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Executive summary
Operating a tourism business has been considered as one of the most lucrative business ventures due to the massive profits made from sale of products and services to tourists. Studies point out that establishing a tourist business might be costly, a consideration that calls for proper planning, astute management proficiency, dexterity, resilience and well devised strategies.
An individual intending to establish a small tourism business in Melbourne, Australia needs to consider variety of factors that include strategic location, facilities, production and service processes as well as human resource planning. Australia has a strong reliance on tourism industry for its economy.
Tourism has become a major economic drive and has promoted employment of vast numbers of people in tourism businesses and companies such as tour drivers, accommodation staff, entertainers and wildlife service guides. Besides, it has contributed to the development of auxiliary businesses and diversification of services in tourist regions. Tourism in Australia has been known to thrive in coastal cities like Melbourne and Sydney as well as in regions like Great Barrier Reef and The Gold Coast in Queensland.
Tourists visit the Great Barrier Reef to see the view the largest Reef in the world. Analysts attribute its growth to myriad of factors like the numerous international visitors and the presence of a stable Australian dollar. Australia’s tourist sector is feasible for a small business which seeks to offer tourist services and products.
The business to be started in Australia will be at Port Melbourne. It is one of the bay beaches in Melbourne. The area has special features and landscape defined by its geography. It is accessible by land, air and water. The premises of the business will be rented until the business is well established. The choice to rent is due to the fact that there is a housing problem in the city, a factor that has been attributed to minimal and sometimes lack of houses.
The cost for starting the business has been estimated to be about US$400000 Australian dollars which will be used for buying machines, vehicles furniture and payment of rents. Besides, the business will recruit both local and regional workers as a strategy to harbor vast talents, capabilities and experience. In addition, the business will give particularistic training and mentorship to every employee to enhance their efficacy in discharging their duties.
Introduction
Running a tourism business has been considered to be one of the most lucrative business ventures due to the massive profits made from sale of products and services to tourists. Studies point out that establishing a tourist business might be costly, a consideration that calls for proper planning, astute management proficiency, dexterity, resilience and well devised strategies.
Tinsley and Lynch (2008, p. 165) point out that competition in the tourism industry is a major factor that prompts businesses to enhance better management practices, higher customer value in services delivery and increased levels of productivity for profitability. This has mainly been the case due to the fast changing systems of consumerism that dictate the need for greater value for the diverse products and services customers receive from the industry.
Individuals or organisations planning to establish a small tourism business needs to consider quite a number of factors that include strategic location, facilities, production and service processes as well as human resource planning. This paper takes a holistic look at the feasibility of starting a small tourist business in Melbourne, Australia.
Business and Industry
Description of the business
Australia has a strong reliance on tourism industry for its economy. Morrison and Teixeira (2004 p. 169) indicate that tourism has been contributing about 2.5% of the county’s GDP in the last five years. According to statistics this represents approximately 35 billion Australian dollars (Morrison & Teixeira 2004, p. 169).
Tourism has become a major economic drive and has promoted employment of 517,700 people in tourism businesses and companies as tour drivers, accommodation staff, entertainers and wildlife service guides (Beames 2003, p. 205). Besides, it has contributed towards the development of auxiliary businesses and diversification of services in tourist regions.
Morrison and Teixeira (2004, p. 170) further report that following the large influx of tourists in the region, many small tourist businesses have developed and become centers for tourists as they seek to take tangible evidence from their trips. In addition to raising the economic standards of the people in the region, tourism has also promoted the development of tourism infrastructure and services to the local communities.
Morrison and Teixeira conclude by noting that following the intensified tourism activities in the region, major hotels, roads, airstrips as well as external healthcare and water services provision have been greatly developed. This indeed makes the region feasible for tourism business.
