The Tourism System

An Introduction To The Tourism System : 

An Introduction To The Tourism System Magiel Venema The Netherlands magiel.venema@tip.nl © 2010 Edutour BV

Aim of the Presentation : 

Aim of the Presentation To give new tourism students a first glance into their chosen field of study Magiel Venema: lecturer at the NHTV Breda University of Applied Sciences (Netherlands) Director of Edutour (www.edutour.eu) Tourism Textbooks Publisher Training and Simulation Software for Tourism and Hospitality

So let’s start:What’s behind all this? : 

So let’s start:What’s behind all this?

The answer…... : 

The answer…... Companies: Hotels, Transport, Entertainment, …. Organizations: Information Services, …. People: Management, Front Office, …. Tourists: Needs, Wants, Behavior, …. Governments: Laws, Subsidies, …. Society: Norms and Values, …. Economy: Income, Employment, …. Technology: Reservation Systems, Internet, .… Together: THE TOURISM SYSTEM

What is a System? : 

What is a System? Something that has parts: Components Which are Interrelated And they are changing in time: Dynamic And it is part of Society: External Environment Components of a System are Interrelated, so they influence each other. The System also receives and sends influences from and to the External Enviroment. Because a Components change, Interrelations change and Society changes, a system is Dynamic!

What is a system? : 

What is a system?

Car as an example of a System : 

Car as an example of a System What makes a system? Components Interrelated Dynamic (Changing) External Environment The System (Car) has many Components (like Tires), which are Interrelated (Wheel with rest of Car), so they influence each other. They are Dynamic (Tear and wear), so there is change. Also the System receives influences from External Environment (Nail on the Road), which causes a flat tire and it sends influences (Exhaust Fumes) to the External Environment.

Tourism as a System : 

Tourism as a System Components: Tourists, Companies, Destinations Interrelated: Supply and Demand Dynamics: Nature of Tourism changes over the years External Environment: Political, Economical, Social and Technological Factors (PEST) influence and are influenced by Tourism

Dynamics of Tourism (1) : 

Dynamics of Tourism (1) Some Characteristics of ‘Old Tourism’ (from 1945): Paid Holidays Economic Growth Jet Aircraft, Cheap Charter Flights Sun-lust Tourists Mass Tourism, Package Tours Entrance of Multi National Companies (TUI)

Dynamics of Tourism (2) : 

Dynamics of Tourism (2) Some Characteristics of ‘New Tourism’ (from end of 20th Century): Attention for Environment and Sustainability Rising Travel Experience More Demanding & Experienced Customers More Media exposure (TV, Internet, Twitter,..) Experiences more important than Sun New Production and Distribution Methods Vertical and Horizontal Integration of Companies New Technologies (Internet, Computer Reservation Systems, Database Marketing, iPhones, ….)

OK, let’s study the Tourism System! : 

OK, let’s study the Tourism System! We will take a closer look at the Components, Interrelations, Dynamics and External Environment Tourists at a Destination Travel Agent negotiating with Hotelier Dynamics: Old Tourism New Tourism Attitude of External Environment

Slide 12: 

The Tourism System: Components, Interrelations and Environment Demand Supply Intermediairies Influences from outside Influences on outside Transit Regions & Tourist Flows Supporting Institutions

We will start with the Demand : 

We will start with the Demand Demand = Tourists Effective Demand: Those who can and do Potential Demand: Those who can, but don’t do it yet Deferred Demand: Those who can and normally do, but not now for some reason No Demand: Those who can’t do Why study Demand? Product Development Marketing Purposes

Slide 14: 

Demand Demand Supply Intermediairies Influences from outside Influences on outside Transit Regions & Tourist Flows S.I. S.I.

Definition of a Tourist : 

Definition of a Tourist Tourists are people who "travel to and stay in places outside their usual environment for more than twenty-four (24) hours and not more than one consecutive year for leisure, business and other purposes not related to the exercise of an activity remunerated from within the place visited. (UNWTO, 1995)

Definition Ottawa Conference (1991) : 

Definition Ottawa Conference (1991) International Tourism: Travelers Visitors (included in statistics) Other Travelers Two types of Visitors: Tourist (Overnight Visitor) Same-day Visitor

A more easy Definition: : 

A more easy Definition: A tourist is a temporary leisured person who voluntarily visits a place away from home for the purpose of experiencing a change Time Choice Destination Motivation Experience

Analyzing the Demand : 

Analyzing the Demand Quantitative Aspects How many? When? How often? How do they travel and where do they stay? How and where to? Qualitative Aspects Motivation Composition Typologies Life styles

The Demand : 

The Demand Quantitative Aspects How many? Where to? When? Ages? How often? From where? Type of Transportation? Type of Accommodation? Etc.

