International Tourism - Assignment Example

1. TRENDS AND DEVELOPMENTS THAT ARE INFLUENCING THE MARKET FOR TRAVEL AND TOURISM IN PAKISTAN Undertake secondary research to identify the key external trends and developments that are influencing the market for travel and tourism for your chosen country. Specifically highlight those factors that are likely to have most effect on the attractiveness of your chosen country as a tourist destination for both domestic and foreign visitors. Present travel market scenario: All over the world, in many countries, travel & tourism contributes a significant share to the growth of an economy. There are certain economies that are largely dependent on their tourism including U.A.E (Dubai), Saudi Arabia (Mecca), Singapore and most recently Malaysia and Indonesia have seen an increase in tourist levels. However, Pakistan, even though bestowed with vast areas of unexploited and unexplored, breathtakingly beautiful landmarks, to date has been unable to exploit the travel and tourism industry to its maximum or for that matter, even the minimum level. According to an article available at Eturbonews. "The tourism industry in southern Asia generally showed growth in 2007, except for Pakistan and Sri Lanka. Political instability and a lack of security in these two countries led to a drop in arrivals from abroad: -7% for Pakistan, and -12% for Sri Lanka" The same news states further, "In general, the tourism industry in the subcontinent showed growth of 12%. In 2006."The same article further refers to Pakistan's tourism industry in the following words, " in addition to Sri Lanka, is represented by Pakistan, where tourism demand fell by 7% in 2007". Experts say this is related to the country's serious political instability and frequent terrorist attacks." From the above, the following conclusions can be drawn: There is significant growth in the travel & tourism industry and the growth figures can go up to 12%. Pakistan has seen a significant deterioration in its tourism (-7%) The reason why Pakistan is unpopular tourist destination is due to political instability and frequent terrorist attacks. In the year 2007, the revenue increased bye 6 % and the tourism industry of Pakistan contributed US $ 276.1 million (www.thepost.com.pk) However, an in-depth external analysis needs to be carried out to determine the real causes of Pakistan's lack of popularity amongst tourists. Tourist Categories: There are two types of tourists' visiting Pakistan, The foreign Tourists and the domestic tourists. The domestic tourists can further be classified into up-country tourist (moving from the south of the country to the north) and down country tourists (tourists moving from North to South). The major chunk of revenue comes form the foreign tourists who have resources available to splurge in the local markets and outing areas. Factors Impacting Foreign Tourists: Since tourism industry is a business model, the various theories that are used for external analysis apply to the tourism industry. The PESTLE Analysis identifies the external factors that impact the tourism industry of Pakistan. Political, Image of Pakistan: The image of Pakistan post 9/11 has been such that it is known as one of the most terrorist afflicted areas. It is believed that it lacks modern ways to commute and transportation networks fail. The volatile political situation makes if a very difficult choice to travel too especially when travel advisories are being issued against traveling to this country every now and then. Moreover, the frequent bombings and suicide bombings enhance this image further. The recent instances of terrorist kidnappings all paint a very deadly picture. Economic: before 2001, the economy of Pakistan was in doldrums with GDP growth rates as low as 4%. This reflected in a low level of investment in tourism and developments of infrastructure. Due to the lack of development of tourist attractions, Pakistan's tourism industry had stagnated. After 2001, there was a boom with growth reached as high as 7%, however, the wealth did not have a trickle down effect and investment on tourism was neglected. This combined with the political instability, led to the minus growth rates in the tourism sector of Pakistan. Technological: According to Capron and Blazer, technology is an integral part of the organization that can be used to create competitive advantage. In this, the government support is crucial. In this regard, the necessary technology required by the tourists was not present. The main tourist attraction lies in the mountainous regions in the north but during winters, the access to some of these places is closed due to snowfall. The necessary infrastructure requires having flights taking people over there is very basic and needs to be improved. There is a dearth of five star hotels in all of Pakistan except for Karachi, Lahore and Islamabad. Socio-cultural: Even though Pakistan is said to be culturally very rich, however, the culture tends to be inclined towards narrow-mindedness whereby any outsider coming in would have difficulty blending in. Also, religious places become the most popular tourist attraction but going there requires the tourists to cover themselves up completely for example when Princess Diana visited Lahore, she was clad in the local kamiz shalwar when she was visiting a mosque. Likewise, Jemima Khan, Imran Khan's ex-wife had to face the similar problem. Legal: "Chairing a meeting at the Prime Minister House to review the initiative, Aziz said that the government was committed to leveraging the country's vast tourism potential and had, to this end, improved access to Pakistan by way of introducing a liberal visa policy."