The Danube Delta Tourism Strategies for Coping with the Economic Recession
The Danube Delta tourism Strategies for coping with the economic recession Specialization Project by Andrei Beno 4sokf submitted to the Department of Hospitality and Tourism Management in accordance with the requirements for the Academy Profession degree under supervision of: Anna HammershoyNo. f characters: 43. 740| 14th March 2011| Table of Contents 1.
Introduction3 2. Problem formulation4 3. Methodology, limitations5 3. 1 Limitations5 3. 2 Methodology5 4.
Action Plan7 5. Funding8 6. PEST analysis. 9 Political9 Economical9 Social10 Technological10 7. SWOT analysis11 Strenghts11 Weaknesses11 Opportunities12 Threats12 8. New market segment13 The Chinese tourist’s profile14 “Danube – Miracle of nature” package14 Marketing16 A first step: Beijing tourism Fair16 The market segment17 Control17 9.
Parallel to the airline industry17 10. Conclusion19 Bibliography21 1. Introduction The economic recession has taken the entire world by surprise for the last couple of years, and all types of industry had suffered from it. The tourism sector, which was continuously growing until the crisis begun, was highly affected. According to the World Tourism Organization (UNWTO Barometer, January 2010), in 2008 there were over 922 million international tourist arrivals, with a growth of 1,9% as compared to the previous year, 2007.
Then, a year after the crisis hit, in 2009 the international tourists arrivals fell to 880 million, representing a world-wide decline of 4%, compared to 2008.
Europe was the most affected, with a 6% decline. France, who is constantly the world leader in number of tourists arrivals, had 74. 2 million in 2009, compared to 80. 9 million in 2007, before the crisis. Spain also lost its second position in front of the United States. The UNWTO reports that started with the crisis, some major changes can be seen in tourism trends (UNWTO barometer – april update 2010).
As seen from above, the most popular destinations like France, Spain, Italy, and the United Kingdom are constantly loosing tourists, which tend to focus on Asian countries, Eastern European states or North America. For example, since the crisis started, Ukraine and Malaysia entered the top 10 visited countries. This means tourists are searching for new, cheaper alternatives, which offer an overall better value for money. As seen from the above, the whole tourism sector was affected by the economic recession, but Europe suffered the most. In order for things to improve, some actions are to be taken.
The European Union is aware of the importance of tourism in Europe, generating over 5% of the GDP, and providing jobs for around 10 million people. So the EU has increased its efforts in promoting the tourism growth of the member countries. On the 19th Nov, 2010, the vice president of the European commission for industry and tourism, Antonio Tajani presented the new action plan: “…To this end, the Commission today presents a concrete action plan. The action plan contains a clear roadmap for developing key actions such as the European Tourism Observatory, the Platform on Tourism and ICT and the European Quality Brand. At the same press release, the commission released a framework for the member countries “Europe, the world’s No. 1 tourist destination – a new political framework for tourism in Europe”.
(Bright Prospects for Tourism in Europe, http://ec. europa. eu, press release on 19th nov, 2010) As seen, the Union is increasing its efforts in making the member countries aware of the direction their tourism strategy has to take in overcoming the crisis. This project focuses on the Danube Delta in the background of the above situation.
The delta is the second from Europe, by size, and the best preserved from the entire world.
Its 5 800 square kilometers are the home for 5 380 species of plants and animals. It is spread on the territory of Romania and Ukraine, with 82% belonging to the Romanian soil. It is a natural wonder, housing 234 international protected species of animals, because they risk of becoming extinct. From 1991 to 2004, the National Institute of Research for the Danube Delta found 2 species of animals and 37 of plants, all new to the science.
The delta attracts tourist by offering a wide range of services and activities, such as: * Recreational tourism – sunbathing, swimming, river cruises on floating hotels * Educational tourism – observing the species, sightseeing, heritage tourism, “photo-safari” * Adventure tourism – “survival guide trips” where the only supplies taken will satisfy the basic needs: knife, matches, first-aid kit, line and compass * Scientifical tourism – for scientist, students, researchers, archeologists who are using the tourism facilities from the delta as part of their work * Special programs for youths – Schools are organizing trips for children to get to know, understand and value the nature * Rural tourism – the tourists use the local people as both their hosts and their guides.
