TABLE OF CONTENTS INTRODUCTION... 1 COMPETITION IN THE INDUSTRY... 1 Threat of New Entrants... 1 Bargaining Power of Suppliers... 3 Bargaining Power of Buyers...

4 Rivalry in the Industry... 4 Threat of Substitute Products... 6 DOMINANT ECONOMIC FEATURES... 6 DRIVERS OF CHANGE... 7 KEY SUCCESS FACTORS...

9 CONCLUSION AND RECOMMENDATIONS... 10 INTRODUCTION Competition in the tourism industry is very high where destinations are fighting to retain and increase their market share of the shrinking tourism industry. Competitiveness between destinations is such that tourists will travel to the destination where they will get the best quality experience for their money. Many countries are now developing uniform and standard criteria for their tourism services. This means that today's traveler will pay for value enhanced products but will also seek value for money and quality services throughout the full range of tourism product from budget tip end. These trends only serve to place greater emphasis on Kenya's ability to reposition itself in the international market place as a quality value added destination-delivering value for money.

I COMPETITION IN THE TOURISM INDUSTRY THREAT OF NEW ENTRANTS Kenya tourism industry is competing in the international market where the various destinations available in different countries compete against each other for tourists. Destination competition for Kenya varies between the source markets and importantly between the types of product under consideration. Kenya beach product may be said to compete against others Goa in the UK market, Mauritius in the French Market, Cuba in the German Market and the Bahamas in the US market. The rejuvenation of the Northern Tanzanian tourist circuit of Ngorongoro crater, Serengeti plains and Lake Manyara are also a threat. The following table shows a matrix of product attributes across a combination of all source markets competing with Kenya. Beach only Cuba Dominican Republic Goa Tunisia / Morocco Mauritius Caribbean Beach and culture Thailand Egypt Indonesia Malaysia Mexico Sri Lanka Adventure and activities South Africa Botswana Australia Brazil / Paris Nepal Beach and wildlife Tanzania Mozambique Kenya clearly has various competitors for differing aspects of product portfolio.

However, Tanzania's beach offering is questionable and Mozambique has yet to fully develop its potential, Kenya's simple combination of beach and wildlife makes the destination unique on the world wide stage. Competition also takes the form of market presence in creating awareness and interest amongst potential customers, and in this aspect Kenya's share of voice has been minimal for a number of years. Direct marketing expenditure by key competitors such as Egypt and South Africa significantly exceed that of Kenya. Egypt has extensive advertising linked with good trade support. South Africa with a brand identity as "a world in one country" informs the travel trade within South Africa of key developments in originating markets while operating a strong in-market presence overseas. Destinations such as Australia promote strong advertising campaigns integrated with partnership marketing and are a leader in web-based travel trade training.

BARGAINING POWER OF SUPPLIERS Competitor analysis seeks to identify aspects of competitive advantage whilst recognizing and acting upon areas of weakness. Kenya tourism as a better bargaining power and a more competitive edge against her competitors because of her unique competencies. These include: Unique wildlife and safari product combined with world class coastal resources and scenic diversity People, heritage and history Highly experienced travel industry High levels of destination recognition in key source markets Climate and proximity to key markets Good will in relation to a new government both local and internationally. All these competencies work towards increasing the bargaining power enjoyed by the Kenyan tourism industry. They are able to attract and influence the cost and revenues accruing to the industry. The industry can charge high rates to tourists while minimizing their costs.

