1.1 BACKGROUND TO RESEARCH
Botswana is a relatively small country located in Southern Africa, sandwiched between South Africa, Zimbabwe and Namibia. A landlocked country, however what it lacks in coastline, it more than makes up for in tourist attractions that have pulled in visitors from across the world. Known mostly for the Okavango Delta, the Kalahari Desert and its Bushmen, and the numerous wildlife sanctuaries and parks that are a host to numerous endangered species.
With a population of approximately 1.8 million people, mostly Setswana speaking, it has enjoyed 40 years of independence and gained its reputation as one of the fastest developing nations since, transforming itself from one of the poorest in the world, to a middle economy country. These great achievements have propelled Botswana into recognition as one of the most politically and economically stable in Africa.
For a long time, Botswana’s economy has been heavily dependent on the mining industry, boasting over 75% of the country’s export earnings. Although the country is also rich in copper, nickel and gold, diamonds are the most profitable. They were first discovered in the late 1960s, and since, the industry has flourished and established itself as the world’s largest producer of gem-quality diamonds. This industry is in no doubt responsible for assisting in and facilitating the speedy development of the country. Other key sectors include the agricultural industry (exporting quality beef), textile and livestock industries, exporting quality beef.
One of the most important objectives of government policy towards achieving its Vision 2016 is the diversification of the economy away from dependence on the mining sector. In recent years, the growing tourism industry has proven itself as a significant contributor to the country’s Gross Domestic Product (GDP) and economic growth. With the country’s competitive advantage of its vast natural resources and offerings, it is automatically put it in a position where it can prosper not just regionally, but internationally as well.
This growth and prosperity can be attributed to initiatives taken by the government in order to boost and improve the industry. Various strategies and policies have been implemented to try and spur private investment. It has initiated campaigns for the development and improvement of the facilities in the National and wildlife parks in order to preserve the environment and its ecosystems. Foreign investment is encouraged, although only if those wishing to do so conduct joint ventures with the citizens, to promote their involvement in the development of the industry. They introduced a policy which allowed both foreign and local investors in tourism, among other selected sectors, to receive grants from the Government, clearly gave a boost to investment in tourism
All these developments have led to an increase in international visitors which in turn has led to an increase in the need for accommodation, and therefore an increase in the building of hotels and lodges.
Extracted from “FDI AND TOURISM: THE DEVELOPMENT DIMENSION, EAST AND SOUTHERN AFRICA. A United Nations Case Study 2003”
The hotels that have been established are both locally and internationally owned, however research reveals that ownership is dominated by international companies and individuals. The most popular of these hotels are; Sun International (a South African franchise), Cresta Hotels (another South African franchise belonging to the TA Group), The Grand Palm and Mondior Summit (a member of the South African Mondior Company).
In an ideal environment, it would have been the other way around, with industrial control fully domestic instead of dependent on foreign aid. The drawbacks of having an unbalanced ownership scale (or one that is not heavily domestic) in the tourism industry, include loosing vital revenues collected to foreigners and the inability of complete revenue maximization by the government and the citizens.
The presence of these multinational hotel chains is evidence that the initiatives taken by the government to boost the industry are effective. However, only to a limited extent because in order for the industry to survive, they have to allow foreign investors to participate but this is pushing the industry into the hands of these foreigners and away from those who can benefit from it the most; the citizens.
With this proposal, I intend to find out if there is a relationship between the large internationally owned hotels and lodges and the significantly smaller locally owned ones.
1.2 RESEARCH PROBLEM
The tourism industry in Botswana is still in its growth phase, with government programs dedicated to the upgrading and development of the areas that attract most tourists. The hotel industry is one that has seen considerable growth in relation to the government’s policy. In order to help expand this industry, the government has favored foreign investment and made it easier for foreigners to invest on a long term basis with political and economic stability providing an ideal investment climate. As a result, the hospitality and accommodation sectors have seen numerous international hotels, lodges and hotel chains set up around the country.
Although significant for a maturing industry, the abundance of internationally owned and operated establishments signals an inequality in the ownership when compared to the locally operated establishments. The industry is dominated by foreign proprietors and it seems they are overpowering local entrepreneurship.
The irony of the situation is that in order for tourists to experience the genuine Setswana environment, they would have to place themselves in an atmosphere that would reflect the true Setswana lifestyle, and that is more than often found in a locally owned establishment. The success of these international hotels is testament to numerous situations, such as:
the local hotels aren’t performing to meet the standards of the tourists
Most of the internationally operated hotels around Botswana can be classified as 5star, and for the economically well-off visitor, luxury and comfort may play a larger role than “experiencing the Setswana lifestyle” in choosing where to stay. There is also a level of quality that can be expected when dealing with an internationally established and world renowned hotel that may cause visitors to automatically opt for it instead of trying out a local hotel. This is not to suggest that the local hotels are not up to par, but the unfortunately the reputation of an international hotel, far exceeds that of a local one.
the tourists are not aware of their services
As more and more of the world business is turning electronic, i.e over the internet, more and more tourists rely on the internet to inform them on where to stay, and the use of the travel agent as an intermediary between the hotel and the tourist is slowly becoming obsolete. It has taken a little bit longer for some businesses to realize the importance of the internet as a marketing tool, and its ability to help them reach out to potential customers. Many hotels have not yet come to this realization and it is this way that they missing out on opportunities by failing to expose themselves to a wider audience. Advertising plays an important role in determining the success or failure of a company and if it fails to run an effective marketing scheme then it will receive limited responses.
