Tourism Industry Analysis
The travel and tourism industry in Kenya has grown drastically over the years. As a matter of acts, it’s the most sought-after and exciting travel destination in the entire globe. In the past, it was just adventure freaks and wild enthusiasts who showed interest in this amazing country (Rodgers 2001). However, things have turned around now as even leisure travelers have perceived Kenya as a unique destination for their holidays.
For purposes of being specific, the travel and tourism industry in Kenya is by far the leading revenue earner for the country. Appropriate planning and showcasing has boosted the industry in Kenya by making it an important destination for traveling in the east African region. The country never fails to surprise and entice its visitors. It is due to the varied geographical features as well as cultural diversity. It is a home for the most amazing beeches globally. It also carries amazing lakes such as Lake Nakuru, Naivasha, and Victoria. The Rift Valley cutting along Kenya contains the first evidence of proto-humans. Kenya is the home of the majestic Mt. Kenya, which is the second highest peak in Africa. The vast and arid north-western region of the country’s landscape is also interesting to explore. Kenya happens to have a rich wildlife populace that boosts its tourism industry. To be realistic, there is no trip to Kenya that can be termed complete without interacting with the wildlife safaris. They offer a unique travel to another world where even words seem to lose their meaning. All that is required is to gape around as the majesty of the entire jungle unfolds before one’s very own eyes. Truly, the country has a lot to offer as far as tourist attractions are concerned.
The travel and tourism industry analysis will be termed complete after utilizing tools such as PESTEL analysis, SWOT analysis, and Porter’s 5 forces.
A PESTEL analysis is a framework or tool used by marketers to analyze and monitor the macro-environmental (external marketing environment) factors that have an impact on an organisation. The result of which is used to identify threats and weaknesses which is used in a SWOT analysis.
The Kenyan tourism industry is on its way to complete recovery from the blow of uncharacteristic political violence. The political violence was followed by the global financial crisis. The recovery started in 2009 with a strong growth although at a slow pace (Gatimu 2007). The industry was faced with a challenge of increasing the visitor numbers to surpass the records set in 2007. With the stability realized by the country since then, the travel and tourism industry has been boosted considerably. More visitors have been received from diversified destinations across the globe. Logically, political instability can diminish the tourism industry if it is not dealt with immediately. Therefore, it is the role of the government to enhance peace, reconciliation, and unity in the country. This would encourage visitors to make bookings for their safety and security are guaranteed.
The travel and tourism industry in Kenya is affected greatly by international relations as a political factor (Gatimu 2007). Different governments have different criteria of international relations. For instance, with the inception of the current government in 2008, the attention of international relations shifted eastwards. This saw an increasing number of visitors from the East, especially from China. Major government projects were entrusted to the East countries, with China being the major beneficiary. Currently, the industry receives more visitors from the East as compared to other markets, such as Europe and America. The politics of international relations is a major influence on the visitors’ attraction. Countries such as the U.S have been on record blocking their residents from visiting the country due to security issues. Consequently, it reduced the number of tourists received from such markets and, thus, it is characterized by travel cancellation.
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Another factor is terrorism and the crime rate. Tourists tend to keep away from areas associated with terrorism and crime rates. Kenya has been characterized by various terror attacks in hotels over the past few years. Hotels in Mombasa have been targets of suicide bombers as well as shifters. There have been terror attacks associated with an illegal Somali sect called Alshabaab. The sect has been associated with several attacks across Kenya. These attacks have been witnessed in places like Nairobi, Mombasa, Garissa, Moyale, and Mandera. Such attacks create fear to the tourists while making them cancel their bookings. Countries such as the U.S and France have been on record advising their citizens to be careful when they visit Kenya. Fortunately, the Kenyan government has come out to defend itself and to create confident on the minds of tourist. It has declared the country as a peaceful country and that everything is under control. However, if the effective measures are not carried out, the terror attacks could affect tourist influx negatively.