(www.tourism.gov.pk).Inititially, visa to Pakistan can be obtained easily. However, the tourists tend to compare the ease of visa acquisition to that of no visa requirement in other tourist destinations like Dubai, which is a free port, and traveling there is like traveling domestically. Environmental: This includes the cost implications, presence and public opinion. The development of tourist attractions and infrastructure will require quite a lot of investment in the in ital years. Other than this, it would also require building a better image of Pakistan. However, this strategy will start paying off in five years and Pakistan's tourism industry can revive PORTER'S FIVE-FORCE MODEL: Porter's five-force model can be used to determine the industry situation. This gives an insight on the competitive situation of the tourism industry and the external forces acting on it. 1 Threat of New Entrants: Pakistan faces a major threat from neighboring Nepal which might be a smaller economy but has achieved 27%growth in tourism. Likewise, with peace restoring to Afghanistan, that could be potentially a threat to Pakistan's tourism industry. Within the Pakistan's tourism industry, it is difficult for any other body to enter to provide tourist services. The tourism sector of Pakistan is heavily regulated by the Tourism Ministry and the Pakistan Tourism Development Corporation (PTDC) looks after all matters relating to this sector. 2. Bargaining Power of Suppliers: PTDC organizes tours across Pakistan at different timings. The major suppliers include transportation providers (in-house) and partner hotels. The partner hotels have significant power since there are only a few hotels present at the tourist attractions. Sometimes, the situation of the presence of one hotel in a far strung area occurs. Due to this, the rates of stay increase especially in the high rate seasons. Due to this, PTDC can not negotiate rates much with them. They have negotiated a discount policy with quite a few hoteliers but it is not possible to bargain much on this. 3. Threat of Substitutes Tourism, as an industry, does not have substitutes. It is the need of recreation that is satisfied by tourism. In case of absence of proper tourism facilities, the customers may opt to choose another destination, or other recreation facilities for example rather than opting for a guided tour to the northern areas, the foreign tourist may choose to remain in the urban city Karachi and avail the recreation services of Karlton hotel, which provides yachting facilities and crabbing festivals at peak seasons. The threat of substitutes is present but since such activities can not completely "Substitute" tourism, so this threat is not a very serious one. 4. Buyer Power: The power of the tourists availing the tourism services is not much since it is a PTDC is a regulated government entity thus profit & loss might be an issue but no as much as in private sector since the Government is supporting this industry. 5. Competitors: The greatest competitors in this region are Dubai, India and Nepal. These countries have proved more successful in marketing of their tourist activities and have been working on the development of their tourism industry for quite a few years. External Analysis: Opportunities VS Threats Opportunities in the Tourism Sector of Pakistan: Since it is virtually a neglected market, this sector in Pakistan is one of the most lucrative sectors promising the most growth potential. The current unexploited opportunities include: Basant in Lahore Pilgrammage of Sikhs in Hasan Abdal at Guru Nanak's Shrine Trip to Jheel Saif Ul Maluk Trips to Kaghan, Naran Valleys and Swat Trips to Interior Sindh near to Hindu Festival Diwali The Horse & Cattle Show in Lahore Excursions to hilly areas like Murree Adventure Sports Affiliation (Yachting Championship, Crabbing, Cruise Shows, Desert safari) Historical and world heritage Sites Ancient Indus Valley Civilizations remains at Moenjodaro and Harappa The above mentioned events have been undermined till yet. If only the right marketing strategies are adopted, the tourism of Pakistan can be very successful and it can lead to generation of employment and well fare of the local areas. Threats: Till yet, the travel and tourism industry has not been developed due to lack of Government interest, stringent regulations and initially it was