Abu Dhabis Ecotourism Sub-Sector - Case Study Example

SЕ АNАLYSIS АSSIGNMЕNT Name of Student Institution affiliation Table of Contents Executive summary 3 1.0 Introduction 4 2.0 EXTERNAL ENVIRONMENT 5 2.1 macro environment 5 2.1.1 Political 5 2.1.2 Economic 6 2.1.3 Social 6 2.1.4 Technology 7 2.2 PORTER'S 5 FORCES MODEL 7 2.2.1 Threats of Entry 7 2.2.2 Bargaining power of Suppliers 8 2.2.3 Bargaining power of Buyers 8 2.2.4 Threats of Substitutes 8 2.2.5 Rivalry among established companies 9 2.3 Driving forces 9 2.4 Strategic group map 10 2.5 Key success factors 11 2.5.1 Brand imaging 11 2.5.2 Availability of infrastructure 11 2.5.3 Convenient location 12 12 2.5.4 Strong direct sales capabilities 12 2.5.5 Proven ability to improve the industry’s output 12 2.5.6 Ability to achieve scale economies 13 2.6 Industry profile and attractiveness 13 3.0 IDEA GENERATION AND DEVELOPMENT 14 Why this idea is the best option 14 Concerns 15 Pros and con 15 4.0 SUSTAINABILITY OF THE IDEA 16 5.0 Conclusion 17 References 18 САSЕ АNАLYSIS АSSIGNMЕNT Executive summary Abu Dhabi’s ecotourism sub sector has been on a gradual growth rate for the past two years. This is attributed to a wide range of factors including the macro environmental factors, industry competitive factors, and the key success factors. Under Abu Dhabi ecotourism sub sectors there are evident identifiable niches and the most viable one is the inactive cruise ship tourism. This is one of the strategic issues in Abu Dhabi’s ecotourism subsector as a niche which I have built my idea around. It is estimated that out of 15 million tourists travelling to Abu Dhabi only a mere 200,000 travel to this city to experience its famous cruise ship tourism. This shows the inactiveness and dormant nature of this type of tourism is in this city. The implication if this niche is not pursued is that Abu Dhabi’s tourism industry risks experiencing stunted growth due to lack of diversity and over reliance on particular form of tourism. One significant cause for the dormancy of this form of tourism is attributed to its expensive nature compared to the other forms of tourism as well as being perceived as a high end form of tourism fonly preserved for high end tourists. The alternative approach to consider for this form of tourism is to reduce its charges significantly in order to make it more affordable to more tourists. This will be followed with effective campaigns strategies to promote this form of tourism and make it relevant to the public in general. Thus, the major criterion for this approach is to ensure that more people are aware of the affordability of this form of tourism and also to disregard the societal perception of this form of tourism being too expensive therefore getting more people to pay for this form of tourism hence promoting diversity and a real chance for the growth of this industry. 1.0 Introduction Abu Dhabi is claimed to have one of the largest ecological footprint due to its famous Arabian Desert. The Arabian deserts in Abu Dhabi are claimed to be strategically located despite the United Arab Emirates currently experiencing tremendous growth into a sprawling urban center. However ,economist argue that the city’s actions to take up Abu Dhabi and use it for ecotourism are instigated by the presence of the Arabian Desert which is strategically located in this city as well is the conducive weather that is characterized by summer temperatures topping 100°F (37.8°C) (Middleton, 2007). A review of Abu Dhabi ecosystem as an external aspect of the city’s ecotourism shows that the city is not known for its rich ecosystem rather ecosystem seems to be a promising industry in this city (Murray, 2013). This can also be attributed to the mangroves vegetation near Abu Dhabi which over the years has become popular ecotourism destination in Abu Dhabi. The mangrove vegetation in this case provide natural habitats to a vast variety seal life which entails fish turtle, seabirds, fish and even foxes(Petrova & Hristov, 2014). Abu Dhabi’s ecotourism industry is estimated to have had an 18% growth rate in the year 2015. Moreover, the Dubai’s Department of Tourism and Commerce Marketing (DTCM) also reported an estimated 17.47 million tourists with a significant number of this tourists visiting Abu Dhabi ecotourism sub sector. On the other hand the World Travel & Tourism Council (WTTC) claimed that Abu Dhabi generated an estimated Dh26.3 billion from its ecotourism sub-sector in the year 2015 (Cityman, 2016). The projection of Abu Dhabi ecotourism sector is in line with Abu Dhabi vision 2030 where it seeks to attract an estimated 20 million tourists by 2030. This ecotourism sub sector is claimed to have evolved in the past two decades moving from a cottage industry to a global business sector in Abu Dhabi that spans continents (Henderson, 2014). The country’s political situation plays a very essential role for the success of all businesses in this country. Abu Dhabi Tourism Authority's (ADTA) has taken up plans to promote Abu Dhabi as a leader in MICE tourism in the Middle East, with the current favorable political situation the city has a somewhat edge over its competitors (Henni, 2015). 