SERVICE MANAGEMENT

UNIT 1

INTRODUCTION TO SERVICE MANAGEMENT

2 MARKS

Define Service 2006, 2008, 2013, 2016

A service is any act or performance that one party can offer to another that is
essentially intangible and does not result in the ownership of anything. It’s
production may or may not be tied to a physical product.

Service Management 2007, 2010, 2013

Service management refers to the process of monitoring and optimising a service

to ensure for meeting the critical outcomes of the customer values. Service
management concept is divided into two terms services and management. Here,
‘service’ means invisible, perishable, intangible activities without which people
cannot manage and ‘management’ indicate the processes involved in service
activities.

Franchising 2013, 2014, 2016

Franchising is a specialised form of licensing in which the franchiser not only sells
intangible property to the franchisee, but also insists that the franchisee agree to
abide by strict tules as to how it does business. The franchiser typically receives a
royalty payment, which amounts to some percentage of the franchisee’s revenue.

Customer Loyalty 2009, 1010, 2014, 2016

The term customer loyalty is used to describe the behaviour of repeat customers,
as well as those that offer good ratings, reviews, or testimonials. Some customers
do a particular company a great service by offering favourable word of mouth
publicity regarding a product, telling friends and family, thus adding them to the
number of loyal customers.

6 MARKS

Role of services in the economy 2005, 2007, 2009, 2010, 2014

1. Service activities are absolutely necessary for the economy to function and to
enhance the quality of life.

2. The service sector accounts for nearly 40% of the world stock of FDI and 50%
of world FDI flows. It improves job market in service sector.

3. Indian economy has been liberalising it’s service sector. FDI increased, and
some of the emerging sectors in the service industry in India are software,
retailing, management consulting, education, tourism & hospitality and
healthcare.

4. Trade in services is growing at a very fast rate all over the world. Many world
class service providers are exporting services of knowledge, creativity and
technology which every country in the world needs.

5. Service sector brings in much of the needed revenue for the country.

6. People are one of the critical factors of success in the service industry. Is is an
extremely challengeable task to amalgamate the components of technology
and people together. The technology enables the expansion of distribution
network as in the insurance and banking segment.

14 MARKS

Features of Service / Characteristics of Service 2005, 2006, 2010

Services have 5 major characteristics that greatly affect the design of marketing
programs.

1. Intangibility

Services are intangible.

Unlike physical products they cannot be seen, tasted, felt, heard or smelled before
they are bought. The person getting a “face-lift” cannot see the results before the
purchase. To reduce uncertainty, buyers will look for signs of evidence of the
service quality. They will draw inferences about service quality from the place,
people, equipment, communication material, symbols, and price that they see.

2. Inseparability

Services are typically produced and consumed simultaneously.

This is not true of physical goods than are manufactured, put into inventory,
distributed through multiple resellers and consumer still later. If the service is
rendered by a person, then the provider is part of the service. Since the client is
also present as the service is produced, provide - client interaction is a special
feature of service management. Both the provider and the client affect the service
outcome. In the case of entertainment and professional services, buyers are highly
interested in the specific provider. When clients have strong provider preferences,
price is raised to ration the preferred provider’s limited time.

3. Variability

Services are highly variable, since they depend on who provides them and when
and where they are provided.

Service buyers are aware of this high variability and frequently talk to others before
selecting a service provider. Service firms can take three steps toward quality
control.

The 1st is investing in good personal selection and training.

The 2nd step is standardising the service performance process throughout the
organisation. This is helped by preparing a service blueprint which depicts the
service events and processes in a flow chart, with the objective of recognising
potential service fail points.

The 3rd step is monitoring customer satisfaction through suggestion and

complaint systems, customer survey, and comparison shopping, so that poor
service can be detected and corrected.

4. Perishability

Services cannot be stored.

