Our Operators

Our Operators The Key to Sector’s Development

The government hopes to attract 2 million tourists per year by the end of the current Growth and Transformation Plan. That’s roughly double the current amount – and research suggests that tour operators may be the key to helping the country reach that goal. However, insiders say that the industry is filled with challenges that prevent operators from achieving their full potential, thereby thwarting the sector’s overall promise. EBR’s Tamirat Astatkie spoke with key stakeholders and consulted research to learn more about the key role tour operators play in this pivotal sector.

In recent years, tourism has emerged as one of the leading sectors in Ethiopia, supporting development endeavours because of its positive growth trajectory. In fact, revenue from tourism is becoming one of the country’s major sources of attaining foreign currency.
For instance, the tourism sector generated USD3.4 billion in the 2015/16 fiscal year, USD650 million higher than the export sector earned in the same period. The number of tourists who visit the country has grown annually. There were 910,000 tourists that visited Ethiopia in 2015/2016, which is more than double the number that entered five years ago.
At the helm of the sector are tour operators who connect domestic and international tourists to the services offered by the tourism industry. A tour operating firm provides services that arrange vacation destination packages by including inclusive travel, hotel, dining and recreational services.
Industry insiders acknowledge that tour operators play a pivotal role in Ethiopia’s burgeoning tourism sector, which many believe has promising prospects. “The country’s superior tourism potential provides an opportunity for tour operating firms,” says Araya Mulugeta, Deputy Manager of Dinknesh Ethiopia, a company with a decade of experience in the sector. “When we compare the trend, it is in a progressive manner.”
In fact, the emergence of tour operators is a relatively recent phenomenon in Ethiopia. The country’s most prominent tourism firm – the National Tour Operation and Travel Agency (NTO) – was established in 1982 and is the precursor to the modern tourism sector, having monopolised the industry for over a decade.
While the NTO is government-owned, the emergence of licensed private tour operating firms in Ethiopia has grown exponentially in recent years. In 1991 the number of private tour operators and travel agencies mushroomed in the tourism industry with the introduction of a more liberalised economy.
According to information obtained from the Ministry of Culture and Tourism (MoCT), which is responsible for the development and promotion of domestic and international tourism, there are 467 certified and legally recognised tour operators in Ethiopia. This is a drastic increase from 25 years ago, when there were no private companies licensed to provide tours. Most of these companies are inbound tour operators that cater to foreign tourists by arranging different tour packages throughout the country.
Tour operators are generally categorised based on geography and the kinds of services they provide. When classified geographically, there are two types: outbound and inbound tour operators. Outbound tour operators are located in the home country of the tourists that send tourists to different parts of the world. Inbound operators are located in the tourist-receiving country.
The other classification method is the services operators provide. By this method, firms are classified as mass or specialised tour operators. Mass operators provide traditional package tours whereas specialised operators create a niche market of products for specific group of tourists, like religious groups.
Researchers stress that tour operators are a key link between supply and demand in tourism. For instance, in a study entitled ‘The Role of Tour Operators in Ethiopian Tourism Development’, Mahlet Seleshi argues that tour operators are key players in the tourism industry because they serve as wholesalers who buy tourism products and services in bulk, break the bulk into manageable packages, and sell these packages to different tourists.
Despite advancements in information technology, which have contributed to the proliferation of travel websites, thereby reducing the role of tour operators and travel agents, their involvement is still crucial. This is because providing package services and credible information on the quality of the tourism products is still an issue, especially in developing countries where telecommunications infrastructure is often weak.
Indeed, the way tour operators arrange and market packaged tours is one of the challenges facing the industry, since they play a great role in enhancing the number of tourists who visit the country – especially countries that heretofore haven’t had robust tourism sectors or that might not be popular among travellers – thereby increasing the revenue derived from tourism.
This is especially important in developing countries, according to data from the International Federation of Tour Operators, outbound tour operators comprise 12Pct of arrivals to developing countries. The United Nations says these operators – both foreign and local – are key to developing overall tourist infrastructure:
“As intermediaries between tourists and tourism service providers, tour operators can influence the choices of consumers, the practices of suppliers and the development patterns of destinations. This unique role means that tour operators can make an important contribution to furthering the goals of sustainable tourism development and protecting the environmental and cultural resources on which the tourism industry depends for its survival and growth.”
With these benefits in mind, local tour operators strive to satisfy customers. Araya shares his company’s experience when it comes to package tour arrangement. “We aim primarily for our customers’ satisfaction, and we strive to meet the standards we set considering the reality on the ground,” he explains. “Dinknesh Ethiopia Tour thoroughly arranges accommodations striking a balance between the request of a guest and the reality on the ground. In this case, guests usually enjoy the service they get within the standard of their expectation.”
Package tour arrangement is important for successful tourist satisfaction. A package tour is typically a bundle of different services for a particular customer – providing him or her several destinations, site visits or cultural experiences in a singular package, usually at a fixed rate.
Literature on the subject describes the package tours as a labour-intensive and synthetic multitude of components that contains both the “soft” characteristics of services (seasonality, perishability, inseparability, intangibility, and simultaneous production and consumption) as well as tangible “hard” elements such as managing logistics, hotel rooms and airplane fares. Increased customer satisfaction results in a higher market share growth; the ability to charge a higher price; improved customer loyalty, a strong link to increased profitability; and reduced transaction costs.
Gelila Degene, Manager of the Tour Operation Department at Green Land Tours, underscores that tour operators are not the ones that take control of all services offered in the tourism industry. “Our principal role is to assemble different services that form a package that will be marketed to potential tourists and, as a result of this, all attributes to the package,” she stresses. Green Land Tours, an Italian owned company with 19 years of service in the sector, is known for arranging cross-country tours in Kenya, Somaliland, Djibouti, Tanzania and Sudan.
