Environmental Analysis - Gold Coast City - Case Study Example

Environmental Analysis Name: Lecturer: Course name: Course code: Date: Executive Summary The Gold Coast City, the Australia’s premier tourist destination, continuos to top as one leading tourist getaways in the world. Recent economic recession did not spare Australia and its booming tourist trade. Most affected was the currency, the Australian dollar (AUD) which soared leaving most businesses at the mercy of government bailouts. However, all is not lost as the tourist market is expecting a major comeback due to the increased number of tourists visiting Australia. Hotels and resorts stretching from Southport to Broadbeach and also Hinterland and Hope Island are considered in this report. Porters Five Forces Model helps in environmental analysis by assessing the forces which positively or negatively impacts on tourism on the Gold Coast, with an insight on 5-Star luxury hotels/resorts. The Gold Coast is a golden bed of tourism destination. Less effort is required to market and promote these deep Blue Ocean, golden sandy beaches and favourable weather throughout the year. The Gold Coast which has previously and at present remains an ideal location for 5 star accommodations. Since the industry so highly reliant on clients who chose to stay, meeting their needs is their core business. Tough economic conditions remain one of the bottlenecks and a new threat to the hotel business. Subduing the present trend of tourists averting Australia and the gold Coast is the greatest undoing of accommodation in this industry. Table of Contents Environmental Analysis 0 Name: 0 Lecturer: 0 Course name: 0 Course code: 0 Date: 0 Executive Summary 1 Table of Contents 2 1.1 Description of Gold Coasts 5-star tourism sector 4 1.2 Industry Analysis: Porters Five Forces Model 5 1.2.1 Threat of new entrants 6 1.2.2 Power of Buyers 6 1.2.3 Threat of Substitutes 6 1.2.4 Power of Suppliers 7 1.2.5 Intensity of competitive rivalry 7 1.3 Broad Environment Analysis: P.E.S.T.E Model and External Stakeholders 7 1.3.1 Political and Legal Forces 8 1.3.2 Economic Forces 8 1.3.3 Environmental Forces 9 1.4 Key Strategic issues facing Hotel Industry in Australia 9 c)  Attracting and Retaining a Workforce 10 d) Investing in Tourism Infrastructure 11 e) Ensuring an Efficient Transportation System 12 Conclusion 14 Introduction The hospitality industry in Australia is quite unpredictable and volatile in a comparative socio-economic discourse in relation to contemporary society. The Gold Coast City, the Australia’s premier tourist destination, continuos to top as one leading tourist getaways in the world. Recent economic recession did not spare Australia and its booming tourist trade. Most affected was the currency, the Australian dollar (AUD) which soared leaving most businesses at the mercy of government bailouts. However, all is not lost as the tourist market is expecting a major comeback due to the increased number of tourists visiting Australia. It is evident from some media reports that the industry will soon spring back to ebullience once the recession hits the low note. Hotels, parks and beaches will soon register increased number of domestic and foreign visitors. 1.1 Description of Gold Coasts 5-star tourism sector The accommodation sector of Gold Coast 5-Star provides a premium market for visitors who are yearning for luxurious standard accommodation. The 5-star rating is designated to high end hotels providing unique and sophisticated composition of hotel accommodation, culinary, conference and beach sceneries which are rarely found in offshore hotels and entertainment joints. Statistics shows that more than 185 hotels are situated in the Gold Coast. (Australian Bureau of Statistics, 2011). About 15 out of them are 5-Star, with the majority in the neighbourhood of Main Beach along the Broadbeach, while others situated opposite Gold Coast Hinterland or Mt. Tambourine. More than 4 million domestic and foreign visitors came to Australia between March 2011 and March 2012 which made the state of Queensland account for 17.7billion AUD (about 7.1%) of the Gross State Product (GSP) according to Tourism Facts and Figures, 2012. Queensland’s tourism sector provides direct employment opportunities to more than 125,000 people meaning than 5.5% of employed people in the state work in the tourism industry. On average, $3,625,000 is spent in hotels overnight stays on the Gold Coast according to Gold Coast Regional Snapshot, 2012. The main attractions are rainforests, beaches, restaurants, shopping strips and theme parks. They serve more than 1500 guests which comprise providing them with conference facilities, private boardrooms, games, sports and educational nature trails. They also offer spa experience to guests, mountain hiking and horse riding in the Blue Mountains. The majority of hotels situated next to beaches attract similar clientele, those in business and leisure. Generally, they share competitive pricing and facilities. They possess indispensable uniqueness and reputation which has stood for years. 