Tourism supply issues

Chapters 5 to 9

Objectives

• To understand the types of tourism suppliers involved producing the tourism experience

Determinants of supply

“Tourism supply is a complex phenomenon because both the nature of the product and the process of delivery. It cannot be stored, cannot be examined prior to purchase, it is necessary to travel to consume it, heavy reliance is placed on both natural and human-made resources and a number of components are required, which may be seperately or jointly purchased and which are consumed in sequence”

Sinclair and Stabler, 1997:58

Main aspects of tourism supply

Destination areas are comprised of:• Attractions and activities• Accommodation• Transportation• Institutional elements• Other tourist facilities and services

• And I would add hospitalityInskeep, 1994

Attractions

• A vital part of the tourism industry as they are the focal point of leisure travel

• Include – Natural resources– Man-made resources– Activities such as special events and festivals

Swarbrooke’s typology of tourist attractions

• See pages 76-78

Types of attractions

• Museums and galleries• Cathedrals and churches• Leisure parks and piers• Wildlife attractions• Gardens• Farms• Country parks• Visitor centres• Workplaces• Steam railways• Special events• Others?

Characterized by

• Scope

• Ownership

• Permanency

• Drawing power

Ownership

• Public– Tourism is not the primary use of the land, balanced

with other agendas – example – National parks, historic sites

• Not for profit– Primary use is for a social good, tourism is balanced

with other causes – examples, festivals, museums

• Private– Primary motive is for profit, tourism is usually a means

to this end – examples – theme parks, outdoor adventures etc.

Permanency

Site attractions• Are physical in nature• Natural or mand made• Permanent or semi

permanent• Expensive to develop

(require capital)Examples?• Theme parks, convention

facilities, museums, galleries

Event attractions• Are often intangible• Location can be changed• Not permanent• Inexpensive to develop• Can be used to help attract

visitors (raise awareness)• Used to finance site attractionsExamples include festivals and

events, tours

Drawing power

• Refers to how much an attraction can draw people over the friction of distance and price

• Local• Regional• Provincial• National• International significance• Examples?

Travel and tourism intermediaries

• Tourism comprises thousands of products and a complex delivery system

• Enhanced through improved distribution by travel intermediaries who package several different components (accommodation, transport, services).

• Enhances access for consumers while increasing revenue for those in supply

Some benefits

Financial economies of scale

• Bulk purchase of seats and rooms means customers benefit in two ways:– Cost of package holidays are cheaper– Purchases can be made conveniently

Strategies used by intermediaries

• Vertical integration– Companies purchasing or operating companies at different levels of

the supply chain (hotel, car rental company, tour operator)• Horizontal integration

– Companies purchasing other companies at the same level of the supply chain to maximize market share (hotels buying other hotels)

• Diagonal integration – Companies use market to sell unrelated products to same customer

base which provides more economy of scope

See p 86-88 for examples

Trend in intermediaries

• Disintermediation• Elimination of the need for intermediaries through

the advent of the WWW• People can now access and plan their own travel

through the WWW taking away the need for the same range of intermediaries.

• Sheer scale has increased dramatically and has changed the supply of tourism products

• Examples?

Transportation

• “is acknowledged as one of the most significant factors to have contributed to the international development of tourism (Page, 1991,1)

• Provides the essential link between the tourism origin and the destination areas and facilitates the movement of holiday makers, business travellers, people visiting friends and relatives.

Types of transport

Land based transport

• Cars, coaches, rail, cycles, and other modes

Water based transport

• Cruise ships, personal transport

Air travel

• International, domestic carriers

Transportation Selection Model (Sheth)

Travelers choose modes on five performance dimensions Functional utility

(how well does it perform? Is it efficient? Effective?) Aesthetic or emotional utility

(how do I like it?) Social or organizational utility

(how well is arranged?) Situational utility

(where is it located?) Curiosity utility

(what is it like?)