Statistics : 

Statistics Quantitative Aspects are found in statistics International Statistics (UNWTO) National Statistics Source for Planning and Marketing!

The Demand : 

The Demand Qualitative Aspects CompositionTypologies Norms and Values BehaviorLife styles

Maslow’s needs and motivations : 

Maslow’s needs and motivations Maslow states that there is a hierarchy in human needs. When a lower need is fulfilled, than a person is motivated to pursue a higher need. From low to high he distinguishes the following needs: Physiological: Relaxation (Rest, Sunlust) Safety: Security (Health) Belonging: Love (Togetherness, Roots) Esteem: Status (Recognition) Self-Actualization: Be yourself (Self-discovery) Enhancement 1: To Know and Understand: Knowledge (Culture) Enhancement 2: Aesthetics: Beauty (Scenery)

Slide 23: 

Aesthetics To know and understand Self-Actualisation Esteem Belonging Safety Physiological Maslow’s Needs and Motivations Applied and Enhanced in Relation to Travel

Plog: Typology of Tourists : 

Plog: Typology of Tourists Dynamics: The curve slides to the right, as exotic destinations become over time more familiar Familiar Destinations Exotic

Plog’s Typology of Tourists : 

Plog’s Typology of Tourists Allocentrics: ‘other-centred’ tourists who enjoy exposing themselves to other cultures and new experiences, and are willing to take risks in this process Psychocentrics: ‘self-centred’ tourists who prefer familiar and risk averse experiences Midcentrics: ‘average’ tourists whose personality type is a compromise between allocentric and psychocentric traits

Types of Tourists (After S. Plog,1974) : 

Types of Tourists (After S. Plog,1974) Psychocentrics Familiar Destinations Traditional Activities Tour Packages Looking for Safety ‘OLD’ TOURISTS Allocentrics Exotic Destinations Discovery Independent More Adventurous ‘NEW’ TOURISTS Link between Type of Tourists and Type of Destination

Dynamics of Tourism : 

Dynamics of Tourism Once Exotic Destinations become Mass Destinations!

Acapulco (México) : 

Acapulco (México) As it was…… As it is……

Types of Tourists (After E. Cohen, 1972) : 

Types of Tourists (After E. Cohen, 1972) Based upon both the interaction with local population and the use of travel industry Drifters Explorers Organized Mass Tourists Individual Mass Tourists

Business & Leisure : 

Business & Leisure No clear distinction between business and leisure in definitions: Business Travel: Trips made by those who are required to travel in relation to their work.

Types of Business Travelers : 

Types of Business Travelers Individual Business Travelers: Sales, Service, Training,….. Corporate Hospitality (Grand Prix, Sky Box) Meetings Incentives Conferences Exhibitions or Events Most of the time referred to as MICE

Slide 32: 

Supply Demand Supply Intermediairies Influences from outside Influences on outside Transit Regions & Tourist Flows S.I.

Supply : 

Supply Tourism Product Broad Sense: Destination Features Narrow Sense: Tourism Industry at Destination

Components of Product : 

Components of Product Attractions Facilities: Accommodation, Restaurants, .. Transport Infrastructure Hospitality

Typology of Attractions : 

Typology of Attractions Feature(s) of Natural Environment Man-Made, but not designed for attracting visitors (Cathedral) Man-Made designed for attracting visitors (Amusement or Theme parks) Culture, Customs, Folklore Special Events Destination Mix: Combination of Characteristics at a given Destination

Natural Environment : 

Natural Environment Climate Beaches Caves Mountains Rivers, Lakes Forests Flora & Fauna

Man-made, not specific : 

Man-made, not specific Churches Historic Buildings Ancient Ruins Historic Gardens Steam Railways Industrial Archeology Reservoirs

Man-made, specific, purpose built : 

