The challenges of developing backpacker tourism in South Africa: an enterprise perspective

Abstract

Since the democratic transition, South Africa has become an increasingly popular destination for backpacker tourism. This article analyses the challenges facing the development of backpacker tourism in South Africa by presenting the findings of a national survey of suppliers of backpacker accommodation. It argues that the industry confronts several challenges, inter alia lack of recognition, poor international marketing, inadequate support and understanding from provincial and local governments, difficulty in accessing finance, and a weak national industry association.

1. INTRODUCTION

Over the past decade, backpackers have shifted out from the policy shadows and the margins of the tourism and travel economy into the global spotlight (Richards & Wilson, 2003a,b, 2004a, 2005). The contemporary backpacker is viewed as an important and growing element of international tourism and, in some countries (such as Australia) also of domestic tourism. Although youths and students make up an important segment of the market, today's archetypal backpacker is as likely to be a late twenties young career professional (Richards & Wilson, 2003a,b, 2005). Moreover, as the backpacker on average stays considerably longer than the long-haul international tourist, the former's average spend matches and in many cases even exceeds the latter's (Richards & King, 2003).

Since the 1994 democratic transition, South Africa has become an increasingly popular backpacker destination (Visser, 2004, 2005). Nevertheless, the national government is only now beginning to recognise backpacking as a potentially important segment of tourism. Within the 2002 South African Tourism Growth Strategy, it is significant that backpacker tourism was excluded from the ‘growth’ segments of tourism (SAT, 2002). This overlooking by SAT of a tourism segment that holds significant potential to achieve key national government objectives has been a major point of criticism from the stream of pioneer works and detailed empirical investigations of backpacking in South Africa (Visser et al., 2003; Visser & Barker, 2004a, 2004b; Visser, 2004, 2004a, 2004b; Visser, 2005). This paper builds on these works and investigates further the challenges of developing backpacker tourism in South Africa. It analyses 80 enterprise interviews conducted during 2005–06 with suppliers of accommodation (backpacker hostels), which is the largest segment of enterprises in the South African backpacking industry.

2. INTERNATIONAL DEBATES

Until the mid-1990s, there was limited international research into backpackers, the organisation of the backpacking industry or the impact of backpackers on destinations (Richards & Wilson, 2004b,c; Gladstone, 2005). Although the foundation for backpacking research had been established in seminal studies by Cohen (1974), Adler (1985) and Riley (1988), little additional work was forthcoming. This research void allowed many governments, particularly in the developing world, to cling to a perception of backpackers as low-budget travellers who bring little direct benefit to destinations (Scheyvens, 2002; Spreitzhofer, 2002). The backpackers' hedonistic lifestyles were viewed in an especially negative light as running counter to the cultures of populations in several countries, including India and Malaysia (Spreitzhofer, 1998; Ian & Musa, 2005).

Since the early 1990s this neglect of backpacking has been addressed by a stream of new research. With expanded knowledge of the importance of backpacker tourism and a greater depth of understanding of its character and dynamics and potentially positive impact on destinations, the image of backpackers experienced a ‘makeover’ (Pearce, 1990; Ateljevic & Doorne, 2004; Gladstone, 2005). Alongside the growth of global markets and consumerism, the notion of the ‘hippie’ drifter was changed ‘in favour of budget-oriented independent travellers seeking lifestyle enhancement and travel as an agent of personal growth’ (Ateljevic & Doorne, 2004: 74). Moreover, as research accumulated, no longer could backpacking be dismissed by tourism planners; instead, backpackers were regarded as an important spearhead for growth, especially in marginal destinations (Hampton, 1998; Slaughter, 2004). As governments around the world were alerted to the potential economic advantages of welcoming backpackers, negative attitudes began to change rapidly (Richards & King, 2003).

From 1995 the tempo of research – both academic and directly policy-linked – has accelerated. In reviews of international backpacker literature Richards and Wilson (2003a) and Ateljevic and Doorne (2004) point out that a shift in focus is observable from sociological or anthropological debates about ‘drifting’ or ‘wandering’ towards a notion of backpacking as a mass global market that is an increasingly attractive tourism niche. New research on backpacking has come from three different directions. Firstly there are investigations sponsored by private sector consultancy organisations, such as Mintel, which has produced reports on the global youth travel and backpacking market (Richards & King, 2003). Secondly there are studies produced by government or semi-government organisations and designed to profile, understand and analyse the state of backpacking in particular countries. The most significant of these national consumer surveys are those undertaken by Australia's Bureau of Tourism Research (later renamed ‘Tourism Research Australia’). Since the 1990s several surveys have appeared, making Australia the most well-researched individual market for backpacking (e.g. Haigh, 1995; Ipalawatte, 2004; Robins, 2004; Tourism Research Australia, 2005; Moscardo, 2006). And thirdly there are responses by academic researchers to the growing challenge and importance of backpacking in the global tourism economy (Pearce, 1990, 2006; Loker-Murphy & Pearce, 1995; Hampton, 1998; Scheyvens, 2002). At least 70 independent academic studies on backpacking now are available (Wilson & Richards, 2003; Ateljevic & Doorne, 2004; Richards & Wilson, 2004a). Most research has been conducted on backpacking in Europe, South East Asia and Australasia, which are areas of the world where the positive impacts of backpacking are recognised (e.g. Lloyd, 2003; Mohsin & Ryan, 2003; Newlands, 2004; Richards & Wilson, 2004b).