Economically, Kenya has growing in sophistication. The country has held the most developed economy across East Africa. Its diversification has shown just how it has progressed. The main contributors to the Kenyan economy are agriculture and tourism. Agriculture had been the largest contributor to the country’s economy over the years, but not until it was overtaken by the tourism industry in the past few years. There have been increased tourist’s destinations in the country aiming at enhancing tourist’s experience. There are various factors of the economy that has impacted the tourism industry in Kenya.
One of the factors is the infrastructure. Kenya has included the infrastructural development as a core project in its strategic plan. It has also featured in the country’s economic pillar of the vision 2030 (Ministry of tourism strategic plan 2008). Roads leading to major cities as well as tourism attraction sites have been developed, and the others are still in the process. A major achievement has been the Nairobi-Thika superhighway that is expected to complete by the end of this year. The superhighway will enhance the accessibility of the interior parts of the country such as Isiolo, Turkana, Samburu, Meru, and Nanyuki just to name, but a few.
The Nairobi-Nakuru highway has also opened the western parts of the country. The aim of the Kenyan government is to open up the interior parts of the country for tourists. It will, in turn, enhance the growth and development while offering employment opportunities for the local community. Similarly, the airline transport in Kenya has been improved to enhance tourist transportation across the country. The country has three international airports located strategically. One of the airports is on the coast of Kenya and is majorly used by beach tourists. The other one is in the capital city, Nairobi, while the third one is in the Western part of the country. The KQ is the Kenyan major airline that has several destinations across the globe. It has also increased its domestic flights to enhance domestic tourism within the country. Moreover, there are many airstrips in almost all the tourist destinations to enhance the air travel. It is clear that the Kenyan government is dedicated to improve transport efficiency in an attempt to enhance accessibility and tourists’ mobility.
Communication is another infrastructural development that has been witnessed in Kenya. This has been fuelled by the country’s adoption of ICT and new technology. The tourism industry has made use of internet in almost all operations. The technologies such as Galileo and Amadeus have been utilized in the travel industry. Kenya is in its initial stages of constructing an ICT city at Konza that will enhance technological advancement in the country. It will impact the travel and tourism industry positively in terms of effectiveness and efficiency. The country is also on its way to turning digital. This shows the country’s seriousness in implementing ICT in all the sectors of economy. Tourism and travel have a bright future in Kenya as ICT has been a major boost to the industry in other parts of the world (Kenya Business Fact Sheet n.d.).
Travel and tourism costs in Kenya have been low as compared to other world destinations. It is a move to encourage a big number of middle class travellers who are the majority. Similarly, the low costs on domestic tourists have encouraged travel within the country. Many local tourists have engaged in travel, with the beach travel being their major destination. The economic stability in the world has also encouraged travel in Kenya. With the end of financial crisis and economic recession, people have been able to embark on travel as a way of spending their holiday. Countries are challenged to take advantage of the favourable economy and improve their travel industry. The ministry of tourism has initiated a move to market Kenya abroad as the destination of choice with the latest move being the opening of a Kenya house in the London Olympics. Since people have a good amount of disposable income, the travel and tourism industry should engage itself in marketing to attract more visitors. Eventually, the industry will grow while at the same time increasing revenue for the government.
Tourism is all about discovery. Visitors expect a variety of surprise packages that are different in their own making. Kenya is a destination that promises visitors of many surprises during their stay in the country. Tourism is a sector that is much affected by the social factors of a country’s population. The way of life or lifestyle defines a population’s social setting. A community with high income tends to have enough disposable income. It makes them eligible and more vulnerable to travel for holidays. Also, they happen to be free from vices such as insecurity, disease outbreaks, and immorality. When tourists visit areas like this, they are assured of total security and a chance to enjoy their stay. However, it is different from communities with low income. They do not have enough to travel for holidays. Their areas of residence are characterized by insecurity, crime, prostitution, poor hygiene standards, and environmental degradation. Visitors are not assured of enjoying their stay in these areas. Therefore, it is evident that economic status of a population dictates their way of life.
