Grant, 2016). Although Chinese international tourism is rising, the country still faces low numbers in this segment (Euromonitor, 2016).
For UK travelers the most important international destinations remain Spain and France (OfficeforNationalStatistics, 2016). South Africa does not appear in the top ten most visited countries, however, tourism to South Africa is increasing (Statistics South Africa, 2014).
Within South Africa, the main competitors are Gauteng and Western Cape (WTEx, 2017). Considering cultural sites these regions offer they form a strong competition to Battlefields. Additionally, Gauteng, Limpopo and KwaZulu-Natal are the most visited provinces among South Africans (KwazuluNatalTourism, 2016).
Gauteng generates the greatest competition. It is the most densely populated province of South Africa. Gauteng offers a great amount of cultural sites, including UNESCO-site ‘Cradle of Humankind' (SA-Venues, 2016b). In the abovementioned list, Gauteng is the number one province regarding the amount of visitors: a possible threat to Battlefields. On the other hand, a differentiating factor for Battlefields is natural beauty and serenity compared to Gauteng, which is an opportunity.
Lodges and B&B's form the largest and most important share of accommodation in KwaZulu-Natal (KwazuluNatalTourism, 2016). Major international hotel chains are not present in Battlefields, most providers act independently. According to SA-Venues (2016a) Battlefields offers more than 70 lodges and B&B's throughout the region.
STR statistics (2017) indicate a substantial growth in ADR, Occupancy, and RevPAR regarding accommodation (Fig. 23, 24, 25). This is an opportunity.
Fig. 23 Fig. 24
Fig. 25 (STR, 2017)
Statistics on South Africa Tourists Arrivals show an overall increase over the past decade, which indicates a growth of the tourism industry in the country (TradingEconomics, 2017) (Fig. 26).
The majority of tourists in South Africa consists of domestic travelers. Figure 27 demonstrates a decrease in trips undertaken by South African residents. This is a threat. However, overseas tourists expenditure exceeds domestic travelers expenditure (74.3% vs 25.7%) (KwazuluNatalTourism, 2016; SouthAfricanTourismDepartment, 2016). Also, research indicates an increase of expenditure among tourists in general (SouthAfricaTourism, 2015). Therefore this threat could turn into an opportunity.
Fig. 27: Domestic tourist trips undertaken (StatsSouthAfrica, 2017)
The latest tourism reports of KwaZulu-Natal (i.e. 2013-2016) show a decrease in tourists visiting Battlefields. The number of domestic tourists stays stable (KwazuluNatalTourism, 2013; KwazuluNatalTourism, 2014; KwazuluNatalTourism, 2015) ). Overseas tourism for leisure purposes show a decline, as well as domestic tourists.
The main purpose of visiting KwaZulu-Natal is Visiting Friends and Relatives (VFR) followed by leisure (Fig. 28).
Fig. 29 (KwazuluNatalTourism, 2015)
Fig. 30 (KwazuluNatalTourismAuthority, 2017)
The average length of stay in KwaZulu-Natal by foreign tourists changed from 8,5 nights in 2013 to 9 in 2015. The average length of stay of domestic tourists increased from 4,4 nights in 2013 to 4,8 nights in 2015 (KwazuluNatalTourism, 2016) (Fig. 30). An increase in the length of stay is an opportunity.
South Africa is listed number 36 of a total 221 export economies. In 2015, the trade balance surplus showed a yearly growth during a period of ten years, resulting in an amount of at least 5 billion USD higher in 2015 than in 1995 (OEC, 2017). That is a great opportunity.
Leading export products of South Africa are precious stones and metals, vehicles and coal. The top import- and export country is China. However, the UK is ranked 3rd as top export country of South-Africa (OEC, 2017).
A very important sector in South Africa is agriculture. Agriculture is the foundation of a successful economy (AgriSA, 2017). Due to seven different climate regions, only approximately 22% of all the land can be used for agriculture. Lack of water and the uncertainty of rainfall are the main reasons for this. This is a threat to international partners.
A premium export product in the province of KwaZulu-Natal is black and green tea coming from the Ntingwe Tea Estate (Brand South Africa, 2008). This exclusive product is also a big opportunity to attract tourism to KwaZulu-Natal as many tourists like to try local produce.
2 Target Marketing
To get an overview of the potential future market, one segmentation table per scope country is made to identify types of travelers and understanding their needs and wants (Appendix 1). By using data and information from Euromonitor, five different traveler types per country were specified. The research consulting a great heap of other sources led to the final travel market segmentation of the scope countries. Two traveler types were identified in the scope countries: the undaunted striver and the secure traditionalist. All of the types are reflected in the segmentation table and analyzed on demographic, psychographic and behavioural variables.
Based on the segmentation tables (Appendix 1), one profile per scope country is chosen which is best to attract. The profiles are chosen based on the extent of the share of the tourist market and their interests. The profiles selected are: the Mindful Moralist for the UK, the Undaunted Striver for China and the Conservative Homebody for South Africa (Appendix 2). To optimize opportunities for a new hospitality concept in Battlefields, these profiles are combined in a target group which is called senior explorers. Characteristics of the Mindful Moralist and the Conservative Homebody are: aged around 45-55 and a high income. Their Benefits sought are: health and wellness, cultural heritage, adventure and nature. Characteristics of the Undaunted striver are: aged between 30-50 and a high income. Travelers of this profile are interested in: adventure, luxury, health & wellness, gaining knowledge, and nature.
The main benefits sought concluded from the abovementioned three profiles are cultural enrichment and health & wellness.
Battlefields is a paradise for senior explorers as the area is flooded with culture, heritage, and adventure. Outdoor activities and tours offer tourists endless possibilities of tasting local South African culture, wildlife and history.
With regard to the wish for health & wellness, Battlefields is an ideal place for tourists due to the numerous Spa's and natural hot springs.
The following positioning map reflects ten accommodations in Battlefields.
The variables placed on the X and Y axes are chosen based on the needs and benefits sought of the selected target market (Appendix 2).
Shown on the X-axis is a scale to which the hotels offer its visitors cultural enrichment. Criteria's measured are: usage of traditional and local food, museums, and monuments in the surroundings, guided tours offered, cultural events organized, view on a landscape, and themed rooms.
On the Y-axis is presented to what extent hospitality businesses match to the health & wellness facilities sought by guests. Criteria's measured are: accessibility to swimming, sauna, body- and facial treatments, massages, outdoor activities, fitness, group lessons and a smoke-free hotel. The accommodations score points when one of the criteria's is offered and based on the total points, the positioning map could be put together.
Fig. 31: Positioning Map
2.4 Direct competition
The positioning map (Fig. 31) indicates two direct competitors to the market of the gap. The Springbok Lodge and Natal Spa Hot Springs and Leisure Resort both score high on facilities and services offered with regard to health & wellness and cultural enrichment. Natal Spa Hot Springs and Leisure Resort offers its guests a wide array of spa facilities and treatments, a gym and is known for its hot springs and beneficial waters.
On the other hand, The Springbok Lodge scores high on cultural enrichment due to the fact that the accommodation is located in a game reserve. Thereby, a great variety of tours and local/ cultural events are organized for guests upon prior arrangement. A detailed overview of the two direct competitors is shown in the direct competition table (Appendix 3).
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