Looking at the current ‘state of the art’ of international research on backpacking, two major strands of research are evident. One is a stream of exclusively academic investigations which probe the cultural and social aspects of backpacking (e.g. Richards & Wilson, 2004d; Hottola, 2005; Muzaini, 2006; Teo & Leong, 2006). The other is a cluster of market-related and policy-relevant investigations (Richards & King, 2003; Richards & Wilson, 2003a,b; Newlands, 2004; Slaughter, 2004). This second body of work includes, by definition, all the studies produced by private sector, government and semi-government organisations, and also several applied research studies undertaken by academic researchers.

This research on backpacker tourism in South Africa is positioned within the context of policy-focused and market-related investigations. Of significance is that most international policy-focused research concentrates on the demand side of the backpacking industry and uses findings from consumer surveys of backpackers. This study on South Africa, however, takes an alternative supply-side vantage point and examine the policy challenges that face backpacker tourism from the perspective of the tourism product suppliers.

3. BACKPACKER TOURISM IN SOUTH AFRICA

3.1 The size and geographical scope

For a supply-side analysis of the backpacker tourism industry of South Africa, at the outset a detailed national database was compiled of suppliers of backpacker accommodation, drawing on a range of sources, including information provided by industry sources (most importantly, Backpacking South Africa), key industry publications (such as the Coast to Coast guide to backpacking in South Africa), the South African Tourism (SAT) website, and provincial tourism websites.

The audit identified the existence (or recent existence) of at least 425 suppliers of backpacker accommodation spread across the country. In addition, there is an ‘informal sector’ of backpacker accommodation provision, especially in major cities, where registered backpacker providers often made complaints about the existence of unregistered businesses. The dynamic nature of the backpacker accommodation segment is reflected in a continual ‘churning’, with enterprises opening and closing as well as changing their status from backpacker hostel to guest house and from guest house to backpacker hostel. Importantly, the audit of numbers of backpacker accommodation providers, as tracked in this investigation, shows that the size of this segment is considerably greater than that officially recorded in SAT data.

The spatial distribution of the backpacker accommodation providers is shown on a provincial basis in Figure 1. It is clear that the largest clusters are found in the Western Cape, followed by the Eastern Cape, KwaZulu-Natal, Gauteng and Mpumalanga. By contrast, there is only limited provision in the four provinces of the Free State, the Northern Cape, the North West and Limpopo.

Figure 1. The geographical distribution of suppliers of backpacker accommodation, by province

At local level, the supply of backpacker accommodation is strongly clustered in the country's major urban centres. Nationally, the landscape of backpacker tourism is dominated by the overwhelming strength of the Cape Town cluster (Figure 2). In addition, there are significant smaller clusters along the ribbon of the Garden Route, the Wild Coast and the KwaZulu-Natal coast. Of note also, in the inland areas, are the clusters of backpacker hostels in and around Johannesburg, as an important entry and exit point for international backpackers, at Hogsback, and at Nelspruit as the stepping-off point for visits to the Kruger Park. Moreover, in terms of the tourism economy of South Africa as a whole, the significance of backpacking for the local economies of Coffee Bay, Jeffreys Bay, Cintsa, Mossel Bay and Oudtshoorn deserves special mention.

Figure 2. The geographical distribution of suppliers of backpacker accommodation, by locality

3.2 Research methodology

The sample of 80 enterprise interviews was structured geographically so as to reflect the broad spatial distribution of backpacker hostels. A deliberate attempt was made, however, to include in the sample a number of interviews with suppliers of backpacker accommodation in peripheral or remoter areas of South Africa. On a provincial basis, the survey sought to capture a number of interviews from backpacker accommodation providers in the peripheral provinces of the Free State, Limpopo, the North West and the Northern Cape (Table 1).

Table 1: Backpacker accommodation survey: provincial breakdown of interviews (n = 80)

Province	Number of interviews
Western Cape	23
Eastern Cape	20
KwaZulu-Natal	13
Gauteng	9
Mpumalanga	7
Free State	2
North West	2
Northern Cape	2
Limpopo	2

All enterprise interviews were conducted either in person or by telephone. For reasons of logistics and costs, the majority were completed by telephone, involving 20 to 30 minute interviews. The survey instrument allowed for the collection of a set of both quantitative and qualitative material. The quantitative material provides evidence of current structure and trends in the South African backpacking industry, while the qualitative gives respondents a voice with which to address key issues they see as shaping the contemporary backpacking industry in South Africa. (In the following sections, place names in brackets indicate the location of the interviewee whose opinion is cited.)

