FEMALE ENTREPRENEURS IN THE HOSPITALITY TRADE: A CASE STUDY IN SOUTH AFRICA Gideon Nieman and Cecile Nieuwenhuizen

Abstract The guest house industry as a sub-sector of the hospitality trade in South Africa has grown considerably in the past five years and indications are that this growth will be maintained in the near future. This visible growth raised questions about the demographic profiles of the entrepreneurs behind these ventures and their reasons for starting these ventures in the first instance. An exploratory study in 1997 revealed that 75 percent of the founders/owners of these establishments were women. This research needed to be expanded to include more respondents and other regions. It was done in this study and this study supports to a great extent the findings of other studies in the USA and Europe on female entrepreneurs indicating that they enter business at a relative late age, prefer service industries and are motivated by a need for recognition and achievement. By using factor analysis the reasons why these female entrepreneurs in South Africa started these ventures could be labelled as: The need for recognition and achievement, the need for independence, tax reduction and financial security. 1. Introduction Tourism has become a fiercely competitive business in South Africa and there is an increasing growth in the tourism business in the country. The demand for accommodation as part of an overall experience in hospitality has developed dramatically for those travelling, whether for leisure or business (Jones, 1996, p21). The hospitality trade in South Africa comprises widely differing forms of accommodation which includes hotels, motels, timesharing, condominium apartments, holiday resorts, youth hostels, caravan parks, bed-and-breakfast (B&B) establishments and guest houses. The guest house sector as part of the hospitality trade in South Africa has grown considerably over the past five years and indications are that this growth will be maintained in the near future. This sector only started developing after a report titled: "A Strategic Framework for Tourism Development is South and Southern Africa", was published in 1991 and identified the need for adequate accommodation facilities as a major problem to be addressed (SATOUR, 1991, p22). The South African Tourism Board (SATOUR) soon after this introduced some guidelines and a national grading and classification scheme for guest houses and bed-and-breakfast establishments for the purpose of formal accreditation. For the purpose of this study bed-and-breakfast outlets (B&B's) are regarded as part of the guest house sector as they are to a great extent perceived by the general tourist as to be the same. The larger B&B enterprises are furthermore very similar to guest houses except that they mostly only offer overnight facilities and are part of an existing house in which the owner and his/her family members also reside. Bed and establishments are defined by SATOUR (c1994, p 1) as "... an informal periodic accommodation operation undertaken from a private dwelling." For the purposes of accreditation the maximum number of guest bedrooms has been determined at six. A guest house is defined as: "... an owner managed commercial accommodation establishment of not less than 4 and not

more than 16 bedrooms, and which has as its primary source of business, the supply of tourist accommodation and a substantial dinner where such facility is not readily available in the vicinity." (SATOUR, n.d.: Accreditation brochure, inside cover). Bed-and-breakfast establishments and guest houses are becoming increasingly popular, The reasons for this trend are varied: some travellers prefer the home-away-from-home atmosphere and personal attention that are hallmarks of this type of place, others prefer the privacy afforded by a small establishment, while rising costs of hotel accommodation is an inhibiting factor for some people (Struik, 1994, p6). The popularity of this type of accommodation is further supported by statistics that 33 percent of foreign visitors stayed in guest houses or lodges while 17 percent of foreign visitors stayed in bed-and-breakfast outlets during January/February 1996 (Mackellar, Seymour, 1996, pp53-55). This growth is not limited to South Africa alone. In the USA and Canada the bed-andbreakfast segment of the lodging industry has grown from approximately 1000 in 1980 to an estimated 15000 in 1994 (Upchurch, Boger, 1996, p261). Presently there are estimated to be more than four thousand guest houses and B&B's in South Africa (WestbyNunn, 1997, p1). Unfortunately nobody can supply exact figures of the exact number of establishments in the country as many are not registered with any of the formal bodies which are involved in some way with the industry. The visible growth of this sector invariably raised questions about the demographic profiles of the entrepreneurs behind these ventures and their reasons for starting these business ventures in the first instance. 2. Past research on the guest house sector, entrepreneurial motivation and female entrepreneurs In 1997 an exploratory study of forty guest houses was undertaken to determine the demographic profiles of guest house owners in the Pretoria-Centurion-Akasia region in South Africa, to determine their start-up characteristics and to explore the reasons why these entrepreneurs entered this sector. This study found that 75% of the owners/founders were women and that they were older than 40 years of age (Nieman & Strydom, 1997). The development and growth of this sector has clearly been an entrepreneurial window of opportunity for female entrepreneurs in South Africa. The other part of the research concentrated on the business start-up reasons to determine whether it corresponded with other studies on entrepreneurial motivation. What motivates an entrepreneur to take all the risks and launch a new venture, pursuing an entrepreneurial career against the overwhelming odds for success? Reasons and motivation leading to start-up have traditionally been regarded as an important element influencing not only the start-up of the business but also its characteristics, survival, and performance (Birley, Westhead, 1994, p8). Every taxonomy of entrepreneurship begins with the same fundamental premise: All entrepreneurs are not the same (Gartner, Mitchell, Vesper, 1998, p183). By recognising many different types and motivations we are more likely to see and appreciate the diversity inherent in entrepreneurship. Results of empirical studies suggest that the overwhelming motivations for entrepreneurship have been an amalgam of a desire for independence and financial betterment, with frustration in previous employment playing a secondary role (Birley, Westhead, 1994, p9). Another question is the extent to which the reasons for start-up of male entrepreneurs are applicable to female entrepreneurs. Hisrich and Peters (1995, p62) suggest that while the characteristics of both male and female entrepreneurs are generally very similar, in some respect female entrepreneurs possess very different motivations, business skill levels, and occupational background than their male counterparts.

