Tourism-related business failures: the case of The Spice Islands Restaurant

Abstract

The Spice Islands Restaurant’s strategy targeted tourists. The strategy failed and the business failed. The proprietors made mistakes in strategy and in operations, and the case can serve to illustrate many things that restaurant proprietors should avoid if their businesses are to survive and possibly flourish. A seminal mistake in this case was not distinguishing flows of tourists and stocks of tourists in a market appraisal for the feasibility study and business plan: this mistake seriously distorted those instruments. The same mistake can confuse other proprietors in certain types of tourist-related businesses, such as hotels, where stocks are more relevant than flows. Knowledge about the causes of business failure, gained from case histories, can help proprietors avoid mistakes and thus the incidence of failure can be reduced. Educational courses on tourism should include topics on business failures. To date this seems relatively rare.