The bed and breakfast market of Buffalo City (BC), South Africa: present status, constraints and success factors

Abstract

A telephone survey aimed at examining the bed and breakfast (B&B) market of Buffalo City of South Africa was conducted, using 36 operators, selected through random sampling. The B&B's had an average of 3.6 years of existence and 2.1 part-time and 2.3 full-time employees. They provided an amalgam of services, facilities, activities and used a variety of promotional techniques with word of mouth being the most prevalent. They experienced problems such as crime, lack of sector focus, lack of entrepreneurial creativity and skills, limited support from local authorities, lack of access to finance and competition. The success factors identified were networked enterprises, access to a dedicated fund for business finance, reduced operating expenses, non-financial support, and continuous skills development. The conceptual framework offered in this study leads to an improved understanding of the B&B sector, provides lessons and insights for other destinations world-wide and serves as a benchmark and platform for future investigations.

Introduction

Tourism has caught the imagination of the public, politicians, planners, and economists as a means of stimulating economic growth and development in South Africa. It is estimated that the global tourism industry, calculated at $4.5 trillion/year, will grow to a $10 trillion industry by 2010, with a 4.3% growth rate representing one of the fasted growing industries in the world (White Paper on Development and Promotion of Tourism (Department of Environmental Affairs and Tourism, 1996; Department of Economic Affairs and Tourism, 2002)). According to Black (1999), the estimates of the contribution made by tourism to GDP in 1998 came to R44.3 billion by means of direct (amounts spent by local and foreign tourists on goods and services) and indirect (contribution made to GDP by industries supplying inputs to the tourism sector) injection of tourist and related spending in South Africa. This gave rise to a tourism multiplier equal to 1.82 for the country as a whole which when applied to the R44.3 billion gives an additional induced contribution of R36.3 billion. This means that the direct and indirect injection of tourist and related spending of R44.3 billion ultimately gave rise to a multiplied increase in total spending or income (i.e. GDP) of R80.6 billion.

According to Ebony Consulting International (2001) the tourism industry has great potential to create job opportunities for emerging and small entrepreneurs and in so doing, supporting access to greater socio-economic benefits for the wider population. In the South African Basic Tourism Statistics (2000) it is indicated that the estimated number of both direct and indirect job opportunities created by the tourism industry in South Africa increased from 470 000 in 1994 to 820 325 in 2000. These figures may be skewed because not all individuals who are employed in the tourism industry are tracked by the Central Statistical Services as CSS makes use of manpower counts in the formal employment industry. Data from the World Tourism Organisation (WTO, 1998) shows that South Africa is already ranked 25th among the top 40 tourism destinations in the world. The country has experienced phenomenal growth in its tourism industry since 1994, with the number of tourists doubling every 4 years. Projected figures by 2010 are anticipated to be in the region of 6 million overseas tourists and 9.5 million African tourists. The World Tourism Organisation (WTO) has also confirmed that South Africa is the leading tourist country in Africa, attracting a total of 5.5. million foreign tourists in 1997 generating R14.1 billion which is 11.9% up compared to the previous year. The WTO report estimates that tourism will create 5 million job opportunities in Africa by 2010. The tourism industry could therefore be regarded as a strategic growth area that possesses the potential to make a significantly larger economic contribution to the South African economy and also create sustainable employment.

As in any market, the tourism industry consists of a supply and a demand side. The demand side on the one hand has to do with tourism markets, people and buyers of products and services, i.e. tourists. The supply side on the other hand is mainly referred to as the tourism industry, which includes the suppliers of goods and services to domestic and international tourists. Generally, the supply side can be divided into 6 different sectors: (i) accommodation, (ii) attractions and events, (iii) transport, (iv) tourism intermediaries (v) peripheral private and (vi) peripheral public sector. Special brands of tourism products expose exciting opportunities for investors, since there is far-reaching and massive growth potential for economic expansion in both local and international markets. Further development of the exceptional brands of products within the industry could offer many outstanding and viable investment opportunities.

Accommodation is a critical component of the tourism product, since the type, scale and nature of accommodation determines the type and scale of tourism that is possible at any destination (Henning & Willemse, 1999). Accommodation provision in cities as elsewhere is a major influence on the volume and value of tourism to any locality. Accommodation should therefore precede any other type of development at a tourist destination. However, it must also be remembered that accommodation supplied at a destination is determined by the demand thereof, by what competitors have to offer and the type of accommodation used by the visitors in the region.

