Data Use Case Study: African Tourism Industry
By Lesley Hsu
About Serengeti Balloon Safaris
Serengeti National Park
Small business (75 staff)
About Latitude Hotels Group
Small business (~1,000 staff)
Africa has a fast-growing tourism economy and is a notable destination for nature and adventure, cultural heritage, and wellness and health tourism. According to the World Travel & Tourism Council, African economies are expected to have the second-highest rate of growth in travel and tourism gross domestic product (GDP) in the world for the next decade (2019–2029). Countries with the best enabling conditions to develop tourism include Mauritius, South Africa, Seychelles, Morocco, Namibia, Kenya, Tunisia, Cape Verde, Botswana, and Tanzania. At the same time, the World Economic Forum (WEF) Travel & Tourism Competitiveness Index (TTCI) found that the majority of the region’s economies were classified as low or lower-middle income, without the means to invest in tourism. One of the biggest barriers to the development of tourism has been the lack of infrastructure, such as for air and road transport and information and communications technology (ICT) adoption.
Participation in the tourism industry is highly dependent on reaching target customers and marketing to them. With the ease of accessing search tools and social media, the digital economy has played an increasingly important role in helping local and small businesses become competitive in the industry. Digital platforms also play a key part in improving consumer confidence in travel to Africa in the COVID-19 era.
In 2004, the African Union (AU) adopted a Tourism Action Plan with the aim of establishing a coordinated strategy and framework for developing sustainable tourism activities among member states. However, subsequent plans meant to work toward this goal have yet to be fully implemented. Africa’s disjointed tourism strategies are attributed to the lack of strong national-level institutional structures to implement the strategies, limited coordination between Regional Economic Communities (RECs), and limited research on the tourism industry at the continental level.
This case study provides examples from the hospitality and recreation sectors of tourism. The Latitude Hotels Group (Latitude) is an upscale boutique hotel company that offers lodging, space for conferences and banquets, and wellness services (spa, gym) for members and guests. The group opened its first location in Malawi in 2012 and has since added two locations in Zambia and Uganda, catering mainly to corporations and international nongovernmental organizations (NGOs). During the pandemic travel restrictions, Latitude was able to successfully pivot and target sales to local businesses and organizations. Serengeti Balloon Safaris (SBS) is a small business based in Arusha, Tanzania, that has been in operation for the past 32 years. The company provides short balloon excursions to visitors of Serengeti National Park, with visits lasting no longer than five hours. More than 80 percent of its business sales come from trade and tour operators, 15 percent are directly from the customers in Serengeti, and less than 5 percent come from direct website sales.
About the Sector
Tourism is regarded as a key industry to promote economic growth in Africa. In 2019, Africa’s travel and tourism sector employed over 24 million people and accounted for about 7 percent of Africa’s GDP, contributing $169 billion to its economy. The tourism sector was significantly impacted by COVID-19. Prior to the pandemic, international arrivals grew at an estimated 6 percent per year, compared to the global average of 4 percent. However, subsequent lockdowns and flight restrictions forced many African tourism operators and companies to shut down. The International Monetary Fund estimated that real GDP of tourism-dependent countries shrank by 12 percent in 2020. This has revealed the industry’s strong dependence on international tourists, as well as the potential for growth in the domestic tourism sector as many companies began to pivot to marketing to local businesses and tourists.
How Data Are Used
Tourism companies primarily use data to gain a better understanding of their current customer base and to inform areas for expansion. Small businesses primarily rely on web-based platforms that collect information from customers booking their services and then manually download and transfer the data to company spreadsheets.
For example, Latitude markets and collects reservations on travel websites, such as Expedia, Booking.com, and Kayak. The group also collects organizational details and information on customer demographics (origin country), nature of the stay, and how the customer heard about Latitude. It also uses social media platforms to collect data on different age groups, what kind of services they show interest in, and where they’re from. Awurama Ng’oma, the Marketing Manager of Latitude’s Malawi location, Latitude 13°, is usually the main point of contact regarding data collection, which is also managed by Latitude’s head office.
Ms. Ng’oma dedicates time to conduct a daily competitive analysis of the hotel’s offerings compared to competitors in the area. This includes online research of rates, promotions, and activities, as well as conversations with colleagues at other hotels. These reports are compiled in an internal database and shared.
Booking a safari can be quite complex, with park fees, flights, and lodging, which are mainly organized through tour operators. As an add-on service to larger safari tours, Serengeti Balloon Safaris’ data collection is limited to sales information and the names of passengers that will be added to the flight manifests, as it is the tour operators who communicate directly with customers. As a result, its primary use of data is focused on the business-to-business side, e.g., booking rates and which businesses are booking tours, to help forecast its sales and opportunities for growth. In previous years, SBS was focused on establishing relationships with safari tour operators to sell its services, and the company’s marketing was brochure-based. However, it has recently begun to pivot to target the final customer to remain competitive as the industry grows. For example, SBS has been developing its website and monitoring the traffic in order to improve its brand awareness and direct bookings performance.