2.0 EXTERNAL ENVIRONMENT 2.1 macro environment 2.1.1 Political The stable political environments is claimed to be a huge contributor to the currents success of Abu Dhabi’s eco-tourism subsector. Through the Abu Dhabi Tourism Authority (ADTA), Abu Dhabi’s eco-tourism sub sector has become a leader in the Middle-East tourism sector due to the favorable political situation in the city (Djamel Boussaa, 2014). On the other had the political status of Abu Dhabi has also contributed to the city’s eco-tourism sub sector success. Among the seven Emirates forming the United Arab Emirates Abu Dhabi stands out as the largest emirates of them (Middleton, 2007). This makes Abu Dhabi more appealing due to the rather reputable hotels and restaurants where these tourists get accommodation. 2.1.2 Economic The economic conditions of Abu Dhabi and the UAE at large are very conducive an aspect that has played a crucial role in the realization of its ecotourism subsector. In this case the Abu Dhabi interest rate of 4.8% was reduced to an all-time low of 1.4% in the year 2009 (Henni, 2015). This has therefore led a significant increment in the public spending which on the other hand has resulted to an improvement of its ecotourism subsector. The Inflation rate in Abu-Dhabi is estimated to be 0.5% which is a significant decrease from the previous estimated 2.4% in the 1990 to 2012 period (Petrova & Hristov, 2014). This has also been a significant contributing factor to the public spending as well as the growth of the ecosystem sub-sector. Abu-Dhabi’s per capital income is estimated to be AED 95,000 per annum ranking among the countries with the strongest per-capital income in the world despite the recently experienced recession. This has therefore led to improvement of the business environment in the city with the city’s ecotourism subsystem gaining a significant amount in revenues. Abu Dhabi’s oil industry has been a huge booster of the city’s GDP and economy; this has led to the city focusing on improving the non-oil based industries like its eco-tourism subsector (Murray, 2013). 2.1.3 Social Social factors in Abu-Dhabi have been a huge factor that has provided opportunity for the economic growth in the UAE. Abu-Dhabi is a nation of Muslim decent with significant level of tolerance for the other religions. In this case the city offers freedom to both citizens and non-citizens living in this country to practice their religion of choice. This has led to Abu-Dhabi be knows as one of the major tourist destinations in the world as well as also boosting its eco-tourism sub-sector (Sharpley, 2008). The Abu-Dhabi population is multi-cultural in nature an aspect that has made them tolerant towards different cultures and led to diversification. In this case tourists globally are appealed to the cosmopolitan aspect of Abu-Dhabi with English being a major business language as compared to the other emirates thus influencing tourist’s choice of Abu Dhabi (Schubert & Gabriel Brida, 2008). 2.1.4 Technology The last two decades have seen Abu Dhabi government injecting a considerable amount of effort into the use of technology. Abu Dhabi’s ecotourism sub sector being a service industry has also benefited from this technological revamp. In this case the online service is one of the technologically improved aspects that Abu Dhabi ecotourism subsector has greatly benefited from (Al Asadi, 2007). Thus, more tourists have traveled to Abu Dhabi to experience its magnificent ecotourism due to the reduction of the end user in flight booking and ecotourism ticket booking.Additionally, Abu-Dhabi has been able to embrace technology advancement through online transaction, CRM and Security (Conference report, 2006). 2.2 PORTER'S 5 FORCES MODEL 2.2.1 Threats of Entry New entrants to Abu Dhabi industry have brought new capacity including the desire to gain market share, and often substantial sources. Companies are claimed to have diversified through acquisition into the industry. However the seriousness of the entry into this industry is dependent on these barriers in regards to reaction from existing competition expected from an entrant (Bajic-Brkovic & Milakovic, 2011). Some of the major sources of the barriers to entry include; capital requirements, government policy, product differentiation, capital requirement, access to distribution channels, economies of scale, cost disadvantages Independent of size and access to distribution channels. 