The perishability of services is not a problem when demand is steady because it is

easy to staff the services in advance. When demand fluctuates, service firms ave
difficult problems. For example, public transportation companies have to own
much more equipment because of rush-hour demand than they would if demand
were even throughout the day.

5. Ownership

In case of services, ownership cannot be transferred as in case of products.

The customer has only the right to a buying process such as occupying a room,
hiring a taxi, or hearing a teacher. The service cannot be purchased or stored. We
cannot buy and own the services. Therefore services are provided to the
consumers. Provider sells the service and consumer consumers it and the
consumer cannot own the service.

Different methods of classification of services / Different types of Services

2008, 2009, 2010, 2014

1. Classification bases on Service Options

First, service vary as to whether they are equipment based ( automated car
washes, vending machines ) or people based ( window washing, accounting
services ) People based services vary by whether they are provided by unskilled,
skilled or professional workers.

2. Classification based on Customer - Employee presence

Some services require the client’s presence. If the client must be present, the
service provider has to be considerate of his or her needs.

Thus beauty shop operators will invest in their shop decor, playground music, and
engage in light conversion with the client. These are interpersonal services.

Some services find the presence of customer only. These are known as self
service organisations. For example, ATM service.

There are certain services where only the presence of the employee is required.
These are known as remote services for example, Insurance companies.

3. Classification based on ultimate user

Services differ as to whether they meet a personal need ( personal services ) or a

business need (business services) or a industrial need (plant maintenance and
repair) Physicians will price physical examinations differently for private patients
versus company employees on a retainer basis. Service providers typically develop
different marketing programs for personal and business markets.

4. Classification based on objectives

Service providers differ in their objectives ( profit or non profit ) and ownership
( private or public ). These 2 characteristics, when crossed, produce four quite
different types of service organisations. Clearly, the marketing programs of a
private investor hospital will differ from those of a private charity hospital or a
Veteran’s Administration hospital.

5. Classification based on level of tangibility

Services can also be classified based on the the degree of tangibility of service.
These are highly intangible services such as car rentals, vending machines. Then
there are highly intangible services such as consultancy, legal service, baby sitting,
etc. And lastly there are major services linked with minor tangible goods services
such as people buying a seat on aircraft are buying transportation service without
anything tangible to show for their expenditure.

6. Classification based on specialisation

Services can be classified based on the level of specialisation. They are

professional services such as the medical, legal, accounting, etc and there are non
professional services such as babysitting, casual labour, etc.

7. Classification based on External-Internal services to Manufacturer

External Services are concerned with the normal work done by the company to
prepare price, distribute and promote the service to customers. Internal service
covers a wide range of activities undertaken by the company such as training and
motivating employees, recruitment, publications, payroll administration, office
cleaning, etc.

 UNIT 2

SERVICES MARKETING

2 MARKS

Service Marketing

Service marketing is selling of services in the best interest of users/ customers. It

is concerned with a scientific and planned management of services which makes
possible a fair synchronisation of the interests of providers as well as the users.

Marketing Mix

Service Marketing Mix is a fair combination of product mix, promotion mix, price
mix and the place mix. The ultimate goals of different mixes is to deliver standard
goods or services to the customer.

P’s of Marketing Mix

Product, Pricing, Promotion, Place, People, Process, Physical Evidence.

Physical Evidence 2013

Physical Evidence is one of the marketing-mixes available to the providers on

basis of which customers form impressions about the service organisations. It
reinforces the proposed position and image of the organisation in the minds of the
customers.

Service Quality 2013

Service quality implies the meeting of service delivery with customer expectations.
It is a critical element of customer perceptions. The elements of service quality are
outcome, interactions and physical environment quality.

Customer Gap 2006, 2010

Customer expectations and customer perceptions play significant role in service

marketing. Customer expectations are the standards of or reference, points for
performance against, which service experience are compared, and are often
formulated in terms of what a customer believes should or will happen. This when
one visits a fast food restaurant, one expects a certain level of service, one that is
considerably different from the level one would expect in an expensive restaurant.