Elliott and Boshoff (2008, p. 35) indicate that tourism in Australia has over the years been known to thrive in coastal cities like Melbourne and Sydney as well as in regions like Great Barrier Reef and The Gold Coast in Queensland. Tourists visit the Great Barrier Reef to see the view the largest Reef in the world. Other locations include the Tasmanian wilderness, the Australian outback and Uluru. Besides, it is important to mention the unique Australian wildlife which is also a point of interest in tourism.
Current and Future trends
Tourism Industry in Australia has continued to excel despite the many challenges presented by tough economic times and various natural disasters. Analysts attribute its growth to myriad of factors some of which include the numerous international visitors who boost consumption rates and the presence of a stable Australian dollar.
Today, the Australian government boasts of a strong tourism industry whose overnight expenditure goes above $140 billion (Morrison & Teixeira 2004, p. 171). Alonso and Ogle (2010, p. 818) observe that its current growth is a factor that has been fuelled by the emergence of significant markets like China. Indeed, the market for tourism products and services that China provides is greatly boosting the Australian Tourism industry and is deemed to become the largest contributor to the economy of Australia by 2020.
Key driving forces and success factors
The Australian tourism industry as Alonso and Ogle (2008, p. 330) point out is a long term industry whose effectiveness has been driven by developed infrastructure like airways, railways, roads, resorts, motels and hotels. Investors and planners of tourism in Australia have seen its growth through making strategic investment decisions which encompass forecasts on long term expenditure and visitors’ duration of stay.
Australia is dominated by inbound tourism sector that receives up to over 5 million visitors (Morrison & Teixeira 2004, p. 171). Another factor that drives the tourism sector towards success is the growing local and international population.
The main opportunities and feasibility for tourism businesses in Australia are depicted from the availability of the ready internal market in the country. Many tourist businesses enjoy a ripe market that emerges from the opportunities and competition in the region. In addition, the current suppressive economic factors that make it cumbersome for local Australians to travel overseas to other tourist destinations have become a major window for success to local businesses.
Feasibility study on small business related to tourism
Products and Services
Australia’s tourist sector is feasible for a small business which seeks to offer tourist services and products. It is important to note that the region is dominated by visitors who can be categorized as backpackers and international tourists (Lamont & Dowell 2008, p. 255). The former are guests who arrive from North America and Western European countries. International tourists who come from different parts of the globe form the major part of the tourism market.
The business will require variety of products and services to meet the various needs of both categories of tourists. Some of the services that will be offered will include accommodation, travel and restaurant services. Visitors will be provided with Australian food and wine some of which the business will manufacture. Tourists will also be taken to travel to various tourist destinations in Melbourne in addition to film, arts, culture, fashion and business centres.
Notably, tourism is largely defined by the comfort that people derive during their vacations (Lamont & Dowell 2008, p. 256). As a result, the business considers creating the best accommodation facilities that will offer comfort that tourists need.
Apart from the comfort, the accommodation areas that this business will make will create an extension of visitors’ interest by providing an effective view of nature from the balcony especially early in the morning and evenings. Besides, the business will also ensure that visitors are involved in different night camping expeditions which are very common in the region. It is important to mention that risk factors be critically analyzed to ensure full security.
Area of differentiation
Strategic analysis provides an examination of the strategies that an organization can employs to competitively remain viable in the market. These form the core of an organizations ability to succeed in a market and therefore dictate its internal and external operations in light of the competitive world. According to Saffu et al (2008, p. 269), assimilated strategies form the nucleus of an organization’s ability to address its developmental demands in the market.
The management of this business understands the nature of the Australian regional and international market. As such, it opts for a low cost model that satisfies tourists of all social classes. This will be a major strategy which it will use to attract consumers in the region. However, this method cannot be effective alone owing to presence of other competitors in the country. To further dominate the region, the business will established subsidiary businesses to extend its services to other regions in Melbourne.
It will also seek to get a stronger grip of the regional and international market by merging with other business and therefore extending its operations to the lucrative Uluru and Queensland. Further expansion is considered essential in giving the business a strong repute and promoting its competitive advantage (Roger et al. 2006, p. 610).
