Executive summary
The business development proposal includes a tourism business’ investment plan in Dubai. Dubai is well known for its established tourism industry and this proposal seeks to explore the business opportunities that the industry presents to its players of which I wish to join. Further, this proposal will identify the opportunity that the proposed business will exploit to earn profits and find its share in the market. Tourism industry is segmented into many sections such as international hotels, tour guide agencies and hotel bookings, among other services. There is an emerging market in the UAE especially in Dubai since the country has resolved to venture into the tourism industry as a second biggest industry that will bring revenue to the country after the oil industry which is going down due to the drying of several oil wells. There is a very big gap in the tourism industry especially in the services related to VIP tour guide, cruise services and looking for best hotels in the city. Tourists need the highest lifestyle when adventuring and touring new places and experiencing new climate.
Dubai is also a country that every business venture is salivating for hotel building because so many tourists both local and international are flocking the city to enjoy it architectural make up of their buildings and the cool breeze from its waters.
This means that the competition is very high therefore the only way to enter into this market is through partnership with the already established tour guide company which commands a good share in the market.
From the research I understood that there is a good demand in this sector and there is a big gap that needs to be exploited and the information they one needs to exploit this opportunity is already available. This makes the business venture the most viable and the most promising therefore looking for a franchise in the city is the way to go.
Chapter 1: Introduction
1.1 Background of study
The research proposal provides a good alternative for MBA students who have terminated their MBA program. The chosen project meets the MBA requirements that will help a student achieve his or her dream of obtaining MBA degree. The business development proposal which is abbreviated as BDP is normally one of the best and sustainable experience that is practically applied in academic setting as well as providing a good experience that is needed when engaging future proposals or projects. This proposal is required to test the management skills that have been studied by the students who are further provided with a chance to do a self-assessment exercise concerning their business skills through the generation of BDP. The self-assessment will include assessing personal weaknesses and strengths.
1.2 Scenario selection
The scenario selection should be introduced realistically for the proposed business. In other words, the selected business proposal should seem to be a reality and the launching should seem a reality. The relevant proposal scenarios that will act as a guideline will include;
commencing a start-up business as a well informed entrepreneur
partnership engagement with a company that already exists in the market
an entrepreneur owning a company that still exists in the market
a currently employing company or organization
a non-profit making organization or a commercial company
In this scenario the proposed development plan will include several scenarios only in a single project. In this case, the scenario will involve a start up company investing in a foreign country but partnering with an existing local company in the same industry. This chosen scenario is very important in shaping my acquired knowledge because it will be of help when utilizing my knowledge as well as gaining insight given various business methodologies and principals.
1.3 Business opportunities
1.3.1 Business idea’s rationale
Tourism business is a kind of business that is very lucrative and attracts every investor who understands that particular industry. The business commands a very high market share more so in well and strongly established countries economically. Tourism in Dubai is emerging and is one of the contributor contributors of the economy in Dubai which is becoming one of the major tourism destinations in the world. Starting up a new tourist company in this country through partnership with a local company will be a good move. Franchising with a local company will help the start up a company gain the customer base very first therefore the break-even point will be shortened.
There are very many tourism companies in Dubai which requires international partnership. They include Skyland Tourism, Alpha Tours Dubai, Atlanta Tourism Dubai, and Akhilaa Tourism among other companies. The company that has been chosen for partnership is Alpha Tourism Dubai. Alpha Tourism Dubai is a company that was established about 20 years ago. The company deals with a range of businesses such as hotel bookings, cruise management, VIP travel, and ground handling excursions and services. My start up company will get a franchise and will be contracted to take up a few Alpha services that will see the company share profits in a way that will agreed upon.
The start up company will take up services concerning hotel bookings and VIP travel guides. Hotel booking is a business that is very lucrative in Dubai following the proposed Dubai Tourism Vision for 2020 that targets over 20 million tourists by 2020. This forecast dictates development of luxurious hotels which will eventually be occupied through booking. The hotel booking will therefore be a good business for my business. The next business will be VIP travel guide where our company will partner with Alpha Tourism Dubai to come up with a strategy of designing a guide for tourists. Tourists need to exhaust their time and money to explore, adventure or tour new sites and places.
1.3.2 Targeted market, accessibility and customers
The targeted market will include local and international tourists. The business will venture into two segmented services that include VIP tour guide services and hotel booking. The targeted group of customers will include local and international tourists. The tourists that are targeted also include the aged, children, families and diplomats. The business will be located at Bur Dubai between Alpha Destination Management and Alpha Tours LLC. This is because of proximity to Dubai tourist centers.