Factors influencing the choice of travel mode (Morrison)

The availability of the mode The mode design The way the mode is operated Personal demographics and lifestyles Familiarity and satisfaction with the mode Trip purpose Impact of unexpected events

Transportation issues facing policy makers

• Congestion

• Safety and security

• Environment

• Seasonality

Ritchie and Goeldner, 2002

Evolution of air travel

1918: first scheduled air service in U.S. 1939: first transatlantic passenger flight. 1960s: number of inter-city air passengers greater than for trains. 1970: first jumbo jet (Boeing 747). 1978: airline deregulation in U.S. Approximately 14,000 airports, employing more than 3 million

people US (2000) launched 24,600 flights per day and carried 1.6 million

people each day earning $129.5 billion in revenue Incredible safety record – the safest place to be!

Trends and issues

• Deregulation and alliances

• A high level of concentration exists to the extent that a wave of alliances have formed

• US and EU are investigating how to deal with alliances

• Will they continue? Will they benefit the customer? Will they create oligopoly?

Travel by Automobile

The growth of automobile travel:

Led to the demise of rail travel. Spread the benefits of tourism more widely. Encouraged development of resorts. Caused a more random pattern of travel

movements. North American travelers use automobiles for the

majority of visits.

Attractive Attributes of Automobile Travel

Control over route and stops en route. Control of departure time. Ability to carry baggage and equipment easily. Low out-of-pocket expenses of traveling with

three or more persons. Freedom to use automobile at the destination. Safe mode of transportation. Like of driving as a recreational experience.

Travel by Bus and Motor Coach

Benefits of traveling by motor coach:

Companionship/making friends Convenience Expertise of tour company Safety Price Most energy efficient mode of transport High economic impact ($192 per passenger, per day or

$7,680 per day with 40 passengers) Hub and spoke concept

Travel by Bus and Motor Coach

Negatives images of motor coach tours:

Negative perceptions of the bus/coach (although studies are finding riders to be younger, better educated and more affluent than thought p.134 G&R).

Regimentation, inflexibility, and passivity of tours Having to be part of a group Infirm, older, and inexperienced travelers

Trends in motor coach travel

• In competition with rail travel in Europe for youth travellers

• Hub terminals are now changing, mirroring airline terminal concept to obtain more revenue from waiting passengers and to link to more travel products

Travel by Train

1841: First tour by train (Thomas Cook). 1869: First transcontinental route completed in the U.S. 1830-1930: Height of train travel. 1920s: Influence of automobile starting. 1970: Rail Passenger Service Act (U.S.) 1971: Amtrak created. 1977: Via Rail Canada created. Outside of North America, rail travel takes on greater

importance (Europe, India, China, Russia)

Reasons for Favoring Rail Travel

Safety Ability to look out of trains and see interesting

things en route. Ability to get up and walk around. Arriving at the destination rested and relaxed. Personal comforts.

Source: Amtrak

Negative Perceptions of Rail Travel

Slowness in reaching the destination. Relatively inflexible departure times. Lack of quality in food service.

Contemporary Trends in Rail Travel

The advent of high-speed trains (e.g., TGV in France, Bullet train in Japan).

Trains are increasingly being used as tourism attractions:The Orient ExpressThe Ghan, AustraliaAlgoma Central Railway, CanadaStrasburg Railroad, Pennsylvania, U.S.

Travel by Ship

1840s: beginning of steamship era. 1957: peak of transatlantic ship travel. 1958: more passengers crossing Atlantic by air than

by ship. 1960-75: declining volumes of scheduled liner

passengers. 1970-2000: growth in volumes of cruise ship

passengers. Since 1980 – average annual growth rate of 8.4% 6.88 million passengers in 2000 Average length of cruise 6.5 days

Cruise Ship Travel

Two-thirds of world’s passengers are from U.S. High repeat business Expanding into new markets in Europe Trying to expand into younger segments

Negative perceptions of cruises:Isolation, storms, seasickness.Ships are slow, cramped and boring, with regimented

activities.