4. RESEARCH FINDINGS

The core research findings from the 80 interviews are classified into six sub-themes: 1) a profile of backpacker entrepreneurs, 2) business start-up and length of operations, 3) visitor profile, 4) employment considerations, 5) business performance and investment, and 6) associations and issues of government support.

4.1 Profile of entrepreneurs

The survey disclosed important aspects of the profile of entrepreneurs and their enterprises. At the outset, it must be recorded that all suppliers of backpacker accommodation would be categorised as tourism small, medium or micro-enterprises (SMMEs) (Rogerson, 2005). These small businesses supplying backpacker accommodation were mostly owned by individuals (31) or families (27), and 22 were owned by partnerships or groups. Often in family-owned businesses the partnership was not only between husband and wife but also cross-generational with a number of mother and son owners. The overwhelming majority – 88 per cent of the sample – were South African born entrepreneurs.

Of significance in terms of Black Economic Empowerment (BEE) are two recent developments in ownership of backpacker forms of accommodation: first, the entry of a small number of individual black or coloured entrepreneurs into the actual ownership of backpacker accommodation and, second, the appearance in the Eastern Cape and KwaZulu-Natal of community-owned enterprises or, more commonly, of enterprises in which local communities have been offered or have secured an equity share of ownership alongside the dominant white partner. In the community shared equity arrangements operating in the Eastern Cape, communities were obtaining a profit share of 30 to 40 per cent of businesses.

Figure 3 shows the age profile of entrepreneurs in the backpacker accommodation segment. These cluster in the 30–39 and 40–49 age groups, a profile that is fairly youthful and which underlines the relatively recent origin of the phenomenon of backpacking accommodation provision in South Africa (Visser, 2004, 2005). It was observed that entrepreneurs who run backpacker accommodation in the Western Cape tend to be somewhat older (in the 40–49 age group) than those in much of the rest of the country, especially in the Eastern Cape, Gauteng and KwaZulu-Natal.

Figure 3. Age profile of suppliers of backpacker accommodation

In terms of the gender of business ownership, backpacking is a sector of the South African tourism economy that is predominantly male-dominated. Of those enterprises that were individually owned enterprises or joint partnerships 46 were male run (or 58 per cent) compared with only seven businesses (or 9 per cent) that were run by women entrepreneurs. This finding points to a conclusion that women's strongest involvement in the supply of backpacker accommodation is through family-owned enterprises, which represent nearly one-third of the total number.

It was shown that the operation of a backpacker accommodation is a ‘hands-on’ activity for the vast majority of business owners and partners on either a full-time or part-time basis; in total 73 entrepreneurs (91 per cent) were involved in the day-to-day running of the 80 business enterprises that were interviewed. A striking finding was the high proportion that was involved in running other businesses besides backpacker accommodation. The survey disclosed that more than half of them (42 of 80 respondents) had additional business operations. Most commonly, these other business activities were also in the tourism and hospitality sector, with the majority closely related to the core activity of the operation of the backpacker hostel. Among the entrepreneurs' other business interests were the operation in the Western Cape, KwaZulu-Natal and the Eastern Cape of additional backpacker hostels, restaurants, bars, tour companies, adventure product supply businesses, and guest houses. In Gauteng and Mpumalanga they were also involved in running safari tours and township tours. By contrast, in the peripheral regions of the country, operating a backpacker hostel was often a supplementary source of income for a diverse range of other household business activities including supplying and installing flooring, and selling insurance and health care.

4.2 Business start-up and length of operations

Backpacker tourism accommodation is supplied primarily by opportunistic and growth-oriented entrepreneurs, drawn from diverse backgrounds. Typically, they saw an opportunity in South Africa's growing post-1994 tourism economy to supply a new form of accommodation. Often they had either been backpackers themselves or had travelled extensively outside South Africa and seen the gap in the local tourism market. In some cases the entrepreneur owned a property and had decided that it could most appropriately be used as backpacker accommodation. Enterprisingly, at Swartruggens in the North West Province a backpacker hostel was established after an aborted attempt to use the property as a venue for music festivals.