* Sport tourism – for water sports enthusiasts Fishing tourism – for people who enjoy fishing Although it offers a variety of attractions, statistics show that in 2006 only 0,5% of the tourists on the Romanian territory are choosing the Danube Delta as their destination, and only 0,3% of the total nights spent by tourists across Romania are in the delta region. In 2008 there was a significant increase of tourists in the area, from 30. 000 in 2007, to 105. 000 in the following year. But after the world economic crisis began, there was a constant negative trend. In 2009, the number of tourists was down by 50%, while in 2010 a significant number of the accommodation facilities didn’t even open for the new season.
The president of ‘Delta Nature Resort’ is arguing that “in the last 20 years, the most important form of tourism in Romania was business tourism. Also, in the latest years, no promotion was made to ecotourism, rural tourism and the tourism in the Delta. We have cut the prices in half to keep attracting the same number of tourists, but even so they were with 50% less than in 2008. ” 2. Problem formulation It is clear the tourism in the Danube Delta is greatly affected from the recession. Last year, the Ministry of Tourism realized this, and they started to focus on the world-wide trend of ecotourism and sustainability, with future plans of promoting the Delta.
Furthermore, the local stakeholders of the Danube Delta have held several meetings and seminars to find some solutions to the problems the tourism in the delta is facing. Also, a lot of NGO’s have appeared with the specific focus on the delta. In the light of the above, my problem formulation is: How can “Save the Delta” NGO offer support to the tourism-related businesses from the Danube Delta, in order to help them cope with the low popularity the region has since the recession began? 3. Methodology, limitations 3. 1 Limitations Given the number of pages this project is restricted to, answering such a broad problem statement is not possible.
That is why this paper limits its bound by focusing on what the “Save the Delta” NGO can do to attract funds, what projects they could implement with this money, and how they will help the local businesses to attract more inbound tourists in the area. The scope of this project is to assess the feasibility of different marketing, funding and internal conduct strategies of the NGO. Next, the costs for developing them will be evaluated and compared against their expected results, and some final conclusions will be made. To have a more focused approach for the NGO’s potential plans, parts of this project will be based only on one specific company, the “la Doru” hotel, and how the NGO can help it attract more tourists. It is a business that includes a 2 stars hotel, and other activities related with the delta.
3. 2 Methodology This project is based on desk research.
In order to gather enough data for the research, statistics were gathered from National Statistics Agencies, and internal statistics within different companies. They will be used to analyze the trends in the inbound tourism, a necessary step in order to detect and focus on the right problems. The referencing style used in this paper is the Harvard method. Two main theories are to be used in this project. Firstly, the theories developed by Pine and Gilmore regarding the experience economy(Pine, J. and Gilmore, J. (1999) The Experience Economy, Harvard Business School Press, Boston, 1999).
According to the authors, the classification for a business is the following: * A commodity business charges for undifferentiated products. A goods business charges for distinctive, tangible things. * A service business charges for the activities you perform. * An experience business charges for the feeling customers get by engaging it. * A transformation business charges for the benefit customers (or “guests”) receive by spending time there. Nowadays, the tourism industry is mostly made up of ‘experience businesses’.
However, the global shift to a ‘transformation business’ has already begun. The ideas and solutions in this project will help the targeted companies to offer a range of different emotions and experiences, by engaging the guests into activities and encouraging them to become part of the service.
It is also intended to provide authentic experiences to the customers, by taking part in the strictly local culture. The purpose of the NGO should be to take the companies to a level that’s somewhere in between of being an experience business and a transformation one. As Pine and Gilmore stated in their book (Experience Economy, page 182), “The first requirement for workers in a transformation business is that they truly care”. This sounds almost impossible, but it can be done if ways of motivating the employees are to be found.
The NGO will also focus on assisting companies in slowly shifting to become a transformation business, by providing something that lasts a life time.
For example, cooking lessons, hunting lessons, medical massage, historical trip (learning local culture). The second chosen theory is the one on cross-cultural communication and business relationships(Richard Gestland – Cross Cultural Business Behavior, Copenhagen, 1997). It helps by providing vital information on different cultures and how to deal with cultural differences. For example, it is intended that the NGO will provide links between local hotels, tourism agencies and international ones. After doing some research, I found the Danish tourism agency JS Rejser, located near Aalborg (http://www.
jsrejser. dk/), which is specialized in sending Danish tourists to Romania, mostly to rural areas.