Research on female entrepreneurs in South Africa is rather limited and mostly in respect of women in the informal sector. Buttner and Moore (1997, p39) found that women tend to start retail and service businesses which require less start-up capital, are slower-growth and labour intensive and that they are more concerned with social contributions like caring about employees and addressing their needs. They also found the general entrepreneurial motivations of women who successfully made the transition from position of responsibility to entrepreneurship are the desire for • • •

for challenge for self-determintion and to balance family and work responsibilities.

The exploratory study found that the drive to be independent was the dominant reason leading to the creation of these ventures. That study, however had its limitations due to the size of the sample. It was clear that a further study was necessary. The research needed to be extended to include more respondents and be expanded to other regions. This would help to develop a broader picture and a case study of the female entrepreneurs in this sub-sector of the hospitality trade. 3. Research Methodology The expanded empirical research comprised a survey research of a further 55 guest houses in the Cape Town area (1500 kilometers from Pretoria) and another 120 participants attending day seminars on guest house management at various venues in South Africa. Two questionnaires were used in the study. The original questionnaire was used again in the Cape Town area but for the day seminar the questions pertaining to infrastructure, objectives and occupancy rates were eliminated due to time restrictions. The original questionnaire used for the exploratory study was developed after a literature review of other entrepreneurship start-up research projects and discussions held with entrepreneurs. Twenty-three statements as used by Birley and Westhead (1994:1 1) in an international study, to determine business start-up reasons were used. Three questions ("to continue learning", "to develop an idea for a product" and "to contribute to the welfare of people with the same background as me") were replaced by two questions on redundancy and unemployment as it was believed that this could be more applicable to the South African situation where a high unemployment rate (32%) was prevalent and many workers being made redundant by their firms. A five point semantic differential scale was used with these twenty-two statements for respondents to indicate to what extent the statements applied to them. The questionnaire covers the demographic details of entrepreneurs. The second part deals with the list of motivations/reasons for business start-up. Part three of the questionnaire deals with the infrastructure, objectives and occupancy rates of the business. (This part was left out in the day seminars). The field work in Cape Town was conducted by a trained field worker. Direct interviews were conducted with the owner/founder of the establishments. One questionnaire was completed per establishment. Entrepreneurs were asked to scale the extent of each motivation influencing their decision to start a guest house. As a few establishments had more than one owner, four additional questionnaires were completed in respect of the question relating to the twenty-two questions. At the seminars the participants were asked at the end of the day to complete the questionnaire and hand it in.The data was processed on BMDP statistical software by the Department of Information Technology at the University of Pretoria. Further details of the statistical analysis are given under the heading: "Factor Analysis of Motivational Items" later in this paper. All the questionnaires pertaining to male

owners and people who had not yet started their guest houses were eliminated from the data leaving a total of 123 respondents. 4. Research Findings The research findings on the founder/owner characteristics and start-up characteristics help to develop a picture and a description of this sector in South Africa as can be seen from a summary of the data presented below. 4.1 Founder/Owner characteristics The demographic profile of the founder owner of the establishments are set out in Table 1. In summary it can be presented as follows: • • •

