University of Guyana

School of Education and Humanities

TST 328-Tourism Marketing
Mrs. Camille Robertson

Question: Mischa’s serves hamburgers fresh off the grill. This

assures high quality but creates left over burgers if the staff
overestimates the demand. Mischa’s solves this problem by
using the meat in chilli, taco, spaghetti sauce, patties and meat
pies. Relate how airlines solve the perishability of unsold seats.
Give additional examples of perishability and how service firms
address it.

Date Submitted: March 21st, 2007

TABLE OF CONTENTS PAGE
Introduction 3
Transportation 5
How airlines deal with perishability 6
Other service industries 8
Food and Beverage 8
Food 8
Beverages 10
Hotels 10
Agriculture 12
Entertainment 12
Conclusion 13
Bibliography 14

INTRODUCTION
Tourism is a service-based industry that has been a real income
generator and contributor to the GDP for most of the world. It is an
activity that provides transportation, accommodation, meals,
attractions, entertainment and other services for the potential tourist.
In order for these services to become known, proper marketing needs

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to be done. Phillip Kotler defines marketing as a social and managerial
process by which individuals and groups obtain what they need and
want through creating and exchanging products and value with others.
This deals with wants, needs, demands, satisfactions and marketers.1
Marketing is defined by the CIM (Chartered Institute of Marketing) as,
“the management process responsible for identifying, anticipating and
satisfying consumers, profitably”.2 Marketing is made up of three
elements, which come together to form a marketing system:
1. The attitudes and decisions of visitors (demand) concerning the
perceived offer of the destination – according to their needs,
wants and desires
2. The attitudes and decisions of organisations (supply) concerning
the position of their offer – in the context of the business
environment they face.
3. The way in which the mix is put together and communicated –
before, during and after the visit/experience.3
With tourism marketing, you are marketing a service that is intangible
in nature. Instead of moving the product to the customer, the customer
must travel to the product.
A service is a product produced through an exchange transaction that
does not confer ownership but permits access to and use of a service
at a specified time in a specified place.4
There are four characteristics of service:
1. Intangibility: product cannot be evaluated or demonstrated in
advance of its purchase. It cannot be seen, tasted, felt, heard, or
smelled before it is bought. When a service is completed, the
customer is left with feelings such as elation, delight, and
satisfaction
1
Phillip Kotler. General Marketing. Marketing Management. Prentice Hall. 2005
2
Dibb, S. et al. Marketing: Concepts and Strategies. Houghton Mifflin. 2001
3
http://www.cim.co.uk
4
Russell Wolak. Et al. An Investigation into Four Characteristics of Services. Journal of Empirical
Generalisations in Marketing Science. Volume Three 1998. Kingston Business School, London.

3
 2. Inseparability: the product is often consumed and produced
simultaneously
3. Heterogeneity: high variability in service delivery. This is mostly
a problem for services with a higher labour content, as different
people deliver the service performance.
4. Perishability: this is the basis of our paper and this means that
services cannot be stored and carried forward to a future time
period. Services are time dependent and time important which
makes them very perishable. The issue of perishability is
primarily the concern of a service producer and the consumer
only becomes aware of the issue when there is insufficient
supply and they have to wait for the service.
Tourism is a service, and therefore suffers from aspects of perishability
(the product cannot be stored) and intangibility (which results in the
customer not being able to sample the product before purchase).
Perishability is a major concern when marketing destinations and
managing visitor attractions. The concern is that if service capacity is
not sold on a particular day, then the revenue is lost and cannot be
recovered. Service production therefore is best understood as a
‘capacity to produce’ not a quantity of products. 5

Hotel operators with a fixed number of rooms, and transport operators

with a fixed number of seats, face identical problems of matching
available demand to perishable supply. The marketing response to
intangibility and perishability is to ‘manage or manipulate demand’.6
Service producers tend to create something else and put it on the
market by using what would have had to be thrown away to make
something else of value. For example, left over meals. “Mischa’s
serves hamburgers fresh off the grill. This assures high quality but
5
Russell Wolak. Et al. An Investigation into Four Characteristics of Services. Journal of Empirical
Generalisations in Marketing Science. Volume Three 1998. Kingston Business School, London.
6
T. Levitt. Marketing Intangible Products and Product Intangibles. Harvard Business Review. Volume 81.
1981

