Factors That Hinder Growth of Tourism Enterprises
Name
ACCT 6600 - Managing Operational and Financial Business Risks
Walden University
2022
Factors That Hinder Growth of Tourism Enterprises
Tourism is faced with multiple challenges in its quest for reasonable growth in Kenya.
According to Kohl et al, (2000), developing countries have specific constraints when attempting
to compete through liberalizing and opening their markets. Especially the group of Least
Developed Countries (LDCs), lack the infrastructure or competitive strength to participate in
most liberalized service industries like ICT and banking. It is not strange that most liberalization
attempts have lead to more uneven national income distribution and increased numbers of
poor (Kohl et al., 2000). Governments efforts in developing countries to stimulate foreign
tourism investments, might improve their Balance of Payments. This however is not per se
leading to economic growth, or a better income distribution.
According to Sam (2002), tourism is a labour intensive industry, which generates employment
opportunities at semi-skilled, technical and managerial levels. This is a very important aspect as
most of the labour force in East Africa is non-skilled. The unskilled labour present in this
touristic regions results to poor management of the touristic sites. The unskilled labour too
results to poor handling of foreign and local tourist who in turn shuns visiting these areas.
It is worth noting that even the most recent and more attractive form of tourism known as “eco-
tourism”, does not fully appeal to the concept of sustainable development. This is so because
eco-tourism can be a major source of degradation to the local ecological, economic and social
systems. For example, the intrusion of large numbers of foreigners with high-consumption and
high-waste habits into natural areas, or into towns with inadequate waste management
infrastructure, about which is eco-tourism, can degrade the natural areas at a more faster rate that
is far much greater than that caused by the host communities themselves Sam ,(2002).It has
already been identified that entrepreneurship is a major contributing factor to tourism growth,
however, entrepreneurial ability and leadership tend to be relatively lacking in Kenya. Collier,
(2005) have identified five primary reasons for the shortage of entrepreneurs in LDCs. Firstly,
this includes the limited profit opportunities which exist in LDCs as a result of lower per capita
incomes and limited markets.
Poorly developed capital markets according to Collier, (2005) make it difficult for potential
entrepreneurs to borrow the funds needed to establish new businesses and take advantage of new
investment opportunities. This ties in closely with the role of microfinance in empowering
entrepreneurship.
Poorly developed infrastructures hinder the development of new commodity and resource
markets as well as inhibiting the efficient operation of existing ones. Fourthly, sometimes social,
cultural and religious beliefs and attitudes attach little importance to monetary gain, restrict
economic and social mobility, or assign very low status to entrepreneurs. And fifthly, an
unfavourable economic and political climate might discourage the development of
entrepreneurial talent and initiative. It is often argued that in light of these barriers, governments
hold the key in opening doors to aspiring entrepreneurs in Kenya, Buddy, (2005).
According to Miga, (2003) Green tourism, in contrast to “eco-tourism”, which relies on travel to
distant locations, seeks to provide recreational attractions and hospitality facilities to local people
within their local regions, thereby reducing tourism-related travel. While green tourism has the
positive economic effect of stimulating local economic activity, it reduces the flow of foreign
currency to developing nations and any resulting economic benefits that may accrue to
developing towns and cities from these revenue flows .
The tourism industry in Kenya lacks proper promotional strategy due to lack of good marketing
machinery to market this industry abroad. This has been largely attributed to mismanagement of
funds and lack of proper fund management system put in place Miga, (2003).
While water use by tourism, on a global basis, is far less important than agriculture, industry, or
urban domestic use, in some countries and regions, tourism can be the main factor in water
consumption. In such areas, it can increase pressure on already diminished water resources and
compete with other sectors as well as subsistence needs of local populations (Box 1). Tourism
can also directly affect water quality, for instance through the discharge of untreated sewage or
freshwater abstraction (Gössling 2010).
Waste management is another increasing and well recognized challenge in the industry. Every
international tourist in Europe generates at least 1 kg of solid waste per day, and up to 2
kg/person/day for the USA (UNEP 2003). By comparison, Cal Recovery and UNEP (2005)
report total country waste generation, including industrial and other sources, for Austria (1.18
kg/person/day), Mexico (0.68 kg/person/day), India (0.4 kg/person/day) and the USA (2.3
kg/person/day).