very difficult to penetrate in this market. Even now the private sector cannot enter into the sector of tourism services provision. However, they are being encouraged to invest in infrastructure related to tourism including Air Travel, hoteling etc. Apart form these threats, the major threats include: Political instability Terrorist activities and bombings Natural hazards and calamities like the earthquake of 2006 The negative image of Pakistan The recent Government activities in Swat to control the local Taliban's have severely affected the tourist activities in the area of Swat. 2.Complete a Segmentation Matrix, identifying at least 4 distinct types of holidaymaker. As defined by Kotler, " segment marketing is isolating broad segments that make up a market and adapting the marketing to match the needs of one or more segments." The target market of the tourism services are affluent consumers form all over the world. The segmentation variables for the tourism market are as follows: MAJOR SEGMENTATION VARIABLES FOR THE TOURISM MARKET Geographic World region or country As mentioned in the Tourism Marketing Strategy approved by the Government of Pakistan,"The first phase of the strategy identifies as target markets: Germany, Austria, France, Italy, Switzerland, Spain, Japan, Korea, USA, Canada and Scandinavian countries. The second phase identifies as target markets: Saudi Arabia, Qatar, Oman, Singapore, Taiwan, United Kingdom and other European countries." City or metro size Usually the people residing in highly urbanized areas have a tendency to travel abroad maybe because incomes tend to be higher. Thus, the target market for tourism is city centers and business hubs like Karachi, New York, London etc with a population of more than 4000,000 and over. Density The density of the target consumers tends to be in highly urbanized areas. Climate Tourism is a global phenomenon and does not require any climatic segmentation. However, the usual tendency is that people from the West where the temperatures tend to drop really low, find Equatorial and tropical weather good for a change and a vacation.due to this , the Demographic Age Above 25 Gender Males mostly but females as well Family Size 1-2,3-4 Family Life Cycle Young energetic, old energetic Income US $ 10,000 and above Occupation Professional, Business men, marketing professionals, owners of businesses Education Graduation at least Religion No discrimination all Race all Generation Baby Boomers Nationality EU Member countries citizens, Americans, Psychographic Social class Working class, middle class, upper middle, lower uppers and upper uppers Life cycle Achievers, adventurous, looking for change Personality Courageous, craving for adventure, desire to explore the unexplored Behavioural Occasions Occasions are most important since it would lead to increased prospects of having a higher number of foreign tourists. Benefits Quality of Service, opportunity to explore lands that people do not have access to. User status Regular tourists Usage Rate Frequent tours Loyalty Status Its difficult to achieve a high loyalty status in tourists since the charm of being to a place wears out after a visit has been made.Once the initial curiosity has been satisfied, the typical tourist chooses another destination for his/her tour. Readiness Stage Aware Attitude Towards Product Enthusiastic, positive After considering the above factors, the four distinct types of tourists are: Foreign: People traveling from other countries to Pakistan for sightseeing and enjoyment Domestic: People traveling from different places within Pakistan for sightseeing and enjoyment Adventure Seekers: People, domestic as well as foreign, visiting for adventurous trips including going hunting, mountaineering, car racing etc. Religious people: a person visiting to pay visits to their ancient religious places. 3.Analyze these segments on a Targeting Decision Matrix to clearly determine your targeting decision for each segment. Target market, as defined by Kotler is " A set of buyers sharing common needs or characteristics that the company decides to serve."(Kotler, Principles of Marketing) There are three factors to be considered when evaluating a market segment to enter. Segment size Growth Segment structural attractiveness Company objectives and resources Considering this, amongst the four segments analyzed above i.e. foreign, domestic, adventure seekers and religious travelers, the segment that has an appropriate size, has the maximum level of growth and the structure of the segment is such that entering and surviving would not be difficult , has to be chosen. Evaluation Of The Market Segments Profitability is the rule of thumb that guides every business. The maximum growth potential is in the segments foreign tourists, adventure seekers and religious travelers. The importance of religious traveling can be realized from the fact that the Saudi economy is substantially dependent on the revenue generated by the yearly pilgrimage of Muslims. Likewise, the presence of