They are currently offering only one trip per year in the Delta region, but more packages could be made so that they focus more on this area. This will be covered later on the project. Also, a new market for Chinese people has appeared during my research process. Because it is intended to attract Danish and Chinese tourists and make specific packages for them, it is important to know how to approach the Danish Tourism agencies for collaboration.
Gestland’s theory deals with perception of space (how people see their private space), perception of time (if it is crucial or not to be on time), non-verbal communication (eye contact, hand-shaking, touching, etc. Ex: Romania: relationship focused (first assure a connection with the people, then proceed to business), formal (hierarchical type of society), polychromic (they tend to do multiple activities at once) Denmark: deal-focused (straight to business), less formal, monochromic (focusing on doing one thing at a time). China: relationship focused (in business they build relationships first, and do business afterwards), formal (hierarchical type of society), polychromic (they tend to do multiple activities at once, and there is a constant connection between family and business – they are often done simultaneous). (Intercultural communication, Ronald Scollon, Suzanne B. K.
Scollon, Blackwell Publishing, 2003)
In the current paper a PEST and a SWOT analysis will be made, showing the most important factors that can influence the success of the projects the NGO can implement. Some threats, risks, opportunities, strengths and weaknesses will surface during this research, which can be found later on in the project. Furthermore, the SWOT analysis will reveal both the internal and external factors that could influence the outcome of the NGO plans. 4. Action Plan In order to assure a better understanding on how the ‘Save the Delta’ NGO can implement successful projects, a step-by-step action plan will be used.
Firstly, the major problem the NGO will face is how they will gather the necessary funds.
This is especially important because since the recession, donations have been in a downfall, and this was the major way they gathered money. Secondly, there is a need to develop realistic project ideas to be implemented by the NGO, that can really make a difference in the local economy and society. There have been hundreds of projects already made, but they didn’t really change anything. For example, gathering volunteers to plant 100 trees is a good thing, but with thousands of trees cut daily in Romania, this is not enough.
The ideas have to go on a larger scale. Next, there should be plans made for organizing different courses for the local entrepreneurs.
This includes language courses, consultancy in finding alternative funding, specialization courses (for becoming a receptionist, tour guide, bartender, hostess, etc. ). Finally, the NGO should keep records and monitor the success of the implemented projects, to assure that the funds are not misused, and there are no problems in putting the ideas into practice. If any problems appear in the implementation process, the NGO should deal with them.
5. Funding As the recession in Romania continues without any certainty as to its duration, the conventional sources of funding are becoming almost impossible to access. With bank financing in short supply, it is frequently a necessity for a company to find an alternative funding solution just to survive.
In these circumstances, it is even more important for Romania to take advantage of the large amounts available in EU funding for the 2007-2013 period. The problem is, since the funding begun in 2007, Romania was always criticized by other European officials that the funding was not properly absorbed, and a lot of the money returned to the Union.
For example, only 16% of the funding for railway infrastructure was used. This leads to underdeveloped infrastructure, which highly affects the tourism. Therefore a European commission called “Mechanism for Cooperation and Verification for Bulgaria and Romania” was made, which traces the progress of these countries twice a year.
They imposed new rules, and if they weren’t followed out, the European Union will take back the funding even from already started projects. (“Romania throws away EU funding opportunities”, www. kpmg.
com, article by Mariana Stancu, 5th June 2010) The funding conditions from the EU present real advantages. For example, a 100. 000 euro project requires an investment from the business owner ranging usually from 20% to 50%, and the rest of the sum is covered by the European Union, money which the company doesn’t have to give back. In the tourism or agriculture field, any entrepreneur can develop a 100. 000 euro business investment with only 20.
000 euro own contribution (cash or loan from a bank).
This is even more important in times of recession, as paying back the monthly rate for a bank loan, when low income has registered, has lead to the bankruptcy of many companies. Furthermore, because of their non-profit status, NGO’s are benefiting from the most advantages. An investment project developed by an NGO is cover by the European Union for 98% of its value. These funds are only available until 2013, so taking advantage of them as a main source for investment is extremely important. This can be further extended to making an active involvement in informing the local entrepreneurs of the European Union funding benefits.