Marital status -- 77,2% of the females are married. Founders age -- 67,5% of the owners were older than 40 years. Education -- 67,5% of the owners had a post school qualification. Table 1 -- Demographic profile of guest house owners Variable

Frequency* Percent

Marital Status Single

28

22,8

Married

95

77,2

<21 years

1

0,8

22-30

8

6,5

31-40

31

25,2

41-50

46

37,4

>50 years

37

30,1

Less than 12 years schooling

6

4,9

12 years of schooling

34

27,6

National Diploma

40

32,5

B-degree

31

25,2

Postgraduate

12

9,8

AGE

Education

*Please note: n = 60.

4.2 Start-up characteristics The start-up characteristics are set out in Table 2. The data in respect of start-up agent, experience in the hospitality trade and number of businesses established previously, only in respect of 60 respondents who had completed the full questionnaire. • • • • •

Start-up agent -- 91,7% of the establishments were started by the present owner Previous experience -- 61,8% had ten or more years working experience prior to establishing the business Trade experience -- 83,3% had no prior experience in the hospitality/hotel trade Other businesses -- 43,3% had established one or more businesses prior to the current one, which indicates some business start-up experience Qualification -- 94,3% had no academic qualifications in the hospitality trade. Table 2 -- Start-up characteristics Variable

Frequency Percent

Start-Up Agent* Self

55

91,7

Previous owner

5

8,3

Yes

7

5,7

No

116

94,3

0-3 years

31

25,2

4-6 years

8

6,5

7-9 years

8

5,3

10+ years

76

61,8

0-2 years

50

83,3

3-5 years

5

8,4

6-8 years

-

-

9+ years

5

8,3

34

56,7

Qualifications in Hotel/Hospitality Industry

Experience Before Starting This Business

Experience in Hospitality Trade*

Number of Businesses established prior to Current One* None

1

16

26,6

2

7

11,7

3+

3

5,0

*Please note: n = 60. 4.4 Reasons leading to start-up of the current business For the 22 statements/reasons for start-up, Table 3 shows the resultant scores ranked in order of the mean score. The table also reflects the percentage respondents that indicated to what extent the particular statement applied to them. The standard deviations are also given in the table. The first six statements show a mean score that is greater than the mid-point score of 3. These statements all reflect a need for independence, and a personel need to change direction and a need for achievement. The desire to continue a family tradition had the lowest mean score of this group. Table 3 -- Reasons leading to start-up of business Percentages Variable No. Reason

To no To little To same extent extent extent

To a great extent

To a Mean Standard very score deviation great extent (5)

(1)

(2)

(3)

(4)

29 To take advantage of an opportunity that appeared

6,5

4,1

13,0

17,9

58,5

4,18

1,43

28 It made sense at that time in my life

6,5

4,9

14,6

25,2

48,8

4,05

1,41

26 To have considerable freedom to adapt my own approach to my work

7,3

4,9

17,1

26,8

43,9

3,95

1,46

27 To control my own time

8,9

5,7

18,7

26,9

39,8

3,83

1,59

35 To achieve something and get recognition for it

17,9

13,0

12,2

24,4

32,5

3,41

2,23

34 To have greater flexibility for my personal and family life

16,3

10,6

26,8

18,7

27,6

3,31

1,95

31 Desire to have high earnings

16,3

22,7

26,8

16,3

17,9

2,97

1,76

30 To give myself, my spouse and children security

26,8

13,8

21,1

13,8

24,4

2,95

2,32

21 To be challenged by the problems and opportunities of

28,5

8,9

28,5

10,5

23,6

2,92

2,27

starting and growing a new business 42 To contribute to the welfare of the community that I live in