2.2.2 Bargaining power of Suppliers Suppliers can exert bargaining power on the industry’s participants all through the reduction of the quality of the purchased service. In this case powerful suppliers have the ability to squeeze profitability out of this industry making it difficult for it to recover cost increase of the ecotourism services (Alobaidi, Abdul Rahim, Mohammed, & Baqutayan, 2015). However the power of these service suppliers is dependent on a number of characteristics which entail the market situation and the overall industry’s purchases in Abu Dhabi. 2.2.3 Bargaining power of Buyers Customers on the other hand could force down prices in this industry. In this case, customers could demand for more services or higher quality service which in the long end could lead to competitors turning to each other in expense of industry’s profits (Djamel Boussaa, 2014). In line with this a buyer group is more influential in this industry especially if it purchases these services in large volumes. This therefore makes buyers a quite potent force. 2.2.4 Threats of Substitutes Substitute services in this industry have a quite significant potential for this industry especially if they place a ceiling on the prices of substitute service. Substitute services in this case limit the growth of the ecotourism industry of Abu Dhabi as well as its earnings (Sharpley, 2008). On the other hand substitute services do not only have the potential to reduce the revenues for the ecotourism industry in Abu Dhabi but it also reduces the bonanaza that the industry has been reaping from during boom seasons (Petrova & Hristov, 2014). 2.2.5 Rivalry among established companies The eco-tourism industry in Abu Dhabi also risks bad performance due to rivalry among competitive companies. There are an estimated 150 resorts and restaurants who offer ecotourism experience and services in Abu Dhabi. This has resulted into market saturation with a significant amount of market entries entering the Abu Dhabi ecotourism industry (Schubert & Gabriel Brida, 2008). Consequently, these competitors have been forced to embrace technology, innovation and specialization in an effort to create service differentiation to be able to capture a majority of the entire market thus proving a challenge to the Abu Dhabi Tourism Authority (ADTA). 2.3 Driving forces One of the most significant driving forces of this industry is its strategic positioning within Abu Dhabi. it is known as the hub of international trade as well as the most attractive tourist destination in the Middle East (Middleton, 2007). This scaling reputation of Abu Dhabi is mentioned as an essential driving force for this industry an aspect that it attributed to the success of this industry. The other driving force for Abu Dhabi ecotourism sector is this city’s stable and secure environment making it stand out among its regional peers due to low crime and terrorism rate. Thus, the Abu Dhabi’s legal protection of foreigners is also a strong driving force for the ecotourism sub sector as well as the peace and tranquility associated with it attracts more tourists (Henni, 2015). Abu Dhabi’s other supporting industries act as an important driving force. the extensive hotel and resort industry is claimed to be a huge influences of the success of Abu Dhabi tourism sector (Cityman, 2016). In line with this, the supporting transport and infrastructure industry is also claimed to hugely boost the success of the eco-tourism sub-sector for instance, its seven star hotels as well as well the airlines. Abu Dhabi transport industry in this case has ensured that this city remains accessible to a significant number of tourists from all corners of the world (Djamel Boussaa, 2014). On the other hand the hotel and restaurant industry as a subsidiary of Abu Dhabi tourism industry also ensure that the visitors visiting this city get the best accommodation service that goes with their breath taking eco-tourism experience. 