Tourism supply issues

1
Tourism supply issues

• Chapters 5 to 9

2
Objectives

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

3
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, 199758

4
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 hospitality
• Inskeep, 1994

5
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
• Swarbrookes typology of tourist attractions
• See pages 76-78

6
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?

7
Characterized by

• Scope
• Ownership
• Permanency
• Drawing power

8
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.

9
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 attractions
• Examples include festivals and events, tours

10
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?

11
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

12
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

13
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

14
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?

15
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.

16
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

17
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?)

18
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

19
Transportation issues facing policy makers

• Congestion
• Safety and security
• Environment
• Seasonality
• Ritchie and Goeldner, 2002

20
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!

21
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?

22
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.

23
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.

24
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

25
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
  GR).
• Regimentation, inflexibility, and passivity of
  tours
• Having to be part of a group
• Infirm, older, and inexperienced travelers

26
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

27
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)

28
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

29
Negative Perceptions of Rail Travel

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

30
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 Express
• The Ghan, Australia
• Algoma Central Railway, Canada
• Strasburg Railroad, Pennsylvania, U.S.

31
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

32
Cruise Ship Travel

• Two-thirds of worlds 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.

33
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.

34
Organization of Tourism
35
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.

36
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)

37
International Organizations

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

38
Regional International Organizations

• Organization for Economic Cooperation and
  Development
• Pacific Asia Travel Association
• European Travel Commission

39
National Organizations

• Office of Travel and Tourism Industries (OTTI)
• Canadian Tourism Commission
• Travel Industry Association of America
• China Tourism
• Tourism Malaysia
• And many others

40
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

41
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

42
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

43
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?

44
WTTC Blueprint for Tourism

• In order to meet the challenges ahead and achieve
  the vision, the Blueprint establishes three
  fundamental conditions1. 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

45
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

46
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

47
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