TOP INTERVIEWS Interview with MR. BALFOUR UTC Could you give us a brief history of your company? UTC has quite a long history starting back in the nineteen-twenties. Its more current history goes back about 54 years ago when it was essentially a taxi company - one of the first taxi companies in Nairobi area. Because of its work as a taxi company people that were visiting would ask if they would take trips to places outside of the city. This eventually led to expanding the company's role more to tourism and just continued to expand over the last 54 years to become one of the biggest, most popular tour companies in Africa. Which have been the most eminent problems Kenyan tourism has had to deal with from 1997 onwards? It is hard to separate any one problem from the overall picture really. Obviously, the Embassy bombings were one of the major factors that created concerns about tourism in Africa, and our business is becoming heavily dependent on the American market. At the time of those bombings, the industry was just recovering from the riots in Mombasa. I myself had just travelled to the US to launch a new campaign that the "time has never been better to travel to East Africa." And there was also the El Nino effect, which caused heavy rainy conditions and many travellers were getting stuck. The impression of Kenya and East Africa in total was, "Go on safari and get stuck in mud." The country also had difficulties with perceptions of high risk of crime. The government and industry investors worked very well in reducing the true risk as well as the perception. Now, of course, the events in the United States on 11th September have had a devastating impact on tourism across the globe. Kenya has certainly been hit as well. How has this situation improved over the last two years? Fortunately, lots of people, I would say, seem to have a short memory and a forgiving memory. I think that many people were able to divorce the Embassy bombings from anything to do with tourism products. The country has shown stability in government and increased care for the security of international visitors. At UTc, we are constantly trying to expand our market coverage to other geographical areas such as Austral-Asia, Russia, and grow our business in Southeast Asia. We currently have a dedicated staff of Japanese speaking Tour Officers just to handle the large volume of business we receive from Japan. How did this affect your business? Business has been a bit of a roller-coaster ride for us over the past few years. We are constantly looking at ways to fill gaps left in one source market with clients from another. We also have been working to expand our product to increase repeat trade. UTc is a Pan-African company with offices and affiliates in a number of countries. We recently made a decision to relocate the corporate headquarters from London to Nairobi because we here on the ground are more in touch with the products available to our clients. Could you tell us whether there was growth in profit? There was certainly a growth in revenue. Our fiscal year ends in March, and the year ending March 2000 was a terrible year and that was because of the millennium. Overpricing by suppliers and a fear of travelling over that period destroyed what is usually our busiest season. Last year (ending March 2001), our growth was very strong, and I would say the company saw a revenue growth of 30%. How do you expect to maintain that growth over the next 5 to 10 years? I do not think we will be able to maintain a growth of that rate. That was a bounce after what was such a poor year. We are seeing still a growth in revenue this year in some of our businesses. South Africa business is looking very strong because it is still an emerging market for tourism. The incentive market, which is one of the components of UTC in which we have quite some business, should also see growth in the long term. The incentive market is one in which we have made a lot of investments. At the moment, Kenya in the incentive sector is a sort of a 'been there, done that'. It is a cycle, and right now the flavour of the month for incentives in terms of large groups is to go to South Africa. For smaller groups, we are doing very well in Tanzania, where travel is still considered extraordinary. Zanzibar still has an exotic thrill to it. To many travellers, Zanzibar is this mystical magical place. We still do have incentives here in Kenya. We had an incentive here with 1400 people back in March of a French company. It was one of the bigger incentives going through Kenya. Which is UTc's special style, which gives you a competitive edge over your competitors? First would have to be our diversity. We have a broad range of products and the resources to deliver them to a variety of markets. Safari Trails, our scheduled departure section, offers dozens of guaranteed trips each week. This means that we take the risk on the vehicle filling and thousands of agents across the world can sell these trips to couples or single travellers at an affordable price. Safari Trails has been highly successful and for dozens of years has been the pillar of the company. We also have the experience and resources to handle large groups such as incentives and cruise ships. There is also the synergy of our many affiliates and offices in other popular African countries to be able to create multiple country itineraries. And finally, we have the product knowledge to be able to assemble an itinerary for the most demanding private client. How do you market yourselves as a group? We have sales offices in the U.S. that differs a bit different from our offices in the rest of the world because they sell retail products mostly through retail travel agents direct to the customers. On the other hand, our office in London is more directed to dealing with agencies and other wholesalers. And there are agencies that deal directly with us. We have a branch-office in France, which works more on the incentive business, because that country has a very high