Either of these situations results in loss of revenue for the local hospitality and accommodation sector and all those involved. These consequences have a long term domino effect, where one situation triggers the other, or one situation is the direct or indirect consequence of another. Such as:
Managerial positions are dominated by foreigners
The only posts reserved for locals are those with lower salaries
General failure of the industry to contribute to the development of the local community and the eradication of poverty.
1.2.1 PROBLEM STATEMENT
The local tourism market in Botswana is saturated by large foreign owned hotels and this is pushing the locally owned ones into the background.
1.2.2 RESEARCH QUESTION
The purpose of this research proposal is to answer the question: What is the impact of the international hotel giants on the local accommodation and hospitality market?
My intention is conduct a qualitative study by interviewing local entrepreneurs to get an in-depth and personal opinion on the role that these hotel giants play in the industry.
The purpose of this study is to assess the impact that international hotel franchises have on the local hospitality and accommodation market in Botswana. This study can be broken down into categories that when concluded, should give a clear understanding of the above mentioned issue.
To recognize the relationship between the abundance of the internationally operated hotels and lodges and the scarcity of locally owned ones.
To determine the impact that these international giants on the local hotels.
To examine the repercussions that the international hotel chains have on the local tourism industry.
To develop research in this area in order to recognize how the current situation can be overcome.
1.4 JUSTIFICATION OF RESEARCH
The reason I have chosen this particular topic is because the tourism industry in Botswana is rapidly becoming a vital contributor to the country’s GDP, as the need for economic diversification away from the mining industry becomes more urgent. As a vital part of the economy, it is important that the public be aware of all aspects that contribute to its growth. By creating public awareness on how the local market is influenced by these foreign giants, it is my hope that they will take initiatives to be more supportive and more participative in the industry.
Another reason for pursuing this topic is because research previously conducted has been limited and non specific, . . . â€¦ .
The primary purpose of this research is to find out if and how the local entrepreneur’s business has been affected by the international hotel chains. What I want find out is the experience, opinion and feelings of these entrepreneurs towards these hotels.
The best way to collect this data would be through conducting an interview, specifically a structured interview. I chose this method because:
It allows for me to investigate the thoughts, views, assumption, feelings, attitudes and perceptions of the interviewee which cannot be provided by any other method of data collection.
It allows me to ask more complex questions and also the ability to validate the data as I collect it, which improves the overall quality of the data.
Due to geographic constraints, my interviews are going to have to be conducted over the phone. The advantages of telephone interview include:
More freedom for the interviewee because they are not under pressure from a face-to-face scenario, therefore the interviewee feels more comfortable.
This also means that their responses will be more honest and open.
I intend to interview a total of ten local businesses located all around the country, in order to determine whether it is a national or just localized phenomenon. I want to find out the opinion of the businessman and woman in all tourist attractions around Botswana to establish whether their view is universal.
Chapter 1 – Introduction
This starts with a brief description of Botswana’s economic history and the contribution that the tourism industry is making towards it. The Research Problem describes how the introduction of International hotels signifies the growth of the industry but that may be at the expense of the local entrepreneurs. Therefore it is my responsibility with this project to find out exactly how these hotels have affected local businesses and to achieve this, I will conduct interview with ten of these businessmen and women.
Chapter 2 – Literature Review
The exploration and analysis of secondary data procured over the internet. I will study journals related to or contributing to the topic, in order to find out the significance of my research.
Chapter 3 – Research Framework
This is an in-depth analysis of the method of data collection, sample sizes and distribution in order to inform the reader on every step of primary data collection process.
1.7 DELIMITATIONS OF SCOPE
The scope of this research is limited to local entrepreneurs in the accommodation and hospitality industry in Botswana, although only those involved in the operation of hotels, lodges or guest houses. The aim of this research is to solicit their opinion on the effect that the international hotel giants have on their businesses with the assumption is that they have all been affected either in a good or bad way by the success of these international hotels.
This research will provide an analytical view of how these local businesses are doing in comparison to the hotels, and this information will be useful to these entrepreneurs in trying to improve the current situation.
This chapter is an introductory chapter that starts off by describing the economic history of Botswana and the influence that the tourism industry has had. The main issue revolves around how this industry has seen the establishment of international hotels and what role these hotels play on the local hospitality and accommodation market. The research questions outline what type of information I’m trying to solicit and the choice of data collection most suitable for that is through conducting interviews.