The current study focuses on B&B's which are one of South Africa's (Blignaut, 1997; Oliver, 1998; Woodgate, 1998; Dube, 2001; Jubasi, 2002) and the world's (Lanier & Berman, 1993; Buhalis & Cooper, 1998; Kaufman & Weaver, 1998; Lubetkin, 1999; Wanhill, 2000) most phenomenal growth accommodation industries, with the potential of contributing to economic growth and development, and, employment generation. B&B's have increased dramatically in number throughout the world in the last three years, though there are no exact statistics that shows the extent of their growth. In South Africa, some suggest between 4000 and 5000, but more optimistic estimates put the figure at nearer 8000 (Woodgate, 1998). B&B's share of the lodging market is too small to represent a threat to the hotel industry, but research studies in California, Massachusetts, Michigan, and New York have shown that B&B's are a lodging alternative that is here to stay (Dawson & Brown, 1998).

The concept of opening up a private home for lodging is not new. The practice originated in Europe, and tourist homes operated by private homeowners have always been a fixture in popular American vacation areas. However, in South Africa, only recently, more and more rural communities, historic mansions, country farmhouses and remote mountain retreats, modern suburban homes open their private lodgings for guests with the aim of generating income and meeting new people. Additional growth in the number of B&B operations is expected for the next several years, particularly in rural areas where the development of hotel and motel businesses may not be feasible. For example, according to the Eastern Cape Tourism Board (1999) the distribution of accommodation types used by foreign visitors during their stay in the Eastern Cape in 1998, were in descending order: hotels (45%); B&B's (18%); self catering (17%); guest houses (13%); game lodges (9%). The problem is that there are no accurate figures on these establishments, as many are not formally registered. South African Tourism (SATOUR, 1998) research has indicated that in 1997 a total of 20% of all foreign tourists made use of B&B accommodation in South Africa. After pioneering the concept in 1984, the B&B Association of South Africa, today boasts 18 home-based reservation centres country-wide, the members each paying the association between R320 and R480 to market their B&B's (SATOUR, 1998).

If the definition of a B&B seemed obvious once, it certainly is no longer so. Each B&B is unique. However, there is a common thread throughout (Tourism Grading Council of South Africa (SATOUR, 1998):

• They usually serve breakfast.

• Accommodation is usually provided in a family (private) home in which unused rooms are rented for the purposes of supplementing income and meeting people.

• They are advertised mostly through word of mouth.

• The lodging usually offers 4–5 rooms.

• The business is usually not the owner's sole or primary source of income.

• They exist in keeping with zoning laws, but are often not extensively regulated due to their small size.

• The owner/manager lives in the house or on the property.

• Bathroom facilities may or may not be en-suite and/or private.

• The guest generally shares the public areas with the host family.

B&B's appeal to tourists because the properties are small and personal in nature—“a home away from home”; have a quiet, private atmosphere, allow guests to become acquainted with new people and communities and typically provide extraordinary personal service (Zane, 1997; Blignaut, 1997; Dawson & Brown, 1998). This concept of providing a few guests with a friendly and interesting atmosphere is the heart of B&B's popularity. B&B's add to the tourism diversity of a region and enhance the appeal of a community to travellers.

According to Zane (1997), B&B's can have a substantial positive economic impact on the communities where they stay because most of the people who run them were once unemployed (e.g. housewives, single parents, etc.). This is particularly true in small communities, where motel and hotel accommodations are limited and B&B's may handle a large percentage of visitors. Their economic contribution is in the form of increased earnings, foreign exchange, job opportunities, production, entrepreneurship and infrastructure. For example, Zane (1997) found that a couple using a B&B for a getaway typically spends US$225.72 per day for lodging, food, souvenirs and incidentals. When multiplied by the median stay of 2.35 nights, this adds up to more than US$530 per trip spent in the host community.

There is a dearth of empirical studies on the B&B industry of South Africa, in spite of the widely recognised fact that it is one of the fastest and maturing Small Medium Micro Enterprise (SMME) sector with the potential of contributing to economic growth, economic development and employment generation. This may be attributed to the local individual nature of the product since studies tend to focus on larger establishments such as hotels and motels. The emergence of B&B's as a contending segment of the tourism industry has led to many questions about its future directions. Chief among these questions, is greater recognition of the need to define what constitutes a B&B property, both for the purposes of zoning and knowledge development. As the B&B industry continues to grow and more small entrepreneurs enter this market, there is a growing need to develop a better understanding of the B&B industry for strategic planning purposes (Kaufman & Weaver, 1998). This will also enable B&B's to tap into the ever growing foreign tourist market and for the development of well-conceived marketing plans. This research has been undertaken as a result of the gap in knowledge on B&B's. This gap should not be allowed to continue, due to the growth and increasing importance of B&B's. In this article, the characteristics of B&B's, constraints and success factors are outlined.