TOP 10 TOURISM BUSINESS ISSUES
IN RURAL BRITISH COLUMBIA
For the Small Outdoor Tourism Operator
By Don Elzer – www.donelzer.com
1. Affordable and Accessible Capitalization
and Cash Flow Solutions
Issues: Many small rural based operators don’t have access to the true value of their net-worth because of bank lending practices which only consider a small percentage of land equity to borrowing power. Also, banks will often provide only a single option for overdraft support – this being a credit card rather than a conventional line-of-credit or overdraft protection. Often, this credit card must be brought to a positive outstanding balance annually making it a difficult solution for start-ups – this method of cash flow support becomes very expensive for small operators and reflects a rural/urban divide within financial sector policies.
2. A Dependable Customer Base
Issues: Advance bookings and contract bookings via Travel Trade partnerships provide assurances that a secure volume of revenues will arrive in the pre-season – this increases confidence and allows the small operator to secure staff and support. However, trends are proving that visitors are not booking in advance – their trip planning provides very little lead time. Also, the Travel Trade (wholesalers from Europe, North America etc) will often consider the interior of BC as not being market-ready and it is very expensive to attract this sector, often beyond the capacity of small operators. Also, many small operators and communities do not know how to sell into the travel trade, and lack strategies even though there is great potential to grow these profitable relationships.
3. Market Readiness and Effective Business Strategy
Issues: Small operators are challenged with capacity issues that impact their access to micro-trends which become important when developing an effective business strategy. Market readiness is often challenged by timeframes where snow melt occurs three weeks before the first visitors arrive making site and logistics preparation a challenge. These businesses are also challenged by the lack of data when trying to understand customer needs: Do they remain rustic and authentic? or Do they create an upscale environment with urban-like comforts?
4. Quality Staffing and Support
Issues: Rural and Backcountry operators are challenged when trying to attract dependable staff because of the remoteness of such operations. Sometimes students fill staffing roles, however they may not return year after year. This causes training costs to remain high. Worker accommodation is also a challenge. Emerging trends are showing that operators are trying to attract active seniors as workers, inviting them to bring their RV with them. Adventure tour providers require trained staff (certification, first aid, class 4 license etc) which can be unaffordable for the smaller operations or simply not available to them because of a worker shortage.
Outdoor tourism has within it a “value chain” which consists of a range of support businesses such as transportation providers, guides, a range of accommodators, food outlets and caterers and marketing agencies etc., if there are gaps in the value chain then the development of a destination is challenged and fewer visitors will arrive which will impact revenues. Operators are challenged with developing value chains in remote areas and then retaining good working long-term partnerships.
5. Dependable Logistics and Access to Natural Features,
Attractions and Partnerships
Issues: Outdoor tourism depends on a healthy mix of natural attractions, tour and hospitality services. This mix is provided by the government sector which controls crownland and the private sector which provides services and logistics. The outdoor tourism sector has been challenged by the costs, rules and regulations that provide them with access to crownland along with maintenance issues on public trails and in parks etc. This along with the cost of insurance has reduced the number of outdoor tour providers by over 60 percent in the Okanagan Valley.
Often the sudden decommissioning of logging roads and trails by government and forest companies will prevent a tour operator from delivering a longstanding tour itinerary which will negatively impact business - as will damage to the landscape and ecosystems by commercial development and industrial operations.
6. Fair and Affordable Liability Insurance
and Risk Management Solutions
Issues: Liability insurance continues to be unaffordable and unfair for the outdoor tourism sector. Sometimes insurance is not even available and this becomes problematic when the Provincial Government requires insurance from operators in order for them to gain access to crownland.
Presently, there is no advocacy organization adequately addressing the insurance problem which results in negative impacts for the outdoor tourism sector which continues to erode because of this high cost.
7. Accurate Environmental Forecasting
Issues: Climate change is impacting not only eco-systems but is adding significant costs to outdoor tourism. The risk of wildfire and the chance of backcountry areas being closed to tourism operations is now an annual risk. Also there are now changing seasons of operation. October now has the potential to become an active month for visitors yet many trails, campgrounds and attractions close for the season in September.
8. Customer Satisfaction
Issues: Word of mouth is still the primary means to grow a customer-base and build return visits. Small business is often challenged when trying to deliver and collect customer feedback information and then building effective follow-up tools.