The customer gap therefore, is the difference or gap between the customer
perceptions and expectations. In perfect world, expectations and perceptions
would be identical. That is customer would perceive that they receive what they
thought they would and in fact should.

Producer Gap 2009

A gap is sometimes called the space between where we are and where we want to
be. A gap analysis helps bridge that space by highlighting which requirements are
being met and which are not.

The difference between customer expectations of service standards and quality

and service providers understanding of these expectations is called the providers
gap.

Moment of truth

Moment of truth in customer service is an instance of contact or interaction

between a customer and a firm through a product, sales force, or visit that gives
the customer an opportunity to form or change an impression about the firm.

Market Segmentation 2014

Market Segmentation is the act of identifying and profiling distinct groups of

buyers who might require separate products and marketing mixes. It is the process
of splitting customers into different groups, or segment, within which customers
with similar characteristics have similar needs.

6 MARKS
Distinguish between goods and services 2005, 2006, 2007, 2016
NO Goods
1 Tangible economic products, we can view the
goods bought by us
2 Can be transferred from one place to another
by transport
3 Goods can be standardised by checking for
conformance with the quality standards long
before they reach the customer
4 Consumers who bought goods are in
possession and also possess a legal right to
resell them
5 There is no involvement of customers to
create a tangible product.
6 The quality or features of physical goods can
be before purchasing determined prior to
purchasing the product such as colour, shape,
style, etc.
7 In case of physical goods, marketing plans are
structured around the traditional 4P’s namely
product, price, promotion and place.
8 Goods are first produced and then stored,
and finally sold and consumed.
9 Tangible goods not sold on any day, can be held
in inventory and sold at a later point and the
revenue recaptured.
10 Demand for tangible goods can be predicted
based on consumer patterns, market entries,
etc.
11 Goods dominant with tangible attributes can be
more readily sold in different nations
Services
Intangible, there is no way to see, touch or feel
them
Not possible to transfer services from the
point of sale to point of use
Services cannot be standardised. It is difficult
for service organisations to control quality and
offer a consistent service.
Services cannot be resold. They have to be
used or surrendered.
Customer’s actively participate in creation of
the service either by serving themselves or by
cooperating with service personnel
Difficult for the customer to evaluate the
quality of service
In case of services, there are 7P’s namely
product, price, promotion, place, process,
physical evidence and people.
Services are first sold, then produced and
consumed simultaneously.
Services are perishable, they cannot be stored
for later sales or use.
It is very difficult to predict demand for
services. Demand for some services can
fluctuate strongly by the month, the day of the
week or even the hour of the day.
Varying legal system, stage of economic
development, cultural norms, lacks of channels
of distribution and different regulatory barriers
complicate selling services across national
borders.
How does people and process dimensions of service contribute to marketing
of service. 2009, 2014

The marketing mix originally has 4 P’s. They are product, price, place and
promotion. In addition to the traditional 4 p’s it’s now important to add additional 3
p’s. They are people, process and physical evidence.

The additional p’s are added because today marketing is far more customer
oriented than ever before, and because the service sector of the economy has
come to dominate economic activity in this country.

1. People

People are the main influencers when it comes to helping a customer mould his
perception or make a purchase decision, people consist of all those actors who
are part of the process of delivering a service or product to a customer, each of the
roles so performed are important for the final sale to take place.

Example - South West Airline ensures that each of their employees possess certain
skills that helps in promoting the airline keeping in mind their vision and values, the
employees are asked to “have fun” and also are trained to make sure the ethos of
the “low carrier” aircraft is exhibited to each of the customers. Thereby being able
to capitalise on the most important assets, ‘people’.

2. Processes

Processes associated with customer services are a number of processes involved

in making marketing effective in an organisation. Example- Processes for handling
customer complaints, processes for identifying customer needs and requirements,
processes for handling order, etc.