The following responses of a cross-section of backpacker entrepreneurs underscore the opportunistic and explicit market-oriented basis for establishing such businesses:

• ‘Been overseas. Liked the idea.’ (Johannesburg)

• ‘Influx of tourists into the townships and thus a gap in the market as tourists said they wanted to sleep over in Soweto.’ (Soweto)

• ‘Based on travelling experience – saw a market in South Africa.’ (Hazyview)

• ‘Have travelled the world and saw a gap in the market in Nelspruit.’ (Nelspruit)

• ‘I had a lodge in Lesotho and saw that Pietermaritzburg had an opportunity.’ (Pietermaritzburg)

• ‘I decided that Bloemfontein needed a backpacker.’ (Bloemfontein)

For community-owned or equity share enterprises, it was emphasised that ‘it is easier to relate to backpackers’ than other tourism markets and that ‘backpacking is ideal for community development as it is easy to enter into’.

Although opportunistic entrepreneurs dominate the supply of backpacker accommodation in South Africa, others are involved explicitly for ‘lifestyle considerations’. These lifestyle entrepreneurs are a diverse group. On the one hand, they have developed businesses as a result of an unintended life change, such as a motor car accident or health problems; on the other, they have set up backpacker establishments in desirable locations that are lifestyle choices in terms of opting to reside in small towns ‘away from the rat race’ or in the Western Cape, which has attracted a number of lifestyle retirees from Gauteng.

The entrepreneurs who supply backpacker accommodation have an extraordinarily diverse set of work histories and backgrounds. Approximately 20 per cent of those sampled had prior work experience in another area of the tourism and hospitality sector, either in South Africa or overseas. The largest proportion, however, had no prior direct involvement in the tourism industry. The range of work histories is remarkable and includes, inter alia, accountants, lawyers, doctors, teachers, a university lecturer, farmers, estate agents, pilots, property developers, a quantity surveyor, social workers, building contractors, insurance brokers, a veterinarian, people involved in graphic design or marketing, others employed in the police force or the army, and one former mayor (of Kimberley).

The average length of establishment of the business operation was 6.63 years: once again a sign of both the relatively youthful character and the (potentially) high turnover of enterprises in the South African backpacking industry. The survey found that the years in which the business was established ranged from 1989 to 2006, with the largest number having been established between 1998 and 2001. Figure 4 shows the distribution of the actual years of establishment of the sample enterprises, and Figure 5 shows that there were geographical variations in the average length of business operation, with those in the Western Cape, Eastern Cape and Gauteng the longest established.

Figure 4. Suppliers of backpacker accommodation: year of enterprise establishment

Figure 5. Average length of operation of suppliers of backpacker accommodation, by province

The source of start-up capital for businesses was predominantly from the owner's or family's private funds. Of the 80 surveyed enterprises, 59 were started on the exclusive basis of own or family funds. In three other cases it was a combination of owners' funds and retained earnings from another business owned by the entrepreneur. In 22.5 per cent of start-ups there was some support from bank financing; in 13 of the 80 enterprises the capital was a mix of owner funds and bank capital, and in only five cases was the business launched primarily upon a bank loan. In two cases of community-owned enterprises, substantial government funding for job creation was available for the start-up.

Entrepreneurs highlighted a number of problems they had experienced when starting their businesses. Some significant ones were marketing the business and getting it known and, in areas such as Soweto, introducing tourists to a new market. Financing was another problem, particularly as the South African banking sector remains ‘very sceptical about backpacker establishments and the funding thereof’ (Cape Town). In addition, since the lack of official recognition of the term ‘backpacker’ makes it difficult to secure insurance cover, at least one backpacker hostel was forced to masquerade as a bed and breakfast enterprise to secure this. In another case, registering backpacker accommodation as a bed and breakfast establishment had an unintended advantage for accessing financing, because ‘explaining to banks that you are a backpacker is no good for getting loans’ (Nelspruit).

Overall, the most pressing set of difficulties at business start-up were often those related to local government. Several entrepreneurs stressed bureaucratic or zoning difficulties with local municipalities because of the absence of any specific regulations governing backpacker hostels' operations. At Hermanus one entrepreneur found that the municipality was unable to re-zone a property from guest house to backpacker accommodation (Hermanus). In Johannesburg, Nelspruit, St Lucia and many other centres, complaints were aired of difficulties experienced with municipalities because of the absence of any regulations or bylaws specific to backpacking enterprises. This meant that suppliers of backpacker accommodation had to register their business in another category of enterprise, most often as a guest house or bed and breakfast. In Pretoria one owner stated that ‘the local government did not know what backpacking was about’. Even in South Africa's backpacker capital, the city of Cape Town, entrepreneurs experienced difficulties with municipalities in setting up backpacker accommodation because ‘there are no backpacker regulations and no knowledge of what a backpacker is’. In remote areas, problems of local government extended further to issues of basic infrastructure support and supply. In the worst cases in the Eastern Cape the problem in certain areas was the lack of any functioning local government at all.

