Gold Coast Five Star Accommodation Analysis - Assignment Example

Name: Professor: Institution: Course: Date: Abstract Gold Coast five star accommodations are located southeast of Queensland in Australia and is well known for its recreational services and it play a very crucial role in tourism. Gold Coast five star accommodations are in the eco-tourism industry. The main purpose of this report was to conduct to examine the broad environment within which Gold Coast Five accommodation operates. The report uses the Porter’s five forces model to analyze Gold Coast Five star accommodation and used the PESTEL analysis to assess the broad environment of Gold Coast Accommodation. Finally, the report identified three strategic issues facing Gold Coast Five Star Accommodation Sector. Table of content Abstract 2 Table of content 3 1.0 Introduction 4 2.0 Industrial Description 4 2.1 Geographic Location 4 2.2 Eco-tourism 5 2.3 Core group Served 6 2.4 Market Characteristics 6 3.0 Porters Five forces Model 7 3.1 Threat of New Entrants 8 3.2 Bargaining power of suppliers 9 3.3 Bargaining power of customer 10 3.4 Threat of substitutes 11 3.5 Threat of existing rivals 12 4.0 PESTEL Analysis 12 4.1 Political 12 4.2 Economical 13 4.3 Social 13 4.4 Technological 13 4.5 Environmental 14 4.6 Legal 14 5.0 Strategic Issues Facing Gold Coast Five Stars Accommodation 14 References 16 1.0 Introduction Nowadays, the recreational traveler is now looking out for tourist attractions that are natural and which give them the ability to explore the natural world. they are now seeking for an eco tour which is an individually guide tour which takes into consideration preservation and conservation issues as it seeks to five back to the local economy as it teaches the travelers about the culture and the nature of that area. The Gold Coast five star accommodation offers eco-tourist a wide and fantastic selection of its natural attractions as well as its eco-tourism sites. It gives the tourist a chance to experience the city’s breath taking sceneries, swim with the dolphins, see the City’s natural wildlife, and be able to observe the star from an observatory as well as enjoy all pristine beauty of the country right from a natural cruise (Goldcoasthotels.com,2012) . This report seeks to conduct an environmental analysis of Gold Cost five star accommodation Eco-tourism Industry using Porters Model and PEST analysis as well as explore the strategic Issues facing the Gold Cost of Australia. 2.0 Industry Description 2.1 Geographic Location Gold Coast five star accommodations is in Queens Land city which is the sixth largest city in Australia and the most occupied non-city in Australia with a population of about 500.000 as well as a skyline which is greatly dominated by hotels and residential buildings. It is a major local as well as international tourist site which has an ever changing hotel sector which is one f the most significant pillar in the Australian eco-tourism industry. The Gold Coast five star accommodations is so developed and many tourists say that it’s a “tourist trap” due to its many skyscrapers as well as hotels which cover most of its iconic coastline of this beautiful city. The city has over 200 main hotels as well as bed and breakfast and over six hundred restaurant which are an indication of the city’s great diversity (Goldcoasthotels.com, 2012). The city has a variety of attractions available to all including surfer’s paradise, cheap hotels for the budget travelers as well as the Gold Coast Five star hotel for the more discerning tourists. The city has very favorable climate with an average of about 830F during summer and about 65 0 F during winter The City’s beaches are very accessible to the tourist with the best surfing in Australia happening in the beaches of Gold Coast. At the suburb of the city is surfer’s paradise which is very popular with many tourists as this suburb offers the best restaurant and night clubs as well as the best recreational and adventurous surfing. Gold Coast city has 35 accessible coastal beaches as well as over 530 miles navigable tidal waterways which form desirable tourist excursions (Gold Coast City council, 2012).. 2.2 Eco-tourism Eco-tourism refers to the act of traveling to pristine and natural areas that have little or no negative effect on human beings. Ecotourism is more than just ordinary tourism as it goes beyond travelling for leisure and offers education to the tourists on ecological and environmental issues as well as preservation of the natural sites so as to ensure that the future generations will enjoy the same. Gold Coast has several eco-tourism attractions including bird watching, national parks, natural water ways, low impact destination beaches as well as other environmentally friendly and natural attraction sites for eco-tourists (Gold Coast City council, 2012). 2.3 Core-groups Served Eco-tourism industry in the Gold Coast caters for both local and international recreational travelers. In addition, it gives a great opportunity for organizations as well as students to learn about the natural environment at the same time enjoying what this environment has to offer with little impact on human beings and natural resources. The main core groups that are served by the Gold Coast ecotourism are overnight and day trip travelers both from local as well as international. The secondary market group served by Gold coast is students, community groups as well as environmental groups. 