The Kenyan industry being at risks of losing these tourists is pushed to lower their charges instead of loosing the tourist altogether. The bargaining power of suppliers is low due to the following reasons: The current threats of terrorist attacks Persistent security and crime perceptions Poor infrastructure especially roads Weak product interpretation Limited quality control Air access limitations Entry impediments - visa and airport logistics BARGAINING POWER OF BUYERS Many of the world's independent travelers some of whom are maturing away from the younger budget travelers will also seek out nature and culture destination preferring a more flexible and individual style of travel but still demanding an authentic experience. Independent travelers will often arrange their own flights and accommodation then purchase an excursion or safari after arrival in Kenya on a walk - in basis. If it meets the requirements they will pay a lot for a unique Eco-tourism experience and adventure activity, long stay often compensates for low daily budgets. However, tourists are also gaining bargaining power by getting more and more experienced and have increased awareness of what the markets are able to offer and the competition there in. They are increasingly aware of the weaknesses in the Kenyan industry and take the advantage of bargaining for lower charges.

RIVALRY WITHIN THE INDUSTRY Different destinations with similar features are competing stiffly for the few tourists landing in Kenya Travel agents - Many tourists arrange visits to Kenya through travel agents. The many travel agents in Kenya are competing against each other to attract as much correspondence as possible. Hotels and lodges - In 2001 the Ministry of Tourism and Information (MTI) reported a total of 2, 228 hotels in Kenya. Of these the majority are on the coast: 456 hotels with 28, 743 beds, 48 of which (14, 185 beds) are classified as 4 or 5 star. There are 433 hotels in Nairobi with 15, 684 beds.

Of these, 18 hotels (4, 339 beds) are classified as 4 and 5 star. Park and reserves have 67 hotels with 5, 735 beds, and the rest of Kenya has 1, 272 hotels (MTI). Hotels are competing with one another to attract more tourists to occupy their premises. Local Handicrafts and Authentic Craft: These with multi-cultural influences feature woodcarving, beadwork, painting and drawing, basketry, weaving, clothing ornaments and jewelry in a wide range of quality and price. Several thousand-licensed curio dealers in Kenya offer a great diversity of souvenirs. There are opportunities in Kenya crafts to be improved and promoted o international markets.

These handicraft owners are competing to spread benefits more widely into local communities, reinforce pride in traditional practices, and help establish the national image of a rich cultural destination. Game parks: Kenya is firmly established as a leading wildlife safari destination. Kenya's 59 National Parks and Reserves cover approximately 8 percent of the total area of the country. Kenya's parks and reserves received a total of 1, 536, 900 visitors in 2001, down 1 percent from 1, 644, 900 visitors in 2000 (CBS).

Each protected area is unique in its diversity, attractions, character and scenery. Arid and Semi arid ecosystems form the largest percentage of Kenya's famous parks and have a great diversity of spectacular and easily observable plain wildlife. These diverse entities strive for tourists to visit their destinations, as park fees constitute a large sum of their income. While inside the park, they visit hotels within the parks and consequently bring in income to the park. THREAT OF SUBSTITUTE PRODUCTS The focus on the tourism industry in Kenya is the available natural resources. Artificial facilities created e.

g. the Nature Trail in Mombasa only add to the anesthetic value. Substitute products may include: Low cost hotels in the town centers Artificial facilities like Bam buri Nature trail Illegal villas All inclusive clubs Home stays Timeshare establishments II DOMINANT ECONOMIC FEATURES a) Competition Competition is quite high in this industry due to its global nature. b) Shrinking Potential Terrorism and terrorist threats have lead to a decrease in industry size. c) Resource Pooling This is done at the regional level where resource pooling establishes regional joint marketing programs. This lower costs, increased growth in destination awareness, greater media exposure, earlier product positioning and more rapid penetration into target markets.