Man-made, specific, purpose built Theme Park Amusement Park Casinos Heritage Centers Zoo’s, Safari Parks Craft Centres Marinas

Culture, Customs & Folklore : 

Culture, Customs & Folklore Traditional Costumes Markets Religion Health Culinary

Special Events : 

Special Events Sporting Events (Olympic Games, World Soccer Cup) Cultural Events (Music Festivals)

Destinations and Attractions : 

Destinations and Attractions Single Attraction: Brighton (UK) Embryonic Destination: Waitomo Caves (New Zealand) Developed Single Market Destination Aruba (Dutch West Indies) Diversified Destination Florida (USA)

Diversified Destination: Spain : 

Diversified Destination: Spain Sun, sea, sand Culture Cities Nature

Attraction as a Product : 

Attraction as a Product Tourism Product: Intangible Perishable Production = Consumption Producers and consumers are part of product Not standardized Core is free Customers don't buy it, but use it temporarily

Product = Experience : 

Product = Experience Anticipation Journey to and from Visit itself Recollection: A story to tell back home!!

Product Levels (Kotler) : 

Product Levels (Kotler) Core Product: Need it satisfies Facilitating Product: Possibility to use it Supporting Product Adding value Augmented Product Atmosphere, Packaging Hamburger (Hunger) Plate, Seat, Etc. Coke Service (Happy Meal)

Destination Life Cycle (R. Butler, 1980) : 

Destination Life Cycle (R. Butler, 1980)

Stages Life Cycle of a Destination : 

Stages Life Cycle of a Destination Exploration: A secret spot is discovered, no or few facilities Involvement: A few locally-run businesses are established Development: A well defined tourism industry is developed. Destination is well promoted Consolidation: Tourism becomes an important or even a dominant feature of the local economy Stagnation: Tourism growth slows down and carrying capacity is reached. The area is no longer a new hotspot, probably it is overbuilt and polluted Decline or Rejuvenation: Decline results as tourists choose other destinations, Rejuvenation typically requires attracting a different kind of tourist and active government support!

Pleasure Periphery : 

Pleasure Periphery Area with popular tourist destinations around the industrial, affluent world. Driving force: Social Distinction: When a higher social class sees that a lower class is coming to their destination, they depart and look for another. In time we see this shift in visitors to a destination: Upper Class, (Cultural) Elite, Gentry Upper Middle Class Mass Tourism

Pleasure Periphery : 

Pleasure Periphery Each main tourist generating region has its own pleasure periphery This periphery grows with the arrival of new possibilities (available transport, time, money) There is an end to this growth, because earth is not infinite There are also overlaps of peripheries of different generating regions: Caribbean, SE Asia To retain their exclusivity, higher classes return to previous visited places, however they indulge there in other, exclusive activities: social distinction!

Pleasure Peripheries Europe: : 

Pleasure Peripheries Europe: Start 19th Century: Coastal Areas Britain & North Sea End 19th Century: Mediterranean 1960-ies: North Africa, Canary Islands 1990-ies: Caribbean, S.E. Asia 21st Century: Space or back to the coast?

Pleasure Peripheries USA : 

Pleasure Peripheries USA End 19th Century: East Coast USA: Rhode Island Start 20th Century: Florida 1950-ies: Mexico, Caribbean, Hawaii 1990-ies: S.E. Asia, South America 21st Century: Space or back to Rhode Island?

Pleasure Periphery : 

Pleasure Periphery Here today, gone tomorrow Coney Island (New York): Once a bustling entertainment area, now derelict, but: Alternative Groups from a cultural elite develop their own things!

Here today, gone tomorrow : 

Here today, gone tomorrow Both host population and travel industry need stability to assure: Income & Employment Tax revenues Therefore: Planning Sustainability

Destination Development Models : 

Destination Development Models Agents of Development: Public Sector Private Sector Typologies: Spontaneous (Costa Brava) Integrated (La Plagne, ski resort in French Alps) Catalystic (Disney in Florida) Sustainability should always be the guideline!