Seminars could be held, brochures should be spread around, informational campaigns should be made. Some of the local companies already invested with help from the EU.
As mentioned above, the new regulations are stricter, and the business owners have to prove they have followed their business plan. Furthermore, they have to pass some specific checkpoints. For example, the chosen business “la Doru” is the result of an investment made with EU funding. The owner, Doru Bejan has provided 50% of the necessary money (part in cash, part from a bank loan), and the EU has funded the other half.
His company has to prove that he will reach the 60% average occupancy rate all year round at the end of 2014. If he fails to comply to this rule, and a few other (mostly regarding profit and the use of the investment money), he will have to pay back the money to the European Union. Doing so will probably result in bankruptcy. 6.
PEST analysis. The first analysis is PEST, which helps by finding the external factors from Romania.
The connection with the problem formulation is written in each specific part. This analysis is very important because it can help the company to anticipate the possible changes in each aspect. Political: Romania is democratic state which, according to the reputable Ducroire/Delcredere agency for risk assessment, has a low political risk. This is particularly important because riots (like the one in Greece in 2010, due to the downfall of the tourism industry) or civil wars are likely to be excluded. (http://www. fita.
Romania was a communism country for about 50 years, until 1989, when our dictator was executed and Romania became a democracy. This means open exports/imports, private property, and most importantly, a major increase in the inflow and outflow of tourists. On a practical level, during communism there was close to zero international tourism in Romania.
There were no private hotel owners. In Fact, all businesses were owed and ran by the government. For a hotel owner, democracy was the best thing that could happen. EU membership will provide further support for Romanian institutional development. As previously detailed in the project, the “la Doru” hotel was able to open only because of the EU funds.
These would not be offered if Romania would have not entered the European Union in 2007. The centre-left government has indicated it is keen to encourage further convergence to EU norms. This could lead to a reduction in levels of corruption which have historically been some of the highest among EU member states. On the other side, the current Romanian political life can be characterized as unstable, and with a high level of corruption. This translates into constant law changes, bad or no investment from the government in certain areas, like the infrastructure. Knowing the importance of roads and air travel facilities is to the tourism industry, the lack of investment in them is a major drawback to the “la Doru” hotel.
Foreign transit tourists tend to avoid Romania, as it is widely known for its bad roads. Economical: The main macroeconomic indicators registered a positive evolution in the last years before entering the EU, which also had a positive impact on the capital market. The main stock exchange indexes on the Romanian capital market had a positive evolution. The unique income tax rate by 16% (this rate is equally applied to income tax and to corporate income tax) since January 1st, 2005 is lower compared to other countries. So the company pays less taxes than the majority of other European states, so it can earn more profit.
Regarding the GDP, after a constant decrease from 7. % in 2006 compared to 2005, to 5% in 2009 compare to 2008, the first signs of overcoming the crisis have appeared. In 2010, the GDP has increased to 6%, compared to 2009. This could be the start of a increase in tourism demand, which will affect in turn the chosen internship company. Also, the unemployment rate has constantly decrease since 2007, from 6.
4% to 3. 9%, which is very low by European Standards. As a consequence, the labor market is expanding. Social: Naturally, the Romanians dominate by far the ethnic composition in the country. The second largest group is Hungarians with near 7% of the population and the rest are Germans and Ukrainians.
The lack of diversity in the ethnic composition is due to the restricting policy of movement of people in Romania forced by the communist party during the second half of last century. Still, the 11 percent of the population which is Hungarians and Ukrainians can highly contribute to bringing more income tourists from one of these 2 countries. The age structure of the country is as follows: 0-14 years: 15. 6%, 15-64 years: 69. 7% and 65 years and over: 14.
7%. Due to the ex-communist regime policies, Romania has extremely high proportion of young adults in its population. The only Western country with higher ratio is Slovenia. This only emphasizes my suggestion concerning the shift of the market segmentation on young people and students.
Household expenditures on food, beverages and tobacco amount to 50% of the total household expenditures in Romania.
Standard house expenditures, including rent, water, electricity and other furnishings and fuels, amount to 19. 4% and expenditures for clothing equals 6. 2% of total household expenses. The figures show that Romanians don’t spend a big percentage of their income on leisure activities or holidays, so, although they take a lot of trips, they tend to spend a really small amount of money. To be more specific, 5. 0% of the average Romanian income will go towards trips and holidays.
