Why Tourism Industries Fail (Part 2)
May 2005
(Part 1 appeared in the April edition)
As noted in the April edition of Tourism Tidbits, tourism and travel industries often do not take the time to analyze failures. Like all businesses, tourism involves business risks, and it is only through a careful analysis of these risks that we are able to see past problems and work to avoid these problems in the future. This month’s and last month’s editions are devoted to some of the reasons for tourism business failures. Neither list is meant to be exhaustive but rather to produce thought processes that will help each reader identify his/her greatest reasons for potential failure.
- One of the many reasons why businesses fail is their inability to develop a discipline of innovation. Take the time to consider how your business deals with the unexpected. Often businesses have such tight chains of command that innovation is lost in the process. What changes are going on in the industry, what are the demographic changes occurring among your clients, how do people perceive your product and is it able to maintain its market share despite economic, political, or societal changes.
- How afraid of innovation is your product? Tourism products have two special aspects. The first aspect is that tourism inventory is highly perishable. For example, once an airplane leaves the terminal the airline cannot fill unsold seats. This same principle holds true regarding hotel rooms and restaurant food can last only for a limited period of time. This first aspect of innovation often results in the second aspect fear of risk. Because tourism officials often have very few chances for loss recovery, there is a tendency to shy away from innovations. This fear of risk can often however mean lack of creative thinking resulting in stale products that become less appealing with age.
- A failure to be realistic is a formula for failure. Too many tourism sites believe that if you build it they will come. That may be a terrible mistake. Develop your attractions and community around realism rather than pure hope. For example, a golf course may be a wonderful extra for the local community, but unless it is a very unique and world-class golf course, few people will travel hundreds of miles simply to play golf. In a like manner, if your downtown is empty and crime ridden, placing one hotel in the midst of urban squalor may not be the way to bring about urban tourism renewal. If building a new site, think if this site is going to need local residents to support it in order to be successful or if it really is an attraction that will pull people in from long distances. Finally, remember that history is highly relative term. The 19th century is historic in US terms, but only a “yesterday” in Middle Eastern terms. Most people are interested in their history, but often could care less about someone else’s history.
- Rapid staff changeovers and staff dissatisfaction can cause tourism paralysis. Many tourism industries see their positions as entry-level positions. The positive aspect of an entry-level position is that it provides for a continuous infusion of new blood into the tourism organization. Nevertheless, the lack of continuity means that employees are constantly at the beginning of the learning curve and that the tourism business may lack a sense of a collective memory. Furthermore, as employees mature, the lack of professional mobility means that the best and brightest talent moves on to other industries creating an internal brain drain.
- Over investment often leads to poor training. Failed tourism industries are of those that place a great deal of money in the technical side of the business to the detriment of the human side. Beautiful furnishing and the top computer equipment cannot compensate for a poorly trained employee. Restaurants sell not only food and ambiance but also service and a restaurant that has not trained its employees well and refuses to pay its waiters and waitresses a competitive level of compensation is one that in the end will close its doors. One of the key reasons that tourism entities fail is that employees have not been taught how to put aside their egos. When tourism entities forget that the travel and tourism business is about the other, that the staff is there to serve the guest, and that we can all learn better work methods, then there is a high probability that that tourism entity may not be a viable business.
- In summary, here are some important ideas to help you to avoid a tourism failure. Concentrate on your business rather than the competition. Too many tourism entities are so intent on beating the competition that they forget about improving their own business. You can never control the other person’s business, but you can improve yours. Make sure that your workers are caring and knowledgeable. Tourism is a people oriented business, nothing goes farther than a smile and nothing hurts more than an employee who comes to work angry. Research your market and then do more research. Lack of data often causes major tourism business miscalculations. Take the time to make sure that you understand what your research problem is and then do the research that will lead you to useful and practical answers. Learn how to prioritize. Too many tourism businesses fail because they try to be all things to all people. Niche marketing is an example of learning to prioritize. Try to appeal to an audience that matches your product. Bring in experts. There is nothing more destructive to a tourism business than trying to do it alone. While experts are not always correct, there is a high probability that they may prevent major errors and in the end save you not only money but also the business.