1.2 Industry Analysis: Porters Five Forces Model Hotels and resorts stretching from Southport to Broadbeach and also Hinterland and Hope Island are considered in this report. Porters Five Forces Model helps in environmental analysis by assessing the forces which positively or negatively impacts on tourism on the Gold Coast, with an insight on 5-Star luxury hotels/resorts. It will seek to determine the future of 5-star hotels on the Gold Coast, their flexibility in the sense that new and existing hotels can expand or enter the market and assess the possibility of the Gold Coast remaining a popular tourist destination. 1.2.1 Threat of new entrants Capital costs, economies of scale, and brand identity affect new entrants. (Patel, S, 2011). Since five star accommodations are highly affected by the tourism and travel trends, the government needs to protect the tourism industry to give leverage to local investors. Established brand names are a business edge to attract new guests and keep the existing clients. By doing so, the industry remains competitive and attractive. 1.2.2 Power of Buyers Hotels clients are important in driving the prices of services downwards. Some are economically powerful and will influence prices of products and services (Ahlstron, D, 2010). In contrast, some consumers would want to pay less for quality services since they would want to maximize on consumption. It is imperative that 5-star hotels need to be sensitive to prices, provide detailed information about their services and avail an opportunity to compare substitutes. Some of the clients of these hotels are business people, international tourists and customers in need of conference and other facilities and have the ability to pay provided they get the quality and standards they want to hence able to switch providers are will making them powerful. 1.2.3 Threat of Substitutes There exists threats from substitutes because of the features those products have, with the capability to be provided at lower prices and better performance (Berger, 2011). However, substitutes are not similar to competing products and services from other industry. The major substitutes offering competition to the five star accommodations are tourism camping and recreational vehicles. Others are corporate guesthouses, family and friends’ accommodation (Patel, S, 2011) which offer much cheaper choices. To make the industry attractiveness low, price values need to be high and the switching costs low. 1.2.4 Power of Suppliers Sources for inputs encompass suppliers who offer services and products like management, training services, property owners, and developers (Bracking, S, 1968, 2009). Uniqueness of products and services keep prices high which makes suppliers non-dependents on some buyers for sales. Labour and real estate are two major suppliers for five star accommodations. Suppliers in the hotel industry are many, but each supplier is small in comparison to five star accommodation making industry moderately high in attractiveness. 1.2.5 Intensity of competitive rivalry Huge competition exists among five star accommodation providers. In addition, some four star hotel and resorts are at close range to five-star with similar segmentation of customers. However, they have to face these strong competitors have to meet and satisfy the needs and desires of customers. Generally, it has low competition making it more attractive. Analytically, a higher forces rating, infers lower industry profitability. Likewise, many small suppliers with inconsequential contribution and many small buyers and few substitutes, infers higher profitability for the industry. 1.3 Broad Environment Analysis: P.E.S.T.E Model and External Stakeholders Technological and Sociocultural forces are indeed relevant to the macro environment, though they vary in level of significance as compared to the economic, political, legal, environmental forces. It is easier to manage technological and Sociocultural forces since they relate to individual establishments but difficult to the latter. Technological effects of future hotel industry can meets the needs of young and advancing youthful population to provide flexibility and chance for diversity. 1.3.1 Political and Legal Forces Political and legal: Change in rules and regulations by government of Queensland impacts on labour, employment and investment in the state. Ease of tourist visa application: Enhancement and expansion of online booking and lodgement facilities for tourist Visa’s from countries such as US, Britain, France and Spain. These should include reducing the level of checks on customer due diligence (CDD) by countries like the US. Increased activities of criminal gangs and xenophobic attitudes of locals, kills tourist investment and lowers the economic growth of the states. 