Starting a Tourism Business

The tourism sector is one of the world’s fastest growing industries and in the Pacific Islands it is recognised as an important driver of economic growth, income-generation and employment opportunities – particularly for women. However, before you embark on starting a new tourism-related business venture, there’s a lot to consider.  

According to Group Director of global travel company, WHL Group, Len Cordiner, women entrepreneurs and businesswomen are making a big impact on the Pacific Islands’ tourism sector.

“Many of the region’s prominent tourism leaders – such as the CEO of Samoa Tourism and Chair of the South Pacific Tourism Organisation (SPTO), Sonja Hunter – are women and it is an industry particularly well-suited to things that women are naturally good at such as hospitality, looking after people and creating special experiences,” Len said.

And whilst many Pacific Island countries are perfectly positioned to take advantage of emerging global tourism trends – such as adventure, cultural and nature-based eco-tourism – there’s a lot to consider before you launch into starting a new business in the sector.

According to Investment and Tourism Manager at Pacific Islands Trade & Invest (PT&I), Chad Morris, the biggest challenges most new tourism businesses in the Pacific face are the same as any other business – access to finance, having or finding the necessary skills to develop a business plan and developing the skills to run your business.

Despite these challenges, starting your own business can be rewarding and a great way to create your own future provided that you lay the foundations for success. The first thing is to ensure that you have a passionate interest in what you want to create. From there, it’s a matter of research, planning, hard work and commitment.

According to Chad, (who has supported a number of PT&I’s tourism-related clients in building and promoting their businesses), the following steps should be taken before you start your business:

  1. Do your research

Tourism is big business and the mass tourism market comprises people from diverse backgrounds with varied interests, tastes and priorities. For this reason, it’s important that you can identify and describe your target market, customise your product to suit their wants and needs, and develop a promotional and distribution strategy to reach them.

The first step towards defining your target market is to conduct market research into current market trends and your customers with the aim of finding out:

  • What markets are most suited to your product?
  • Where do these markets originate (country, state or city)?
  • How does your target market prefer to travel (e.g. independently, in a group or on a tour)?
  • What kind of budget do they have?
  • Who are your competitors?
  • What are the opportunities available to you?

It’s also worth speaking with your national tourism office and local chambers of commerce, hotel associations, trade and investment officers, accountants and other service providers (e.g. tour operators, accommodation providers etc.) to find out as much as you can about the industry, your competitors and the opportunities that exist.

  1. Develop your product

Once you’ve identified your target market, you’ll need to develop your product and service offering to match the wants and needs of your target market. This includes identifying and describing:

  • What is your unique selling point (USP)? i.e. what makes you different / stand out from your competitors?
  • What will be included in your product? e.g. will you package your product with other products, services and experiences? Who will you work with?
  • Do you need to do any product development and what are the costs for these developments? How will you cover those costs?
  • How will you price your product (ensuring that you have built in a profit margin)? 
  1. Write your business plan

Having a business plan is one of the most important steps you will need to take towards setting up your new business. A good plan will set out your business strategy and the steps you will take towards achieving you business goals. It will also support your application for finance or funding grants – and is often a mandatory requirement for any bank loan. In writing your business plan, you will need to outline the following:

  • A description of your business / product
  • Who your customers are (including market trends and customer segments)
  • Who your competitors are and how you differ to them (your positioning)
  • A SWOT analysis (identifying your strengths, weaknesses, opportunities and threats)
  • Your marketing strategy (your distribution channels, sales methods and promotional activities)
  • Your management structure and personnel
  • Operations (including office location, equipment, IT systems, financial set-up and reporting etc.)
  • Financial targets and forecasts.
  1. Develop your sales and marketing strategy

An essential part of your business plan is to develop a sales and marketing strategy that identifies how you will promote your product to your target markets (consumers), the travel trade and media? Your plan should outline:

  • What distribution channels you will use to sell your product (e.g. retailers, wholesalers, online*)? What commission will you pay to them?
  • What marketing tools will you need to develop (branding. website, social media platforms, brochures, photography etc.)? Who will design and build these for you? What will it cost to build and maintain these?
  • Will you participate in joint/cooperative marketing activities (e.g. transport carriers, major accommodation chains, government tourism authorities etc.)?
  • Will you participate in travel shows and exhibitions to target international consumers?
  • What tactics will you engage to reach your target market? (e.g. advertising, online marketing**, media and public relations, events etc.) How will you measure the success of these activities?

