Tourism business growth with specific reference to black economic empowerment in the tour operating sub sector in South Africa

Abstract

This study reports on the findings of research that was conducted amongst tour operators in South Africa in an attempt to determine the level of Black Economic Empowerment (BEE) in the sub-sector as well as to determine measures that will expedite BEE. The survey method was deployed to generate primary data from this target market and the Chi square method used to determine causality between the size of enterprises and the support for BEE in principle. This method was also used to determine if the size of an enterprise influences the propensity to support and apply BEE in tour operating enterprises as well as the utilization of incentives.The research indicate that the vast majority of tour operating enterprises in South Africa are small businesses with 62,3% indicating a turnover of R2,5million or less per annum and 63,9% indicating that they employ two or less full time employees. In terms of ownership, 14,3% of respondents indicated that they are 100% black owned. The fact that these enterprises are small makes it difficult to attract investment or involvement from Previously Disadvantaged Individuals (PDI’s) although 72% of respondents indicated that they support BEE in principle. However the application of BEE in these enterprises are only supported by 61,8% of respondents and the degree of implementation vary according to the different components of the tourism scorecard. In terms of the seven pillars of the tourism scorecard, the procurement and social investment pillars achieved the best results.In order to grow this sub-sector and create opportunities for BEE expansion, government needs to provide training and education interventions as well as dedicated incentives to assist tour operators in gaining access to markets and capital goods. The suitability of all the pillars in the tourism BEE scorecard is questioned due to the nature of small businesses and further research needs to be done on the other sub-sectors in tourism to determine a scorecard that can be effectively implemented.A model for business growth is proposed to enhance the BEE efforts and to create opportunities for fast growth and new start-up businesses. The model consists of interventions aimed at the following four areas:  Enterprise level (new start-ups and fast growth enterprises)  Sector specific environment  Economic growth in the external environment, and  New target markets A recommendation to the National Minister for Tourism during the course of this study has resulted in the provision for a national tourism database in the Tourism Bill (2011).