4
creates left over burgers if the staff overestimates the demand.
Mischa’s solves this problem by using the meat in chilli, taco, spaghetti
sauce, patties and meat pies.”
To deal with perishability producers can do one of three things:
1. Increase supply to match demand
2. Decrease demand to match supply
3. Manipulate both demand and supply
TRANSPORTATION
The transportation sector is one of the most important components of
the tourism industry because it provides the service of transferring
tourists from one destination to another. The airline industry in
particular is responsible for taking individuals to places where trains
and cars cannot go, or even if they can, it would take triple the amount
of time an airplane would.
How Airlines deal with unsold seats
An airline seat left empty represents revenue, which can never
be regained. This indicates high-risk nature of the tourism industry.
Marketers in the tourism and hospitality industry have to develop
complex pricing and promotion policies in an attempt to see ‘off-
season’ periods and create greater synchronization of staffing levels
and supply with demand patterns.7
It is said that there are 25,000,000 seats flying empty a year around
the globe.8 Airhitch, a website which tracks down unsold seats, serves
to fill these empty seats and enable travel possibilities for a lot of
people that would not otherwise have them. Airhitch serves as a
clearinghouse between airlines who have seats that are left unsold at
the last minute and people who would dearly love to be in those seats
when the plane takes off.
Airline marketing prices are kept as high as possible for as long as
possible, but as it nears the point of perishability (flight date and time)
7
Chris Cooper, etc, Tourism Principles and Practice, Longman Group, Ltd, 1993. Pg. 231

5
a buyer must be found for it at any price rather than let perish (operate
at a loss). This means that, the closer to departure for each flight, the
more desperate the airline is to sell seats that it thinks are not going to
be sold. For example, A passenger at an airport requesting a seat
hours before departure time will be given a discount in price (to
prevent the seat leaving unsold). 9
However, there are times when the airlines have the upper hand.
Passengers traveling last minute are sometimes charged at a higher
cost by air airlines. There are instances where a person needs to buy
an airline ticket for an urgent travel today or tomorrow and would be
willing to pay just about any amount of money for the ticket, because it
is very important to them. So basically the airline, on one hand would
love to sell these ‘last minute’ tickets for very high prices to ‘must
travel’ passengers, but also would be pleased to sell them at almost
any price to people that would only travel if they see an incredible
discount. This means that should you take a flight somewhere and look
around you. The chances are that the person seated next to you may
have paid four times more than you, for the exact same flight. Or
maybe you were the sucker and paid four times more then he did.
Worse still, many of the people seated in first class probably aid less
for their seats then you did for your uncomfortable middle seat way at
the very back, next to the toilets, galleys and engines. 10

Also it is noted that airlines basically write off seat as lost and wasted
at least three days before it departs. This is because the procedure for
converting an interested potential passenger into an actual passenger
(strapped in the seat with a plane taking off) is very complicated and
sometimes involve middlemen (Travel agencies, tour operators, etc)
and the more middlemen who are involved, the more complicated it
gets. Often the air carriers consider going through this process is
8
http://www.airhitch.org/info.htm#how
9
www.airhitch.org/info.htm#how
10
www.travelinsider.info/2002/0621.htm

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simply not worth if for the small amount of revenue they perceive
would be gained from such an operation. Southwest airlines stated that
costs are recovered for those unoccupied seats by pricing the occupied
seats high.11
Mr. Junior Horatio of North American Airlines stated the practice of
yield management and this is partially accredited to the airline still
being in operation. He stated that with three to five days of the flight
departure time ticket prices are lowered but are not advertised, since
most airlines wish to sell their airline tickets at the highest price
possible. He further said that stand bys are encouraged, in that in the
event a confirmed passenger is delayed or does not show on time for
the departing flight, standbys are placed to fill these seats so as to
avoid it going empty.12
Jet Airways noted that an airline seat is a perishable product, so
therefore the idea is to sell it at any cost if the aircraft is about to fly
with empty seats. Flights that have excessive seats, they may offer
attractive discounts to fill them.13
Some airlines, in an attempt to decrease the risk of seats perishing,
encourages standby or some even overbook. Overbooking is a form
airlines take in order to reduce perishability. This is where one would
often find that two or more passengers would be issued the same seat
number because they would have both paid for that particular seat.
When flights are overbooked, it guarantees the airline full capacity and
they can always resolve this conflict by making an offer to the
passenger to fly on a next carrier or offering them compensation
packages like staying at a hotel or even paying a passenger to give up
his of her seat.
OTHER SERVICE INDUSTRIES