Young children from poor backgrounds are involved into prostitution as a way of raising money for sustenance. Some lack guidance from their guardians and are influenced by those already involved. This facilitates child sex tourism where people from different areas of the world visit a location with sole intensions of having sex with children (Kibicho 2009). Other travel to enjoy sex with adult prostitutes. Such areas become uncomfortable for other kinds of tourists. The spread of HIV/AIDS and other viral infections is evident, and poor people die as a result. Prostitution, crime, child sex, and theft tarnish the image of the travel and tourism industry internationally (Kibicho 2009). This might in turn affect the influx of tourists in Kenya, which is a blow to the country’s economy.
Kenya is well-known for its cultural diversity. It comprises of 42 different tribes, each having its distinct culture. The country has several cultural exhibitions at the Bomas of Kenya where tourists come to watch (Travel and Tourism in Kenya 2005). Each tribe showcases its originality with the most famous internationally being the Maasai culture. Local delicacies that tourists enjoy during their stay in Kenya are derived from the distinct cultures. Each tribe has its own values, dances, and commodities to showcase. This fuels the expansion of cultural tourism. Tourists who travel for cultural experiences enjoy a full package tour product with nothing to regret about. Cultural presentations blend the tourist experience and, as such, there is no complete holiday without a cultural experience. Traditional cultural commodities are sold to tourists, thereby boosting the community’s income. Major hotels in Kenya have scheduled cultural dances at least once per week. This is to allow the tourists who do not move out of the hotel to have a cultural taste.
Community based initiatives boost tourism in the country. Some communities have come together to conserve the environment around them. This creates conservancies that harbour wild animals as well as exhibitions for cultural diversity. Communities also form group that undertake various projects to improve the environment around them while offering them employment. A community that is conservation minded creates a favourable environment for the tourism development. Tourists enjoy a variety of products from a particular location, which leaves them satisfied. Therefore, community based initiatives should be facilitated as a way of boosting the tourists’ experience.
Technological advancement is evident in the present generation. Discoveries, innovations, and upgrading are emerging now and then. The improved technology facilitates efficiency, effectiveness, accuracy, and other forms of satisfaction in the tourism industry (Laws, Chon & Prideaux 2007). One of the areas affected by the improved technology is transport. Methods of transport have become faster and more fuel efficient. It has eased transport while reducing costs of travel. This means that transport has become more efficient and cheaper for people to travel. Therefore, it is the duty of the industry to adopt the new technology for maximum realization of the benefits.
The technological advancement also brings about the infrastructural development. The more tourist facilities a country has, the greater the success it realizes as a tourist destination. The facilities enhance recreation while improving the tourist activities accordingly. Recreation facilities are products of the technological advancement. The travel and tourism industry has to adopt such facilities to ensure that tourists enjoy their stay successfully. The improved infrastructure enhances the tourist’ services by making them fast, effective, and reliable. Tourists who enjoy their stay due to improved infrastructure are more likely to make a repeat visit to the same destination.
The technological advancement has led to the development of information technologies. ICT has made a great impact on the travel and tourism industry. Through the internet, people are made aware of a variety of travel options. Tourists can book their trips instantly from their homes. They also have an opportunity to enquire about the travel details to blend their satisfaction. The industry is also capable of utilizing the internet in marketing its products. Marketing done over the internet is capable of reaching audience from the entire world. ICT has also improved the services that tourists experience. This enhances their experience by characterizing it will efficiency, effectiveness, speed and accuracy. Communication is also made easier between the tourist and the tour operators (Laws, Chon & Prideaux 2007). Transfers are also facilitated by the internet. Therefore, the industry has adopted ICT and incorporated it in almost all the operation. It makes sure that the tourists enjoy their stay and leave satisfied. It also makes the tourist to re-visit a destination.
Kenya is strategically positioned along the equator. Half of the country in is in the northern hemisphere while the other half is in the southern one. Therefore, the country has adverse climatic changes. It has a hot/warm season between January and March, and between September and November. The cold season is present between April and August, and December. This designs the peak and off-peak season in the Kenyan tourism trend. The country enjoys a peak season during summer when the climate is favourable and experiences off-peak during winter. However, in the past months, it has been difficult to predict weather due to the global climatic change. Sometimes it rains heavily and unexpected. This climatic change has gone further to disrupt the eight wonder of the world, i.e. the wildebeest migration.