Example - South West airlines follow a very low, no frill career objective, it makes
sure that all the functions ranging from seat allocation to not providing baggage
transfer are keeping in mind their version, here the customers are very much part
of the process.

Explain the role of the customer in the delivery of the service 2010, 2011

There are 3 major roles played by the customer in the delivery of the service.

1. Customers as Productive Resources

Service customers are often called the “partial employees” of the organisation. For
example the human resources who contribute to the organisation’s productive
capacity. Customers contribute to the organisations productivity in terms of
quantity and quality of the output generated.

Customer participate in many of the service creation processes by learning to

perform more effectively the tasks that they are already doing.

An example in the regard is that of introduction of many automated airline services

such as baggage self check-in, self ticketing, etc.. all these are intended to speed
up the process for customers while freeing employees for other tasks.

2. Customers as contributors to service quality and satisfaction

In service areas such as healthcare, education, personal fitness, and the like,
service outcome is highly dependent on customer participation.

For example - If a patient does not take medication on the right time or follow the
dietary instructions given by the doctor, he will not be able to recover out of the
illness.

3. Customers as competitors

In cases where the customers partially perform the service, or entirely perform the
service themselves, no service provider is needed. In this sense customers are
competitors of the companies that deliver the services. Whether to provide the
service for themselves, or have someone else provide for them, is a big question.
However this decision is dependent on a number of factors such as:

level of expertise, resource availability, time constraint, economic rewards, degree

of self confidence, and control over processes and outcomes.

14 MARKS

7P’s of Marketing / Expanded mix in services 2005, 2006, 2010, 2013, 2014

There are 7P’s. Product, Price, Promotion, Place, Process, People, Physical
evidence.

1. Product

Product is the most basic marketing mix tool, which stands for the firm’s tangible
offer to the market, including the product quality, design, features, branding and
packaging.

A service product refers to an activity or activities that a marketer offers to

perform, which results in satisfaction of a need or want of predetermined target
customers.

The service product consists of core product, which is the primary benefit the
customers seek from the service; and the peripheral services that are the
secondary benefits the customers seek. The management often tries to integrate
core and peripheral service into a competitive advantage.

A company’s product mix will have a certain width, length, depth and consistency.
These four dimensions provide the handles for defining the company’s product
strategy. The company can add new product lines, thus widening its product mix.

It can add more product variants to each product line. It can acquire strong
reputation is a single field or participate in several fields.

2. Price

Price is the only element in the marketing mix that produces revenues, the other
elements produce costs.

Price should commensurate with the perceived value of the offer or buyers will turn
to competitors. The type of organisation, the market structure, the lifecycle stage
of the service, price charged by the competitors and organisational objectives - all
have an impact on pricing decisions.

Costs, competition and value to the customer are the 3 legs of the pricing strategy.

The cost to be recovered sets a floor to the price that ay be charged, the value of
the service product to the customer sets a ceiling, where as the price charged by
the competitors for similar or substitute products may determine where, within the
ceiling-to-floor range the price level should actually be set.

Company’s use various pricing methods such as cost plus pricing, price
skimming, penetration pricing, etc..

3. Promotion

Promotion stands for the various activities, the company undertakes to

communicate and promote its products to the target market. The basic elements
which serve to achieve organisational communications objectives form the
promotional mix. This essentially brings together the various promotional tools
used in the marketing program in a coordinated and controlled way. In consumer
services marketing, advertising will be by far the main component ( and the most
expensive ) while in industrial and business-to-business sectors, greater emphasis
is placed on personal selling, trade fairs and other promotional tools.

There are 3 types of promotional objectives.

- inform

- remind

- persuade

Promotion may not always be aimed at potential customers or end customers, but
in many business areas it is necessary to design promotional programs aimed at
the channel customers to complement end user promotions. Channel customers
are intermediaries in the channel of distribution.