volume of incentive travel and up-market groups. We have representation in Germany, which looks after Austria, Germany and Switzerland working closely with retail sales organizations. She has been very effective, especially in Tanzania, because the Germans have a greater interest in Tanzania. We also have franchised sales offices in Japan, Korea and the Middle East. Does it also mean that you've got regional package as well? We do quite a lot of regional packages. One of our strengths is that you travel with UTc from the moment you arrive to the moment you leave. We have a full-time employee at the Namanga road-border between Kenya and Tanzania, whose job it is just to assist UTc clients. An added value is to make sure that clients have no problem crossing the border. They have to be taken care of the moment they are entering any part of East Africa till the moment they leave. You said earlier that in Kenya your competitors undercut your strategy and came into the market, and that you may have been a bit sleeping. How do you make sure you are not sleeping on the regional basis? We now have a fairly new management team, and I have been in the Tanzania office for some time, but I moved here to take charge of the regional operations, and we have a new management in Tanzania. We are restructuring the company both to try to be more proactive in our sales and information area, and also to be a leaner company in terms of our overheads, so that we can remain competitive. How is your cooperation with the airlines? Would you describe that cooperation is coming smoothly? We consider the airlines serving East Africa as a strong ally in our success. Though, from their sales point of view, the importance is the relationship with our international sales offices were the travel begins, he were work as partners to ensure the clients receive outstanding service from the commencement of their travel until they return home. With the economic problems many airlines are dealing with, we remain concerned that the number of flights to Nairobi might reduce. Already, we have seen Lufthansa and Air France discontinue flights to Nairobi in the last few years. Sabena and Swiss Air are now questions marks. Which do you consider to be the major challenges for UTC in the future? I think our major challenge is to remain competitive, and look at ways to offer new products in the face of increasing competition throughout the world. We have areas that are opening out to travel tourisms such as China. Also, tourism goes into cycles that people who have been to Africa and made their first safari in Kenya so now they want something other than Kenya, something that is different. What we need to do is to create the base for reaching the next generation of travellers, who may not have any African experience and hopefully bring them into Kenya to start their experience, and begin the cycle again. Where would you direct Forbes Global readers and first time travellers to in Kenya? Which are your most favourite places in Kenya that you consider to be very special to go to? It depends on what their interests are. Obviously, the Masai Mara remains one of the focal points for tourism if you are looking for immigration for large numbers of animal and still want to have the ability to stay in a comfortable hotel in a relaxed environment. For somebody who is interested in something that is more unique, the western regions of Kenya, which are much drier arid areas, offers many perspectives and experience that is not as touristy and not as crowded. The Coast is still a very popular destination with Europeans who love. We have spectacular beaches with staff that are well-trained in handling a beach holiday and provide the range of extra activities that people enjoy when they are at the beach, such as snorkelling, a dhow cruise, wind-surfing and scuba-diving. I think that it is important that we continue to package our trips with Tanzania and Zanzibar, because that allows people to have a variety of experiences in their holiday. As you know Forbes Global magazine is published for the business community. With that in mind, could you inform us about your previous professional experiences before you came to this job? I was working in US as a hotel manager in a company that managed franchise hotels, and I was part of their team that went when they took over a franchise or management contract. I went in and helped change the systems. At the time, I was really focused on staff training and evaluating the management skills from the people in place. My bachelor degree is in elementary education. It may sound like an odd combination for becoming Managing Director of a global tourism company. But when you think about it, my job here is not so much making day-to-day management decisions as it is training the managers to make decisions for themselves. Currently, UTC prides itself in is that we have only Kenyans working for us with the exception of our two Japanese Tour Executives. The remaining 300 employees of our company are Kenyans. I am the only non-Kenyan executive in the company. My goal is some day that a Kenyan sits in this chair. Are you confident that will happen? Yes. Absolutely, because we have some great people that have been with us for a long time. Do you have a final message for the readers of our magazine? Come to Kenya! Somebody asked me if I had the money, would I invest in Kenya. At the time we were talking about the elections coming up by the end of next year and the concerns of what the results will be. My answer is that now would be the time. If you have money to invest in Kenya and put in two or three years without expecting huge returns, you should be well positioned to start making a solid return. Once we get past that the election next year and the country enters a new year, then I think the growth potential in Kenya is going to be enormous. Right now it is time to start investing and take advantage of that potential. 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