41,5

13,8

18,7

13,0

13,0

2,42

2,11

41 To contribute to the welfare of my relatives

52,8

9,0

21,1

7,3

9,8

2,12

1,9

23 To be innovative and be in the forefront of tourism development

38,2

8,1

15,5

14,6

23,6

2,77

2,65

36 To achieve a higher position for myself in society

53,7

13,0

14,6

13,0

5,7

2,04

1,71

32 To have access to indirect benefits such as tax exemptions

48,0

14,6

24,4

7,3

5,7

2,08

1,52

39 To have more influence in my community

55,3

17,1

13,0

10,6

4,1

1,91

1,46

33 As a vehicle to reduce the burden of taxes I face

54,5

20,3

15,4

4,1

5,7

1,86

1,36

37 To increase the status and prestige of my family

62,6

16,3

8,9

6,5

5,7

1,76

1,43

24 Was unemployed

74,8

5,7

4,9

3,2

11,4

1,71

1,87

38 To be respected by friends

62,6

19,5

9,0

8,1

0,8

1,65

0,99

22 Due to being made redundant

78,0

8,2

4,1

2,4

7,3

1,53

1,36

25 To follow the example of the person that I admire

74,0

13,8

8,9

1,7

1,6

1,43

0,72

40 To continue a family tradition

82,1

11,4

1,6

1,6

3,3

1,33

0,74

Using this method of ranking the reasons for starting the current business can be ranked as follows: • • • • • •

To take advantage of an opportunity that appeared. It made sense at that time of my life. To have considerable freedom to adopt my own approach to my work. To control my own time. To achieve something and get recognition for it. To have greater flexibility in my personal and family life.

The remaining 16 statements have a mean score that is lower than 3 and reflect reasons for start-up drawn from the literature but to which these owners do not appear to subscribe strongly.

This preliminary analysis would appear to support the results found in the studies of Birley and Westhead (1994, p14) and that of Dubini (1989, p15) that the drive to be independent was the dominant reason leading to new venture creation. However, the starting of a business is a complex process which involves a variety of motivations and stimuli. Therefore, the second part of the analysis is concerned in identifying the underlying patterns in the responses. 4.5 Factor analysis of motivation items Factor analysis was conducted on the motivational variables (statements in Table 3) in order to gather in different groups, those variables that were highly correlated. In order to explore dependencies and/or structure in what was indicated to be the reasons for starting the business, an exploratory factor analysis was performed on the 22 questions regarding that. The five-point semantic scale was assumed to be a quantitative measure of the respondents' feeling on the items. Since this study was also intended to be a comparative one (at a later stage), it was decided to do a factor analysis. Firstly, an item analysis was performed on the 22 items in order to verify the reliability of each item. Four items had item-scale correlation's less than 0.3. A value of 0,786 was obtained for Cronbach's alpha coefficient (Kerlinger, 1986:p429). Some of the statements, however, had successfully been used by Birley and Westhead (1994) in their study and it was decided to retain them. Two of these five statements were those relating to unemployment (V22) and redundancy (V24) and were taken out. They were included in the questionnaire as we originally believed them to be applicable to the South African situation. A principal factor analysis was performed on the remaining 20 items. The number of eigenvalues greater than 1 is often used as a criterion to determine the number of factors to extract, however, with this analysis, the researchers wanted to establish a factor structure which had a sufficient number of variables in each factor and give factors which were usable and definable. This resulted in four clear, definable factors. Due to the limitations in the length of the paper the various eigenvalues and scree groups are not presented as part of the paper. The BMPD programme using quartermin rotation was used for the analysis. After the initial factor analysis the following six variables were eliminated due to the fact that they loaded less than 0,3 and that they loaded on more than one factor (Table 4). Table 4 -- Variables eliminated from final factor analysis Variable Description 25

To follow the example of the person that I admire.

28

It made sense at that time in my life.

29

To take advantage of an opportunity that appeared.

31

Desire to have high earnings.

34

To have greater flexibility for my personal and family life.

V42

To contribute to welfare of community.