The environmental development has also created impact in travel and tourism industry. There has been an increase in involvement of environmentalists as well as NGOs in production, tourism and trade issues. NGOs have become useful during information dissemination. They help upgrade the environment through conservation, control of pollution, tree planting, conservancy development, and environment based projects such as dam construction. The government of Kenya has an NGO that control environmental issues while giving approval to constructive initiatives that are environmental friendly. The NEMA (National Environmental Management Authority) is an NGO in Kenya that has made environmental assessment to become a legal requirement. It also curtails development activities through encouraging environmental action groups.
However, pollution is a major problem facing the Kenyan environment. This is fuelled by polluting technologies and poor waste management. Pollution in form of smoke, litter, noise, and waste disposal is common in the country. The irresponsible behaviour of tourists also causes pollution, especially when they litter in national parks or feed the animals. A well-conserved environment will enhance satisfaction to the tourists while making them enjoy their stay being away from home. On the contrary, a polluted environment is a disgrace to the country and might keep tourists away from visiting Kenya for health issues. The government of Kenya under the ministry of environment has developed initiatives destined to conserve and improve environment. This has been done through funding group and community projects that seems promising.
Legal issues are part of the everyday life and any society cannot do without them. They help uphold unity, peaceful co-existence, rule of law, and good governance. Legal issues that affect travel and tourism are contained in the country’s constitution, industry’s by-laws, and the local government by-laws. The rule of law has increased awareness among communities on their human right issues. For instance, the human-wildlife conflict was experienced in the last month in Kenya. Some lions from the park attacked homesteads and ate several cows while injuring others. The angry community went in to the park and killed five lions as a form of revenge. The community complained of the government’s reluctance to compensate their damages. Tourism legislations contained in the Kenya’s constitution should be implemented fully to avoid such conflicts in the future.
The Maasai Mara national reserve is the home for the great wilder beasts’ migration (The Great Wildebeest Migration 2004). However, in the recent past, the local community demonstrated and blocked the road leading to the park. This led to the delay of transport on the road for almost six hours. Residents were complaining of poor roads that lead to the Mara. The incidence proved that the tourism legislations are not implemented effectively to avoid such tragedies. Such issue would discourage tourists from visiting the country.
Other legislations that affect tourism are hospitality laws that define the relationship between the hotelier and the guest. Therefore, it is all about following and implementing the laws enacted by the country’s government.
It would be unfair to complete the industry analysis without reviewing the internal environment. SWOT analysis facilitates the identification of resources, assets, processes, and skills of the industry. It also enables the air travel and tourism industry to discover its strengths and weakness while taking advantages of opportunities to minimize the threats.
Strengths of SWOT analysis
The travel and tourism industry in Kenya is characterized by a unique hospitality and diverse tourism products. This makes it a destination of choice for all kinds of tourists. Business tourists, adventure tourists, explorers, beach tourists, mountaineers, divers, birdwatchers, and holiday makers among others, find a destination of choice in Kenya. The hospitality offered to the tourists is of high standard characterized by efficiency, speed, and quality. The efficiency and speed are facilitated by the use of technological applications such as Amadeus or Galileo in the air travel. Tourists enjoying the hospitality services are entertained either by cultural dancers or performers. This is to make their stay comfortable and enjoyable. The hospitality staffs are well-trained to offer competent services at all times. The country has many tourism products that cater for all types of tourists. This encourages a high number of tourists at the same time with no congestion.
Kenya is a relatively secure destination. The country upholds peace and unity. It condemns insecurity crime and terrorism with the strongest words possible. Tourists are always assured of protection and security through out their entire stay. There has never been an instance of attack on tourists in the recent past. The provincial administration has established a section of the police force that deals with tourism security called tourist police. They ensure that all tourist facilities are secure and that all destinations are safe to explore.
Kenya as a destination has established tourist facilities that enhance service provision. In all hospitality and tourism outlets, there are up-to-date facilities. Their existence enhances the tourism experience as the essence of tourism and hospitality facilities is to provide a tourist with service beyond expectations. The facilities are equipped with the latest technology to enable service improvement. In the air travel, technological applications, such as Galileo and Amadeus, are used. They facilitate booking, air ticket distribution, and airline transfers to tourists from all over the world. The centralized computer reservation system enables proper management and coordination of destinations and source market. Galileo and Amadeus have enabled people to book and conduct reservation while at home or work. It has created efficiency and tourists’ experience in the air travel.