The bright side for the “la Doru” hotel is that 47% of the Romanians choose to spend its holidays only inside the country.
This results in an abundance of local guests. However, international visits are more than welcome, as they result in larger income. (www. ivox.
ro, Romanian statistics database, Feb. 2011). Technological: Recent statistics show that 70% of the Romanians do not have basic computer skills and 43. 5% of the urban inhabitants in the country own a computer. However, the nationwide number drops to 24.
6%. Computers are still not very popular at the working place with only 9. 8% penetration. Marketing the hotel via Internet is more on the long term, so the hotel should split the focus between electronic and classic door to door promoting, letters, flyers and the word of mouth.
Romania ranks last in EU for Internet penetration.
That is why my suggestion in offering discounts for affiliate programs could prove a success, or attracting groups of students by approaching teachers from local schools, and offering the teachers free accommodation. (www. actmedia. eu, article “With 7. 7 million users in June Romania ranks last in EU for Internet penetration”, accessed on 28th march 2011).
7. SWOT analysis Now that we have an insight on the external factors that can influence the feasibility of any development, we can analyze the threats and opportunities the “la Doru” hotel faces, as well as its strengths and weaknesses. Strenghts Motivated employees.
The staff at the hotel is motivated because being a rural area, there are mostly agricultural jobs in the region, so one at a hotel is something most employees would struggle to keep. Low level of competition.
The region is still underdeveloped with regards to the number of accommodation facilities, and their offered services. Financing. The hotel has only 50% own contribution for the investment costs, and 50% taken from the European Union. This assures a smaller loan from a bank, resulting in a smaller monthly loan repayment. Not being able to pay back the big investment debts during the economic recession is what makes most business go bankrupt.
“la Doru” hotel has a serious advantage here. Technological. Cable Tv and Broadband Internet is currently available at the site, even if it’s located in the rural area.
Plans are made to implement an intranet network, as a result of my suggestion. I was inspired by the UCN’s network.
Competition edge. The advantage over the competition is that “la Doru” hotel offers a wider range of peripheral services, which attracts a broaden market segment. Location. Being at the border with Ukraine and close to the Bulgarian one attracts a big number of international tourists, mostly transit ones. The site has also a number of natural attractions, who the tourists enjoy. Weaknesses Lack of transportation facilities.
An ascending number of hotels offer a way of transportation from/to the nearest airport, train station or big city.
Some of them investment in their own transportation means, while most of them collaborate with local buses for charter trips. My suggestion is that a similar strategy should be implemented in the “la Doru” hotel as well. Low reputation. This is mostly due to the fact that the hotel is newly opened.
The small number of stars ( 2*) is also a weakness which concerns the image of the company. Branding the hotel with the image of a bigger hotel chain can overcome this. Lack of marketing expertise. Not having a higher education is a big disadvantage for the managerial staff, because their ways of promoting are very limited. Mostly monolingual staff.
The staff doesn’t know enough English to ensure the proper delivering of the services. When dealing with international tourists, this is a must, so basic English courses should be provided to the personnel. Opportunities Developing market: the internet. As seen in the PEST analysis, Romania is very low at internet penetration, but the number of internet users is skyrocketing. Because more and more tourists are using the internet to book their holidays, advertising and selling the hotel’s services online can increase the occupancy rate.
Strategic alliances with tourism agencies. JS Rejser, for example, is specialized in offering packages at similar accommodation facilities as the “la Doru” hotel.
A collaboration with such a agency will prove a great opportunity. Also, It was already discussed the benefits of a partnership with a Chinese tourism agency. A new international market.
As described above, the JS Rejser company is sending only Danish tourists to Romania. This is a totally new market for the “la Doru” Hotel. The Chinese market was previously described in another chapter. Threats New competitors. A number of competitors are planning to access EU funds to build or improve their already existing hotel. Not reaching the 60% occupancy rate goal.
This would result in the EU retrieving its 50% investment in the business. The bankruptcy will follow soon.
Market demand shifts. Tourists losing interest in ecotourism, rural tourism and adventure tourism is a serious threat to be taken into consideration. The modern forms of tourism are becoming more and more popular, such as: health tourism, disaster tourism, extreme tourism or gambling tourism.