sites of religious importance in itself is a blessing and resource for a country that can be exploited by the tourism industry. The same implies to Iran and Baghdad where people visit yearly to visit their sacred religious places. Considering this, the market segments that the tourism industry of Pakistan is proposed to serve, as the most profitable and growing segments are the foreign tourists, the adventure seekers and the religious travelers. Foreign Tourists: This is the most sizeable segment and the broadest category. These may include travelers visiting for business purposes or just enjoying holidays. The best venue for these travelers is the northern areas of Pakistan. They might be interested in visiting sites of heritage like for e.g. they can visit the museum of Taxilla where the remains of ancient Buddhist civilization are preserved. The greatest competition in this sector is India and Dubai. The reason for this is that these two countries roughly fall on the same travel routes. For eg a person traveling to Dubai can easily visit India and make a stop over at Pakistan. However, due to negative travel advisories and the over all negative image of Pakistan., foreign tourists decide to plan their trip with a stop over at either India or Dubai to proceed ahead to European countries or Arab countries. In this way, Pakistan's tourism department till yet has failed to capitalize on the strategic advantage that it has by being placed in a central area in the South East Asia where all the flights have to stop over and passengers can opt Karachi as a center to take interconnecting flights to their destinations. The nearest option for this is Dubai and India and they have built very strong images due to which people prefer their connecting flights to be either from India or Dubai rather than Karachi. Adventure Seekers: Pakistan has the necessary resources e.g. an expanse of high terrain areas best suited for mountaineering activities, ice peaked hills that can be used for ice skating, rivers that can be used for boating, yachting, deserts that can be used for desert racing and sea that can be used to encourage surfing. However, till yet these activities are not being promoted. The greatest competitors in these activities again are India and Dubai. Being in the same geographical area; India more or less possesses the same natural resources and Dubai has really established itself and built its strength as the best shopping area. Likewise India has branded itself for the historic places. Pakistan to date has some recognition for the handicrafts but till yet the branding has not been carried out. This is one of the most profitable segments. Adventure seekers tend to have a nag for thrill for which they are ready to spend money. On the other hand., adventure sports are seldom without sponsorships. Thus, if an adventure sports program is launched the sponsorships will be able to cover more than 70% of the total cost. Religious Travelers: This sector if developed will be by far the most profitable sector year after year. The reason for this is that religion and religious fervor is passed down from generation to generation. The greatest advantage Pakistan will have by developing this segment is that it will be able to change its image from that of a terrorist, extremist country to that of a peace loving, harmonious country that respects other religions as well. The other advantage is, that such visits to the religious places and shrines are inspired by religious thoughts and preaching. Thus, a regular adventure traveler or a foreign tourist may look to go to some other area after the first visit; the religious visitor will have a tendency to visit the same place over and over again. So the repeat visits and loyalty is at a very high level. 4. Primary Target Market, Competition, Positioning and Plans to develop a competitive edge Keeping the above segments in mind, the primary market of Pakistan's tourism industry should be Adventure Sports. The reason for this is that even though religious se4gment is very lucrative but there might be a lot of resistance to allowing religious visits frequently by the local public. In view of this and due to security concerns it is best to keep up the effort to penetrate in this market but not advertise it till yet. Adventure sports on the other hand do not face such threats to this degree, and Pakistanis are into sports. There is a lack of good entertainment activities. The entertainment concept in Pakistan has been limited to eating out only. Due to this, there exists a gap of satisfying their entertainment needs. Competition Analysis: The choice of this market is best also because the key competitors, India, Dubai and Nepal do not offer Adventure Sports. Dubai offers the Desert Safari, shopping festival and Wild Wadi. However, India and Nepal just rely on their hereditary religious places for their tourism. The key competitors are not present in the Surfing, Yachting, Ice Skating, mountaineering, jungle trips, hunting, and desert motor racing