Studies conducted on the subject also demonstrate that a package tour comprises dozens of elements and that the satisfaction of tourists will not be limited only to attractions or accommodation. According to a study entitled ‘Package Tour Arrangement in Addis Ababa: The Case of Selected Tour Operators’ by Fasil Endale, for tourists to have a complete and inclusive experience with Ethiopian tour programmes, the packages should be crafted thoughtfully and all elements of the overall experience need to be incorporated.
A lack of awareness among the different stakeholders is a major problem in the sector. To do things in a coordinated manner to promote tourism requires the involvement of all stakeholders.
Sector unity has been a key component in the success of the tourism industry in other countries. For example, according to information from South Africa’s Ministry of Tourism, key components in unifying the country’s tourism sector include increased linkages between the public and private sector; municipalities prioritising tourism infrastructure development; and aligning marketing, product development and management across the sector, both public and private.
Additionally, Araya says besides the economic advantages, the labour-intensive nature of the sector greatly helps in reducing unemployment, which is a serious socio-economic problem in Ethiopia. “But when we compare our service delivery with some African counterparts, we lag behind,” he stresses.
According to the destination competitiveness analysis in a report entitled ‘Tourist Flows and Its Determinants in Ethiopia’ published by the Ethiopian Development Research Institute, 141 tourists were asked to rank Ethiopia regarding the perceptions they had before visiting and after visiting. One of the major problems they mentioned is the insufficient promotion undertaken by the government, tour operators and other stakeholders about Ethiopia’s tourism potential.
The research suggests “huge investment on promotion is required to tell the world that Ethiopia has much more than poverty. More tourists would have been attracted to Ethiopia, had there been a strong and coordinated promotion of the country’s tourism attractions.” But the research stresses this requires coordinated action by all stakeholders, including tour operators and the government.
Ephrem Merid, General Manager of the NTO, also argues that the basic problem of the sector is a lack of awareness. “Taking this into account and its rippling effect as well as long term advantages of the sector to the nation, the NTO has taken initiatives in organising camping that involves students,” he explains. “That is how we mainstream the concept of tourism among different generations.”
The NTO also hopes to tackle this issue by creating new markets in the tourism sector, like religious pilgrimage. Currently they are promoting tourism to Christian sites.
This form of tourism is especially fruitful for tour operators, as religious sites are often located in remote areas, and require guides to explain the history and significance of the site. As a result, it requires a level of logistics management that’s difficult to replicate via travel websites.
On top of this, the NTO has researched and finalised an assessment to begin tours this year to certain Muslim sites. This, Ephrem believes, along with the Christian pilgrimages and camping, will significantly support the development of local tourism, which in turn will have an impact on the whole sector.
Yet, the greater danger the sector is facing, according to Gelila, is the dramatic change of the cultural elements in many tourist attractions such as the Omo Valley, which is a cradle of a unique kaleidoscope of cultures who have kept traditions alive for generations. “In five to six years, the tribes with their rich culture may no longer be tourist attractions due to the dynamism of culture and urban influence,” she says.
On top of these, the sector suffers from a lack of trained manpower as well as the preference of hiring experienced tour operators instead of novice ones. Getenet Yigzaw, Head of Public Relations at the ETO, acknowledges the scarcity of professionals in the sector. However, he criticises that many firms prefer working with experienced operators on a freelance basis, thereby thwarting the development of new professionals in the sector.
In fact the research conducted by Mahlet reveals that despite continuous improvements, a lack of skilled manpower in the field is still prevalent, making the economic sustainability of tour operation alone difficult. As a result, tour operating firms tend to run other related businesses, such as travel agencies, car rentals, hotels, restaurants, and lodges, which can negatively affect the quality of services.
In order to address the scarcity of human resources, different degree programmes pertinent to tourism are offered at a number of public and private higher institutions. Getenet suggests that tour operating firms create opportunities for novices to gain experience to help the sector grow.
Stakeholders also stress that the presence of a weak professional association is another hindrance. The Ethiopian Tour Operators Association (ETOA) was established in 2003 and currently has 211 members. Gelila says that the ETOA is not actively participating in the sector’s development: “I don’t remember a significant accomplishment that the ETOA has contributed to the development of the sector except on some minor issues. It is not visible enough in light of the prominent role it can play.”
However, Sosina Mulugeta, General Manager of the ETOA, disagrees with Gelila’s assessment. “We have a good track record in executing our responsibilities as much as we can,” she says. “The ETOA, in collaboration with the Holland Embassy in Addis Ababa, organises trainings to members in order to build their capacity, supports members upon their request in facilitating their marketing abroad and by giving references to agents or tourists on behalf of its members, although a lot remains to be done.”
Araya partly shares both Gelila and Sosina’s concern regarding the role of the ETOA and doesn’t like to discredit the Association altogether: “The lower performance of the ETOA is mainly due to a lack of commitment among members who prefer to pay membership fees only.”
As a result, Araya demands members discharge their responsibilities to enjoy membership entitlement as well as positively develop the sector: “We should learn from good standing associations, like the Ethiopian Horticulture Association – a successful association in its strong accomplishments and influential stance.”
Stakeholders like Araya and Gelila agree that tour operators play a critical role in the tourism industry since they deliver the most convenient option for tourists to visit the country’s destinations, especially those that are remote, require extensive logistics or have historical significance. Since Ethiopia possesses enormous potential for the expansion of tourism they stress that accelerating and supporting tour operators is necessary to adequately reap the benefits of the country’s tourism sector. EBR

5th Year • November 16 2016 – December 15 2016 • No. 45

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