1.3.2 Economic Forces Global Financial Crisis: Massive job losses and investments have dampened the lives of many, leaving them with dismal income, homeless and/or bankrupt. Trends in human needs change but not want. Strength of the Australian Dollar (AUD): This forces the Australian residents to always travel outside of Australia meaning that money getting out of Australia while foreign travellers who usually frequent Australia visit other destinations. 1.3.3 Environmental Forces The weather bureau Gold Coast City Council expects that climate change will impact on the patterns of the Gold Coast weather amplifying the occurrence of disasters like cyclones, typhoons and heat waves as hinted by Australian Department of Climate Change, 2009. Erosion of beaches has changed the sight of beaches, utility and sustainability (Lewis, Mortensen, Stuart, Dronen, Tomlinson & Hunt, 2010). 1.4 Key Strategic issues facing Hotel Industry in Australia a) Competition As mentioned earlier in the Porters five forces, competition is significant in the provision of quality services and elimination of monopoly forces. Competition is driving the industry to attain quality, improve on their creativity and innovation of their products which is advantageous of the customers. Many tourism markets have opened up in Australia pulling away residents who would have engaged in domestic tourism. Residents in Australia have a tendency to travel long distances but because competition has increased, the local flights are now affordable. Similarly, accommodation is abundant and easily affordable. Low cost holidays in Asia and Bali has been attracting holiday makers from Australia especially those who have not spent in the past. b) Cooperation The hotel sector has seen great cooperation with many stakeholders especially Australian department of foreign affairs and trade. Cooperation brings smooth flow of information and growth. Various departments working closely with tourism like air travel, agriculture, wildlife and culture enhance a good mix of factors to foster cooperation in economic growth. c)  Attracting and Retaining a Workforce The Australia department of labor approximates shortfall of over 1.3 million workers in its economy by 2022. Australian Tourism Human Resource Council, also estimates that Australia's overall labor force is anticipated to drop from a 1.5 percent growth rate in 2007 to 0.6 percent by 2017, due to a lower birth rates and aging population. To aggravate the problem, demand for labor continues to rise across all sectors thus leading to high economic growth rate. The labor market in tourism witnesses a fragmented, multi-faceted seasonal service industry, constituting a huge number of entry-level jobs. Owing to this seasonal nature, tourism industry is greatly contributing to dual labor markets development, comprising of peripheral and core workers. In many situations, industry employees see tourism as a threshold into the labor market. Tourism contributes about 60 percent of employment which is within the accommodation, food and beverage sectors which require a skilled and stable workforce. As a result of potential labor shortages, it is increasingly becoming important to emphasize the quality of jobs in the tourism sector and to enhance the entry of those whom the labor practices under-represent. Australia will have to study the practices of other countries in order to similar challenges. For instance, Organization for Economic Co-operation and Development (OECD) countries are at present making efforts to enhance foreign workers employability. There exists an opportunity evaluate how Australia can adjust present immigration policies to better reflect the needs of the tourism industry. Despite the tourism industry providing initial work experience for many people, the industry is at times ill-perceived to be a career choice. Again, attracting employees with skills is critical to the growth of the sector. There is a demand to enhance the variety of prospects and long-term career opportunities that are offered by tourism. These are mainly in the hospitality, management and operation ranks. Long-term careers which are rewarding are available in hotels, attractions, auto rentals, airlines, and entertainment. d) Investing in Tourism Infrastructure Basically, tourism infrastructure is perceived as comprising of cultural institutions, museums, heritage sites and parks. However, the success and enjoyment of experiences in tourism demands quality public infrastructure. The government of Australia shows determination to work collaboratively infrastructure restoration. More than $30 billion has been invested in infrastructure from 1996 cutting across many projects across the country. Although big investments have been made in infrastructure, Australia statistical reports show that the growth in public infrastructure assets value lags as per the entire economy. In the 1980’s public infrastructure as a GDP share 21 percent, but reduced to 17 percent by 2003. However, the government is making great investments in public