Factor analysis requires some judgement on the part of the researcher as to the labeling of the individual factors. Obviously this introduces a measure of subjectivity to any interpretation of a factor analysis which is by nature a difficult task to undertake. Interpretation of factors calls for a decision regarding which factor loadings are to be considered and which not. A factor loading of 0,30 is considered fair. (Kerlinger, 1986, p.572), while loadings of 0,40 are considered important and loadings of 0,50 and higher are generally regarded as very significant for interpretation. Therefore in Table 5 we have only presented factor loadings of 0,30 and higher and eliminated other loadings to make it more readable. The four factors formed by the preceding analysis have been interpreted and labelled appropriately and are discussed. Table 5 -- Factor analysis of motivations for start-up Variable/Reason

Factor 1 Factor 2 Factor 3 Factor 4

V21 To be challenged by problems and opportunities of starting busniess V23 To be innovative and at forefront of tourism development

0,294 0,241

V26 To have considerable freedom

0,860

V27 To control my own time

0,783

V30 To give myself, my spouse and children security

0,606

V31 Desire to have high earnings

0,676

V32 To have access to tax exemptions

1,007

V33 As a vehicle to reduce burden of taxes

0,656

V35 To achieve something and get recognition

0,610

V36 To achieve higher position in society

0,732

V37 To increase status and prestige of family

0,787

V38 To be repected by friends

0,536

V39 To have more influence in community

0,817

V40 To continue a family tradition

0,452

V41 To contribute to welfare and relatives

0,418

Eigenvalue

4,201

2,164

1,503

1,384

% Variance accounted for

12,57

21,76

10,42

6,10

Cummulative variance

12,57

34,33

44,75

50,85

Cronbach's Alpha

0,707

0,604

0,822

0,626

Factor 1: Need for recognition and achievement Five of the variables (motivations) had high loadings on the first factor. Another motivation "To be innovative and at the forefront of tourism development" loaded less than 0,3 but was retained as this also fits with this label. Factor 1 represents 12,57% of total variance and depicts motivations related to a strong need for recognition and achievement. The entrepreneurial need for achievement was first identified by McClelland in his work on economic development (Dollinger, 1995, p48). This factor also corresponds to the results of the studies of Dubini (1989, p15), Birley and Westhead (1994, p 15) and Shane, et al (1991, p435). Factor 2: Need for independance Two variables loaded high on the second factors, both referring to the females' entrepreneur's desire for flexibility in structuring her own work and controlling her own time. This desire for autonomy, personal control and freedom of choice are quite often paramount to the new business founder (Birley and Westhead, 1994, p15). This seems to be an universal need as an earlier comparative study in Italy, South Africa and Taiwan found that the desire of having one's own activity was the most important factor in Italy and Taiwan and it came second in South Africa (Trevisan, et al; 1993, p419). A third motivation which loaded slightly less than 0,3 on this factor, namely "To be challenged by problems and opportunities of starting a business" does fit in that it represents a "pull" factor (Dollinger, 1995, p52) to seek the opportunity for independance. Factor 3: Tax Reduction Both the items under this factor loaded high and refers to tax reduction motivations. The age of the female entrepreneurs and the fact that most are married and utilising an existing dwelling for the business does make this more understandable. Interest on mortgage loans and residential houses are not tax deductible in South Africa unless the properties are used for commercial purposes or rented out. By converting a residential property into a quest house the owners can deduct the interest from income derived. One can also consider this factor as very closely related to the next factor. Factor 4: Financial security Items in Factor 4 are related to money or material incentives and includes motivations such as "Desire to have high earnings" and "To give myself, my spouse and children security". This corresponds to the findings of Dubini (1991). Dubini (1991, p16) makes the point that although starting a business may be risky, if an entrepreneur succeeds, she is likely to make more money in a shorter time than if working for an employer. Money is also viewed as a means of allowing for independence and freedom. The other high loading under this item namely "To achieve something and get recognition" fits more under Factor 1 but then one must consider the fact that financial success may also lead to achievement and recognition.