SBS has different seasonal sites and has up to three sites open at one time, but it operates six or seven balloons per year. SBS Chief Executive Officer John Corse uses sales data to help inform the company where to operate its balloons and when to move between locations. Maintenance data, such as the consumption of parts, are also monitored closely to avoid being susceptible to fraud (i.e., buying parts that are not needed), which is a regular and significant issue in the industry.
Data Privacy, Storage, and Cybersecurity
As a hospitality business dealing with the exchange of personal information, Latitude takes the issue of customer safety and security very seriously. Barnabas Cephas, the Chief Technology Head of Latitude, explained that there are levels of restrictions on the company’s systems so that certain data are limited to only those who need to know (for example, the front office and reservations teams), and the company uses private channels on Microsoft Teams to exchange information. Booking information is maintained on booking websites that have their own levels of security. Latitude also works with many international clients and therefore strives to maintain international security standards. For financial transactions, the company offers guests the option to pay their bill through a secure third-party, dollar-denominated account that is backed by the Reserve Bank. The company has set up firewalls and antivirus software to prevent and limit the spread of any cyberattacks. It does require some investment to add this security. Each property manages its own costs regarding data security; however, Mr. Cephas noted that the company’s Kampala location pays about USD$200/month to maintain a firewall and that the cost is worth it for the safety of its guests. Nevertheless, the weakest link in data privacy and security is people, and one important component of maintaining security at Latitude is the regular training of all levels of staff to recognize phishing attempts and to handle sensitive guest information. Implementing these measures is essential to assure guests that they will be protected while staying at the hotel and when they access the Internet there. Latitude’s standard is to provide the same experience to its guests in Africa as they would expect when traveling to any other quality hotel in the world.
SBS’s Mr. Corse recently began transitioning the company’s databases from manually inputted spreadsheets to a web-based reservation system (easyOTA), which collects information on the date of sale and reservation, and to an online accounting system (Xero). SBS relies on the security measures bundled into these systems to protect the data that are being collected from customers. One of the biggest challenges with moving to web-based systems has been staff resistance and reluctance to the changes. Another is the lack of Internet connectivity in the Serengeti, making it difficult at times to access data for those working on the ground. One workaround for this problem has been to establish a habit of downloading information in a PDF at the beginning of the day and transmitting it via WhatsApp to the team on the ground.
Data Policy Regime
Data privacy and security laws have increased along with the rise of digitalization in the past decade, especially during the pandemic, and these laws vary from country to country. For example, following in the footsteps of the European Union’s General Data Protection Regulation (GDPR), Kenya passed its Data Protection Act (DPA) in 2019 that regulates the collection, processing, and protection of personal data in the country. In 2020, Kenya appointed a Data Commissioner to oversee the implementation of the DPA. There are similar Data Protection and Privacy Acts in place in Uganda and Zambia and one is on the horizon for Malawi, but currently none is in place in Tanzania. The only regulation that SBS is beholden to is that of preparing flight manifests for the Civil Aviation Authority and Serengeti National Park.
The level of engagement that countries have with businesses in developing policies varies, as well, although all are largely limited. Mr. Cephas noted that the National Information Technology Authority in Uganda (NITA-U) reaches out to businesses and organizations to try to understand current issues—for example, sending out surveys to assess the industry’s needs. SBS is a member of the Tanzania Association of Tour Operators (TATO), which provides coordinated advocacy and projects on issues that serve the broader interest of the Tanzanian tourism industry, such as security and marketing Tanzania as a tourist destination. However, in both cases, the government response to addressing emerging issues has been slow and may take years.
Future of Data Use
As the COVID-19 pandemic subsides and tourism rebounds, the industry expects to further engage with potential customers through digital channels. Although connectivity can still be an issue for African tourism service providers, increased investment in digital infrastructure throughout the continent is expected to mitigate this problem, leading to greater use of digital tools, such as online booking platforms, digital payment platforms, and websites to improve brand visibility.
Improvements in the reliability and quality of connectivity will also allow greater investments in back-end digital solutions, like the web-based reservation system and the online accounting systems that allow SBS to manage its daily operations more efficiently. These improvements in data collection and management can both increase the profitability of SBS’s operations and improve its customer experience. As more customer data are handled via digital platforms and customer management tools, the emphasis on data security and privacy will also increase. Tourism firms will want to ensure that their booking and payment platforms and internal data management systems offer sufficient security for their customers to trust them with their private information and to feel confident booking the firms’ services.
With improved customer data collection and data management in the industry, tourism providers will make more informed investment decisions and will better tailor their services to specific markets. For example, evidence of an increase in travelers from Malawi could allow Latitude to add Malawian dishes to the restaurant menu. The data that Latitude currently collects at its Malawi location allow the group to gain a better understanding of tourism demographics in the southern region of Malawi. The data also help inform potential areas to grow as a hotel group and to generate customer loyalty. For SBS, tourism data and trends could assist the company in deciding where to allocate the efforts of its small team and how to run the company more efficiently.
E-Trade Alliance Case Study. Author: Hsu, Lesley. “Data Use Case Study: African Tourism Industry.” USAID Digital Economy and Market Development (DEMD) Project. March 2023.