The client
Our client on this assignment was the Ministry of Tourism in a country in which tourism is the third largest contributor to GDP and accounts for over 12% of the country’s formal employment.
Situation
One of the biggest challenges that the hospitality, tourism and leisure industry the world over faces is its cyclic seasonality. At its worst, this leads to decreased revenue, staff lay-offs, closure, dilapidation of properties, and low return on investment among other undesirable consequences. When an industry faced with such volatility is a country’s leading foreign exchange earner, this problem escalates from being a common business problem to a national concern.
Client requirements
Effects of the high and low season cycle experienced in the tourism industry was an increasing concern that the government, which the Ministry of Tourism sought to mitigate through diversification of source markets and in a very deliberate way, through the growth of domestic tourism. The client specifically needed to develop a sustainable strategy to drive domestic tourism. This included opening of domestic tourism sites, rehabilitation of underutilized sites, as well as optimization of existing facilities.
Our approach
As advisory partners to a taskforce appointed by the Minister of Tourism, we engaged with industry stakeholders to address three key areas:
1. Seasonal fluctuation in the overseas demand for the local tourism product
2. Foreign exchange fluctuation and its impact on earnings accruing to the tourism industry
3. Macroeconomic shocks arising from economic downturn in its key source markets
We engaged the industry's stakeholders in an end-to-end value chain analysis, evaluated comparative strategic options that the hospitality, tourism and leisure industry across the world has used to address similar situations, and developed a product differentiation framework to distinguish the country's domestic tourism product, at the end of which we obtained a viable government strategy to grow domestic tourism.
Significant outcomes
Following adoption of the domestic tourism strategy by government, the administrative structure for the advancement of domestic tourism was reviewed. This included the appointment of senior government officials specifically responsible for domestic tourism, who were tasked with implementation of the domestic tourism strategy.
Over a period of three years following adoption of the domestic strategy, domestic tourism recorded 28% compounded annual growth rate (CAGR), securing jobs, and significantly mitigating revenue losses from international tourism demand variation. The capacity and sustainability of previously underutilized domestic tourism attractions was also significantly enhanced.
ARTEMIS Transition Partners
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Plugging the troughs of a cyclic business pattern