4.3 Visitor profile

The visitor profile of these enterprises points to the overwhelming significance of international rather than domestic backpackers. International backpackers represented more than half of the clientele for 71 of the 80 enterprises (89 per cent of the sample). This reliance on the international market is further emphasised by the finding that the proportion was as high as 70 per cent or more for 60 enterprises (75 per cent), and 90 per cent for 35 of them (44 per cent). Where the major market is for domestic rather than international backpackers, across the country this is mainly in peripheral remote areas or small towns (e.g. Nieu Bethesda, Colesberg, Dundee, Tzaneen and Nylstroom), or on the periphery of the major urban centres of backpacking, such as in Pinelands (a suburb of Cape Town), Ramsgate (in the Durban region) or Alberton (near Johannesburg). In several areas where the domestic market was dominant the entrepreneurs relied on group travel (often school, youth, sports or church) rather than on individual domestic backpackers.

Table 2 shows the average length of stay that was recorded for backpackers at the sample enterprises. Not surprisingly, there is a distinct pattern of geographical variation. In Cape Town the average length of stay was estimated to be six to seven nights, as compared to two nights in other centres of the Western Cape, two nights across the Eastern Cape, KwaZulu-Natal, Gauteng and Mpumalanga and between one and two nights in the peripheral areas.

Table 2: Average length of stay at suppliers of backpacker accommodation

Length of stay	Number
1 day	5
2 days	41
3 days	21
4 days	4
5 days	4
6 days	1
7 days or longer	3
No response	1

4.4 Employment

The sample of 80 suppliers of backpacker accommodation provided a total of 557 full-time jobs or an average of 6.96 employment opportunities per enterprise. As compared to direct employment in the mainstream tourism economy, this is a small number. Nevertheless, in many parts of South Africa where backpacking is locally significant, such as the Wild Coast, the jobs created by backpacker lodges represent vital pro-poor contributions to local economic development. The number of employees at each enterprise ranged from zero at backpacker establishments where the family provided the necessary labour to 35 at one lodge in the Western Cape. Table 3 provides a more detailed breakdown of the number of jobs at each of the respondent enterprises.

Table 3: Number of full-time employment opportunities per enterprise

Number of employees per enterprise	Number	%
No. employees	4	5
1–5 workers	44	55
6–10 workers	19	24
11–20 workers	10	13
Over 20 workers	3	4

As a consequence of the uneven geographical significance of the backpacker sector across the country and the uneven patterns of length of stay, it is not surprising that there are broad provincial variations in average numbers of jobs per enterprise. The Western Cape, the Eastern Cape and Gauteng have the largest number of job opportunities per backpacker establishment (see Figure 6). Further geographical variations can be seen in the racial composition of workers at backpacker establishments. On the whole, the majority of jobs are for black or coloured employees, who represented an estimated 78 per cent of the total number of employees. The proportion of white employees varied across the country, with the lowest shares of 9 per cent recorded in KwaZulu-Natal and 14 per cent in Mpumalanga. The highest number of white employees as a proportion of the total workforce was recorded at 30 per cent in the four peripheral provinces (the Free State, the Northern Cape, the North West and Limpopo), followed by 27 per cent in the Western Cape and 24 per cent in the Eastern Cape.

Figure 6. Average number of jobs per enterprise, by province

Seasonal variations in employment occurred at one-third of the establishments, mainly those in the major backpacking areas of the Western Cape, the Eastern Cape and KwaZulu-Natal. In these areas, casual or part-time workers were used to supplement the core full-time non-seasonal workers. Overall, nearly half of the backpacker establishments (45 per cent) employed some staff with formal training in tourism and hospitality. The channels of staff recruitment varied according to the skill level required for the position. Most backpacker enterprises used a variety of channels for staff recruitment, the two most common being word of mouth (50 cases or 62.5 per cent of the sample) and existing staff (25 cases or 31 per cent). Other channels were advertisements in the local press (17.5 per cent); a local training college, technikon or hotel school (5 cases or 6.3 per cent); the internet (3 per cent); and, in the case of those establishments with community ownership, the local community (3 per cent). In the vast majority of cases of employee recruitment – 86 per cent of the total – it was labour from the local area that was engaged. Only 14 per cent of enterprises recruited any staff from outside the immediate locality. Reasons given for non-local recruitment related to the absence of local skills for particular positions, such as general manager, receptionist or bar manager.

The inadequate skills base for tourism employment was a factor highlighted in the interviews. Overall 37 enterprises or almost half the sample acknowledged that they experienced problems with the skills of the staff they employed. The core problems were illiteracy, poor English language skills and lack of knowledge or awareness of the tourism industry. These shortcomings were addressed in the majority of cases by on-the-job training rather than through any formal training programmes. One short-term strategy for dealing with skills shortages was engaging international backpackers on a casual basis, often trading free accommodation for work. Of the sample of enterprises, 26 or almost one-third of the sample admitted to using international backpackers on a casual or part-time basis for short-term work at their establishments.