5. Discussion From this study a picture or case study of female entrepreneurs in a sub-sector of the hospitality trade in South Africa entrepreneurs emerges. The general lack of other research on female entrepreneurs outside the informal or survivalist sector of the South African economy means that there is no significant research in South Africa to compare it with. One can however see a picture of a women in her forties, married and having an existing dwelling seeing an opportunity in the service sector. Their age would indicate that their husband's are also in the same age group meaning that they are probably well established in their own careers or business. The homogeneous characteristics of the respondents (female and older than 40 years of age) resulted in a further study of the literature. Environmental factors that encourage or "push" people to start new ventures, label such entrepreneurs. Longenecker, Moore and Petty (1994, p 15) refer to housewife refugees who start their own businesses after their families are grown or at some point when they can free themselves from household responsibilities. Other authors have referred to this as the "empty house syndrome". This fits to a great extent the demographic profile of this particular group of entrepreneurs. A large percentage (67,5%) has a post school qualification and substantial prior working experience (61,8% had ten or more years experience). This could indicate a further "push" factor and the need of achievement which was never realised in the effort to keep a balance between family and work. The sample does suggest that this particular sub-sector created a window of opportunity for female entrepreneurs in South Africa in the nineties. This sector tends to be slower growth, labour intensive business from the home which also helps to maintain the balance between family and work which has always been a major conflict area for female entrepreneurs. 6. Summary and conclusion The aim of this study was to expand on the exploratory study and obtain more data in respect of the female entrepreneurs in the hospitality trade in South Africa. Findings support to a great extent the findings of other studies in the USA and Europe in that they have: • • •

enter business at a late age (40 plus years of age due to the work/home conflict) prefer the service industry and are motivated mostly by a need for recognition and achievement.

The exploration into the reasons why the owner/founders of guest houses in South Africa started their own ventures are: • • • •

The need for recognition/achievement. Need for independence. Tax reduction. Financial security.

Most of these factors correspond with those found in other studies such as Dubini (1989) and Birley and Westhead (1994). Lafuente and Salas (1989, p18) believe that personal characteristics of entrepreneurs, and especially their motivations and work experiences, are relevant factors in the study of entrepreneurship, since they will lie behind the supply side of entrepreneurial activities and will have to be identified in any public policies orientated to promote such policies. The promotion of the tourism industry in South Africa has become an important economic consideration since 1994. We believe the demographic profile and business characteristics presented in this paper might be of some help to policy makers directing their promotion and other strategies at the appropriate audience. Notes and Acknowlegments The authors wish to thank Ms Rina Owen of the Department of Information Technology and Mr Solly Millard of the Department of Statistics for their assistance with the statistical analysis and interpretation. References Beeld, (1996), Groei in die gastehuisbedryf gaan nog lank voortduur. Sake-Beeld. 15 Julie 1996: S10. Birley, S and Westhead, P., (1994), A taxonomy of business start-up reasons and their impact on firm growth and size. Journal of Business Venturing. January 1994. 9: 1: 7-31. Bovill, T.S., (1998), Guest house Management in South Africa with Specific reference to the Promotion element of the Marketing Mix. Unpublished MBA dissertation. University of Pretoria. South Africa. Buttner, F.H. & Moore, D. P., (1997), Women's organizational exodus to entrepreneurship: Self reported motivations and correlations with success. Journal of Small Business Management. 35 (1), 34-46. Dollinger, M.J., (1995), Entrepreneurship: Strategies and Resources. Burr Ridge: Irwin. Dubini, P., (1989), The influences of motivations and environment on business start-ups: Some hints and policies. Journal of Business Venturing. 4:1 1-26. Gartner, W.B., Mitchell, T.R. and Vesper, K.H., (1989), A taxonomy of new business ventures. Journal of Business Venturing. 4: 169-186. Hisrich, R.D. and Peters, M.D., (1995), Entrepreneurship: Starting, Developing, and Managing a New Enterprise. 3rd ed. Chicargo; Irwin. Kerlinger, F.N., (1986), Foundations of Behavioral Research. 3rd ed. New York: CBS Publishing. Longnecker, J.G., Moore, C.W. and Petty, J.W., (1994), Small Business Management: An Entrepreneurial Emphasis. Cincinatti: South Western publishing. Nieman, G. and Strydom, H.F., (1997), A taxonomy of Business start-up reasons in the guesthouse industry. In: (Anwireng-Obeng F. et al ed's) Proceedings of the 10th Annual SAESBA Conference. Victoria Falls, Zimbabwe. 2729 April 1997.

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