To counter the soaring competition in the country, this business will woe more customers by giving special offers to frequent visitors through frequent offering program. The program extends preferential treatment for the customers who will frequently use the services and products of the business and therefore encourage them to stick to the business to enjoy benefits.
By extending special offer to customers, it becomes easy to win their loyalty. Loyal customers are generally open and provide an organization with the necessary criticism to improve a system as they are able to associate with it.
Operations Objectives
Physical Presence and location
The business will be set in Port Melbourne, one of the bay beaches in Melbourne. This is because the area has special features and landscape defined by its geography. It is accessible by land, air and water. It is worth mentioning that Melbourne is one of the most populous cities in Australia (Lamont & Dowell 2008, p. 255).
This location is important for the business it forms a cultural capital where cultural institutions thrive. Some of those institutions include the Australian impressionist art, Australian football and the Australian film theatre. The topography of the location has a major bay side beaches which will be important for tourists.
The uniqueness of this area compared to other in Australia is that it is an international cultural enter. This will be a source of advantage as more tourists will frequent this area to enjoy the exclusive architecture, art, musicals, drama, films and festivals.
Premises and layout
The premises of the business will be rented until the business establishes. The choice to rent is due to the fact that there is a housing problem in the city, a factor that has been attributed to minimal and sometimes lack of houses. This has led to a very high demand for houses and subsequent high housing prices. The money for renting the business premise as the business starts will come from donations from friends and family as well as from grants.
The business premise layout will be such that it will have frontages, gardens and grounds, bathrooms, public areas, production and storage facilities. There will be proper lighting with energy saving bulbs, heating, sufficient water and insulation. As noted earlier, the environment will provide tourists with a view of the spectacular sights of the City.
The cost for starting the business has been estimated to be about US$400000 Australian dollars which will go into buying machines, vehicles furniture and payment of rents.
Other money that will come from donations and grants will be used to cover costs related to wages and benefits such as compensation for workers, benefits and salaries among others. Basically, it is important to clarify that the money will be dived appropriately to spread across wages costs, sales and marketing costs, administrative costs, professional fees and cost of sales.
Facilities and maintenance
The various business facilities that will be used will be bought with the funds collected from the aforementioned sources. The facilities, machines and other business operations will require the employment of a maintenance process which will initially be catered for by the revenues that the business will make.
This business will use a maintenance strategy review (see figure below) which offers variety of methods to enhance quality and positive outcomes. The maintenance processes will adhere to quality standards to make sure that all tasks are carried out effectively and align with business goals.
Processes and Supplies
Production/service process
Lamont and Dowell (2008, p. 260) explain that the main operation that defines how products and services relate to the tastes and preferences of consumers is the production processing. At this stage, the raw materials are subjected to key reactions that finally bring out the quality of the final product for consumers.
The strategy that will be employed by this business will entail creating a balance between professionalism and technical application in a manner that reflects what is required at the end of a production chain by consumers.
Studies indicate that balance has always been hard to maintain due to the critical input from divergent points such as assessment reports, profits expectations, a business’ brand and respective national standards. This business will seek to computerized production and service processes to provide highly precise proportions that will win the market.
Production strategies for this business will be made efficient through strategic operations that will ensure an organized process of manufacturing so as to guarantee that excellent and high quality products and services are produced.
Due to this, the business has set up mechanisms that will make all production process of foodstuff and related tourist products are smooth by establishing efficient production facilities and effective operations. Those operations will encompass distribution, manufacturing and design. The materials that this business will produce will majorly be foodstuff, wines and related products while services will include transport, accommodation and tour guiding.
Inventory management and suppliers
Inventory management is an integral aspect for success to be achieved in the modern business environment (Abel & Liu 2010, p. 245). The business will use a just-in-time evaluation model to establish instantaneous achievement of its set objectives.