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Kenya boasts to be a renowned tourist destination. Tourists who visit Kenya carry the country’s good image to their home country. The gospel is spread in all the continents making more and more people to want a taste of the experience. Kenya hosts the eighth wonder of the world, that is, the great wilder beast migration (The Great Wildebeest Migration 2004). It has the largest beach tourism in the world. It also harbours the largest cultural diversity experience. These unique features market the country globally making it renown than other destinations. The wildlife in Kenya is diverse and rich in all kinds of animals, thousands species of birds, sea creatures, and physical features. There has never been a time when tourist would come for a holiday and consume all the products during their stay in the country. Tourism discovery of new attraction sites is also progressive. This means that tourism in Kenya is not dormant and tourists are assured of new packages every time they visit the country.
The country has a strategic regional communication centre. This centre facilitates communication across the region. It also improves coordination of tourism services. Tourists are able to communicate effectively with their friends, tour operators, and service providers across the entire region. Communication is the main ingredient of tourism services. The tourists must communicate with the service providers and vice versa if a memorable experience is to be achieved. The communication centre acts as strength of the travel and tourism industry in Kenya as it enhances efficiency in service provision.
Weaknesses of SWOT analysis
The travel and tourism industry in Kenya has some weaknesses, which tends to undermine the service provision. One of the weaknesses is the outdated legal and policy framework. Times are changing, and the world is moving from the old generation to a new one. This means that procedures of operation should change and adapt to the technological advancement appropriately. Legal issues keep changing as the generation transforms. Therefore, there is needed to keep amending them so as to comply with the current times. The travel and tourism industry has not updated the legal and policy framework and this leads to various problems, such as human-wildlife conflicts, local-tourists conflicts, and land ownership conflicts.
Over-reliance on the traditional market sources is another weakness. The industry has not diversified its source markets. This hinders the industry from exploring the new markets with potential tourists. In other words, the industry blocks potential markets that would revive its profitability and expansion. The marketing that is done over the internet tends to target the traditional sources, which show a lack of innovation.
The tourism industry has inadequate financial resources that would facilitate tourism development and marketing. The government fails to allocate enough resources to the ministry of tourism that would foster development and marketing. This makes the attraction sites dormant and similar from season to season. The poor infrastructure is also as a result of inadequate financing. Roads leading to major tourists’ attraction sites are in bad shape. Residents have even held mass action to pressure the government to improve roads leading to national parks in the country.
Another weakness facing the travel and tourism industry in Kenya is inadequate research. There has been no research related suggestion that would improve the industry or position, which is strategically in the global market. This has led to under-development of domestic and regional tourism markets. Much attention is focused on income and expenses balance as opposed to tourism research and development.
The air travel is affected by the fact that Galileo and Amadeus systems are only used by BSP certified travel agents. This limits bookings and air tickets only to those who have authority to use the system. Travel agents who have no International Air Transport Association (IATA) certification are not allowed to access the system. This means that their operation will be manual or just internet programs. This might be fuelled by monopoly. Galileo and Amadeus are the only systems used and recognized by the IATA. If there had been other systems with the same technology, all the travel agencies in Kenya would have adopted at least one of them.
Kenya is rich in natural beauty and wonders. There is still a lot to be discovered. There are also untapped tourism potentials in the country. Such potentials include the diverse culture, cruise, eco-tourism, and conference. Therefore, the industry is challenged to find ways of exploiting these potential tourism products in an attempt to increase profitability and expansion. With these potentials, the industry is assured of a bright future full of advancement and improvements.
There is also an unexploited domestic tourism market in the country. The local community of Kenyan people is reluctant on travel. This is due to the myth that tourism is meant for foreigners. They fail to understand how one can be a tourist in his / her own country. With creation of awareness by the travel and tourism industry to the locals would discover the unexploited market. The industry is faced with a challenge of creating awareness to the people of Kenya, and in return, there would be benefits realized.