4.5 Business performance and investment

The 80 enterprises in the surveyed sample were asked to provide an assessment of their business performance over the last five years and during the previous business year, and also to identify the major obstacles to business development and provide information about recent and planned trends of capital investment.

The results show a highly satisfactory overall business performance as recorded by these suppliers of backpacker accommodation over both the five-year period and the previous business year. A positive business trajectory was in evidence in terms of indicators of levels of occupancy, business profits and employment levels. Of the 80 enterprises, the five-year picture revealed the following profile for 70 respondent enterprises (10 had either not been in business for five years or failed to respond): 51 reported that levels of occupancy were up, 9 said levels were same, and 10 said they were down; for business profits 44 said up, 16 said same, and 10 said down; and for employment levels 36 said up, 31 said same, and 3 said down. For the previous business year a similarly positive outlook was recorded: 49 reported that the number of visitors was up, 15 said the number was the same, and 14 said it was down, (2 did not respond); for business profits 34 said up, 29 said same, and 13 said down (4 did not respond); and for numbers of employees 28 said up, 43 said same, and 6 said down (3 did not respond).

Across the country certain interprovincial differences in business performance were observed; in general, business performance levels were observed as strongest in the Western Cape, modest in the Eastern Cape, KwaZulu-Natal, Mpumalanga and Gauteng, and weakest in the four peripheral provinces. Several cases were noted of backpacker lodges closing in the Eastern Cape (at Storms River) and in Limpopo (at Tzaneen) because of a deteriorating business environment; in other cases the property used as a backpacker lodge was being transformed to other uses, including upgrading to a guest house but often to non-tourism usage.

In the trends observed by interviewees, several themes emerged. One was increased levels of competition, particularly in the Western Cape and the Eastern Cape, which suggests that, unless overall numbers increase or international backpackers stay longer, the number of supplier enterprises has reached saturation point. A second theme was increased levels of competition from new international destinations for backpackers, which was placing a premium on the need for more aggressive international marketing of South Africa as a backpacker destination. Moreover, in the context of a growing level of competition for backpackers, South Africa's limited existing schemes for working holiday visas was seen as a blockage on the industry.

A third theme was that the nature of the international backpacker market was shifting to an older cohort from the formerly typical 18–22 years age cohort. Accompanying this shift was an increased preference among these more financially independent travellers for en suite rooms rather than dormitory accommodation. A fourth was that improved individual marketing by enterprises and improved facilities were seen as being rewarded in terms of higher levels of occupancy, through word-of-mouth referrals and some return visitors. Finally, in remote areas increased levels of occupancy were often associated either with more visits by school and sports groups or local infrastructure developments, resulting in a market of short-term contractors using backpacker accommodation.

Notwithstanding these difficulties and challenges, during the previous 12 months 52 of the enterprises in the sample (65 per cent), using mostly retained earnings, had either undertaken a new investment, or committed to it, for expanding or upgrading existing facilities or developing new ones at their establishments. Common projects were upgrading the accommodation, providing new entertainment facilities (such as pool tables and satellite television), renovating kitchens, and acquiring new furniture or new vehicles for shuttle transport. Upgrading and new capital commitments were especially widespread in Cape Town, which is the major focal point for international backpackers.

Detailed information was obtained about annual levels of occupancy at the backpacker lodges. Of the 80 enterprises, 65 provided what might be viewed as strategic information about their annual levels of occupancy. Table 4 shows the distribution of responses. It is evident that 41 per cent of enterprises were operating at annual occupancy levels of less than 50 per cent; in at least two cases as low as 10 per cent. The median response for annual level of occupancy fell in the range of 51–60 per cent; however, since many of the non-responses were enterprises with potentially low levels of occupancy, it is likely that the real median for occupancy could be closer to 50 per cent across the country as a whole.

Table 4: Annual level of recorded occupancy at suppliers of backpacker forms of accommodation (n = 65)

Level of annual occupancy	Number of enterprises	%
Below 30%	8	12
31–40%	8	12
41–50%	11	17
51–60%	14	22
61–70%	16	25
Above 70%	8	12

Figure 7 shows geographical variations in occupancy, with the highest average levels recorded in the Western Cape and Gauteng and the lowest in KwaZulu-Natal and the four peripheral provinces. Not surprisingly, marked seasonal variations in occupancy levels were recorded by the majority of enterprises (67 of the 80, or 84 per cent) across the country. Their most common strategies for addressing seasonal variations were price cuts, off-season special packages, group discounts and marketing for the domestic South African market, particularly for school, sports or church groups. Most saw the off-season as a time for short-term closure, maintenance and cleaning.