Impacts of Tourism : 

Impacts of Tourism Impacts can be either Positive or Negative Impacts of Tourism on Destination: Spatial Economical Cultural Environmental Political Social

Index of Irritation (Doxey, 1975) : 

Index of Irritation (Doxey, 1975) Also called the IRRIDEX

What is the total impact and which impact do we want? : 

What is the total impact and which impact do we want? To reach a desired impact on a destination, a clear planning policy is needed Aim is of course to maximize the positive impacts and to minimize the negative impacts Tourism development must be aimed at sustainability

Principles of Sustainable Tourism : 

Principles of Sustainable Tourism Tourism should be blended with local environment and community Tourist experience focuses on existing features Local ownership Local materials and food Conservation of resources

Product in narrow sense : 

Product in narrow sense Accommodation Type: Resort, City Location & Atmosphere Concepts: All-suite All-Inclusive Bed & Breakfast Category: Stars Restaurants Information Services (VVV)

Transportation : 

Transportation Train Scheduled Trains Special Trains (Blue Train) Road Car (Private and Rental Car) Coach Water Cruises (River / Ocean) Ferries Air Scheduled Charter

Quality in Travel : 

Quality in Travel Quality is to deliver what you promised So make it clear what you are going to deliver Quality is objective: amount of complaints Quality is subjective: different persons, different standards Quality is value based: Price / Quality relation

Hospitality Model : 

Hospitality Model Consumer Provider Services Money Needs Objectives Expectations Environment Behavior Product Concept

Quality = Meeting Expectations : 

Quality = Meeting Expectations Expectations are a result of: Word of mouth Personal needs and objectives Past experiences Marketing communications Expectations are tested in Service Encounter : Moment of Truth Expected Quality < > Perceived Quality Result: Better - Equal - Below

Reasons for Poor Quality (5 Gaps Model) : 

Reasons for Poor Quality (5 Gaps Model) Consumers Expectations as Perceived by Management Translation of Management Perception into Service Quality Specifications Service Quality Specifications into Service Delivery Communication to Customers of Service Delivery Expected Service and Perceived Service

Slide 65: 

Intermediairies Demand Supply Intermediairies Influences from outside Influences on outside Transit Regions & Tourist Flows S.I.

Intermediairies : 

Intermediairies Stimulators NTO's, Regional & Local Tourist Offices Producers Tour Operators / Wholesalers Distributors Travel Agencies Facilitators Touring Clubs, Banks

The Travel Industry : 

The Travel Industry Which players are there? How do they interrelate?

The Travel Chain : 

The Travel Chain Distribution Channels Information Services

Travel Chain : 

Travel Chain Destination Destination Destination Destination Customer Customer Customer Customer T.O. T.O. T.O. D.M.C. D.M.C. T.A. T.O. = Tour Operator / Wholesaler T.A. = Travelagent D.M.C. = Destination Management Company

Main Players: : 

Main Players: Tour Operators (or Wholesalers): They produce tour-packages, which are either sold directly or via: Travel Agencies: They sell the packages made by touroperators and add other services (like insurance) Destination Management Companies: Supplier of additional services at destination (like excursions, transfers) Eyes and ears of Tour Operator on a destination

Tour Operator / Wholesaler : 

Tour Operator / Wholesaler CONCEPT RECIPIES INGREDIENTS PREPARATION BUDGETTING PROMOTION MENU CARD SERVING THE MEAL CONTACT WITH CLIENTS AFTER SALES Compare it with a restaurant

Tour Operator: Added Value : 

Tour Operator: Added Value Selecting and packaging holiday elements Promoting and distributing them Offering prices un-obtainable by consumers Providing information Setting and Monitoring quality standards Organizing extra’s: excursions, entertainment Risk brokerage for both resellers and consumers Managing relations with principals

Types of Tour Operators : 

Types of Tour Operators Mass Tour Operator High Volume Well known Destinations Wide Public Appeal Available through T.A Slow response to changing markets (long term commitments) Integration (hotels, transport, agencies) Low buying rates and prices Specialists Low volumes Exotic Destinations Appeal to niche markets Local Style and owned Accommodation Direct Sellers Quick response to new market trends Higher buying rates and selling prices

Types of Travel Agencies : 

Types of Travel Agencies General Bricks and Mortar (‘High Street’) Independent Chains Pop and mom’s Touroperator owned Home Based Agents Niche Agencies Virtual Agencies: Expedia, Travelocity, …

Travel Agents Added Value (1) : 

Travel Agents Added Value (1) Assistance in search and information Objective and unbiased advice Needs assessment and product matching Customer risk management Product distribution Additional services After sales: advice with complaints