infrastructure that directly and indirectly benefits the tourism sector. The importance of interests in tourism with regard to infrastructural projects ought to continue being communicated to the numerous jurisdictions with the obligation for development of infrastructure. The strategy will be crucial in enabling cooperation and coordination between states, especially in guiding policy direction on tourism and infrastructural projects. e) Ensuring an Efficient Transportation System Being the largest country as a subcontinent in the world, Australia's vast diverse geography and territory pose an ongoing challenge on transportation for the tourism industry. Air travel in Australia's remote areas is highly costly with limited transportation options like rail and road. These affect the tourism operators’ ability to promote their products. In addition, growth and recent shifts in the low-cost carrier proposition of the airline industry is aiding the domestic tourism market. The more flexible, cheaper price structure of these airlines has encouraged more people to travel. Air access has been made affordable to many states and territories in Australia, once seen as too costly to serve. In this regard, there is a need to pursue opportunities to ensure that affordability, accessibility, and service quality are fostered through a liberalized international air policy and elimination of impediments in Australia’s tourist entry. There should be continuous efforts to seek opportunities to steer international bilateral agreements with other nations. Similarly, the existing agreements update, like the Open Skies consensual agreement with the U.S. and EU ought to be encouraged. There is also a demand to integrate the national transportation system to provide passengers to link easily between transportation modes, whether traveling by boat, bus, train, plane or automobile to or from other areas inside and outside Australia. As part of this, specific attention should be paid to the efficiency and security of the Australia international travel regulations to promote entry of international travelers. The Government of Australia is determined to pursuing national transportation system integration through investing more in new infrastructure within the states. The Budget 2009 provided a monumental level of support for diverse infrastructure across Australia. This comprises of support for large and small scale municipal infrastructure projects in communities across Australia, and land border crossings and highways improvements. Major international gateways fluidity and trade corridors are important to the tourism industry and the entire economy as whole. The Initiative, Asia-Pacific Gateway and Corridor, has sought to boost trade, tourism and commerce with the Asia-Pacific region through integrating investments in improving local transference system reliability and efficacy. Conclusion The Gold Coast is a golden bed of tourism destination. Less effort is required to market and promote these deep Blue Ocean, golden sandy beaches and favourable weather throughout the year. The Gold Coast which has been in the past and at present remains an ideal location for 5 star accommodations. Since the industry so highly reliant on clients who chose to stay, meeting their needs is their core business. Tough economic conditions remain one of the bottlenecks and a new threat to the hotel business. Subduing the present trend of tourists averting Australia and the gold Coast is the greatest undoing of accommodation in this industry. The significance of being environmentally friendly has also engendered increased standards of removing market externalities. References Australian Bureau of Statistics, (2011). National regional Profile: Gold Coast (Statistical Division)(no. 307). Canberra, Australia. Ahlstrom, D., 1961, & Bruton, G. D. (2010). International management: Strategy and culture in the emerging world. Mason, Ohio: South-Western/Cengage Learning. Bracking, S, 1968. (2009). Money and power: Great predators in the political economy of development. London: Distributed in the United States of America exclusively by Palgrave Macmillan. Buhalis, D. & Law, R. (2008). Progress in information technology and tourism management: 20 years on and 10 years after the internet – the state of eco-tourism research, Tourism Management, 29(4), 609-623. Kustin, R. (1993). A philosophy for globalization. Marketing Intelligence &Planning, 11(2), 4-8 Lewis, J., et al (2010). Detailed Assessment of Extreme Coastal Erosion and Storm Surge Vulnerability of Central Gold Coast Beaches. DHI Water and Environment; Griffith Centre for Coastal Management; Gold Coast City Council, Gold Coast QLD. Patel, S., & Shibamoto, T. (2003). Effect of 20 different yeast strains on the production of volatile components in symphony wine. Journal of Food Composition and Analysis, 16(4), 469-476. Doi: 10.1016/S0889-1575(03)00021-8 Read More

 

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