Figure 7. Average annual levels of occupancy, by province

Marketing by the suppliers of backpacker accommodation was pursued simultaneously through several different channels. Almost without exception (96 per cent of the sample) they had websites and used the internet as a vital marketing tool. An equally high number (93 per cent) also advertised in a range of publications, most commonly the Coast to Coast guide and the Lonely Planet series. One backpacker entrepreneur in Nelspruit said their lodge was advertised in 17 different local and international publications. Another medium of marketing used by 65 per cent of the sampled enterprises was advertising flyers. Finally, more than half of enterprises also viewed their membership of various associations as a significant marketing channel. Overall, the responses showed that publications were seen by more than half of the sample (44 enterprises) as the most important channel for marketing their businesses, while the internet and word of mouth were viewed as of equal significance by one-third of the sample. Flyers were not regarded as a particularly significant marketing tool; indeed only one of the 80 enterprises ranked them as the most important.

The core target for marketing is the international backpacker consumer. Nevertheless, it was disclosed that approximately 40 per cent of enterprises also directed some marketing specifically at the South African consumer, most commonly through local universities or advertising in Getaway magazine. Among the 60 per cent of enterprises that did not target South African consumers there was often a marked degree of ambivalence and sometimes considerable hostility towards the local market, expressed in comments to the effect that ‘South Africans don't backpack’ and thus are ‘not our target market’. From several centres, typical responses were as follows:

• ‘We are open to South Africans but have to be selective about it due to crime linked to cheap rates.’ (Johannesburg)

• ‘South Africans can be a bit pushy and opinionated when drunk.’ (Nelspruit)

• ‘Prefer not to have South Africans as they cause trouble.’ (Bloemfontein)

• ‘The domestic market coming through Johannesburg is trouble. They book out without paying.’ (Johannesburg)

• ‘South Africans are not into the communal living of backpackers.’ (Port Edward).

• ‘School groups are fine, so is the occasional band and businessman. But you do get some unsavoury characters.’ (Johannesburg)

• ‘The students are fine and so are some locals but there is a vagrant type attracted by low prices.’ (Nelspruit)

The strongest hostility towards domestic backpackers and South African consumers was found in Cape Town, as shown by the following responses:

• ‘South Africans are too much trouble.’

• ‘They bad mouth South Africa.’

• ‘South Africans steal and abuse cheap accommodation.’

• ‘South Africans don't do tours, eat or drink on the premises. They only stay because the accommodation is cheap which means that we sometimes have to turn away international tourists who are likely to spend more.’

• ‘In Long Street people want accommodation for only an hour so the rule is no South Africans.’

4.6 Associations and government support

Lastly, the sample of suppliers of backpacker accommodation provided information about their links with other enterprises, their involvement in associations, and the effects of various government measures on their business. An important set of responses was obtained concerning recommendations to various tiers of government, from local through provincial to national level.

In respect of association membership, it was disclosed that this was most commonly with Backpacking South Africa (BSA), local and provincial tourism organisations and, less frequently, organisations such as VIP Backpackers and Fair Trade in Tourism South Africa. BSA is the key industry association in South Africa. At the industry level, one of the most critical lessons from international experience is the importance of developing strong industry associations to support the backpacking industry and provide a policy lobby on its behalf. There is a striking contrast between Australia's strong industry association for backpacking, the Backpacker Tourism Advisory Panel or BTAP, and South Africa's equivalent association, BSA, in its current state. The Australian association has received support through national government funding, but BSA is funded only through voluntary membership subscriptions. This situation seriously limits the activities that can be realistically undertaken by BSA, which has no full-time committed personnel.

Uneven responses were provided by entrepreneurs on the benefits of linking to BSA. The following represent the mixed set of responses that were put forward.

• ‘As a marketing tool, perhaps of use.’ (Cape Town)

• ‘Networking and helping each other is beneficial.’ (Cape Town)

• ‘Gives you credibility.’ (Cape Town)

• ‘All they do is sit around and bitch.’ (Johannesburg)

• ‘Too much backbiting.’ (Johannesburg)

• ‘BSA is not interested in this part of the country.’ (Northern Cape)

The survey disclosed that the major current strength of BSA is as a basis for networking among product suppliers in the backpacking industry. There were widespread criticisms of the ‘limited effectiveness’ of this organisation in terms of marketing and promoting the industry as a whole; a situation that is a reflection of its limited financial base.

Much criticism was also directed at the ineffectiveness and general weakness of local tourism organisations throughout the country in support of the backpacking industry. Where local tourism organisations helped secure bookings or referrals, complaints were made about the high levels of fees or commission they charged for this service. By contrast, strong and positive sentiments were expressed about the benefits of inter-enterprise cooperation among entrepreneurs, especially for information and bookings referrals. In Cape Town, for example, it was noted that the group of backpacker owners knew each other and offered ‘referrals when full’ as well as sharing information about ‘problem guests’. Many enterprises had links not only with the groups of local tour companies, travel agencies (especially STA Travel and Flight Centre) and the dedicated Baz Bus transport company but also with international tour operators or agencies in major international markets.