Example - In tourism industry, hotel owners and airlines will need to promote their
services to tour operators as well as to the end users and independent travellers.

4. Place

Distribution or the ‘place’ element, of the marketing mix is concerned chiefly with 2
main issues - accessibility and availability.

The inseparable nature of services means that services must be accessible to

potential customers in order for the exchange to take place. Accessibility must be
a component of the actual service offering for it to have value.

Also the perishable nature of services means it is essential for the service to be
available to customers in the right place at the right time. Services cannot be
stored until a later date, it must be available for consumption at the point of
production. The simultaneous production and consumption of service indicate that
the channel of distribution is generally limited.

Location decisions are important in professional services or retail financial

services. Because many clients use convenience as a key factor, which enables
the customers to walk-in to make an appointment for an eye test or for legal
advice. The service provider must see that their services are available and
accessible to the target market.

For this purpose they have to design a channel strategy.

5. Process

The principle by which service delivery processes can be designed, implemented

and monitored are really no different from those mentioned relating to the fields of
manufacturing, computing, etc.

Service encounter should be a positive one and service quality should be

maintained. The following steps should be followed while designing the service
process.

1. Breakdown the process into logical steps and sequences.

2. Identify those steps which have the highest probability of something going
wrong because of judgement, choice or chance.

3. Set deviations or tolerance standards for these steps thereby providing a

performance band for functioning.

6. People

Human element forms an intrinsic part of the service industry not only to service
personnel, but also recognises the role that other people such as the customers
play in service delivery.

Central to successful service delivery is management of the customer/ service

provider interface. Employees need to understand their role in the service
exchange, and human resources management provides the programs and
strategies to ensure the highest standards of customer care.Development of
quality circle, empowerment and a service culture organisation all prove the above.

In services, marketing is everyone’s job. Thus it is important to have employees

with skills, commitment, attitude and ability to use discretion in dealing with
customers. This especially true in those services where there is a high level of
contact with customers. By adding value in the way the employees perform and by
maximising the impact of their activities, the firm has a competitive edge over the
other service companies.

7. Physical Evidence

The important factor influencing consumer satisfaction with a service exchange of

any organisation is the physical setting within which it occurs.

While the physical setting may have an affect upon the exchange of goods as well
as services, it is suggested that the setting’s symbolic value has greater impact
upon the evaluation of a service. This physical evidence can take a number of
forms. The building and the service environment where the service is delivered are
the major evidences of the nature of service.

A clean, bright environment is used in a service outlet can help reassure potential
customers regarding their purchase decision. For this reason, fast food and photo
processing outlets often use red and yellow colour schemes to convey an image of
speedy service. In case of tourism industry, brochure serve the purpose of
evidence.

Physical Evidence are of 2 Types

a. Peripheral Evidence

Which can be possessed by the consumer but has little independent value.

Example - Bank cheque book

b. Essential Evidence

Which play an important part in service facilities, which cannot be possessed by

the consumer but has independent value.

Example - Bank’s Branch or Office

The service provider must coordinate both types of physical evidence to achieve
uniformity in its projected service image.

5 Dimensions of “SERVQUAL” or Service Quality / Factors which influence on

service quality

The popular tool used for measuring service quality in services is called “Servqual”
and is based on the service quality difference diagram. Servqual was developed by
Parasuraman and others and is basically a multiple-item scale used for measuring
the five criteria of service quality.

Reliability, Willingness, Assurance, Empathy and Tangibles.

It has been found that the quality of a service has 2 distinct components.

- Technical Service Quality : The outcome component of the service delivery

process.

- Functional Service Quality : The service encounter component during which

the customer and server interact,

THE 5 CRITERIA’S

1. Reliability

It implies the capacity of the service firm to deliver the promised service
dependably and accurately. This means that the same service is performed every
time, on time, in the same way and without mistakes.

