Keeping More Tourism Spend in Destinations is Crucial for a Sustainable Hospitality and Tourism Development in Africa.

A view from Thomas Mueller, Founder & CEO of rainmaker digital | www.rainmaker.travel

The global travel, tourism and hospitality industry is constantly evolving. The internet has created shifts in traveler behavior, and new market players, business models, value chains, applications, systems, and platforms have made the day-to-day business of hospitality and tourism increasingly complex.

Unfortunately, the hospitality and tourism industry has remained in the past, not adapting to these changes as it should be. It is not an innovative industry, except for various start-ups disrupting silo aspects. Emerging, small, medium and independent providers in destinations are increasingly unable to cope with these changes and the complexity of the modern marketplace.

Just 10% of the 200,000+ hospitality and tourism providers in Africa have a digital presence and only 15% use technology in the operation and management of their businesses. This puts them at a significant disadvantage. They cannot partake in the digital paradigm shift, leaving them unable to create the business results in terms of occupancy, revenue and profit that would be possible, were they enabled to do so.

These businesses have become fully dependent on the unsustainable value chain of DMC-Wholesale-Retail-Traveler. Traveler behavior has also changed. Their demands want and desires are very different from what they were like 10 years ago.

A major change is that the organized group tours have given way to individual travel. This has had a huge impact, but the readily available information on the internet has had an even bigger impact. The traveler’s mental model of Dreaming, Planning, Booking & Paying, Experiencing and Sharing is now catered for online.

A large number of people no longer travel for 3 or 4 weeks for their annual vacation, but travel 3 - 5 times a year for shorter periods on themed trips, such as city breaks or wellness escapes.

Most African destinations languish in the past. They still provide and promote the same way as they did 10 or 15 years ago. They have not changed their offering, presentation, visibility, reputation, and distribution to adapt to the modern market and consumer.

Today’s traveler researches their trip online for months, visiting hundreds of websites, social media and review platforms, and online travel agents before fixing their plans. In this, the dreaming and planning phase, they are in no rush. However, once they have made up their mind, their mindset shifts. They want instant gratification when it comes to booking and paying.

90% of African in-destination providers fail in this regard. The customer is ready to book, but providers are unprepared. They do not enable the customer to do business with them in the way they demand. When the customer shifts to the “instant gratification” mode, they do not want to email, send inquiry forms or telephone the business. They need a seamless process that fulfills their demands.

This results in three types of losses for the destination and its businesses:

The customer decides to go elsewhere, as it is just too complicated to make the itinerary booking.

The customer takes their itinerary to a high street travel agent to make the booking on their behalf. The in-destination supplier loses 60% to 80% of their profit for no good reason.

The customer uses online travel agents. Again, the in-destination supplier loses 60% to 80% of their profit.

Due to the market power of large online travel agents, as well as Google who have also entered the market space, the traditional value chain is coming under intense pressure.

New consumer-focused products are entering and disrupting the market as well, hunting for travelers. Large wholesale operators in major source markets have begun to utilize vertical integration strategies. Some have done this for the traveler already: the next step is the destination and the supplier. This will change the business in destinations forever.

African in-destination suppliers continue to come under pressure from DMCs and traditional value chains, who demand that they offer lower rates and higher commissions, squeezing their decreasing profit margins. They demand extra payments for brochure contribution, exhibitions and fam-trips for travel companies, increasing the cost of distribution yet again.

Many DMCs make block bookings to keep out other market players, effectively monopolizing inventory. Unsold rooms often only are released as little as 30 days prior to arrival with no compensation. This is an inventory that is hard for the supplier to sell, as African destinations are not known as last-minute destinations. DMCs often are running an unsustainable business model on the account of the supplier. In the long term, they harm the entire industry and the destination.

In order to develop a sustainable African hospitality and tourism industry, it is critical to enable in-destination providers. A digital transformation strategy initiative enables them to do business with potential customers. Education, training, awareness and capacity building in African destinations is also critical, with training on market and technology aspects, as well as economic, social and ecological sustainability in the destination.

It is rainmaker’s passion to democratize technology that only large organizations were able to afford previously. We enable African hospitality and tourism businesses to take part in the digital paradigm shift through our VISTA Destination Network Open Platform and Ecosystem and the Award Winning 5 Stages of Success managed services.

Our Public-Private Partnership Model for Destinations and Tourism Authorities, and our Freemium business model for the VISTA.frontdesk booking application builds the foundation in terms of a Digital Transformation Initiative for the destination, aligned to the UNWTO Digital Transformation Strategy and the Tourism SDGs.

We have also developed a local capacity building program, consisting of two master classes, a VISTA.sprint workshop, as well as training programs on visibility, reputation, and distribution management.

This technical and capacity building enablement is of critical importance for a destination, its businesses, and its people. It allows the entire sector to keep more tourism spend in-destination and for its businesses to move towards economically, socially and ecologically sustainable hospitality and tourism development, increasing local prosperity.