Important notes:

* Make sure you have a professional online presence – It’s important to understand that the future of the travel and tourism industry is online – and regardless of where you are in the world, you need to have a professional online presence to succeed.

According to Len Cordiner, “The future of travel and tourism is most certainly online. All tourism-related product providers need at a minimum to have a mobile friendly (responsive) website, they need to be bookable online, and they need to be set up to plug seamlessly into third party distribution channels such as online travel agents (OTAs) like Expedia and booking.com,” Len said.

** Online Marketing – Key to your success will be getting great traveller feedback. This is your online brand. Before you start your business have a look at the feedback for your likely competitors to see their strengths and weaknesses, and things you can do better.

  1. Put the right financial and operational plans in place

Launching your business is one thing, keeping it running is another – so it’s important that you have the right systems in place to ensure the success of your new venture. Things you’ll need to consider include:

  • What are your operating costs?
  • What is your desired profit margin?
  • What are your total distribution network costs?
  • What are your net and retail rates?
  • What systems do you have in place to handle enquiries and manage bookings?
  • How will you effectively manage your business mix?
  1. Find a mentor and/ or business network

As a business owner it’s valuable to learn from the experience of others – both within your industry and the wider business community.

With 87 per cent of business said to come through referrals it’s also critically important to build a network of contacts that can help promote you and refer business your way.

Business networks also provide the opportunity to meet other businesswomen, find mentors to support you on your journey, be inspired by their success stories and learn from the mistakes of others. Business networks are also a great place to obtain information about specific aspects of running a business such as finding suppliers and tapping into new markets.

It’s also important to engage the professional services of specialist agencies such as trade and investment promotion agencies, NGOs and other government and multilateral agencies who provide technical assistance, training and development, grants and scholarships to support women in business across the Pacific. For information about support networks across the Pacific Islands, visit out Network Directory here.

A final word of advise from an owner-operator
American-born, Soraya May is the owner of Le Vasa Resort in Samoa – a 16-room oceanfront hotel that she bought with her late husband in 2006. In 2012, she was also voted by Westpac as one of the top 50 businesswomen in Samoa.

Soraya highlighted the importance of having a business plan and marketing your business prior to opening. She also said, “Educate yourself, live in the area you want to set the business up in, understand your competition and do something different to them, go over contracts thoroughly. Hire a lawyer to set up your business and review your contracts – and find a good support system with other business owners.”

RESOURCES:
If you are thinking about starting a tourism business, Pacific Islands Trade & Invest (PT&I) offers a number of online resources to support you including the following:

Tourism Ready Checklist

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More a detailed guideline than a checklist, this document outlines the important things you need to consider before you start a tourism-related business. 
Download the guideline here.

 Creating a Plan for Your Tourism Business
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A checklist summary of 61 important things you will need to consider for your tourism business across areas including market analysis, production description, strategy, financial plan and operating plan. Download the checklist here.

Tourism Funding Directory for Pacific Islanders
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This document outlines a number the grants, foundations, funds, microfinance and development programs available to Pacific Island business. Download the Directory here.

How to Write a Business Plan for Pacific Islands Businesses

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This guideline outlines all the elements you’ll need to consider to write a business plan for your new business. Download the guide here.

NETWORKS & SUPPORT:

Pacific Islands Trade & Invest (PT&I)
PT&I provide a number of services to tourism-related businesses in the Pacific Islands including business advise, branding and website development, trade support and promotion, exhibition support and Digital Tourism promotional packages. For more information, contact:
Chad Morris
Manager – Investment & Tourism
Pacific Islands Trade & Invest (Sydney)
Email: chad.morris@pacifictradeinvest.com
Phone: +61 2 9290 2133
Website: pacifictradeinvest.com

South Pacific Tourism Organisation (SPTO)
SPTO is the mandated organisation responsible for promoting tourism in the region. The Organisation offers a number of resources for tourism-related business including e-marketing support for SME Accommodation Providers and Tour/ Activity Operators, tourism training providers and programmes, consultants and more. For more information visit the Resources section on SPTO’s website at spto.org/resources