This will entail key inventory keeping effects and evaluation of benefits and problems in order to establish a change model for guiding original objectivity achievement. From this consideration, inventory management becomes a central pillar in creating a platform within which new efforts are embedded to create satisfaction, renew efforts and focus in creating a competitive advantage.
The business will develop special refined software that will assist it to accommodate inventory as per the regional demand. Materials for the business will be ordered thrice every week and stored within the premises in storage facilities. Management of inventory will be both at minimum and maximum levels depending in the needs of the business. Using the inventory, it will be possible to estimate customers’ demands and therefore minimize the high risk of stocking either too many or few products.
In his view, Ghazali (2005, p. 37) indicates that having an effective supply and distribution network is perhaps the most valuable strategy as it facilitates an assumption of the critical niche in the market. The fact that it is impossible to establish many suppliers due to accruing costs, the business will maintain key distribution points to ensure that all its consumers have ample access to products and services. Besides, it will maintain constant links and communication with distributors to ensure constant delivery.
To concur with Ghazali (2005, p. 37) and Friel (1999, p. 97), distribution cannot be fully separated from the overall marketing of the products by a business. The business’ products and services will be aggressively marketed online and through magazines to persuade consumers to purchase its products and services. Therefore, its advertising activities will be designed to coincide with distribution and availability of products and services to visitors at tourist destination points.
Managing seasonal variations
Many tourist businesses all over the world are faced with the problem of seasonal variation. This could be due to the various seasons a region has. This business has set up mechanisms to challenge seasonality. One such method is planning with the climate variations of the region it will be located.
Besides, the accommodations, means of transport and other facilities the business has will be designed to meet the various seasonal requirements. In addition, another method of dealing with natural seasonality will be through establishing alternative seasons and encouraging visitors to lengthen their stay. Both methods will be tailored along giving economic incentives, organizing special events, broadening markets, and establishing alternative attractions.
Regulations
The small tourism business will operate from a license that will be obtained from Smart license. The importance of the license will be to confirm the legality of the business and its ability to offer quality services and products. In addition, the business will obtain copyright for its brand. It is also important to mention that an IP protection will be required and to protect the business’ intellectual property.
This will be obtained from the Australian Patent and Trademark Office. One of the advantages of an IP is its ability to keep a business safe from intellectual property theft. The restaurant will also obtain a trade secret and a Trademark as it will need to expand to other regions and to distinguish its services or products.
Human Resource Planning
Employees, positions and terms of employment
Success in an organization over the years has been cited as a factor that is determined by the management and staff’s ability to work together in a harmonic mode. Notably, it is this coterminous harmony that emphasizes the need for quality and customer value a notion that raises the profits of an institution greatly.
As Mary Jo Hatch indicates in her model of organizational cultural dynamics, the ability to establish a cohesive culture acceptable to the staff for increased output forms the key to success for any organisation (Friel 1999, p. 97). At the initial stages, the business will limit its employees to 70 people whose positions will be full time. They will include drivers, chefs, waiters, supervisors, cleaners, engineers and security officials.
Recruitment sources and regulations
According to Levenberg (2002, p. 108), human resource managers should seek to use the best recruitment systems that guarantee the most qualified staff to work in the organization. Staffs in an organization act as its image both internally and externally. The business will recruit both local and regional workers as a strategy to harbor vast talents, capabilities and experience.
The Human resource manager will seek to reach these talents and bring them to the organization to facilitate its ability to achieve its objectives. Following strict employment regulations, the business will only recruit qualified individuals certified by relevant agencies and authorities.
Training and performance appraisal
According to credible studies, it is clear that the role of human resource in providing training to staff is very critical in perfecting workers and achieving goals and objectives an organization has (Richins 2009, p. 360). In this respect, this business will give particularistic training and mentorship to every employee to enhance their efficacy in disposing their duties.
