In Zimbabwe, tourism played a very significant role in the development of the nationaleconomy taking advantage of its most diversified tourism resource base. The contributionof the 0.7% in 1980 to 9.8% in 2007. Notwithstanding natural attractions, very limitedtourism development occurred during the past nine years owing to challenges associatedwith perceived country risk, lack of working capital, inadequate domestic services, anddeteriorating infrastructure.
Turnaround strategies of the Rainbow Tourism Group
RTG wage bill continued to increase from 15% in 2009 to 35% of total costs in February2010 and since 2009 the company only made a profit in May 2009 and a loss of US$742000 was realised in June . Due to continuous increase in operational costs, andcontinuous losses, the company implemented turnaround strategies. The company hasdeveloped strategies to boost tourism, focussing on: (a) destination re-branding; (b)review of our international marketing strategy; (c) development of market-specificmarketing programmes; and (d) targeting the world’s top tourist generating markets.
Cost reduction strategies
According to Robertson (2010), in order to reduce operation cost the company is nowimporting from China and India, Look East where despite the long distances involvedlanding policy costs are 30% lower than local goods. This strategy is feasible since lower operations costs will enable competitive pricing and the company will be able to use themoney to invest in other sectors. Also this strategy will also attract China and Indiatourists into the country.According to www.fingaz.com March 2010, RTG’s wage bill had increased from 15% to32% and to reduce these costs the company retrenched non core staff and contractworkers. This strategy is to a great extent relevant since the company should focus on thecore activities and reduce unnecessary expenses. However some of the staff may beneeded in the future since the company is in the process of expanding its operations.