South Africa’s hospitality industry faces a web of complex challenges from the rise of Airbnb to the threat of running out of water. How it approaches these will be critical for the future of tourism in the country. Jonathan Steyn and Graham Wood discuss how the hospitality sector can leverage tourism growth.
The hospitality industry and the tourism sector more broadly is a vital contributor to South Africa’s economic growth that was singled out by President Ramaphosa in his maiden State of the Nation address as an area that provides South Africa with “incredible opportunities to, quite literally, shine”.
According to a Tourism and Migration Survey by Stats SA, over 4.6 million travellers passed through South African ports of entry in December 2017, showing an increase of 2.7% on December 2016.
This positions the sector as a significant contributor to GDP. A report by the World Travel and Tourism Council indicates that the total contribution of South African travel and tourism was R402.2 billion in 2016, accounting for 9.3% of GDP. This is forecast to rise to R624.2 billion by 2027, at 11.5% of GDP. The industry provides just over 1.5 million jobs, forecast to rise to 2.4 million by 2027. Furthermore, according to the PWC Africa Insights Hotels Outlook: 2017-2021, hotel room revenue for SA, Nigeria, Mauritius, Tanzania and Kenya will increase at an 8.7% compound annual rate to R52.9 billion in 2021 from R39 billion in 2016.
While these numbers seem like good news, the reality is that the fast-paced hospitality industry is facing massive global disruption including digital platforms for managing bookings and reviewing hotels, and the rise of Airbnb. The other related challenge is that the industry has become over-commoditised to a point where consumers are not able to understand brand differentiation between competing hospitality offerings. Furthermore, the industry locally is challenged by water shortages and the stresses of an emerging market economy, political instability and societal inequality.
To tackle these challenges and reap the benefits of increasing tourism, leaders and managers in the industry need to invest in two key areas: firstly, using mentoring to build and retain industry knowledge and foster a new generation of transformed leadership; and secondly, fostering a culture of innovation to better differentiate and personalise guest experiences and balance social, environmental and economic purpose.
Mentors hold the key to industry knowledge
Current hospitality leaders hold a wealth of experience and insight and have a hugely powerful role to play in guiding the younger generation to improve their capabilities by sharing the know-how, networks and skills they have built up during their career. Unfortunately there is a disconnect between current or outgoing industry leadership and emerging leadership and this is hindering the transfer of knowledge.
To bridge this gap, African hospitality leadership needs to consciously devote the time to mould and develop a new generation of leaders. A tried-and-tested way to do this is via targeted leadership development and mentoring.
Mentoring, like coaching, is aimed at providing personal development opportunities such as improving personal outlook and unlocking potential and leadership. However, unlike coaching, it is a one-way “telling practice” where a mentor takes an active role in providing wisdom and guidance to mentees who are engaged in a transition at a key point in their careers – such as stepping into a new leadership role. Coaching on the other hand is a client-centred “asking practice” where the client is guided to finding their own, unique solutions.
The hospitality industry in South Africa has until now suffered from a lack of educational opportunities to support the development and transition of people to managerial positions. While hotel schools offer technical and operational training, there has been little on offer for hospitality leadership. Leaders in the industry need to be taught the vernacular of leadership far earlier in their careers and mentors and can help achieve this. Additionally, supportive mentorship can ensure that any formal training is embedded into daily work so that learning can be implemented. A recent McKinsey survey highlights that successful leadership-development interventions are roughly five times more likely to succeed if they involved senior leaders acting as project sponsors, mentors, and coaches.
A culture of innovation is needed to unlock value
Effective mentoring does not just pass on knowledge but should facilitate an extended dialogue that can develop collaborative new ways of thinking and expose emerging leaders to innovative leadership and thinking. Strong and innovative leadership at all levels, and a culture of continuous innovative strategic thinking, is vital if the industry is to rise to the many challenges it is facing – not just when there is a crisis. Innovative thinking needs to be endogenous to each organisation and to the industry as a whole.
Strategic innovation encompasses revolutionary, externally-orientated ways to create more value and meaning. This can be by finding uncontested space in the market to deal with industry disruptors, creating user-centred solutions to create markets which never existed before, or constantly re-imagining the DNA of the experience to make it memorable, compelling and unique.
Innovative thinking also extends to sustainable innovation that seeks to balance social, environmental and economic purpose – with the industry’s response to the Cape Town water crisis being a case in point. The over-emphasis on economic sustainability has potentially led the hospitality industry to be criticised for its slow response to the water crisis, but many hotels have since implemented innovative solutions. Tsogo Sun, for example, plans to build a desalination plant to decrease its dependence on municipal water and secure its own supply to avert a possible Day Zero scenario, while other hotels like The Townhouse Hotel have successfully motivated guests to participate in their emergency grey water system. The hotel educates guests about the current drought conditions and inspires responsible tourism by providing buckets in bathrooms. According to a statement from FEDHASA the Cape Town drought is not a “once-off”. “As the effects of climate change intensify, and because South Africa has always been a water-stressed region, we encourage our members to make long-term sustainability a key focus of their operations,” it said.
Innovative leadership also takes the cultural and generational diversity of the industry into account. Managers need strong emotional intelligence and the softer skills of leadership to deal with a wide variety of people – staff and guests. In a client-facing industry, which relies on positive client experience for continued growth, people skills are key.
As President Ramaphosa said, “we have the most beautiful country in the world and the most hospitable people”. Ultimately people run the hospitality industry, and leaders need to know how to get the best out of their staff, and condition and prepare the next generation to take the reins.
Jonathan Steyn convenes The Hospitality Leadership course at the UCT Graduate School of Business. Graham Wood is a former MD of Tsogo Sun and is now a partner at PMR consulting.