2.4 Market characteristics According to a research conducted by Tourism Queensland as authorized by Destination Australia Market alliance indicated that twenty six percent of all the visitor of United Kingdom qualify to be eco tourists and were found to possess the following features: Over sixty percent spent their holidays in hotels which three-star or higher 43% of the visitors used the internet to search for suitable travel sites Sixty five percent of the visitors reported that they prefer to tour pristine and natural tourist sites Sixty two prevent of the visitors prefer to view wild life in natural surroundings The Demographic features include Sixty nine percent are married while twenty one percent are single Fifty four percent work full time Twenty two percent have an undergraduate degree while fourteen percent are post graduates Seventy seven percent have no children below the age of eighteen in the households Source: (Tourism Queensland UK Ecotourism Market Report) Gold Coast was able to attract twenty percent of all the visitors in Queensland coming second after Brisbane which attracted twenty percent as local tourist destination site. In regards to the international visitors, Gold coast came second with thirty nine percent after Brisbane which had 46% (Tourism Queensland GC Snapshots, 2011). The tourism has a great contribution towards the GDP in Australia and especially in Queensland. In between the year 2007 and 2008, the total expenditure on tourism was over nine billion dollars with Queensland taking up to 25.4 percent of the total consumption on tourism. Of this, 32 percent was consumed by sports, cultural as well as recreational activities The ecotourism market in Gold Coast includes many service-related companies including transportation, lodgings, hotels, food and beverage (Pambudi et al, 2009). 3.0 Porter’s Five Factor Analysis The porter’s model provides basis for assessing channels of competition. By analyzing the industry using this model, one will be able to understand the strategic positioning, get insight into the expected profit margin and be in a position to decide to either enter or exit the industry (Porter ,2008) Two of the five forces (bargaining power of customers, and bargaining power of supplies) refer to the competition from internal threat which the other three forces (threat from substitutes, threats of rivals, and threat of new entrants) refer to competition from external threats. The diagram below shows an industrial analysis of the ecotourism industry Porter’s five factor model 3.1 Threat of New Entrants According to the Ecotourism Australia (2012), the number of registered ecotourism in terms of tour operators in Queensland is high but low in terms of themed attraction and accommodations which are privately owned. The ease of entering this industry is largely determined by the competitive threat posed by the new firms. The ecotourism industry not only contributes to the GDP of a country, as well as the industry with gross value added economic benefits, it also encompasses huge barriers in terms of protection and environmental as set out by the Australian government as well as regional and local authorities. Therefore it may be easy for a new firm to enter this industry in terms of fees and licenses but for it to get its operations up and running, it may require more training and specialized operating licenses from the relevant environmental agencies and this imposes a significant barrier to new entrants. According to Kandampull & Suhartanto (2008), barriers to entry for ecotourism ventures in the Gold Coast area include, protected patents, cost of initial investment, scarcity of necessary inputs such as well trained staff, size requirements for profitability of operations such as the number of beds required to be filled to make a lodging venture profitable, existing partnership with ecotourism attraction agencies as well as barriers set out by the Australian government in terms of environmental impacts. The table below highlights the barriers for new entrants and their rating Barrier Rating Economies of scale High (5) Product differentiation High (4) Brand identity High (4) Capital Requirement High (5) Access to technology Moderate (3) Access to raw material High (4) Government protection Moderate (3) Summary of threat of new entrants Threat of new entrance: medium Ability to overcome this threat: medium Attractiveness rating: High 3.2 Bargaining power of Suppliers The Eco Tourism Australia is the only company that offers accreditation and training for eco-programs and eco-guides. Established in 1991 as a non-profit organization, Eco Tourism Australia composes of diverse sects of the ecotourism industry such as protected area planners, tour operators, training consultants, local and regional governments, environmental organization, and ecotourism accommodation (Ecotourism Australia, 2012). It is not necessary to be accredited by this organization but any company planning to venture in ecotourism in the Gold Coast should consider certified through the Eco Tourism Australia as it is recommender as the number one ecotourism site for Australia by Tourism Queensland. Therefore, the bargaining power of suppliers in this industry is high. According to Scott et al (2009), lack of accreditation from Eco Tourism Australia does not necessary pose a threat to profit but would mean missing out on potential booking regardless of the ecotourism services being offered. In conclusion, the summary of bargaining power of suppliers in