Research on the Performance of the Services Sector

4.17. Value Chains or opportunities

The South African tourism value chain begins with the tourists, who can access the sector privately or through a travel agency. The flow between tourist, transport, operator, accommodation and entertainment can occur at any point. Each of the tourism categories is supported by secondary services.

Figure : General Tourism Value Chain in South Africa



Source: FEM Research 2011

The main players are in the tourism value chain are tourists, tour operators and tourism products, accommodation, catering, and visitor experiences and services. These players interact with each other in various stages and they require support from secondary services such as suppliers of products or related services. Each player in the tourism value chain has a specific function and requires secondary services and support. For example when a tourist decides to come to South Africa it may be for business or pleasure, they will require transport, accommodation, food and possibly entertainment. The tourist interacts either with a tour operator to arrange the necessary requirements or the tourist might interact with each of the required products directly.

A tour operator can be a transportation service provider or a travel agent; and importantly they may require services from industries that are not related to tourism. These products and services would include fuel, maintenance, internet and business support and labour to operate the business efficiently. The tour operator may deal directly with tourists or other tour operators on behalf of tourists, furthermore tour operators will liaise with accommodation establishments and visitor experiences as well as catering establishments.

These types of relationships exist throughout the tourism value chain. Accommodation establishments need the support services such as laundry, cleaning and maintenance to offer services to tourists, who either book accommodation services directly or through a tour operator. Accommodation establishment can offering catering or outsource catering services or refer tourists to specific catering establishments. Visitor experiences and services are recommended similarly by tour operators and accommodation establishments. Opportunities that exist for SMMEs in the tourism value chain are both within the direct supplies and the support services. Within the direct supplies there are opportunities for small tourist operators in township tours, cultural tours and educational tours. There is also a need for quality affordable accommodation as well as transport and shuttle services. Opportunities within the support services are more diverse and include offering services such as laundry services, catering services, maintenance and construction services, cleaning services, landscaping and gardening services, and general supplies. The table below provides an indication of the type of opportunities that exist in the tourism value chain per province.

Table 17: Tourism Opportunities per Province

Opportunities	Province
	WC	EC	NC	KZN	GAU	Limp	MPA	FS	NW
Accommodation	X	x	x	x	x	x	x	x	x
Beach Tourism Activities	x	X
Catering/Food outlets					x			x
Conference Facilities			x		x		x	x
Cultural Tourism				x				x	x
Eco Tourism Activities	X	x	x	x			x
Shuttle Services/Transport	X		x		x			x	x
Tourism Facilities	X	x	x			x		x	x
Training facilitators	X		x

Accommodation opportunities exist within the tourism sector, in particular these opportunities are for cheaper accommodation packages and facilities. There is a need for Bed and Breakfast type accommodation and backpacker facilities as well as more affordable family friendly accommodation. Furthermore SMMEs can access opportunities in the accommodation industry by offering accommodation related services. These services include cleaning services, catering services, laundry services, gardening services and delivery services. Furthermore these services have very little entry challenges or barriers and are accessible for SMMEs.

Beach tourism, cultural tourism and eco-tourism activities are more suited to small scale operators offering personalised services and activities. These activities include shuttle services, personalised guided tours, and hiring of bicycles or equipment such as surfboards and kites etc.

Tourism and Conference facilities would be opportunities more suited to big businesses as the start-up costs would be quite large but the opportunities for SMMEs would be in provided services to these facilities. Again these services would include, cleaning, catering, transport and delivery services, which are all quite easily accessed. Furthermore these opportunities would create employment in the areas where they are developed.

Key growth opportunities for tourism in South Africa include:

Business tourism marketing and packaging

At the moment business tourism accounts for a small percentage of tourism in the country however the sector continues to grow annually and presents a major growth opportunity especially for packaged products and services. Business tourism is a growing industry and business tourists generally spend more money on average than leisure tourists. Packaging and promoting business tourism products and services represents an opportunity for economic growth and distribution of tourism offerings. There is also a need for conference facilities with good service level other than ICCs.

Eco tourism packages and offerings

Climate and environmental awareness has created an opportunity for sustainable and environmentally sensitive tourism products. These types of activities include hiking, biking, visiting farms and being involved in community tourism projects.

Medical tourism packages

South Africa offers an affordable option for medical procedures given the foreign exchange rates and the excellent health services as well as the diverse tourism offerings available, the packaging of medical services and tourism offerings is development opportunity for South African tourism. These opportunities can be as diverse as offering a medical service to offering a transport service or accommodation. Medical tourism would be geared towards people having minor procedures so that the risk factors would be minimal and these people would still be able to partake in tourism activities.

Development of tourism facilities such as coastal resorts and activities

Tourism facilities and resorts exist in South Africa, however these can be upgraded and expanded to increase the product and service offerings and attract more visitors. Furthermore theme parks present a development opportunity for South African tourism as currently there are not many established theme parks in the country.

Charter flights and incentive tourism packages

Increasing air access and availability of flights to South Africa will increase market access. Increased market access will increase tourist arrivals and in turn increase economy growth and development. The increase in tourists to the area will create jobs as well as opportunities for SMMEs to enter the tourism industry as secondary service providers. Opportunities could include transport and shuttle services, tour guides and accommodation.

Development of SMMEs in the support services industry

Tourism businesses rely on support services to function efficiently, these services include maintenance of buildings, equipment and vehicles, catering services, cleaning and laundry services as well as administrative support such as IT and business services. Opportunities exist for SMMEs to provide these services to tourism businesses.

Furthermore, gaps in tourism products were identified in the Spatial Gap Analysis for the Western Cape⁵¹ and these gaps are applicable to the rest of South Africa as well;

Lack of quality affordable accommodation

At present the accommodation facilities in South Africa are catering for middle to high income tourists and there is a need for more affordable accommodation for families and young tourists. This accommodation should be more competitively priced, and offer similar services of backpacker establishments.

South African cuisine, township experiences

Promoting and packaging township and rural tourism with South African cuisine offerings represent an opportunity for small businesses and entrepreneurs as well as communities.

Adventure tourism

South Africa has an opportunity to attract more adventure tourists by diversifying the adventure tourism offerings to attract repeat visitors.