11
www.airhitch.org/info.htm#how
12
Interview
13
www.jetairways.org

7
Food & Beverage
The Food & Beverage Industry is vital because individuals need to eat.
These can be in the form of restaurants, fast food outlets, Food and
beverage entities resolve the issue of perishability through several
means, some of which include dumping, giving to charity and giving to
employees. The use of both Local and International examples will be
used to justify that indeed each entity handles the issue of perishability
differently.
FOOD
1. Humphrey’s Bakery. This entity is located in Ketley Street,
Charlestown. Georgetown Guyana. This Bakery uses its
perishable bread to make Chester Cakes.
2. Glow Amigo Restaurant, which is, located at Queen Street use
their left over Baked Chicken to prepare some of the next day’s
meal including Fried Rice, Chowmein and Cook- Up- Rice. They
would normally strip the Baked Chicken and cook it in the food
and also make sandwiches or salads.
3. Kentucky Fried Chicken is an International business operation,
however, the main branch of Guyana, which is located at
Stabroek Market deal with their perishable items via three
methods. The first being, upon closing hours once KFC realizes
that they have extra chicken they usually give all present
customers extra chicken along with their current orders.
Secondly, once, there are closed and they have excess chicken
and fries they would dump the perishable items.
4. The Oasis Cafe, which is located on Carmichael Street, would
let their employees consume all perishable items (for example
Salads) after the buffet is closed.
5. Roti Hut gives their perishable items only if it is in a large bulk
to Joshua’s Home and if it is not a large amount they would dump
the perishable items.

8
 6. Olive Garden which is located throughout the United States
solve the issue of perishability by using their left over tomatoes
to make sauce for the Spaghetti and also sun dry the tomatoes
to put them on Pizza or to serve with other meals.
7. Pizza Hut, which is located on Vlissengen Road Georgetown,
said that they solve their issue of Perishability by dumping the
left over dough. The dough is said to have a life frame of eight
hours.

BEVERAGES
Beverage is one of the basic necessities required within the tourism
industry.
1. Demerara Distilleries Limited (DDL)
They deal with their perishable items that are approaching the
expiration date they usually sell off those stocks through the form of
promotions. For example, buy one 1-liter Pepsi and get the second
free or at half price.
2. Ansa Mcal & Banks DIH
Both of these companies usually solve the issue or perishability in
their company by merging with wholesalers and event promoters
through the form of having special Happy Hours on those Beer that
are approaching the expiration date or those that are abundant in
stock. During these happy hours promotion they may normally sell
their beers at a reduced price; for example, 3 Banks Beer for $500
and 9 Carib Beers for $1000.
HOTELS
Hotel rooms are perishable commodities. A person standing in a hotel
check in line in front of you would have probably paid less for the same
room with the same service.
Some travelers get immense discounts by booking rooms at a hotel
consolidator or reservation service or they book rooms at the last

9
moment. This is done because unsold rooms are lost revenues, which
are negotiable. Hotel consolidators negotiate deals with hotels by
buying blocks of rooms sometimes last minute advance. Reservation
services save hotels money on their rooms.14
In a statement, the site founder, Mr. Anant Jain, said that the business
model on which the site is based is that hotel rooms are perishable
commodities, the value of which perishes. ``As hotels get closer to a
given date, their incentive, to sell that room increases. Hotels try to
sell these rooms which otherwise would have earned no revenue at all
and the customer will be able to stay in a luxury room at the minimum
possible rate,''
Most hotels try to practice yield management. Yield management is
suitable when selling perishable products. Its aim is to provide an
optimal mix of services at a variety of price points at different points in
time or for different baskets of features.15 Yield management seeks to
minimize the issue of perishability. This practice is one that depends
on the amount of rooms one thinks they will be able to get at the full
price that the hotel offers. If too many rooms are protected then they
can be empty rooms at the end of the period and if too many are not
protected then the hotel forgoes the extra revenue it may have
received from other guests. When managers think of practicing yield
management on their business they pay more attention to two of the
five characteristics:
 It is expensive or impossible to store excess resource (we cannot
store tonight’s room use for tomorrow nights customers).
 Commitments need to be made when future demand is
uncertain.16