9. Level Playing Field and Confidence
Issues: Small outdoor tourism businesses require an extra-ordinary level playing field to operate within. Because they are hands-on entrepreneurs who are often located in remote locations and remain somewhat isolated from the larger tourism industry, external issues of regulation, access to marketing and development support can often appear to be daunting to overcome. Such external pressure can negatively impact confidence.
Having the capacity to gather information and then effectively address issues is a challenge that requires a new industry management model that considers small vs. large businesses and rural vs urban areas.
10. Competition
Issues: There are many layers of competition that impact small outdoor tourism businesses, some of these elements are linked to the consumer marketplace, others are linked to the tourism industry itself. The following represents a few points of competition faced by this sector in rural and remote areas:
a) Local and Regional – There is always a degree of local competition which operators address through a local strategy, however inter-regional competition takes place between competing communities through their Destination Marketing Organizations (DMO’s). If a DMO is not robust then visitors will not have knowledge of an area and its operators. Rural areas often lack the marketing resources to promote themselves inter-regionally, as a result, local operators will suffer.
b) Small vs. Corporate – Small family owned outdoor tourism operations compete with large corporate owned operations which are usually Ski Resorts. These resorts attempt to become all-inclusive destinations with large marketing budgets. Their negative impacts on small businesses in rural areas continue to grow as they evolve into all-season resorts with accommodation and activities.
c) Discretionary Spending – Probably the single greatest element of competition is the direction by which consumers spend their discretionary income. Do they buy a barbeque on sale at Walmart or rent a lakeside cabin for a week? This spending is very unpredictable and is often driven by large scale media campaigns from big box retailers.
d) FIT vs. Guided Package – Tour operators largely survive as a result of providing guided group tours however much of BC’s destination marketing strategy is directed to the Fully Independent Traveler (FIT) who is encouraged to drive to a destination and then navigate an experience on their own. FIT is a lower cost form of travel but leaves behind significantly less revenue in a local economy. Also, impacts from FIT’s which can include ATVing and snowmobiling require that communities spend significantly more maintaining wildland areas, forest service roads and trails.
e) Local vs. Global – Canada and BC’s global position as an outdoor tourism destination is constantly being challenged from other parts of the world. As our destination marketing becomes more urbanized our outdoor/adventure “brand” lessens in the global marketplace which in turn reduces the number of international visitors seeking outdoor adventure in rural and remote Canada.
f) Brand Wars and Trends – The overwhelming presence of corporate media in all forms driving new trends can impact the tourism marketplace suddenly and without warning. Small business is challenged with shifting market strategies in order to compete in such a marketplace.
g) Industry Influence – Pay to Play – Every year governments and communities provide millions of dollars to the tourism industry so that it may leverage a greater market presence nationally and internationally. However, much of this leverage is being applied to growing the tourism corporate sector that includes Golf, Ski and Hotel experiences. Investment is made largely to support the development and marketing of resort properties (timehares) because this tourism sub-sector can prove a direct economic benefit (properties sold, rooms booked etc). By comparison, tourism in rural and remote BC is seen as economically marginal. Small tourism operators have a difficult time competing against such influence and as a result are not able to capture the marketing resources to grow their business and brand their area as a successful destination.
Don Elzer draws his experience from 35 years as an entrepreneur, investigative journalist, researcher, artist and activist. In the past decade he has focused much of his energy on sustainable community economic development, toiurism and small business planning in the rural areas of British Columbia. He can be found online at www.donelzer.com and www.bearfootcanada.com
Five "Real" Tourism Development
Actions for Rural Communities
This is a tourism development toolkit for community leaders that outlines five tangible actions that a rural community can implement in order to achieve real results. The toolkit outlines the step-by-step actions required to support certain development initiatives that will attract visitors to a rural area; engage local residents in tourism activities and encourage visitors to stay longer in a community.
CONTACT
If you are interested in participating in these projects as a sponsor please contact Don Elzer at the Discovery Centre at 250.547.9812 or by email
The Cascadia Conservancy Society
2910 30th Avenue Suite 204, Vernon, BC V1T 2B7
Phone: (Hodge & Associates) 250.542.4048 - Fax: 250.542.1744
