Industry overview | Guest house business plan
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6. Industry Overview
6.1 Industry Overview, Size and Growth
The business form part of South Africa’s vibrant hospitality industry. The hospitality industry forms one of the key income generators in the Northwest Province. In terms of overall spending, this is estimated at R13.9 billion (2010 financial year). In the 2010 financial year, total spending increased substantially owing to the 2010 FIFA World Cup. It is expected to decline by 7.1% in 2011 to R12.9 billion. The hospitality industry’s growth rate is estimated at 7% (compound annual growth). It is anticipated that the total number of domestic visitors will increase by 3.4% compounded annually between 2011 and 2015. Foreign overnight visitors will rise to 14.8million by 2015 – a growth rate of 5.35% gain compounded annually from 2011.
6.2 Players In The Industry
The Federated Hospitality Association of Southern Africa represents the South African Hospitality Industry. It strives to protect the interests of all stakeholders of the industry.
Industry Players can be identified by assessing the value chain for tourism and hospitality. There are many providers of research and development services in the sector – this includes providers of business management consultancy services. There are also a number of marketing and sales agencies, and back office support services – these encapsulate accountants, auditors, insurance brokers, advertising houses, travel and tour operators, and travel agencies. Additionally, lodges, bed & breakfasts, casinos, hotel groups operating at national and local level, and farmers and retailers who are the major suppliers to this sector are considered to be key players in the industry. Africa Sunrise Guest House will be established as a guest house that offers the ultimate in hospitality.
6.3 Key Success Factors
The key success factors for a business in the hospitality industry are as mentioned below:
- Customer satisfaction
- The provision of quality
- Having a unique attraction
- Leveraging the knowledge of past experiences
- Innovation and creativity
- Skilled and trained management and staff
- Market positioning in terms of hospitality
- Strong branding
- Pricing is also a key success factor
- Convenience and reliability
- Status in terms of grade
- Providing the best value for money
- The barriers to entry in the hospitality industry are as follows:
- The lack of highly skilled, competent and knowledgeable staff
- The lack of resources and capacity – these primarily include financial resources
- High capital costs
- The need for a strategic location
- The fierce intensity of competition in prime areas
6.5 Seasonal Demand
The tourism and hospitality industry is affected by seasonal fluctuations. Peak periods are between August and December when foreign tourists come to enjoy the warm climate. During the cold periods the industry records low sales. However, business from corporate, government, political parties and educational clients tends to be more stable. Africa Sunrise Experience Guest House will organize outdoor activities which will enable it maintain a continuous positive flow of income.