For example - Receiving the newspaper or milk at approximately the same time
each day is quite important for people.

2. Willingness

It refers to how willing employees are to help customers and provide prompt
service. Customers do not like to wait unnecessarily and if this happens, it reflects
badly on the quality of service.

3. Assurance

It means the knowledge that the providers possess which enables them to perform
the service competently. It also includes attitudes like courtesy, politeness and
respect for customer that the server holds the customer’s best interest on a high
pedestal.

4. Empathy

It means the power of understanding the customer’s feelings and needs which
allows the server to care for him and provide personal attention to him. With this, a
customer feels that he can approach the server with confidence and has a feeling
of security.

5. Tangibles

It includes the overall appearance of the surroundings, equipment, information

material (brochures, handouts, menus, etc.) and personnel. This can act as visible
evidence of the care and attention to details shown by the service firm.

CHECK SCANNER FOR SOME MORE QUESTIONS

 UNIT 3

TOURISM AND HOSPITALITY

2 MARKS

Tourism 2007, 2009

Tourism is a temporary ( not more than 1 year ), short term movement of people,
establishing relationship with others and involves complex mixture of material and
psychological elements.

Tourist 2010, 2013

Tourist is a person who travels for pleasure, usually sightseeing and staying in
hotels. He / she is supposed to leave his /her hometown in order to visit a different
area for the purpose of leaving an experience of shopping, entertaining, visiting,
cultural and historical attractive locations and having fun.

Tourism Marketing and Tourism Management 2016

Tourism marketing is creating a need to visit a destination of tourist interest.

The activities that are managed to boost tourism services is called Tourism
Management.

Tour operators 2009

Tour operators buy an element in the travel product and add value and sell as a
package to the clients. He is responsible for delivery of service required by the
customer.

Package Tour 2010

Package tour is a tour arranged by a travel agent. It is a complete trip that includes
fare, accommodation, meals, ground transport, tour guides, taxes, etc. in one all
inclusive price.

4 important tourist destination in India 2006

- Taj Mahal, Agra

- Mysore Palace, Mysore

- Goa Beach, Goa

- Tirumala Balaji Temple, Tirupati

2 World Heritage Centre’s in India 2008

- Taj Mahal has been listed as new seven wonders of the world

- Ajanta Caves, cut into horseshoe shaped hillside, silent but for birdsong and
rippling Waghora River below, Ajanta is a hidden sanctuary.

Travel Agent 2014

A travel agent is one who acts and does work on behalf of a principal, who may be
the original service provider such as a hotel, airline, transport or shipping company.

Features of Travel Organisation 2013

- Own means of transport, examples tourist buses

- Provide attractive destination packages

- Arrange for hotel reservation

Services offered by Travel Agent 2005, 2006

- The arrangers for accommodation

- Arranges for transport

- Food

- Guide

2 Travel Organisations 2007

- Indiavoyages

- HRG Sita India

Escorted Tour 2007

A prepaid, structured programme of sight seeing, meals and accommodation for a

group of people travelling together accompanies by an escort from the beginning
to the end of the trip.

Word of mouth communication 2005, 2006, 2014

Word of mouth communication plays a very important role in tourism. If someone

known to us communicates to us something positive or negative regarding the
services they have experienced in a particular hotel, in the restaurants or
cafeterias, at the tourist sites, etc. we find the process effective.

Expand MICE and TAAI 2008

MICE - Meeting Incentive Conference Exhibition / Events

TAAI - Travel Agents Association of India

What is meant by the occupancy rate in hotel industry 2016

It is the information for the management of the hotel about the relation between
the number of occupied rooms and the total number of rooms.