1.3.3 Business model
The business model that will be used is known as Tourism Business Model. The model will be depended of four major factors. These factors are customer interface, management of infrastructure, financial models and product or service.
1.4 objectives of the proposal
The tourism start up business aims at establishing a good brand of its products and services in the Dubai tourism market. The company will gain popularity very fast because of the franchising deal with Alpha Tourism Company thus commanding a good market share in the shortest time. After commanding a good market share, the company will terminate its contract with Alpha Tourism Company and enter into the market a lone and expand its service provision and open up branches all over Dubai. The company is projected to be recognized in the market within the first six months and will be under partial management of Alpha Tourism Company. After wards, the start up company will then stand on its own in terms of management and will expand its operations to other areas in the region.
Main objectives
The start up Tourism Company will give provisions for quality and timely services at a very competitive price.
Each financial year the company will seek to expand its market share by 7%.
Within the period of six years, the company will be regarded or ranked among the most competitive company in the region.
The brand motto and the partners of the franchise phrase will be “ Moving forward with the best tourism and hospitality services for all”
Other detailed objectives that this proposal presents is to do an extensive research on Dubai’s economy by giving tourism sector a priority as the second largest contributor of country’s GDP. This research proposal will also analyze the tourism and hospitality markets stating the factors that have influenced the sustainability of the markets and the competitors that exist in the market. In addition, the proposal will also present the procedures and regulations that a start up company will follow in acquiring a license and launching business in United Arabs Emirates.
1.5 The Report Structure
This proposal will be subdivided into 5 broad chapters and these subdivisions will be arranged as follows.
Chapter one: this is the introduction part where the concept, appearance, outlines, aims and scenario are introduced. This part contains the vision, mission, position, products, and the market growth expectations. The business concept and business opportunity will also be discussed in this chapter. This chapter also explains in details the objectives of the proposal stating the opportunities that are presented by tourism industry in Dubai.
Chapter two: It is the literature review part which is very crucial in this proposal. Tourism industry in Dubai will be discussed in this chapter. The opportunities that the industry presents to the company are also discussed in this chapter. The procedures of opening up a tourism industry in Dubai will also be discussed in this chapter. In this chapter the vision and mission of the company will be stated. The business concept will also be discussed in this chapter.
Chapter three: this chapter will present the in-depth market research and the methodologies used in this research. The chapter will also contain company’s organization as well as its financial profile. In this chapter, the feasibility study will be done on the tourism market in Dubai to see if the business will be viable in the region. The methodology on the market research, service and products methodology, organizational feasibility, industry and market feasibility and financial feasibility will be discussed in this chapter.
Chapter four: The idea’s strategic analysis and the business model development will be captured in this chapter. Deep strategic analysis of business idea, the value chain analysis will be captured in this chapter. The company’s SWOT analysis will also be captured in this chapter.
Chapter five: the chapter captures the whole business plan, which includes the organization, finance, marketing and operation.
Chapter two: Literature Review
2.1 Dubai overview
Dubai is ranked as one of the leading tourism hotspot in the world. It is not only one of the leading but also climbing the rank at a very high speed. TripAdvosor has published in its papers that Dubai which is a commercial city of United Arab Emirates is now included in the Travelers’ Choice Destinations of 2016 and it has been termed as the only city in UAE that has the potential of making it to the top of the 25 known tourism destinations (Kapur, 2016). Further, Dubai was figured as number one in the region and number thirteen globally according to the latest Travelers Choice Awards as stated by TripAdvisor (Kapur, 2016). The UAE has been showing a substantive improvement in its ranking for the previous year and this was experienced from the time it acquired the 24th
position in the 2015’s list of travelers Choice Destinations. Dubai has been identified as the cosmopolitan oasis and a futuristic cityscape which towers allover the Arab desert. The city is also terms as a city occupied by superlatives and a home of the largest dancing-fountain in the world where the Burj Khalifa which is the tallest structure stands. The other dancing-fountain includes; Burj al-Arab which is a 7-star hotel, Palm Islands which is the biggest artificial island, and the Miracle Garden which is the biggest natural flower gardens. The ranking took into account the quality and the quantity of hotel reviews, restaurants, and the attractions recognized world wide over the years as well as assessing the trends in booking as monitored and noted in TripAdvisor. The city is on with enhancing its experience in receiving visitors and it is done by the Department of Tourism and Commerce Marketing of Dubai. Tourism in Dubai acquired the “Best Tourism Board” award from the London’s Travel Weekly Globe Award. In 2015, Dubai received 14.2 million visitors overnight thus recording an improvement of 7.5% over the year 2014. This increase doubled the projected percentage of 3 to 4 by the United Nations World Travel Organization (UNWTO) (Zaidan, 2015).