2.4 Strategic group map Abu Dhabi has been focused on contributing towards its tourism growth through fostering this industry’s complementary sub-industry’s. In this case it has invested significantly into its transport industry where it has adopted various methods of transport majorly cruise ships and air transport to ensure accessibility of Abu Dhabi as a significant tourist destination (Bajic-Brkovic & Milakovic, 2011). On the other hand Abu Dhabi has also promoted cruise ship tourism in this city in an effort to make this mode of transport for the city as well as impactful for the eco-tourism sub-sector. One parameter that this map can be used is to show the significance of industries with the most impact to tourism. The Abu Dhabi’s security industry, hotel and restaurant industry and transport industry are the three main industries fostering the success of this city’s transport industry. The other parameters for the use of this map is to show the directly impacting industry’s which should be considered in an effort to improve Abu Dhabi tourism industry (Conference report, 2006). 2.5 Key success factors 2.5.1 Brand imaging Abu Dhabi branding and imagining is one of the key success factors that has led to the city to enjoy its current eco-tourism success. Abu Dhabi has been involved in aggressive branding and marketing campaigns portraying itself to the world as the best ecotourism destination (Sharpley, 2008). This city’s branding and imaging efforts have been supported by the current technological and media revolution having huge impact on Abu Dhabi’s national branding and imaging campaign. 2.5.2 Availability of infrastructure The success of Abu Dhabi ecotourism subsector is also attributed to the availability of infrastructure. In this case Abu Dhabi has invested a lot in ensuring that the right infrastructures are in place for both the tourism and other supporting industry (Schubert & Gabriel Brida, 2008). This has therefore led to significant improvement for these industries as well as fostering the ecotourism industry in general. 2.5.3 Convenient location The other success factor for Abu Dhabi’s ecotourism sub-sector is its convenient location in the UAE. In this case this city has enjoyed a significant amount of peace an aspect which has encouraged more tourists to visit this emirate (Petrova & Hristov, 2014). 2.5.4 Strong direct sales capabilities Abu Dhabi’s strong direct sales capability which is attributed to this industry’s uniqueness fosters its ecotourism sector. In this case this city’s eco-tourism compromises of majorly rich marine life and desert tourism which is quite unique as well as a booming form of tourism (Murray, 2013). This has led to more tourists to travel to Abu Dhabi to experience its ecotourism since it has marketed itself as a 7star destination as well as its industries. 2.5.5 Proven ability to improve the industry’s output Abu Dhabi ecotourism boom proves the improvement of the industry’s output is associated to the leadership tenure of HH Sheikh Kahlifa bin Sultan Al Nahyan who redefined his father, HH Sheikh Zayed bin Sultan Al Nahyan the earlier president national strategies making Abu Dhabi a global player (Middleton, 2007). In this case he redefined the UAE’s vision and goal where he refocused them to the global perspective and pumping a lot of capital to revamp and keep the industry vibrant. 2.5.6 Ability to achieve scale economies The promising scale economy is a huge influencer in this country’s business environment. Abu Dhabi has a relevantly stable economy and it gains a significant amount in funds from this industry as well as the ever-booming oil industry which enables the UAE to redirect these funds into improving other industries (Henderson, 2014). 2.6 Industry profile and attractiveness It is evident that the ecotourism industry is one that is attractive having that it has been booming from the start this is attributed to the key success factors discussed above. Moreover, it’s notable that this industry is very promising as a result of the diversity which is mainly characterized by desert tourism and marine life tourism in Abu Dhabi. This industry is quite attractive to its current incumbents with its current revenues showing a significant annual increment. One of the future prospects of this industry is it becoming a global ecotourism destination (Djamel Boussaa, 2014). Additionally another prospect for this industry is that it will become self-sustaining and minimize its dependence on government funding. Through this the government is able to focus on other industries as well as also ensure that it gets return on investment from this industry. One challenge that this industry faces is the ability to sustain its growth with having that a lot of investment is required. In regards to sales this industry is high attractive with the revenues generated from it hitting an all-time high in the year 2015(Henni, 2015). On the other hand this industry is moderately attractive in regards to its competitive intensity with the market having a significant number of companies offering ecotourism services. Some of the major players in this industry include the government and other privately owned enterprises and resorts. On the other hand some of the globally reputable tourist companies have also started entering the UAE market thus an indication of the attractiveness. 