Expand ITDC, FIT, GIT

ITDC - Indian Tourism Development Corporation

FIT - Free Independent Traveller ( Applicable to Individual travellers )

GIT - Group Inclusive Tours ( Applicable to a group of people travelling together )

Expand NHB and GIC 2016

NHB - National Housing Bank

GIC - General Insurance Company

6 MARKS

Nature / Features of Tourism 2007

1. The tourism industry is highly perishable

Perishability is an important factor that influences the decision making behaviour

of the tourist professional. The service is used, just when it is offered and therefore,
it it remains unused, the business is lot. If the tourist don’t visit a particular place,
id the seats in hotels, aircrafts remain vacant, the business is lost.

2. The tourism industry is highly inflexible

The capacity of a hotel in terms of rooms, or seating capacity in a transport facility

is fixed and it is not possible to meet sudden demand during peak seasons. At the
same time during off seasons, the demand is less and the capacity remains
utilised.

3. Intangibility complicates the task of marketers

Tourism is a multisegment industry in which the transportation and

accommodation service constitute a place of significance. The users, first use and
then come to know about the quality of the service.

4. Fixed Location

The fourth important characteristic is fixed location. The destination is fixed and
efforts are required to make the potential tourists to visit the location.

5. Large financial investment

Modern tourist establishment requires large financial investment both to start and
to maintain the services, making it ‘high risk’ service as the rate of return is
critically important. Tourism industry can’t exist if hotels, transportation services
are found nonexistent.

Efficient transportation facilities, hygienic hotel accommodation, sophisticated

communication services are some of the key infrastructural facilities, adding to the
tourism service. All this requires huge capital layout.

6. The users are a heterogenous group of people

It is important to mention that the tourism users come from different regions,
income groups, sections, age groups, genders, professions or so. This makes it
essential that the marketers are familiar with the different groups of people using
the services.

Due to the development of science and technology, there has been tremendous
innovations in transportations, communication and other business activity. This
has contributed to the growth of the tourism industry.

Significance of Tourism Industry in India 2008, 2010, 2016

1. Tourism Industry in India is on a great boom at the moment. India has

tremendous potential to become a major global tourist destination and Indian
tourism industry is exploiting this potential to the hilt.

2. Travel and Tourism industry is the second largest foreign exchange earner for
India, and the government has given travel and tourism organisations export
house status.

3. The tremendous growth of Indian economy has resulted in more disposable

income in the hands of middle class, thereby prompting increasingly large
number of people to spend money on vacations abroad or at home.

4. India is a booming IT hub and more and more people are coming to India on
business trips.

5. Aggressive advertising campaign ‘incredible India’ by the Tourism Ministry

has played a major role changing the image of India from that of the land of
snake charmers to a hot happening place and has sparked renewed interest
among foreign travellers.

6. Tourism industry’s contribution to Indian Industry is immense. Tourism is one of

the main foreign exchange earner and contributes to the economy indirectly
through its linkages with other sectors like horticulture, agriculture, poultry,
handicrafts and construction.

7. Tourism industry also provides employment to millions of people in India both

directly and indirectly through its linkages with other sectors of the economy.
According to an estimate total direct employment in the tourism sector is
around 20 million.

“Tourism Act as a catalyst of an Economy”. Substantiate 2013

Tourism acts as a catalyst of an economy in the following ways:

1. It increases employment

Tourism is highly labour intensive. It uses a relatively high amount of unskilled and
semi-skilled workers. Hence, tourism is an important source of employment for
poor people.

2. Indirect effects

Indirect effects occur through tourism value chain. Tourism draws on inputs from
the food beverage, construction, transportation and other sectors.

3. Dynamic effects

Tourism has a wide range of dynamic effects. It can affect the livelihood strategies
of local households, the business climate for small enterprise development,
patterns of growth of local and national economy.

4. Employment of women

Tourism tends to employ a relatively high proportion of women and helps enhance
women’s economic positions and overcome gender barriers.

The tourism industry in India is substantial and vibrant, and the country is fast
becoming a major global destination. India’s travel and tourism industry is one of
the most profitable industries in the country, and also credited with contributing a
substantial amount of foreign exchange.