King, McKercher and Waryszak, (2003, p. 415) indicate that performance appraisals are essential in assessing the past performances of the employees and teams while seeking the roadmap for the best training that could be initiated to enhance further development. Arguably, the human resource planning will have a focus which will be mainly based on the need to form a long term responsive system that can facilitate sustainable productivity of the employees
Remuneration
Arguably, the role of a human resources manager is linked with determination of the remuneration systems that conforms with the organization’s returns and need for development (Richins 2009, p. 800). The human resource manager in this business will motivate the staff through competitive remuneration to enhance their participation and promote further creativity and innovation.
Payments for staff will depend on positions and levels of staff with the least getting US$ 1000. This will also depend on the policies the business will have as well as the particularistic legal framework in the organization. Even so, it will seek to offer high remuneration based on qualification and performance of the staff to promote their contribution.
Work schedule for employees in a week
NB: Workers performs their various duties each day except on Sundays. Workers also work in terms of shifts which changes every week.
Conclusions
To sum up, establishing a tourism business in Melbourne as reflected in the literature review is feasible when proper planning and business strategies are set in place. Tourism industry in Australia has over the years proven to be profitable despite the many disasters and economic challenges.
As indicated in the discussions, an individual intending to establish a business in Melbourne stands a high chance of succeeding due to the developed infrastructure, cultural institutions, good transport networks and a massive population made of locals and visitors from across the world.
References
Abel, D. A. & Liu, Y. (2010). Wine tourism development in emerging western Australian regions. International Journal of Contemporary Hospitality Management, 22(2), 245-262.
Alonso, A. D. & Ogle, A. (2008). Exploring design among small hospitality and tourism operations. Journal of Retail & Leisure Property, 7(4), 325-337.
Alonso, A. D., & Ogle, A. (2010). Tourism and hospitality small and medium enterprises and environmental sustainability. Management Research Review, 33(8), 818- 826.
Beames, G. (2003). The rock, the reef and the grape: The challenges of developing wine tourism in regional Australia. Journal of Vacation Marketing, 9(3), 205-205.
Elliott, R. & Boshoff, C. (2008). The influence of business orientations in small tourism businesses on the success of integrated marketing communication. Management Dynamics, 17(4), 32-46.
Friel, M. (1999). Marketing practice in small tourism and hospitality firms. The International Journal of Tourism Research, 1(2), 97-97.
Ghazali, A. (2005). Small firm owner-managers networks in tourism and hospitality. International Journal of Business and Society, 6(2), 37-54.
King, B., McKercher, B. & Waryszak, R. (2003). A comparative study of hospitality and tourism graduates in Australia and Hong Kong. The International Journal of Tourism Research, 5(6), 409-420.
Lamont, M. & Dowell, R. (2008). A process model of small and medium enterprise sponsorship of regional sport tourism events. Journal of Vacation Marketing, 14(3), 253-266.
Levenberg, N. M. (2002). Family business goals in the tourism and hospitality sector: Case studies and cross-case analysis from Australia, Canada, and Sweden, by Tommy Anderson, Jack Carlsen, Donald Getz. Family Business Review, 15(2), 107-109.
Morrison, A. & Teixeira, R. (2004). Small business performance: A tourism sector focus. Journal of Small Business and Enterprise Development, 11(2), 166-173.
Richins, H. (2009). Environmental, cultural, economic and socio-community sustainability: A framework for sustainable tourism in resort destinations. Environment, Development and Sustainability, 11(4), 785-800.
Roger, A. E., Marcel, F. N., Marthe, A. M. & Zobo, E. P. (2006). Feature-oriented workflow modelling based on enterprise human resource planning. Business Process Management Journal, 12(5), 608-621.
Saffu, K., Samuel, O. A., Elijah-Mensah, A. & Ahumatah, J. (2008). The contribution of human capital and resource-based view to small- and medium-sized tourism venture performance in Ghana. International Journal of Emerging Markets, 3(3), 268-284.
Tinsley, R. & Lynch, P. A. (2008). Differentiation and tourism destination development: Small business success in a close-knit community. Tourism and Hospitality Research, 8(3), 161-177.
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