soy00411

Tourism Theories and Practices

Study Guide

Topic Gateway7 Tourism industries & organisations

In this topic we will continue our exploration of the remaining aspects of tourism supply: accommodation, transport, travel agencies and tour operators, and merchandise. Consequently we begin to focus more on the tourism industry which is the fifth element of the whole tourism system. We will also explore the involvement of other stakeholders in tourism including government and industry bodies and organisations.

Definition of tourism industry

The tourism industry (or tourism industries) may be defined as the sum of the industrial and commercial activities that produce goods and services wholly or mainly for tourist consumption. Broad categories commonly associated with the tourism industry include accommodation, transportation, food and beverage, tour operations, commercial attractions and merchandising of souvenirs … and other goods purchased mainly by tourists.

(Weaver and Lawton, 2014, p. 40)

The table on page 40 of the textbook shows the distribution of the tourism industry across the three regions of the whole tourism system: origin or Tourist Generating Region, Transit Region and Destination Region. As you would expect, most tourism industry activity is situated in the Tourism Destination Region as this is where tourist attractions, accommodation, and other tourist related services are located.

Now, you may have noticed that the topic is called ‘Tourism industries’ and Weaver and Lawton’s definition also refers to tourism industries. The reason for this is that although there is a recognisable tourism industry we must also recognise that the tourism industry overlaps with other industries such as the transportation industry, the accommodation industry, the food and beverage industry. Each of these industries supplies goods and services to tourists, but they also supply goods and services to other consumers as well. In other words, the provision of goods and services to tourists is provided by a number of allied industries: the tourism industry itself serves tourists alone but other industries such as transport and retail serve other customers beyond tourists.

It is also important to understand that the Whole Tourism System is greater than what the tourism industry alone supplies. Tourism is characterised as being partially industrialised. It relies on a whole range of aspects that the tourism industry does not (or cannot) provide such as climate and weather, flora and fauna, landforms and landscapes, cultures, to name a few. And, when we look particularly at accommodation and transportation, we must recognise that while the tourism industry provides much but not all of the accommodation that tourists use (think about the rise of AirBnB and how private homes are becoming more common as a form of tourist accommodation) and transport (think about the importance of the private motor car as a form of transportation used by people to go on holidays) you will appreciate the partial industrialisation of tourism.

The tourism industry

Text reading

Go back to page 40 and 41 of your text, where the concept of a tourism industry was first introduced. This section of Chapter 2 introduces the major industry sectors and identifies where these industrial sectors are located within a whole tourism system.

From this reading, move on to Chapter 5 (pages 140 to 148) that describes the activities of the major tourism industrial sectors – travel agencies, transportation, accommodation, tour operators, and merchandise. Pages 146 to 148 explain concepts of horizontal and vertical integration and globalisation. Make sure you have an understanding of these concepts in relation to tourism.

Finally, look at pages 200 to 205 that briefly outline the role of destination tourism organisations.

Now let’s take a look at the component parts of the tourism industry that we haven’t yet examined.

Travel agencies

As we saw back in Gateway 1, travel agencies have been an important part of the tourism industry since Thomas Cook began to develop and sell his packaged up day trips which eventually grew into package tours.

Travel agencies occupy an intermediary position between the tourist and the tourism industry, assisting tourists in buying entire package holidays or components such as airfares, accommodation, etc. Prior to the advent of the Internet, tourists relied on travel agents to a significant extent. It was just not possible for an individual tourist to book their own airfares, for example.

But since the Internet, there has been considerable ‘dis-intermediation’ taking place – that is, the removal of intermediaries such as travel agents from what are called ‘distribution networks’. Distribution networks are the networks that connect tourists (customers) with suppliers of goods and services (such as accommodation and attractions).

The Internet now provides various platforms for people to book and pay for their own air, rail or coach fares; search for, book and pay for accommodation; as well as access to all kinds of information about destinations. These functions were once provided by travel agents.

What sort of future do you predict for travel agencies? If travel agencies are to survive, how might they need to change or adapt? On what basis do you make that prediction?

TripAdvisor LogoAnd tourists are no longer dependent on travel agents for advice on what hotels to stay in or what attractions to experience. Online platforms such as tripadvisor enable travellers and customers generally to rate all kinds of accommodation, attractions, cafés and restaurants among a whole range of services and to provide reviews.

These reviews and ratings can be powerful influences on tourist decision making. For instance, a group of tourists on a road trip approaching a town where they want to have lunch, can search tripadvisor for the Top 10 places to eat based on customer reviews and ratings. They will often then select the top rated restaurant to go to, meaning the others, which could have stood a chance of being selected had the tourists walked past and had a look at the menu and the ambiance of the restaurant, miss out. Tripadvisor ‘streams’ or drives tourists to the top rated venues.