North America and Europe’s tourism destinations are experiencing challenges from the destinations that are emerging in the South and the Middle East (Shankman, 2012). The arrival of international tourists has been experiencing a continuous growth to about one million in 2012 from 1995’s 528 million. With the increment of the departure from the economies that are emerging, in 2013, the number of visitors reached about 1.1 billion (UNWTO, 2014). Although, according to United Nations World Tourism Organization (2014), on average, a 3.3% increase in the number of tourists was expected on a yearly basis from 2014 al the way to 2030 with a representation of 43 million of international visitors each year which marks a 1.8 billion by the year 2030.
Tourism industry is termed as the core driver of Dubai’s economic growth in actual sense it is estimated that about 20 to 30% of its total GDP. The hospitality and transport sectors’ latest information shows that the city of Dubai is trying to achieve its strategy that aims at achieving a 20 million visitor goal by the end of 2020. The Dubai statistics Center (DSC) in the year 2010 and 2012, in total the number of employees in the sector of tourism in Dubai increased by 13% on average amounting to 435, 595 employees per annum. This statistics is a representation of about 18.4% of the entire workforce in Dubai. Concerning the strategic objective of 2020 tourism Expo, it is estimated that a creation of about 277,000 will be initiated in the coming 6 years where about 40% (110,800) will be linked to the tourism industry.
In the year 2016, tourism and travel generated about 317, 500 direct jobs amounting to about 5.4% of the overall employment in Dubai. The employment growth grew by 2.3% in 2017 amounting to about 324,500. The employment in this sector included travel agents, hotels and other passenger and airline services. The employment rate in this sector is estimated to grow by 2.4% annually for the next 10 years (World Travel & Tourism Council, 2017)
Hospitality sector
KEY WORD: Q1, Q2, Q3, AND Q4 represents first quarter, second quarter, third quarter and fourth quarter respectively.
Source: Dubai Statistics Center (DSC), Emirates NBD Research
2.2 Issuance of Tourism License in Dubai
The number of Dubai’ issuance of license has been increasing tremendously since 2014. In 2014, the increase in the number of licenses in the year 2014 was 12.2% which accounted for about 1.6% of all the businesses acquiring licenses in the region (Tsetsonis, 2014).
2.3 Setting-up of a tourism and Travel Corporation in Dubai
Registering a limited liability corporation in Dubai involves some legal procedures and processes. The business activities involving the tourism and travel business are divided into three sections. They are Inbound-Tour Operator, Out-Bound Tour Operator and Travel Agent. In-Bound Tour Operator (activity code: 630412) includes corporations and firms which organize and prepare incentive tours to local and international visitors who attend events and conferences. It handles visas, residence and transport (First Gate Business Services, 2018). The second division is the out-Bound Operator (Activity Code: 430411) includes those firms or corporations which sell and organize programs of tourists abroad through tourism and travel agents. The third division is the Travel Agent (630402) which sells air tickets to visitors as authorized by the relevant and official agents. The main role of this division is limited to reservation of seat, ticket issuance as directed by the official agents. They are also responsible for offering car rental services and hotel booking.
2.4 Conditions for these services
The manager’s education certificates as well as the experience should be produced. He or she must possess a minimum of three years experience in the field. The manager should hold a certificate of specialization in the field of travel or tourism or hold a Bachelors degree in the field of travel and tourism. All managers and partners should have a Police Clearance Certificate. If that manager possesses secondary certificate only, then he or she is required to hold an experience certificate in the field. The office space of all the operators should be about 30 meters square. And if the firm takes up for instance three services the office space should be 90 meters square.