3.0 IDEA GENERATION AND DEVELOPMENT One identifiable gap in the Abu Dhabi ecotourism sub sector is the cruise ship tourism. In this case this is a form of tourism under ecotourism that has been experiencing slow growth due to the rather expensive nature of this form of tourism. In this case it is estimated that the number of cruise ship tourist visiting Abu Dhabi is estimated to be 200,000 this figure is quite low considering the estimated figure of nearly 15 million tourist visiting Abu Dhabi (Cityman, 2016). The city should focus on making this form of tourism more affordable in order for more visitors to try it out. This idea will ensure that the tourists are able to experience a completely unique form of tourism from what they have been experiencing previously (Conference Report, 2006). Why this idea is the best option The uniqueness of this form of tourism makes it a better option having that it gives the tourists an entirely unique experience and a chance to get away from the other common forms of tourism readily available globally (Bajic-Brkovic & Milakovic, 2011). Similarly the preference of this option over the others having that it is a dormant form of tourism that shows a lot of promise judging by the figures on the number of tourists visiting Abu Dhabi and those that are willing to try it out. Concerns However the concerns notable in my analysis regarding this idea is that significant amount of effort is required to create awareness of this form of tourism. In this case this is a form of tourism that over the years has been dormant (Alobaidi, Abdul Rahim, Mohammed, & Baqutayan, 2015). Moreover, the society is more likely to have adopted a different perception of this form of tourism that it is too expensive therefore wading of any interest in it. This means that a lot of investment, time and effort will be injected into creating awareness of this form of tourism. Pros and con One significant advantage of this industry is that due to its uniqueness it can be a hugely appreciated form of tourism. Similarly, this form of tourism it is not likely to experience market saturation due to its uniqueness and huge investment required for the entry into this market (Al Asadi, 2007). On the contrary, the huge investments and the effort required to create awareness for this form of tourism is a major disadvantage on the key players. Tangible Resources Financial Company’s capital Company’s cash and cash equivalent Company’s borrowing capacity Physicals Company’s assets Technology Trade secrets Patents copyright trademarks Innovative service provision process Organizational Effective strategic planning Excellent control systems and evaluation Intangible resources Human Managerial skills Trust work experience and capability Company specific practice and experience Innovation and creativity Innovative capacity Technical skills Reputation Brand name customer reputation; quality and reliability Organization capabilities Company’s skills competence it seeks to transfer inputs into outputs Capacity to combine tangible and intangible resources Example Outstanding customer services Excellent service development capabilities Service innovativeness Ability to hire, motivate and retain human capital 4.0 SUSTAINABILITY OF THE IDEA This idea is sustainable with the four pillars of Abu Dhabi vision 2030 pillars. Economy The affordability of this form of tourism as proposed ensures that it meets the economics sustainability standards. Social This idea is sustainable with this pillar through the promotion of voyage entertainment during this form of tourism. In this case the entertainment industry also gets to benefit from this form of tourism. Culture Abu Dhabi cultural entertainers get the rare opportunity to showcase their culture to the tourist taking part in this cruise tourism Environment This idea is also sustainable since through this form of tourism it will ensure it abides by all set standards in regards to environmental conservation. 5.0 Conclusion It is evidently seen that this idea is sustainable in all pillars of Abu Dhabi vision 2030. On the other hand with Abu Dhabi being adjacent to the coastal line and with other six emirates surrounding it is strategically fit for this form of tourism which can also be incorporated as a form of water transport in the UAE. 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