Most Popular Cruising Areas

Caribbean Alaska (adding in the Canadian west coast) Mexican Riviera Mediterranean Strong growth expected in cruising in the Asia-

Pacific region Cruise lines international association is the

marketing, promotional trade organization comprised of 23 major cruise lines.

Organization of Tourism

Objectives

1. Understand the magnitude of world tourism in terms of the number of organizations that serve the needs of their diverse memberships.

2. Recognize the variety of types and functions of tourism organizations.

3. Know why government is often involved in tourism promotion and development.

4. Learn how national, regional and trade organizations are structured and operated.

Organizing the tourism system

• The tourism system is complex and requires numerous organizations at multiple levels to deliver tourism experiences to visitors.

• Levels include: International, national, state or provincial and local or regional.

• Organizations provide:– Policy and planning (to guide development of the industry)– Regulation (to control negative impacts and ensure safety)– Marketing (to promote travel and destination development)– Delivery (to connect visitors to tourism experiences)

International Organizations

• World Tourism Organization• World Travel and Tourism Council• International Air Transport Association• International Civil Aviation Organization

Regional International Organizations

• Organization for Economic Cooperation and Development

• Pacific Asia Travel Association

• European Travel Commission

National Organizations

• Office of Travel and Tourism Industries (OTTI)

• Canadian Tourism Commission

• Travel Industry Association of America

• China Tourism

• Tourism Malaysia

• And many others…

Provincial or State Tourism Organizations

• In Canada, provinces and territories coordinate with CTC• Example

– Tourism BC

• In the United States, there is no CTC equivalent so States market themselves

• Example– Travel Michigan

Regional organizations

• As there is still diversity in tourism destination areas at the provincial/state level, regional organizations are involved in promotions and product development

• Example:– Tourism BC Regions

– Tourism Vancouver Island

Coordinating tourism development and promotion

Strengths• Tourism bodies represent

industry and destinations• Areas of specialization

have developed (policy, measurement, promotion)

• Progressive, action oriented organization of the industry

Weaknesses• Rapid growth leads to

overlap of work• Bodies do not represent

environment or communities

• Difficult to integrate activity from international to regional level

• Definitions and methods differ

Discussion questions

• What components of tourism development are the organizations concentrating on?

• What components seem to be receiving less consideration?

• Can you foresee any problems with this distribution of emphasis?

• Is there a need for industry and government bodies or are there other models?

WTTC Blueprint for Tourism

• In order to meet the challenges ahead and achieve the vision, the Blueprint establishes three fundamental conditions:1. Governments must recognize Travel & Tourism as a top priority2. Business must balance economics with people, culture and environment 3. All parties must share the pursuit of long-term growth and prosperity

Governments must recognize Travel & Tourism as a top priority

• To meet the first condition, governments must:• Elevate Travel & Tourism as an issue to the top level of policy making • Create a competitive business environment• Ensure that quality statistics and data feed into policy and decision-making• Invest in developing the appropriate human capital• Liberalise trade, transport, communications and investment• Build confidence in safety and security• Promote product diversification that spreads demand• Plan for sustainable tourism growth, in keeping with cultures and character• Invest in new technology, such as satellite navigation systems

Business must balance economics with people, culture and environment

• To meet the second condition, the industry must:• Expand markets while protecting natural resources, local heritage and lifestyles• Develop people to narrow the gap between the ‘haves’ and ‘have-nots’• Provide traditional tourism products sensitively• Reduce seasonality and increase yields with imaginative new products • Improve quality, value and choice• Agree and implement quality standards at all levels• Transfer skills and best practice throughout the industry• Increase the sophistication of information, to make better business decisions• Communicate more broadly and more effectively

All parties must share the pursuit of long-term growth and prosperity

• To meet the third condition, all the main stakeholders must:• Ally best practice in tourism with government policy• Prepare sustainable master plans for entire destinations• Create locally driven processes for continuous stakeholder consultation• Restructure national tourism boards • Set environmental policy goals that can be met• Develop and deploy skills effectively• Collaborate on information requirements• Collaborate on security• Develop confidence on all sides