the ecotourism industry is Threat rating: High Ability to overcome threat through collaboration: High Attractiveness rating: medium 3.3 Bargaining power of customers According to the Tourism Queensland UK Ecotourism report, 20% of all visitors to Queensland coming from UK qualified as ecotourism. Therefore, the market of ecotourism is large in Queensland with the Gold Coast rated second as the most desirable destination after Brisbane. Venturing Gold Coast possess a high potential for profits given its natural coastline and tidal waterways, the nearby parks as well as visitors statistics. However, due to the large number of tour operators in this industry, the bargaining power of customers is likely to be high and this makes it less attractive to tour operators. With themed attractions as well as ecotourism accommodation being small in overall operation number, the bargaining power of customers is likely to be low which makes it attractive for market ventures in these areas. For Gold Cost to lower customers bargaining power, they should present a new accommodation venue which is unlike those that already exist, or a new themed attraction that does not yet exist. The UK reports also pointed out that demographic population of eco-tourists are those who are well-educated, married, willing to pay for an ecotourism experience, and without young children. Therefore, the customers bargaining power in regards to price is relatively low as customers will be willing to pay high prices for an ecotourism experience (Scott et al, 2009) Summary of Bargaining Power of Customer Threat rating: medium: medium Ability to overcome threat: High Attractiveness rating: Medium 3.4 Threat of Substitutes In the Gold Coast five star accommodation, there are five national parks which are run by the Australian government and staffed by government subordinates. These national parks include Hillsborough, Cape Palmerstone, and Eungella national parks. They pose a very high threat of substitute for an ecotourism venture as the government has a well established marketing strategy which can drive tourists to national parks as opposed to ecotourism venture. However, related the eco-tourist industries such as tour operators, hotels, transportation, and dining have a significant profitability factor and this has brought about an eco-tourist which supports national park tourism. Tidal waterways, Coastal beaches, and National parks are the major eco-tourist attraction (Queensland Australia, 2012). Availability of close substitutes Medium (3) Switching costs Low (2) Substitute’s price value Low (2) Profitability of the producers of substitutes High (4) 3.5 Threat of Existing Rivals The eco-tour sub-industry in Queensland is very competitive which makes it less attractive for new ventures. There is low number of operators in the thematic attractions and ecotourism accommodations which means high attractiveness for ventures in this area. Due to the ease of substitutes between one attraction and another, there is a very intense competition between thematic attractions. Moreover, the environment regulations set out by the environmental agencies which apply to a thematic attraction in terms of impact on natural resources may also barriers to exist as well as pose difficulties in terms of market growth; therefore the attractiveness of investing in an ecotourism venture in the thematic attractions area is low. On the other hand, the restaurant and hotel industry within the ecotourism sector is not saturate, the sector offers great customer experience and differentiated service hence having a high potential for market growth (Ecotourism Australia, 2012). 4.0 PESTEL Analysis 4.1 Political There is political stability in Australia and the country also enjoys a democratic structure which is based on English common law. The government welcomes and encourages capitalist ventures, the Queensland area is a major hub for development and thus a major stakeholder where it ensures safety and growth of its citizens and that the environment is protected and supported. In terms of taxation, any company\business is required to pay state taxes, city fees, and if applicable national taxes but in the ecotourism industry, huge taxes are found in environmental regulation fee, and payroll if any. Ecotourism ventures enjoy stable political environment, a potential market niche, and a supported tourism industry. However, payroll taxes and environmental issues should be looked into since they are increasing operating cost for businesses operating in this industry 4.2 Economic despite the global financial crisis that struck in 2007, Australia was still able to grow and develop its economy significantly. OECD reported that Australia’s economy had grown by 3.3% by the year 2010 this was greatly contributed by the country’s abundance of natural resources. The OECD further reported that that the economic challenges of the country were only short term as the country had been able to manage the risks that had come from the global economic crisis and had been able to increase its productivity. The rising of the eco-tourism industry had brought a substantial increasing interest of Gold coast as a suitable market venture (OECD, 2012) 4.3 Social The Gold Coast five star accommodations social climate is highly favorable for tourism; the city is the most biodiversity of all cities in Australia which makes it a desirable destination for those seeking an exploration into the ecology and environment of the area. According to the OECD, the residents of Gold Coast city are largely English speaking, friendly, and of high economic status. The diversity in their customs is as a result of their aboriginal culture which has an influence of the Asian Culture and the English colonization history all combined to form a unique world of citizens both culturally and socially (Hay, 2009). 