The special instructions or conditions guiding tour operators (Out-Bound and In-Bound) require that; the insurance policies that cover risks which may encounter visitors programs, the insurance policy’s validity shall take cover for the license’s whole period or term and will expire in a month’s time following the expiry period of the license. The stakeholders that wish to start up the firm should conduct a feasibility study on the project where the benefits that the tourism industry will enjoy are stated. In the part of In-Bound Tour Operator, it is required that Dh 100,000 which is a bank guarantee and is irrevocable in the name of Department of Tourism and Commerce Marketing (DTCM) that may be issued by any banking institution based in Dubai. In the part of the Out-Bound Tour Operator, the stakeholders wishing to open up a corporation in the city are required to deposit Dh 200,000 as a bank guarantee that is irrevocable in the name the Department of Tourism and Commerce Marketing (DTCM) that may be issued by any banking institution based in Dubai.
The special instructions or conditions guiding activities of Travel Agent require that; acquisition of No Objection Certificate (NOC) from the Civil Aviation Authority of Dubai should be done. To obtain NOC, the agency should do an application to the Civil Aviation with a fee of Dh 5,425. The application should be done in Arabic and submission should be done in the name of a sponsor that is a local of Dubai. The attachments that will accompany the submission should include copy of family book (Jinsiyya) and a copy of the passport. A bank guarantee of Dh 100,000 which is irrevocable is deposited in any local banking institution. The bank guarantee should be done in the name of the Department of Tourism and Commerce Marketing (DTCM). There is no requirement for a report on feasibility study concerning activities of Travel Agent or insurance cover. In total, one should invest Dh 400,000 to open up a Travel agency.
2.5 Business Opportunity
The tourism and hospitality industry in Dubai is becoming the biggest tourism destinations given the global or world wide tourism map. Each year, tourists visit Dubai from every corner of the world and this is because the city is attracting shoppers, businessmen and women as well as other professionals who want to visit it. Dubai is known for its safety both economically and politically (Dubai Chamber, 2014).
Trends in growth of Dubai’s tourism industry currently
According to Dubai Department of Tourism and Commerce marketing, Travel & Tourism News Middle East (2010), in the year 2010 the city experienced a huge tourism growth. For instance, in 2010’s first half, there was a 9% increase in the number of guests in the hotels when comparing it with 2009’s first half. In 2012, the annual growth of tourists increased by 7% in the restaurants and hotels in the city of Dubai and this marked the fastest growing industry in the economy of Dubai (Dubai Chamber, 2014). As from 2012, the growth momentum of this industry has been maintained.
In 2014’s first half, the number of tourists amounted to about 5.8 million where in 2013, the number stuck at 5.5 million. Research shows that a steady growth in the hotel sector has been maintained where hotels are growing at a rate of 6.7% and hotel apartments are growing at the rate of 4.2% (Banerjee, 2015). One of the core drivers of Dubai’s industry of tourism is the visitors’ length of stay in the country (ZAWYA, 2014). Along side hotels the rate of rooms rented have also shot up. For instance, in 2014’s first six months, on average the rate of rooms was 305 US dollars which was about 296 US dollars the a year ago (ZAWYA, 2014). Also the rate of occupancy has been growing significantly where in 2014 alone there were about 85% occupancy rate.
The population growth in the United Arab Emirates region has been pointed out to be the core reason why the there is a rise in travels that are inter-regional that contribute to the rise of tourism industry in Dubai (Oates, 2014). Another factor that may have contributed to the growth of the sector is the emerging decline of oil reserves which has forced the government of United Arab Emirates (UAE) to start venturing into other potential sectors such as the tourism industry to supplement their future economic growth (World Travel and Tourism Council, 2012). Actually, the government of UAE is now making effort to boost tourism sector through investing about 300 billion US dollars in infrastructure that is related to tourism and this is aimed at attracting more tourists into the region (Oates, 2014). In actual sense, Dubai is making efforts to become the link between South America and Asia and this will affect the mobility on an international scale therefore contributing to a further growth in Dubai’s tourism industry (Oates, 2014). In the same context, this gateway effect is regarded as a core factor that is behind Dubai’s growth of tourism industry. Dubai is now considered the main gateway connecting Countries in South America and USA and also it is now connecting some countries who which to travel to Asian countries. Dubai is in fact experiencing stopover traffic which is also a contribution to the industry sector in Dubai.
Assessing the factors that have enhanced the growth of the tourism industry as well as the current trends of the industry, there is a potential of significant growth of the industry in the future. According to Dubai chamber (2014), this tourism and travel sector in UAE will experience a growth of 4.1% annually where Dubai is seen to be the biggest destination of the tourists in the whole country. The importance that has been experienced in the sector has called for a huge investment in the sector which will attract the inflow of visitors. The future growth of the sector will also be impacted by the planned expo 2020 which will take place in UAE, Dubai. The government of UAE is investing more than 8 billion US dollars on the infrastructure the will boost the event. The infrastructure will strengthen the reputation of Dubai as a prime destination for tourists.