Travel Agents Added Value (2) : 

Travel Agents Added Value (2) Dissemination of product information Purchase influence Provision of customer and market information Producer risk management Transaction economies of scale Integration of producer and consumer needs Savings on marketing costs

Marketing in Tourism (4 P’s) : 

Marketing in Tourism (4 P’s) Product Promotion Price Place: Most Important Change! Place = Distribution of the Product: On-Line vs. Off-Line Direct vs. Indirect New Customers vs. Retaining Old Customers

Distribution is part of Marketing : 

Distribution is part of Marketing Development of Tourism Marketing: 1950’s: Mass Market: The Tourist 1960’s: Simple Market Segmentation: Old People 1980’s: Multilevel Segmentation: Wealthy Old People 1990’s: Niche Markets: Wealthy Old People who love to walk 2000’s: Markets of One: Long Tail

Market Segmentation : 

Market Segmentation Mass market 1960s – 1970s: The Tourists (No segmentation) Simple market segmentation 1980s: Older Couples – Younger Couples Multilevel segmentation 1990s: Wealthy Older Couples Ethnic Older Couples Niche markets & Markets of one 2000s: Postal Code & Mr. Johnson

What is the Long Tail? : 

What is the Long Tail? The Long Tail is: A huge offer of single items which are each of interest only to a small group or niche, but whose total market-potential is bigger than that of the market-leader! Since ICT today is characterized by: Cheap and fast processors Cheap data-storage High speed data-transmission Hugh bandwidth It is possible to store huge varieties of transportation, lodging, ancillary services, etc. Needs from any niche market can be satisfied

The Long Tail : 

The Long Tail

The Long Tail in Tourism : 

The Long Tail in Tourism All Tourists  Old People  Wealthy Old People  Wealthy Old People from Amsterdam  Market of One (From General Interest to Highly Specialized Interest)

Distribution Models : 

Distribution Models Traditional Distribution Chain: Off-line “Bricks and Mortar” New Distribution Chain: On-Line (Cybermediaries) “Clicks” Emerging Distribution Chain: Multi-Channels “Bricks and Clicks”

Distribution Models : 

Distribution Models Direct Off-Line Direct On-Line Indirect Off-Line Indirect On-Line

Dynamics in the Travel Industry : 

Dynamics in the Travel Industry All players have to add value If a member of the distribution chain does not add value to the product or service, then his function is parasitic and, as a result, he will eventually disappear! TRENDS: De-intermediation (Internet) Globalization Integration (Horizontal, Vertical, Diagonal) Increased Scale of Operations Home-based Travel Agents (‘Tupperware Ladies’) So: Rethinking of Business Processes

Slide 86: 

Transit Regions & Tourist Flows Demand Supply Intermediairies Influences from outside Influences on outside Transit Regions & Tourist Flows S.I.

Tourist Flows : 

Tourist Flows Seasonality Intensity Direction Distances Dependency What happens when the road disappears .........

Slide 88: 

Supporting Institutions Demand Supply Intermediairies Influences from outside Influences on outside Transit Regions & Tourist Flows S.I. S.I.

Supporting Institutions : 

Supporting Institutions United Nations: UNWTO Universities: Research Education & Training Consumer Organizations ..............

Slide 90: 

External Environments Demand Supply Intermediairies Influences from outside Influences on outside Transit Regions & Tourist Flows S.I.

External Environments : 

External Environments Political Economic Social Environmental Technological Demographic September 11 Pig Flu Financial Crisis

Influence of Technology : 

Influence of Technology Trans Pacific Transport System: Range of Planes

Technology: Influence on Transit Region : 

Technology: Influence on Transit Region Sydney Nadi Honolulu Los Angeles Evolution of Trans Pacific Travel System: 1950 – 1980 - 2010

Technology: Influence on Tourism System : 

Technology: Influence on Tourism System Internet Changed production of tourism products Mass Customization Dynamic Packaging Changed distribution of tourism products User Generated Content (Blogs, Facebook, You Tube, ..) ICT: Processing power of chips enormous Data storage enormous Date transmission enormous speed and bandwidth All this at still lower costs!

Slide 95: 

The Tourism System Demand Supply Intermediairies Influences from outside Influences on outside Transit Regions & Tourist Flows S.I.