14
http://www.onthegopublishing.com/hotel.shtml
15
http//.wikipedia.org/yield_management
16
http://ite.pubs.informs.org/Vol3No1/NetessineShumsky/NetessineShumsky.pdf

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Other ways hotels try to solve the problem of perishability is with their
reservation system, which most hotels around the world also have in
place. This system whereby potential guests make reservations to stay
at their property ensures that a credit card number is collected to
guarantee some amount of payment if the guest does not show up on
the dead- line set out by the hotel.
Hotels also tend to hike their prices during peak periods such as Easter
vacations and summer vacations. They also hike prices when there are
special events such as Carnivals, Mashramani and events such as the
current Cricket World Cup being played in the Caribbean.

AGRICULTURE
Farmers have several perishable items to sell which rot and smell after
a day or two leaving the farmer with lots of losses, thus farmers have
decided to either sell out there produce at a reasonable cost when the
day is almost completed at the same market venue which may be out
of their village, while others would take back to their home-town and
sell the produce at reasonable prices to the villagers. Some farmers
call this service a framer’s market.
Farmers also use these unsold produce to make animal feed for
livestock such as pigs, chickens, sheep etc. This stock feed also sold to
villagers at reasonable rates so as to bring in some amount of revenue
to the farmer while at the same time not allowing wastage.

ENTERTAINMENT
Entertainment promoters tend to reuse unsold tickets that were
scheduled to be sold at an event at some other event so as not to
bring more cost on themselves. In the United States, theatres would
usually sell their tickets at half price during intermission so as to full
the unsold seats, since they are a perishable commodity.

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CONCLUSION
The tourism industry is filled with services and most of these
services are intangible products. These intangible products are often
perishable. Perishable goods are only able to last for a period of time
until they are no longer valuable. In this case, service industries are
faced with the task of ensuring that their perishable products are sold
or consumed so as to avoid loss of revenue or waste. As our paper
outlined, different service industries solve the issue of perishability
differently even if they are offering the same service.

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Reference
Cooper, Chris. Et al. Tourism Principles and Practice, Longman
Group, 1993.
Dibb, S. et al. Marketing: Concepts and Strategies. Houghton
Mifflin: Chicago. 2001.
Kotler, Phillip. General Marketing. Marketing Management.
Prentice Hall; London. 2005.
Levitt, T. Marketing Intangible Products and Product
Intangibles. Harvard Business Review. Volume 81. 1981.
Wolak, Russell. Et al. An Investigation into Four Characteristics of
Services. Journal of Empirical Generalisations in Marketing
Science. Kingston Business School, London. Volume Three 1998.
http://www.cim.co.uk
http://ite.pubs.informs.org/Vol3No1/NetessineShumsky/NetessineShum
sky.pdf
http://www.onthegopublishing.com/hotel.shtml
www.jetairways.org
www.travelinsider.info/2002/0621.htm
www.airhitch.org/info.htm#how
http//wikipedia.org/yield_management
Interviews
Mr. Leyland Stewart. Proprietor Glow Amigo Restaurant. March 1st
2007.

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Troy Cadogan. Manager Ansa Mcal. Telephone Interview. March 1st.
2007.
Mr. Junior Horatio. North American Airlines. March 2nd, 2007.
Demerara Distillers Ltd.
Mr. Lee Baptiste. Guinness Manager. Banks DIH Ltd. March 2nd, 2007.
Supervisor. Pizza Hut.
Supervisor. Roti Hut
Staff. Oasis Café
Staff. Kentucky Fried Chicken. March 3rd, 2007.
Marlon Humphrey. Manager Humphrey’s Bakery Telephone Interview.

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