Transportation

Movement of tourists from the Tourist Generating Region to one or more Tourist Destinations requires some form (or mode) of transportation along the Transit Route Region.

The most commonly used forms of transport for tourism are the private motor vehicle, and now that we are living in the age of low-cost carriers, air transportation. But there are other modes of course including rail, boats and ships, bicycle, motor bike, bus and coach, animal-based transportation such as horses, donkeys and llamas, and of course, your own legs.

Transportation has been significantly influenced by technological improvements which have increased speed (and thus decreased travel time), reduced cost, improved safety and enhanced comfort. Low cost air carriers now enable people who would never have been able to afford to travel, to travel long distances.

As I’ve already pointed out, however, not all the customers of the ‘transportation industry’ are tourism-related.

Air

Ensure that you understand the contemporary issues that the textbook discusses in relation to air travel, such as the formation of airline alliances; deregulation; privatisation and low-cost (or budget) carriers.

Road

Cars, motorbikes, bicycles, buses, coaches, motor homes.

Drive holidays (when tourists are driving their own or a hired vehicle) provide considerable freedom and enable people to set their own itineraries that other forms of transportation do not enable so easily. Motels were established along highways often on the outskirts of towns and cities to accommodate travellers driving their own vehicles. Think about the design of the conventional motel: a large central car park around which are the ‘arms’ of the motel, enabling people to park their cars directly in front of their room.

Motel 6

Grey Nomads, a term used to describe older adults travelling on extended road trips, are an increasingly significant market in Australia, Canada, the US and Europe.

Railway

Once a very important means of travel, rail lost popularity after the increased use of the private motor vehicle. But prior to the car becoming so ubiquitous, rail was the most common mode of travel to move people on holidays around a country such as Australia. Large hotels were established near to train stations so people wouldn’t have very far to walk with their luggage to their accommodation.

Station Hotel Lismore
The Station Hotel, Lismore. There would be many hotels in Australia named ‘Station’ and ‘Terminus’ that are located adjacent to, or opposite, a train station.

Rail travel is still very important as a mass tourism mode of travel in Europe and East Asia and tourists can buy various rail passes that provide discounted fares. It is likely that the popularity of rail travel will increase due to it being a more sustainable way of travelling with the production of lower greenhouse gases than aircraft.

There are also a number of luxury rail products. In Australia these include the Indian Pacific that travels across the country from east to west and back again, and the Ghan Rail which goes from Adelaide, through Alice Springs and up to Darwin.

Other very well known international brands include the Orient Express between London and Istanbul and the Eastern Orient Express between Singapore and Bangkok. These trains offer an experience that goes beyond simply transporting people from origin to destination: the rail travel is a high quality experience in itself. But it can be an expensive experience!

Luxury train dining car
The dining cabin in an Indian luxury train

Water

Cruising has become a very ‘on-trend’ thing to do and there has been a rapid increase in cruise tourism over the past decade or so. Historically, as your textbook says, cruises were once very much a ‘high-end’ kind of product (think of the Queen Mary or Queen Elizabeth II), but the cost of cruising has come down significantly, making cruise tourism an affordable option for many people. Like rail, the cruise is not just a form of transportation, but it is also the attraction and the experience. Modern cruise liners are extraordinary vessels, some of which can carry 5000 passengers together with an almost similar number of crew; multiple dining and entertainment options; pools, gyms, high-end retailers etc.

Cruise ship

The most significant issue affecting the transportation sector of the tourism industry relates to fuel: cost and sustainability. We now know that the amount of carbon emissions from air transportation and motor vehicles and cruise ships contributes significantly to global climate change. We will explore this issue in Topic Gateway 9.

Accommodation

A diversity of tourist accommodation is available, depending of course, on the destination. Each destination has its own ‘accommodation profile’ which is the mix of different types and standards of accommodation that a destination possesses. If you recall Butler’s Destination LifeCycle Model, you will recall that the diversity of accommodation types tends to increase over time as destinations respond to greater numbers of tourists and also greater diversity of tourist markets.

Forms of accommodation include:

Luxury accommodation

We will see in Topic Gateway 9, that one of the most significant shifts that has created some issues recently in the accommodation sector has been the rise of what are called ‘peer to peer’ online accommodation platforms, with Airbnb being the most well known.

Tour operators

Another intermediary business sector like travel agents. Tour Operators operate in the TGR, the TR and of course the TDR, depending on whether they are outbound tour operators or inbound tour operators.