Losing vital contracts. Ending the contracts with the current partnership agencies. Loss of key staff. Being away from the city, losing key personnel means it will be hard to find a replacement, because of the big distance to the city, and the low qualifications of the local workers. 8. New market segment Europe has found a new source for inbound tourists: the Chinese.
A number of European countries are expecting a big wave of Chinese tourists on their territories, due to the new Chinese generations who are benefiting from China’s economic growth. According to a new legislation at the European level, Chinese tourist groups will get the permission to visit 29 European countries. Until the present, the Chinese tourists could enter the European states only if they requested visas for business purposes. The restriction still applies in Great Britain, Ireland and Denmark, where they still need a visa. The Chinese can buy trips to Europe for around 1600 dollars, even less. European countries see in the Chinese people a huge potential, especially from a strictly economical perspective.
It is estimated that 100 million Chinese will go abroad on holidays until 2020. The local press is mean to stimulate them to visit Europe, but is assuring them at the same time about prices and cultural differences compared to China. The countries close to it are already benefiting from China’s unprecedented growth. According to WTO, China surpassed Spain in 2010, and is the third country in the world by the number of inbound tourists. Statistics published by the “national tourism administration” of China reveals that in the first 7 months of 2004, the number of Chinese tourists who spent their holidays abroad was up by an incredible 63,7% compared to the previous year, 2003.
This upward trend was noticed since 1994. With more than 20 milion tourists who went abroad in 2003, China surpassed Japan (with known tradition in abroad trips), thus becoming the number one country in Asia by the number of outgoing tourists. In the 1994-2003 period, the number of Chinese to have trips abroad raised with approximately one million per year, or 13,87%. This percentage is about three times higher than the world’s average. This upward trend is due to the improvement in the Chinese lifestyle and standard of living. In 2003 the GDP of China grew with 9,1 % more compared to the previous year.
It was the first time in history that the GDP per capita exceeded 1000 dollars.
Below are some figures that show this increase in outgoing tourists. The first graph represents the amounts spent by the Chinese tourists (billions of dollars). As you can see, with the exception of 2003, after the crisis and the 9/11 incidents, there is a positive trend. The second graph reveals the same situation. It shows the growth in percentages for international trips.
The Chinese tourist’s profile They are among the youngest tourists in the world, having an average of 37 years. They prefer group travelling. High interest in knowing the western culture. They rather go on shorter periods of stay. They are on the fifth place by the amounts of money spent on shopping and expenses during their trips.
In 2003, they have spent an average of 2967 dollars/person on a package in Europe. As comparison, the average American spends 3879 $, while the Japanese are spending an average 3. 616 $. In order to attract more Chinese tourists to the Delta region, “save the delta” NGO should provide some research to the local entrepreneurs, so they understand the immense potential the Chinese market has. Next, tailored packages and services should be designed for them. “Danube – Miracle of nature” package, addressed to Chinese families or groups, aged around 35.
Price of the package – 650 euro. It includes am eight days cruise on the Danube river and daily stops in the delta, inside nature.
Gestland’s theory on cross-cultural communication and business relationships should be used by the NGO in order to customize the services to suit the Chinese culture. These cultural differences should be passed on by the NGO to the tourism agencies and hospitality facilities in the area. Things to consider concerning Chinese tourists and Chinese business owners/managers: Relationships ;amp; Communication The Chinese don’t like doing business with companies they don’t know, so working through an intermediary is crucial.
This could be an individual or an organization that can make a formal introduction and vouch for the reliability of the company.
Before a business meeting it is a good idea to send a presentation that describes the company, its history, and literature about the offered products and services. The Chinese often use intermediaries to ask questions that they would prefer not to make directly. Business relationships are built formally after the Chinese get to know the other involved parties. Patience is very important.
It takes a considerable amount of time and is bound up with enormous bureaucracy. The Chinese see foreigners as representatives of their company rather than as individuals. Rank is extremely important in business relationships and you must keep rank differences in mind when communicating. Never lose sight of the fact that communication is official, especially in dealing with someone of higher rank.
Treating them too informally, especially in front of their peers, may well ruin a potential deal. The Chinese prefer face-to-face meetings rather than written or telephonic communication.