Another potential presented to the Kenyan tourism is the emerging markets in Africa, Middle East, and Asia. People from these destinations have turned to travelling and holiday making. They also tend to prefer Kenya as a destination. The travel and tourism industry in Kenya should tap the market and exploit it effectively.
The world economy is turning digital. The expansion of global digital economy is evident and investors as well as business practitioners have shifted to e-business. This has brought about the emergence of new global distribution systems in the air travel such as Sabre. The travel industry in Kenya should acquire the emerging computerized systems as a way of remaining at the competitive edge. The air travel should improve the efficiency of Galileo and Amadeus as it seeks to acquire new systems, such as Sabre.
The travel and tourism industry is faced by potential threats that might affect its future (Spilsbury 2011). One of the threats affects the air travel and might offer a challenge as far as service provision is concerned. The increasing competitive rivalry between Amadeus and Galileo global distribution systems may result in sabotage. The competition is dominance oriented as opposed to quality. The competition might threaten the entrance of new distribution systems that would increase efficiency in the air travel.
The travel and tourism industry is also threatened by the negative media publicity (Spilsbury 2011). Many people and especially the tourists depend on the media for information regarding a particular destination. If the media broadcasts negative information regarding a destination, tourists will tend to avoid it. Tourists might even cancel their bookings, which might be costly on the travel industry.
Another threat is that there is an increased tourism competition in the region. Countries in East Africa have embarked on tourism upgrade, which threatens the future of Kenyan tourism. The travel and tourism industry in Kenya should, therefore, focus on quality improvement, marketing, and management. Once they improve quality, create efficiency in technological systems and market effectively, tourists will always choose Kenya at the expense of other destinations.
The Western influence in Africa has led to erosion of cultural values. Local communities tend to copy behaviours of tourists. This makes them forego their cultural values, which they inherited from their forefathers. Cultural tourism is dependent on these values. Once they are forgotten, there would be nothing to showcase. This means that cultural tourists won’t enjoy or get back the value of their money. This is a major threat to the tourism industry in Kenya.
Illegal trade of ivory and skin is endangering the animal species while leading to environmental degradation. It has fuelled poaching and killing of animals such as rhino, elephant, and leopards. Illegal trade may make some species become extinct, thereby affecting travel and tourism negatively.
Porter’s five forces
Having dealt with external and internal environments of the travel and tourism industry, it’s important to blend the two and have a clear understanding. To blend the two effectively will require the usage of Porter’s model of five forces. Three of the forces refer to external sources of competition, while the other two refer to the internal threats. These forces are more of microenvironment as opposed to macro environment. They consist of forces close to the industry that affect its ability to attend to its customers and make profit. The overall market attractiveness does not justify that every industry will return the same profitability. The five forces are analyzed below with relation to the travel and tourism industry in Kenya.
Threat of New Competition
The travel and tourism industry is a profitable market that yields high returns (Industry analysis of travel and tourism industry 2010). Therefore, it attracts new entrants that will cause congestion. This decreases profitability for all the industries in the market. It is until the new firm’s entry is blocked so the profitability will be revived. The tourism industry has no barriers to entry. This means that there are no patents or rights allowing barriers of entry to be high and those of exit to be low. Therefore, many industries can enter the market and non-performing ones are not obliged to exit.
The products offered by the tourism industries differ. The new entrants in the market bring about new products with distinct experiences. The existing firms are faced with a challenge of improving their operations to outdo the new entrants. Many industries fall and suffer loss in the hands of new market entrants. The issue facing them is how they fair in terms of attractiveness and tourists’ preference.
The travel and tourism industry in Kenya is a renowned brand that attracts tourists across the globe. Therefore, many investors have shown their interest in the industry. They have come up with hotels, new tourists’ attractions, wildlife conservancies, tour companies, etc. This has led to an increase in competition within and outside the industry. The new competitors switch costs, thereby affecting the overall profitability.