Joint management of resources, cooperative security, cost effective joint marketing and cross order protected areas such as Mara Serengeti, Amboseli, Kilimanjaro and Lake Victoria regions in Kenya. d) Partnership This exists between public and private sectors and it is advantages for smaller businesses with limited resources to market their products internationally. In Kenya we have initiatives between Kenya Tourism Board (KB) and: Kenya safety center, (KSC) Ecotourism Society of Kenya (E SOK) Beach operators Relocation Programme (BORN) Kenya Professional Safari Guides Association (KPS GA) e) Strategic Positioning Kenya tourism industry is well placed to respond to the global interest in eco-tourism. Currently, there is a direct flight to Kenya that aims at encouraging frequent visits by the international tourists. f) Product Differentiation Kenya has stunning topography ranging from snow capped peaks of Mr. Kenya (5199 m) the cradle of civilization in the great Rift Valley, Alpine highlands lunar semi deserts, rolling Savannah plains, wilderness, deserts and some of the best palm fringed beaches in African and even the world over.

g) Distribution channels The industry has a well elaborate distribution channel ranging from travel agents, telex and Internet. h) Marketing Tourism industry is characterized by heavy promotions to increase patronage. Nowadays marketing strategies are basis to any tourism industry in the world. III DRIVERS OF CHANGE Long term growth Industry showed positive growth despite various challenges.

i) During 2001 tourism revenue rose to 24 million (US$307 million) representing 2. 7 per cent total exports. ii) Contributes to balance of payment exceeded in export value. iii) In the Year 2002 it contributed 8% of GDP. Product Innovation i) Dedicated websites enable tourism to share experiences of tourism destinations.

ii) Digital television is a means whereby product information is obtained and holidays are booked. iii) Customers get access to greater range of information sources. Technology Change Has become a fundamental aspect of the industry i) Modern technology lowered costs of service delivery through efficient systems. ii) Fast and quality services are offered. Market Innovations i) Target marketing aims at consumer with a combination of technology through the web and data casting T.

V. ii) The marketing bodies alert people about destinations encouraging hence encouraging business by securing email addresses including arrival and departure times. iii) Special offers encourage visitors to return to Kenya. iv) Extensive co-operation and partnership from with and without the travel industry to promote the industry in Kenya.

Globalization i) Same service / product is found in quite a number of countries. ii) Regional cooperation provides linkages. iii) East African tourism council formed aims at joint National Park fees, common visa and resolution of conflicting tourism policies. Government Intervention The Kenyan Government has enacted legislatures governing the industry for purposes of providing safety standards and proper general welfare of all tourists in the country.

IV KEY SUCCESS FACTORS Security Acquire modern security gadgets for all the tourist destinations in Kenya. Branding Establish a strong and sustainable brand positioning providing optimal yield and season spread. Different target market focus Focus on core domestic markets and extend into emerging markets through emphasis on market specific web sites, trade and public relations. Partnerships Provide strong leadership to Kenyan tourism firms and develop valuable strategic relationships with stakeholders and relevant non-tourism organizations to harness the collective resource and expertise.

Product innovation Enhance established products and develop a diverse portfolio of small-scale culture, adventure, activity and eco-tourism niche products. Infrastructure Acquire good means and modes of transport. Effectively exploit the benefits of new media communication and distribution system to improve the speed, timeliness, depth and breadth of Kenya destination information. Organization Build a focused organizational structure and culture to increase efficiency and effectiveness and increase the quality and delivery of customer research and market intelligence to the travel trade.

Differentiate Kenya with a distinct market image and positioning in target markets as a "Uniquely Kenya" quality safari and coastal destination offering a rich diversity of culture, adventure activity and eco-tourism experiences. CONCLUSION AND RECOMMENDATIONS The Kenyan tourism industry is one of the industries that has experienced some unique dynamics. Security in tourist destinations is a very critical issue. It is one industry that needs a lot of reorganization.

Terrorist attacks as well as threats have caused a great deal of depression in the industry. However, the technological, product and marketing innovations have determined which firm continues to stay in the industry and which one is pushed out. Only those firms who have placed their strategies well have been able to stay in the industry. Firms in the tourism industry need to change their market focus, improve on their organization, enhance product / service innovation, take up more aggressive marketing strategies, acquire some modern technology and lastly ensure safe and secure environments. The Kenyan Government should assist in improving the infrastructure in order to attract more local and international tourists.