Business Meeting Etiquette Appointments are necessary and, if possible, should be made between one-to-two months in advance, preferably in writing. A great attention should be paid tothe agenda as each Chinese participant has his or her own agenda that they will attempt to introduce. Send an agenda before the meeting so the Chinese colleagues have the chance to meet with any technical experts prior to the meeting. Discuss the agenda with your translator/intermediary prior to submission.
Each participant will take an opportunity to dominate the floor for lengthy periods without appearing to say very much of anything that actually contributes to the meeting.
Being patient and listening is crucial here. Business Negotiation Only senior members of the negotiating team will speak. Business negotiations occur at a slow pace. Chinese are non-confrontational. They will not overtly say ‘no’, they will say ‘they will think about it’ or ‘they will see’.
The starting price should leave room for negotiation. What to Wear? Business attire is conservative and unpretentious. Men should wear dark colored, conservative business suits. Women should wear conservative business suits or dresses with a high neckline. Women should wear flat shoes or shoes with very low heels.
Bright colors should be avoided.
All the above etiquettes and conducts should be known by the involved people in the tourism industry, prior to the first Chinese group arriving in the Delta. (http://www. kwintessential. co. uk/resources/global-etiquette/china-country-profile.
html “China – Language, Culture, Customs and Etiquette” article Mar 2009) Marketing The local tourism agencies should form partnerships with reputable Chinese tourism agencies, such as “China Youth Travel Service”. The hotels should include themselves in Chinese and international databases for accommodation. This is where the previous point on ‘business ;amp; communication’ should be used. The Chinese prefer to work with intermediates, until a direct business relationship is established (over time). The chosen NGO can e this needed intermediate, linking Chinese tourism agencies with Romanian representatives.
Also, being non-profit offers better credibility for the Chinese, concerning its intentions. A first step: Beijing tourism Fair A Romanian delegation of the “National Authority for tourism”, led by Corina Popescu, will participate at the “China International Travel Mart”, in Shanghai. The Chinese Authority for Tourism already received a list with the Romanian agencies that will be present at the fair. The next step is for them to send to the Romanian tourism agencies a reply with the contact details of the Chinese companies who are interested in a collaboration. The market segment
As previously mentioned, the market segment is mainly 3-4 member families or groups, aging around 35 years old, who want to explore the wonders of the Delta, and experience new activities.
The Chinese prefer to spend their holidays in family groups of at least 3 members, who travel in organized manners, with tour operators, having a medium stay of 6 days, and a average budget of around 150$ per day. Most of the Chinese prefer all-inclusive packages because they are afraid of the language barriers that can impose problems during their stay. Because of the price range, they tend to choose 3 stars hotels, but an increasing number of Chinese, especially from larger cities, would rather go to a 4 or 5 stars hotel.
It is estimated that between 80% and 90% of the outgoing Chinese tourists are booking their holiday through a tourism agency. Control In order to ensure that this project is feasible, and that it meets the needs of the guests, the following factors will be collected and analyzed over time: * Sales volume * Costs volume * Return on investment, on a monthly and annually basis * Efficiency of the marketing strategies * The packages penetration on the Chinese tourism market * The speed these packages penetrate the new market 9. Parallel to the airline industry One industry where new strategies for crisis times have appears is the airline industry.
Ryanair and Easyjet both started off in the early 1990s but really began to boom post the slowdown in air travel post 9/11. We all know the success stories behind these companies but what is relevant to the hotel industry is that, because of their cost control, they were able to expand when others were not able to. Consider the example of Ryanair. In 2002 they announced that they were going to launch 26 new routes and establish a new hub in Frankfurt. In 2003, when Boeing was in serious trouble because aircraft production was coming to a halt, Ryanair pounced and ordered 100 new aircraft at extremely preferential rates. To finish off the year, they acquired Buzz from KLM at a knock-down price. Legend: dark blue line – change in demand
Light orange lone – change in supply As seen in the graph above, the supply exceeded the demand during all three recession periods (1990-1992, 2000-2003 and 2008-present). However, a positive trend can be seen starting with 2009, and with 2010 the demand is bigger than the supply. The tourism and hospitality industry should take into consideration the possibility of investment.