From the above analysis the company will have its share of over 20 million tourists at by 2020. This will be achieved through partnership with already established companies such as Alpha Tours. The company will design a business model that will enable the company gain more visitors at the shortest period of time. The opportunity that the company will exploit is the expo that is planned to take place in 2020. The company will do its marketing intensely at the expo where it will be targeting both local and international tourists as well as promoting its brand.
Hotels and hotel apartments have been experiencing a tremendous growth given the growth of tourism industry where inventory of hotel rooms is projected to reach 160,000 in the year 2020. The government of UAE is now streamlining the industry through the allocation of public land to the development of three and four five star hotels with a waiver of 10% on municipality fees (Gulf News, 2014). This is another opportunity as the company will identify the hotels to partner with while doing its hotel booking business as well as VIP travel guide. The company will earn more profits from partnership with the hotels than approaching the market alone and the cost associated with opening a new company is very high and complicated than partnering with already established company. The targeted visitors will approach 20 million where the age bracket will be between 25 and 55. This is the active lot on social media therefore the company will seek to promote and advertise its products online to boost its sales.
Factors enhancing growth of tourism in the city of Dubai
One of the major factored that has favored tourism in Dubai is the strict restrictions concerning drug trafficking and other legal related dangers. People entering the city of Dubai are subjected to imprisonment of not less than four years if they are found guilty of possession of drug substances that may be termed illegal by the state. The security at the airport has made a lot of progress in acquiring scanners that are able to detect drug substances in the blood stream. In Dubai, even if the conflicted person is found in possession of the smallest quantity of drug substance, he or she will be found guilty of possession of drugs. This regulation helps the industry receive more revenue from the industry since it encourages genuine visitors only.
Health issues in Dubai also encourage tourists to the city. The city has not put across special or specific immunizations program on its visitors but in most cases it encourages its visitors to acquire a medical insurance cover that may be appropriate for them before taking a flight to Dubai. Government programs of immunization have resulted into the recognition the travel magazine (Bell, 2016). The latest advancement in the modern health care system established in Dubai is that the city offers contacts of all doctors in online platforms. These arrangements have attracted more tourists to Dubai since their health has been taken care of.
Shopping malls in Dubai are one of the major tourist attractions of the city (LivinginDubai.org, 2013). The city has been given a nickname “Middle East Shopping Capital”. Dubai is drawing large numbers of tourists all over the globe from Africa, India to Europe. The city is also famous for the Souk districts where the word ‘Souk’ is a word from the Arabs that means a market where the all kinds of goods are exchanged for cash. In the ancient days, dhows that came from China, India and Far East would offload their goods that were then exchanged for cash or other goods in the Souks that were adjacent to docks. Dubai Duty Free which is based at the international airport of Dubai provides catering services to multinational visitors by the use of International Airport of Dubai. Electronic malls, boutiques, and other supermarkets provide goods and services to customers at a basis of fixed price while other shopping outlets are considering negotiations with potential clients. Dubai hosts many shoppers from all over the globe during a Dubai Shopping Festival that goes for a month and held in January every year. During this period all the UAE becomes a single shopping center or mall. The festival comes with art and music exhibitions and shows as well as traditional dances.
The Arabic culture also is a factor that attracts foreigners to the city. The ancient culture that Dubai maintains, which is seen to be overshadowed by the booming economic advancement and development, is found in the creek (The Emirates Group, 2018). The creek divides the city into two large parts namely Deira and Bur Dubai. Buildings that surround Bur Dubai adds flavor on the old city. Heritage village stands out to be the next sign of Dubai’s historical sites that has preserved old buildings. Diving village also offer shows on fishing and pearl diving. This Diving Village is a site that forms a section of ambitious plans of turning all “Shindagha” regions into a cultural town, which recreates life in the city as the past days. Other sites of attractions are the house of Sheikh Saeed Al marktoum. The Dubai Museum that was built in 1799 at Al Fahidi Fort and Hatta’s Heritage Village that is situated in about 115km South-East of Dubai is also a site that attracts tourists.
Dubai has other activities that attract tourists for instance sports. Dubai is a city that hosts international or global championships such as Dubai World Cup which is the world’s richest horse-race, Dubai classi