An important point to note is ‘By the destinations and services that they choose to assemble [to create itineraries], both types of tour operators exercise an important influence over the development of tourism systems’ (Weaver and Lawton, 2014, p. 145). Give some thought to what the significance of this quote might be.

Some markets are particularly reliant on tour operators to design, organise and facilitate a tour suitable to that market. For example when Japanese tourism was becoming a significant market for Australia in the 1980s, the majority of Japanese tourists came as part of a tour organised by a tour operator. Things have changed somewhat now and more and more Japanese tourists are travelling in Australia as FITs: Free, Independent Travellers.

With the rapidly-growing Chinese market, tour operators are very important in designing and facilitating package tours to Australia. There can be some degree of vertical integration in the tour operator sector with some companies that own tour operation businesses also owning tour buses and retail outlets.

Tour operators also operate within niche markets where tourists may require specialised operators to design their tours, including specialised wildlife tourism, such as bird-watching tours; gay and lesbian tours; older adults; and women’s travel, for example.

Tour operators

Tourism merchandise

The goods that tourists buy can be divided into those that are purchased in the TGR prior to their travels, such as specialised equipment, luggage, travel guidebooks, and the goods that are purchased at the TDR, especially the souvenirs and other products that are bought for themselves or as gifts. And we know that a lot of tourist souvenirs can be kitsch and tacky and mass produced, with the profits often leaking back to the country in which they were made. For instance if you look at where many Australian souvenir t-shirts, ‘stuffed’ koalas and kangaroos and even boomerangs are made, you will find that they are often not made in Australia.

There has been considerable misuse of Indigenous artworks and designs by the souvenir industry with many Indigenous artists not properly recognised or remunerated – in other words, their designs have been used – for t-shirts, tea towels etc. – without their consent and without them receiving any royalties.

For some cultures, such as many Asian cultures, the act of gift giving is a social obligation and tourists are compelled to purchase gifts to take back to family and friends.

The category of tourist merchandise also includes postcards. Postcards were once a very important form of tourist marketing as the images on the front of the postcard depicted attributes of a destination that were used to promote it as a place for holidays. Prior to the Internet, postcards were the main way that tourists communicated with family and friends back home. In the age of Facebook, Twitter and Instagram, postcards could be seen to be a rather obsolete and old fashioned form of communication. Do you still post postcards when you travel?

Now that we have examined the components of the tourism industry, we need to understand the other stakeholders and allied organisations associated with tourism.

Stakeholders in tourism activity and development

Who or what are stakeholders?

Stakeholders can be individuals or organisations who have a direct or, in some cases, indirect, interest in, or concern for, a particular phenomenon, and, who are often impacted by that phenomenon. In other words, they have a ‘stake’ in that phenomenon, such as tourism. Some stakeholders own shares in a company and so clearly they have a very direct interest in the financial performance of that company. Another stakeholder group are the employees of a firm or business or the employees working in an entire industry. Other stakeholders include governments, tourists themselves, local communities and individual residents, and various industry bodies and organisations.

According to the United Nations World Tourism Organisation (UNWTO), the following are tourism stakeholders:

We will look at two categories in detail: Governments and Industry Organisations.

Government involvement in tourism

The role of government in the tourism system varies depending on the nature of the political system operating in any particular country. In a capitalist, democratic society such as Australia, tourism is largely a private enterprise-driven form of activity. However, governments in market economies still play a role in regulating and controlling the industry; planning; in marketing and promotion; and in revenue generation through the industry.

Have a look at this analysis (by a British tourism academic) of the Chinese Tourism Policy.

The role of governments in tourism in Australia focuses on:

Industry regulation and control

Each of the three tiers or levels of government in Australia (federal, state and local) plays a role in regulating and controlling the tourism industry. Legislation, that is the system of laws operating in a country, plays a major role in how businesses operate. Legislation, through various acts of parliament, controls and regulates such things as workplace behaviour and wages; taxation regimes; food and hygiene standards; liquor licencing; and workplace health and safety. Zoning regulations (usually operating at a local level) regulate where certain types of economic activity (such as tourist accommodation) can operate within a town or city. Environmental laws will control the kinds of activities that can take place within a national park or whether a parcel of coastal land can be utilised for a resort. Licences and permits to undertake certain activities (such as operating a tourist boat in the Great Barrier Reef Marine Park for example) are also controlled by governments.