The key competition Pakistan can face in the field of adventure sports comes from USA, EU Countries and Malaysia and Thailand. These countries are geographically widespread and do not fall into the same geographical area as Pakistan. Due to this, the competition provided by them is not neck-to-neck. Positioning of Pakistan's Tourism Industry: Till yet, there has not been much attention to positioning of the Pakistan's tourism industry even though the Government has approved the Tourism Marketing Strategy and the year 2007 was declared as the year of Tourism in Pakistan. The positioning of some other countries is: Malaysia-truly Asia India-The destination Dubai & Pakistan however lack in such positioning statements. But Dubai has an advantage whereby everyone is acquainted with the Dubai Shopping Festival. India has individually branded its various segments in tourism Place Positioning India The destination Deccan Its here the Deccan Odyssey Farm & rural tourism Off the beaten track Agra fort Wonder in stone The strategy followed by India should be taken up by Pakistan as it not only builds the image but will also lead to top-of the mind recall since remembering has been made so easy with the tag lines. The Unique selling proposition of Pakistan is the diversity it offers. In north it might be snowing whereas in South, the people might be experiencing desert heat. It is one basket full of different goods. Other countries cannot offer these experiences. Positioning of Pakistan The word Pakistan means "The Land of Pure". This can be used in branding of the tourism industry of Pakistan where the theme would emphasize on the unexploited beauty and experiences that Pakistan has to offer. The positioning statement of Pakistan's tourism industry would be: " Explore! - Experiences that are pure" Developing a Competitive Edge: A competitive edge can be achieved by offering unmatched services and experiences for the adventure tourists. This may be carried out by devising tourism plans all around the year and marketing them on the website similar to the way Dubai and India are marketing. All the mentionable events are mentioned and listed on their websites. Online Presence: Today's business is more virtual than real. Therefore, increasingly companies, businesses and individuals turn to the Internet to seek information and details on whatever is coming up. Having en impressive website is very important, The foremost thing for Pakistan's tourism department is to update the website to make it more dynamic, impressive and it should contain all that the tourist would want to know including hotel rates, travel advisories, upcoming events and what tourism sites it has to offer. Marketing Mix: The second activity is for Pakistan's tourism department to Brand itself in the way specified above by having the right marketing mix and by positioning this sector. For this a marketing consultant can be hired. Event Management, organizing sports events planned all over the year can only attract the adventure seekers. Not only will it yield revenues, but will also keep a flow of foreign tourists coming all around the year. For e.g. January: Ice Skating in Himalayas-positioned as hurray in Himalayas February: Mountain Climbing Competition in Margalla hills, near the capital Islamabad -positioned as "Aspire" March: International Flower Show arranged at the Capital Islamabad-positioned as "Pak Blossoms2009" April: Car Racing in Thar Desert Sindh BTL Marketing: The tourists frequently tend to travel. Thus the best way to reach them would be to have hoardings and billboards on all international airports like Heathrow, Dubai etc with a link to the website. That might lead a lot of traffic to the website and eventually people might be interested to visit Pakistan. Building up of Infrastructure: The best way to encourage tourists is by improving the security and building up the necessary infrastructure like hotels. Different Faiths One Belief Campaign: "In a bid to attract the Hindu pilgrim tourist, the Pakistan Tourism Development Corporation (PTDC) has identified three places of worship that could be of interest to the Hindu pilgrim under its 'Different Faiths One Belief' campaign. Groups from Kolkata and Varanasi have visited these holy places. There is definitely a growing interest. Twenty per cent of the 70,000 Indian tourists come for religious purposes. A majority of Indians come to see their place of birth or visit relatives. The third destination on the itinerary is the temple of Hinglaj, on the banks of the Hingol River in Baluchistan" (Tayyab Nisar Mir, PTDC spokesperson, Hindustan Times, Guess who Pakistan is Wooing) At present, this strategy of Pakistan is very appropriate since is not being massively advertised in view of arousing religious unrest in the country, however, the Government is aiming to promote religious tourism. (4002 words) REFERENCES Kotler, Principles of Marketing www.tourism.gov.pk/approval_marketing_strategy. www.cnfa.org www.eturbonews.com http://en.wikipedia.org Read More