The air travel is not left behind as new entrants to the market are evident. Various airlines have emerged with their target market being the travel and tourism in Kenya. This has increased competition in the air travel industry. Moreover, the new global distribution systems have entered the market creating a stiff competition on the computerized reservation systems. The air travel in Kenya has been using Amadeus and Galileo. However, new entrants such as Sabre will create a competition and a threat to them.
Threat of Substitute Products and Services
The travel and tourism industry in Kenya is faced with threat from the emerging and existing substitutes. For instance, the development of Serengeti National Park in Tanzania as a tourist attraction has threatened the eight wonder of the world, i.e. Maasai Mara Annual Wilder Beast Migration (The Great Wildebeest Migration 2002). In addition, the tour companies in Kenya are threatened by tour consultant agencies that are evident in the market. These substitutes affect pricing and, hence, profitability of the industry.
Other countries in Africa have emerged to offer different products to the tourists. This makes them to be potential markets where a curious tourist wishes to explore. It offers a threat to the travel and tourism industry in Kenya. There have emerged a number of animal orphanages in and outside the country that keep all types of animals. Many people tend to prefer seeing the animals at the orphanage as opposed to visiting national parks and reserves. The orphanages charge a low price than national parks and tourists are guaranteed a diverse experience in a limited area.
The Global Distribution Systems have also faced a threat from the online booking offered on the internet (Maingi n.d.). Many people have shifted to internet booking that goes at a cheaper rate. This has created a decrease in the number of clients accessing the Global Distribution Systems, such as Galileo and Amadeus. Hotels have also developed a booking system via the e-mail and phone calls. This allows for a direct contact between the client and the destination. When e-mails and phone calls are applied, tourists fail to consult the Global Distribution Systems, thereby threatening the quality of services.
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The Customers’ Bargaining Power
The bargaining power of customers, in this case, tourists, forms the market of outputs. It is the ability of the tourists to put the industry under pressure thereby creating customer’s sensitivity to price changes. Tourists tend to compare prices among various destinations before making reservations. With that, they acquire an understanding of how prices have been distributed and the extent which they can be altered too.
Tourists tend to bargain with facts and evidence from other destination. To avoid losing clients, the travel and tourism industry in Kenya tends to negotiate with them. This allows them to come to a consensus on switching costs considerably. The bargaining power of customers is fuelled by the existence of substitute products and services. To survive this power, the air travel and tourism industry should make tourists’ information available both on the internet and manuals. This will help create a differential advantage of the Kenyan travel and tourism industry products and services.
Bargaining Power of Suppliers
It is the market of inputs. Suppliers of labour, raw materials, services, and components to the travel and tourism industry can be a source of power over the industry. It may only happen when the substitutes are few. Suppliers may stop working with the industry or charge high prices for specific resources. The tourism industry depends on agriculture for supply of raw materials (Kenya Business Fact Sheet 2007). The air travel depends on the aviation industry, which supplies the aircrafts and equipment. Moreover, the travel industry relies on tour operators and travel agents for suppliers. All these kind of suppliers may subject the travel and tourism industry with pressure in terms of prices. If the power is too much, the industry’s profitability may be at risk.
The charges imposed by tour operators and travel agents directly influences the prices charged to tourists. It means that the bargaining power of suppliers is transferred to the tourists and other cents in the tourism industry. Likewise, changes in prices by the tourism industry may cause changes in prices by suppliers. However, the suppliers’ competition may be advantageous to the industry. For instance, tour operators may compete for market, thereby offering incentives such as reduced prices and discounts.
The travel and tourism industry’s competitiveness is determined by the intensity of competitive rivalry. Industries involved are under pressure to secure market for their products at the expense of their competitors (Spilsbury 2011). The only way to secure a competitive advantage is through innovation. It will create a product and service difference that will attract an addition customer segment. The tourism industry in Kenya has managed to establish new attractions and tour products. Some are in form of the community-based projects as well as eco-tourism initiatives.
To secure a competitive advantage, the air travel and tourism industry has gone online. Marketing and booking services are done online to ease access and to create efficiency. The industry also spends a lot of money on advertisement. It is done through television documentaries, brochures, manuals, online articles, and blogging. To make sure that all goes well with the industry, there is a need to create a powerful competitive strategy that will ensure ready market at all times.