The limited extent of government support for the backpacker industry is an important issue. Of the 80 enterprises, only 10 (13 per cent) had received any form of direct government assistance. The most valuable assistance awarded had been financial support for community-owned backpacking ventures, such as those involved in the Mehloding trail in the Drakensberg. In other instances the support was through funding provided by the Department of Trade and Industry (DTI) for travelling to an international travel exposition for marketing. Other examples of support were through successful applications made to the DTI SMEDP (Small and Medium Enterprise Development Programme) funding programme and support from the Tourism Enterprise Programme for marketing and linkage assistance.

The recently launched Tourism Charter had produced a high level of awareness among the surveyed suppliers of backpacker accommodation. Of the 80 enterprises, at least 50 said they knew about the Charter and its associated BEE scorecard. The direct impact of the Charter on the industry is potentially limited, however, as most businesses stated that they would be unaffected by its guidelines because of the size of their operations. Nevertheless, several enterprises – especially in the Eastern Cape – were making conscious and energetic efforts to fulfil the requirements of the Charter in terms of changing their ownership structures, offering shares of the business to black staff and expanding local ownership and profit-sharing arrangements with local communities.

More than half of the sample of backpacker enterprises – 41 of 80 responses – exhibited an awareness of the linkage potential and pro-poor impacts of the backpacking industry through outsourcing or developing business relationships with black-owned supplier enterprises. By far the majority identified the greatest potential for empowerment linkages in terms of transport, tour services (especially cultural or township tours), maintenance or laundry services.

In a number of outstanding cases, in both the Western Cape and the Eastern Cape, there was clear evidence of the potential for developing pro-poor linkages through backpacking. A number of examples exist of projects variously designed to assist and involve surrounding local communities, to encourage local entrepreneurs to set up laundries or bakeries, to train local people in tourism, to source food supplies from local suppliers and to use the services of black electricians, builders or transport operators. At Bulungula Lodge in the Eastern Cape, the community had been helped to launch a number of 100 per cent community owned and run businesses that included horse riding, canoeing, fishing, guiding, baking, sewing, cooking, wood carving and environmental protection projects. By 2006 – less than two years after the Lodge was established – these initiatives had created jobs and incomes for 33 families over and above those who had direct employment at the Lodge.

5. CONCLUDING REMARKS

South Africa is a late arrival in the global market for backpacker tourism. A number of significant obstacles or challenges to the development of contemporary backpacker tourism in South Africa can be identified from this investigation. From an enterprise perspective several major barriers are viewed as hindering the industry's competitiveness.

To overcome these, firstly the industry needs to be officially recognised as a viable niche in the South African tourism economy, and data on the industry needs to be regularly collected and research conducted. Secondly, the national government needs to increase and improve its marketing of South Africa as a competitive destination for international backpackers. In the international market, Australia is often seen as the model for South Africa because of the aggressive way it markets itself to international backpackers. In terms of policy innovation, Australia's Working Holiday Maker programme is a key underpinning of the country's popularity as an international backpacker destination and has no existing parallel in South Africa.

Thirdly, a host of issues must be dealt with relating to the responsiveness of provincial authorities to the marketing and development of backpacker tourism. In nearly every province, with the exception of the Eastern Cape, entrepreneurs complained that provincial tourism authorities were uninterested or did not seriously promote the backpacking sector or low budget tourism more generally. A Nelspruit-based entrepreneur stated that ‘Mpumalanga Province does not take backpacker tourism seriously at all’; a sentiment that was echoed nearly countrywide.

Fourthly, a further set of critical issues of awareness and understanding of backpacker tourism must be addressed at local government level. The top priorities are to establish local authority guidelines to regulate the business of suppliers of backpacker accommodation and to improve local government awareness of and sensitivity to the developmental prospects of backpacker tourism. In the Western Cape the imperative that was stressed was ‘sorting out municipal issues and creating a better awareness about backpacking’. Additional challenges for local government are providing signage for hostels, improving the condition of local roads, and most critically – in larger urban centres – upgrading South Africa's appallingly inadequate public transport and looking after the safety of backpacker travellers.

Fifthly, access to finance must be facilitated for improving existing businesses and, in the case of black entrepreneurs, developing new ones. And finally there is a strong case for the national government to strengthen its support of the industry association, BSA, so that it can become a much more effective policy voice and marketing arm for the industry in the increasingly competitive global market for backpacker tourism.

Additional information

Notes on contributors

Christian M Rogerson

1Professor of Human Geography, School of Geography, Archaeology and Environmental Studies, University of the Witwatersrand, Johannesburg. Thanks are extended to Jonathan Mograbi for interview assistance and to Wendy Job for the diagrams.