Determination of attractiveness of the hospitality industry in Malawi

Abstract

The objectives of the study were to determine the attractiveness of the hospitality industry in Malawi and to determine factors that make the hospitality industry in Malawi attractive. Industrial Organization (IO) economists classify market structure according to certain characteristics. Industry structure has a profound effect on the ability of firms to earn higher rate of return on capital employed. Competing forces in a structure of an industry can be determined using Porter five forces model. This research was a survey of all firms in the Malawi hospitality industry. In an effort to meet the research objectives the researcher collected primary data from industry players. The primary data was collected using a structured questionnaire which was administered to corporate managers or in their absence marketing managers of firms in the industry. The data were analysed using descriptive statistics. Summarised proportions, percentages, averages and standard deviations were analysed and ranked. The study found out that the collective strength of the industry forces in the Malawi hospitality industry is weak hence the industry is attractive. The industry was also found to be in the growth stage hence this was concluded to be one of the factors that determine the attractiveness of the hospitality industry in Malawi. The research findings have several implications for policy makers, researchers and management. The researcher recommends that Tourism and Hotels Board should come up with separate policies and guidelines for hospitality industry and tourism industry. Managers and prospective investors should dedicated more energy in cultivation and development of partnerships or strategic alliances with financial lending institutions, property developers and investment agencies to overcome the highest barrier to entry into the hospitality industry which is high capital requirement. Management of industry players could make use of the research findings to analyse their organization strength and weaknesses and craft competitive strategies that can position their firms where their firm’s economic activities can achieve higher profitability. Researcher could mount studies on competitive strategies that hospitality industry players employ to beat competition. Further research could be conducted studies on other factors that make the hospitality industry in Malawi attractive besides Porter Five Forces. Researchers could replicate the study but focus on a single category.