The scope of this project cannot cover this analysis, but the NGO can perform it and send the results to the stakeholders. Another possible solution would be to cut down the costs. This should be done by reducing the number of included extra services, and not their quality.
Instead of reducing personnel, or employing under-qualified cheaper staff, the hotel should set a base price per room, which includes only accommodation. Wi-fi access, free shampoo, included breakfast and cable TV are services that a lot of people don’t need, so they would chose this specific hotel because of the low prices, and will not be bothered by the lack of included services in the standard room price.
These services should still be present, but only on demand, at extra costs. This is similar to the strategies used by low-cost airlines such as Ryanair. The concept has been already implemented in the “TUNE” hotel chain, with successful results. It is also a popular model in SE Asia, even before the crisis. (http://www. insights.
org. k , “The Effect of the Recession on the Hotel Sector” article, Dec 2008) 10. Conclusion My problem formulation was based on several factors. Firstly, the need of growth in number of tourist in the delta is a crucial step in the development of the region. This has been suggested by different proposed solutions during the project. Next, in order for the NGO to be able to implement some of the ideas described in this paper, a need for funding hast to be covered.
This includes both funding for the NGO’s projects, and for the businesses it plans to help. It is not enough to present to companies action plans and certain strategies, if they don’t have the possibility to invest.
Furthermore, the project covered the problem that the chosen “la Doru” hotel faces, meaning that it has to reach 60% occupancy rate (all year round average), in order not to be forced to give back the EU funding. A 5 year limit has been given by the European Union. This paper tried to research some solution to this sub-problem. Among the findings are: finding new market segments, expanding the offered services in order to attract more guests, implementing a different approach regarding the price rooms (concept brought from the airline industry).
This problem is crucial for the hotel, as if it doesn’t reach this rate, it will probably go bankrupt. This is a very specific problem, concerning mostly the marketing of the hotel.
Being new, it still is in the phase of building a name for itself, a reputation, and after that assuring the return of the guests. Other suggestions have not found place in the project during its limitations and its scope, but they are briefly described here: To meet the society needs for qualified personnel, the NGO should organize different types of specialization courses for the employees and entrepreneurs in the region. These courses would include, but will not be limited to: Language courses, seminars for finding funding alternatives, business models and ethics for the new entrepreneurs, chef’s courses, bartender course and so on. Also, as seen in the PEST analysis, although the technological factor is questionable in Romania, the trend is obvious.
People start to book more via the Internet, and to plan their holidays using it. A database with guests information on the “la Doru” hotel and other tourism facilities should build up, so in the future the company can send newsletters, thank you cards or photo souvenirs from their stay can be made. This research paper shows that increasing the occupancy rate of the hotel is possible during the following years, by putting into practice the findings from the analyses. There are drawbacks that need to be faced, such as the economic recession, the high corruption level of Romania, the big number of competitors at a national and international level. (http://www. fonduri-structurale.
ro/, “6 NGO’s have stolen 400. 00 euro in European funds”, May 2007) Even so, I strongly believe that the problems that the Danube Delta is facing can be overcome, but only by strong involvement of NGO’s, such as “Save the Delta”. This is due to that fact that the government is highly corrupt, the companies are in pursuit only of their short-term benefits, and the only organizations that can make a difference are the NGO.
They are non-profit, ran by volunteers and specialist in the field, so they are unlikely to make biased decisions. To conclude, my opinion is that the aim of this project was fulfilled. The research made was enough to answer the chosen problem formulation, but a final outcome can only be estimated.
Bibliography Gruescu Ramona, The Romanian tourism industry in the enlarged community * Richard Gestland – Cross Cultural Business Behavior, Copenhagen, 1997 * Romania once again misses out on EU funding, “Adevarul” Newspaper article, December 6, 2010 * WTO, Master Plan for developing national tourism 2007-2026; * WTO, Romania, tourism and travels impact upon jobs and economy. * World Travel and Tourism Council, Travel and Tourism Economic Impact 2010, Romania, available from: http://www. wttc. org/bin/pdf/original_pdf_file/romania. pdf. * Gheorghe Romanescu – Danube Delta, Universitatea “AL.
I. Cuza”, Iasi, 1996 * Alexandru D. , Negus S. , Istrate I. , Tourism Geography, Ed.