Perceived impacts of possible currency change on accommodation establishments in a selected Zimbabwean town

Abstract

Accommodation is a growing sector in the global tourism industry. The benefits derived from this sector include economic growth through the contribution of gross domestic product and job creation. It is therefore of paramount importance to ensure a favourable economic, social and political environment to achieve sustainable growth and profitability of this sector. Decision-making through collaboration of various stakeholders is perceived to be effective in providing a comprehensive framework plan to create such an environment. With Zimbabwe facing economic crisis that has brought instability in the financial sector in terms of the cash crisis and a potential change in foreign currency pricing, businesses across the country, including accommodation establishments, are in a dire situation to predict growth and profitability. The aim of the study was to investigate the perceived impacts of possible currency change on accommodation establishments in Victoria Falls town. The town of Victoria Falls is one of Zimbabwe’s tourism hubs and it is home to the famous Victoria Falls waterfall, the widest in the world and one of the world’s seven natural wonders—making the town an attractive destination for visitors. There is also an array of activities, which are a major tourist drawcard. The study was guided by five objectives, which were to determine the current pricing structure of accommodation establishments in the town of Victoria Falls, to determine the involvement of accommodation establishments in discussions of a potential change in foreign currency pricing in Zimbabwe, to determine the preferred currency of accommodation establishments in Victoria Falls, to ascertain the impacts of current currency on accommodation establishments in Victoria Falls and to determine the perceived impacts of a potential change in foreign currency pricing on the accommodation establishments in Victoria Falls. In pursuing these objectives, a quantitative research approach was adopted using a survey of owners/managers of accommodation establishments. In doing so, a simple random sampling technique was employed. Sixty-three questionnaires were administered to the respondents who were managers or owners of the establishments visited. The study is distinctive in its nature as most studies on currency change and the accommodation business focus on the effects of dollarisation but ignoring the influence of stakeholder participation through collaboration to minimise the negative impacts associated with currency change. The study contributes to existing literature on the effect of dollarization on the accommodation establishments. In addition, it provides a foundation of academic literature on the impacts of cash shortages in the accommodation business in Zimbabwe. The study revealed that accommodation establishments in Victoria Falls commonly use penetration and premium pricing structures. These two structures are implemented by businesses that are at different stages of growth in the product life cycle, that vary in the level of service quality offered to guests and whose target market, marketing and business growth goals differ. The results of the study indicated that decision-making through collaboration can bring about sustainable tourism development and economic growth can be achieved. This principle has not been effectively implemented in Zimbabwe’s accommodation sector. The study concluded that accommodation businesses in Victoria Falls do not have equal opportunities to participate in decision-making at both local and national government levels. One of the main conclusions drawn from the study is that the use of multi-currency dominated by the United States Dollar is preferred by most establishments. Further conclusions were that the United States Dollar as an official currency benefits accommodation business to a lesser extent, although it may be viewed as of great benefit to the economy at large. Furthermore, accommodation in Victoria Falls is expensive and less competitive compared to neighbouring countries and shortage of United States Dollars is perceived as contributing to a drop in accommodation bookings, which affects tourist spend at the destination. Interestingly, it was noted that pricing in United States Dollar enhances price stability. There were mixed reactions on the impacts of potential change in foreign currency pricing on the accommodation establishments. However, there is a strong belief that currency change can grow the regional and domestic tourist markets, allowing establishments to compete equally with the rest of the southern African region and allowing tourists to stay longer. Emanating from the results of this study, it is recommended that accommodation establishments engage forums like the Zimbabwe Tourism Authority and Hotel Association of Zimbabwe on decisions that affect their operations and their members. Four recommendations were made, namely compulsory grading of accommodation establishments, implementation of competitive pricing, creation of multi-stakeholder platforms for engagement, and collaborative decision-making. The lessons drawn from this study are not limited to accommodation establishments but extend to other sectors of the tourism industry such as events, transport, attractions, and food and beverage.