4.4 Technological There is Technological advancement in Australia and more particularly in the highly populated urban as well as the suburban such as the gold Coast five star accommodations. There is availably of high speed internet and there is a strong cellular service. The service providers have very high server capacity and in general, the utilization of technology among the citizens is quite high (ATS, 2012). As a result of this, businesses here have favourable marketing and advertising strategies and for this reason the Gold Coast five star accommodations enjoy the best technology in the world to advertise its operations to all visitors all over the world. 4.5 Environmental All environmental factors are of significance to the ecotourism industry and they determine whether or not a business in this region is successful or not. Environmental laws Australia are very strict and expect the operators to adhere to environmental issues including how safe the operations of that particular business are to the environment (Toomey, 2011). Although the tourism council of Queensland and the Eco-tourism supports ecotourism development in the city, it is important for any potential eco-tourism operator to involve a legal representative to explain fully all the responsibility and rights of the operator in the Gold coast 4.5 Legal Just like the environmental issues, there is need to for any potential entrant to the Gold coast five star accommodation eco-tourism industries to seek assistance from a qualified environmental consultant before deciding to engage in any business operation that pertains to this industry (Toomey, 2011). 5.0 Strategic Issues Facing Gold Coast Five Stars Accommodation From the environmental analysis that has been conducted, Gold Coast five star accommodations face the following key strategic issues: Threat of New Entrants Legal and environmental issues Bargaining power of Suppliers The above analysis brings out the attractiveness of bringing up an ecotourism venture in Gold coast as well as the high bargaining power of suppliers which pose a threat in the industry. This threat is high because to the oversight by the non-profit organization as well as the Australian Government. However, this threat can be reduced through collaboration. Moreover, there is a high threat of new entrants as any new entrant is able to identify easily the attractiveness of the ecotourism accommodation and expand on it. The third strategic issue as analyzed in the report is the environmental legal issues which are of great significant and they need to be examined urgently by an environmental consultant. Generally, we found that Gold Cost five star accommodations ecotourism industry’s attractiveness is quite high although one should always take into account the market penetration. References (ATS, 2012) ATS in Queensland Retrieved on 22nd August 2012 from http://ats.business.gov.au/ Ecotourism Australia (2012), To Help ecotourism grow to promote, sustain, and conserve our natural heritage Retrieved on 22nd August 2012 from http://www.ecotourism.org.au/membership.asp Goldcoasthotels.com (2012) Gold Coast Hotels Retrieved on 22nd August 2012 from http://www.goldhotels.com/ Gold Coast City council, (2012). Welcome to Your Gold Coast City Council Website. Retrieved on 22nd August 2012 from http://www.goldcoast.qld.gov.au/default.html Hay, S (2009). transforming Social and eductaional governance: Trade Training centers and Transition to social investment politics in Australia. British Journal of Educational studies, Kandampull & Suhartanto (2008), Customer Loyalty in the hotel industry: the role of customer satisfaction and image. International Journal of Contemporary Hospitality Management, 346-351 OECD (2012) Economic Survey of Australia 2010 Retrieved on 22nd August 2012 from http://www.oecd.org/eco/economicsurveysandcountrysurveillance/economicsurveyofaustralia2010.htm Pambudi. D, Van Ho. T, Spurr. R, Forsyth P, Dwyer L & Hoque S (2009) tourism satellite accounts 2007-2008. Retrieved on 22nd August 2012 from http://www.sustainabletourismonline.com/9/economic-contribution/tourism-satellite-accounts-2007-08-summary-spreadsheets Porter M (2008) The five competitive forces that shape strategy. Harvard Business Review Queensland Australia, (2012). Queensland Image Tours - Pictures of Queensland. Retrieved on 22nd August 2012 from http://www.queensland-australia.com/queensland-image-tours.html Scott, N, Ruhanen, L & Ding, P (2009) Developing China's Eco-tourism product through marketing:Examples from Australia. 2009 International Forum on Eco-tourism. Xining, China Toomey, (2011). Safety, security, health and environmental Law. Annandale, NSW:Federation Press Tourism Queensland UK Ecotourism Market Report ( n.d) Retrieved on 22nd August 2012 from http://www.tq.com.au/fms/tq_corporate/research/fact_sheets/the_united_kingdom_ecotourism_market.pdf Tourism Queensland GC Snapshots, 2011. Gold Coast Regional Snapshot Retrieved on 22nd August 2012 from http://www.tq.com.au/fms/tq_corporate/research/destinationsresearch/gold_coast/11%20September%20Regional%20Snapshot%20Gold%20Coast.PDF Read More