One of the criticisms of Airbnb properties is that many operate outside government controls and regulations that tourism industry accommodation properties such as hotels and motels have to comply with (such as fire prevention and workplace health and safety). Each of these requirements adds a cost that the accommodation property has to pay, meaning that this cost is then passed on (usually) to guests, making the property more expensive than a similar quality Airbnb property. Some local governments are now requiring Airbnb properties to comply with these regulations and controls.

Marketing and promotion

Governments at all three levels in Australia involve themselves in marketing and promotion.

At the federal level, Tourism Australia is the statutory authority responsible for international and domestic marketing and promotion of Australia, including the encouragement of investment in tourism in Australia and the undertaking of research and data collection that can assist in the marketing of Australia. The Federal Minister for Trade, Tourism and Investment is, at the time of writing in January 2019, The Hon. Simon Birmingham.

Take a few minutes and familiarise yourself with the Tourism Australia website:

Visitor information centreEach state and territory has their own organisation responsible for the marketing and promotion of tourism in their state or territory. These include Destination NSW, Tourism and Events Queensland and Tourism NT.

Local governments involve themselves in tourism through planning controls and regulations but mostly in marketing and promotion. Most towns and cities have a Visitor Information Centre that is usually run by the local council and usually have a designated council staff officer whose role it is to facilitate and promote tourism development, investment and visitation in the local government area.

Research and planning

Research is undertaken to various extents by Tourism Australia, the various state government agencies and to a lesser extent by local governments, in order to gather data that can assist with managing tourism and in the marketing and promotion of tourism. Tourism Australia, for instance, undertakes periodic visitor surveys of international tourists in order to develop profiles of international tourist visitation, international visitor arrivals, activities that international tourists engage in and the levels of satisfaction of international tourists as well as conducting similar research through visitor surveys with domestic tourists.

Governments involve themselves in tourism planning through the development of strategic planning and policy documents such as Tourism Australia’s Tourism 2020: a strategy designed to ‘build the resilience and competitiveness of Australia’s tourism’.

Activity

Cut and paste into the table below the four Policy Priorities that Tourism 2020 has identified:

Policy priority
1
2
3
4

State and local governments also produce various kinds of strategies and plans relating to tourism. Tourism and Events Queensland, for instance has developed a series of Destination Development Plans and Tourism Opportunity Plans.

Income generation through taxes

The federal and state/territory governments can derive indirect income from tourism through the taxation system. This can come from taxes imposed on the incomes of residents who sell goods and services to tourists; from the GST that is on goods and services that tourists buy (if international) tourists spend in excess of $400.00 at one retail outlet they can claim the GST back from the Government); and from the charges for visas that some international tourists are required to pay and the departure tax that all people leaving Australia (both international tourists and Australian residents) are required to pay. The Federal Government did impose an arrivals tax as well but this has now been removed, as has the ‘bed tax’ – a NSW state tax tha was imposed (briefly) on accommodation providers in 2000. However, there has been discussion recently in some states about imposing a kind of bed tax onAirbnb providers.

Reading 9.1

Richardson, J. & Fluker, M. (2008). ‘The managers of tourism’.

This reading considers the concept of ‘destination management’ and the roles of governments involved in tourism in Australia. This reading also briefly introduces the concept of policy (pages 206 and 207). As outlined in Topic 6 – Tourism Environments, it is important to understand the political and legislative influences on tourism.

Table 7.1 of this reading provides a good outline of the responsibilities of commonwealth, state/territory and local tourism organisations in Australia.

Note, if you are located in another country, you should research and become familiar with the roles, responsibilities and activities of governments there.

Note – apologies that a couple of pages appear crooked – you should be able to read, however.

Industry organisations

There is a wide range of industry organisations that operate at either an international, national, regional or local level. Some are industry-wide organisations while others have much more specific aims and objectives focused on one aspect of tourism. So for instance, some industry organisations lobby governments on behalf or the tourism industry; other organisations are primarily concerned with promoting a particular destination region; others are involved in research while others run their own accreditation systems.

Activity

Complete the table below by entering in the purpose and functions of each of the industry organisations listed:

Tourism organisation Website Purpose and function
United Nations World Tourism Organisation www2.unwto.org/
Pacific Asia Tourism Association www.pata.org
Regional Tourism Australia regionaltourism.com.au/
Tourism and Transport Forum www.ttf.org.au/
World Travel and Tourism Council www.wttc.org/
Ecotourism Australia www.ecotourism.org.au/
Australian Hotels Association aha.org.au/
Accommodation Association of Australia aaoa.com.au/
Exhibition and Event Association of Australia eeaa.com.au/
International Civil Aviation Organisation www.icao.int/

Virgin Atlantic aircraft

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