Business of Tourism

Session 1- Batch 2021-23

Introduction to Tourism,
underlying Terms and Concepts
Why tourism assumes an important role not
only in our lives but also globally?

Why study tourism?

Interest in how people spend their spare time,
especially their leisure time.
Tourism is a discretionary.
Is of growing economic significance.
Employment Opportunities.
Becoming associated with quality of life issues.
Possible solution to poverty.
Technology introduction.
What is tourism to you?
 Challenge of defining tourism

Tourism has been characterised as:

Under theorised Eclectic Disparate

Yet not atheoretical.

Great deal of efforts toward defining tourists.
Designates variety of concepts.
Leiper (1993) levels of definition

POPULAR NOTIONS

HEURISTIC definitions

TECHNICAL DEFINITIONS
 Leiper (1993) proposed that meaning of the term tourists may be
subject to three levels of definition.
First, there are POPULAR NOTIONS that comprise the meaning
that are evident in everyday communications.
Second, there are HEURISTIC definitions often in the form of
popular notions that are refined into academic concepts with
a view to clarifying meaning.
Finally there are TECHNICAL DEFINITIONS that might, for
example, form a basis for legal administration (such as entry
of tourists into a foreign country) and which commonly
provide a means for statistical enumeration of tourists and
tourism.
 Hunziker and Krapf’s definition of Tourism

One of the first attempts at defining tourism was that of

Professors Hunziker and Krapf of Berne University in 1942. They
held that tourism should be defined as ‘the sum of the
phenomena and relationships arising from the travel and stay
of non-residents, in so far as they do not lead to permanent
residence and are not connected to any earning activity’
 League of Nation’s adopted definition

League of Nations had recommended adopting the

definition of a ‘tourist’ as one who travels for a period of
at least 24 hours in a country other than that in which he
or she usually resides.
 United Nations’ Definition of Visitor
Visitor - any person visiting a country other than that in
which he has his usual place of residence, for any reason
other than following an occupation remunerated from
within the country visited. (UNWTO, 2010).
Revised to:
A visitor is a traveler taking a trip to a main destination
outside his/her usual environment, for less than a year, for
any main purpose (business, leisure or other personal
purpose) other than to be employed by a resident entity in
the country or place visited. (UNWTO, 2010)
Classifying travellers

Source: UNWTO
 Related Terms (UNWTO classification of tourism based on
border crossing)

 Domestic tourism, involving residents of the given country

travelling only within this country.
 Inbound tourism, involving non-residents travelling in the given
country.
 Outbound tourism, involving residents travelling in another
country.
 Domestic tourism
 Tourism involving residents of one country traveling within their own country.
 Does not involve the crossing of international borders at entry points.
 Difficult to track.

A strong relationship among tourism Mass domestic tourism determinants:

and visiting friends and relatives and - increased disposable income
religious pilgrimage has been found in - labour rights
countries with a long history of - deregulation
domestic tourism
 Inbound tourism
 All incoming non-resident arrivals to a targeted destination.
 The foremost choice of travel mode is by air, closely followed by road, and,
peripherally, by water and rail.
 Long haul trips.
 Relatively higher expectations.
Leisure Purpose of
travel
Health

Recreation
Business
Holidaying VFR

Religion
 Outbound tourism
 Outbound tourism describes the phenomenon of residents traveling from one
country to another.
 Source markets are largely concentrated in the industrialized countries.
 Rise in a single tourist market seen as a significant development.

Thrust areas for market research

Destination Travel External Marketing

choices behavior influences strategies
 Business of Tourism

Foundations for Understanding

Tourist Motivations
Outline

 Push and Pull Motivations

 Maslow’s Hierarchy of Needs
 Pearce’s Travel Career Patterns
 Plog’s Psychocentric– Allocentric continuum
 McIntosh et al. (1995) categories of Motivations
 Push and Pull Motivations

 Travellers are both “pushed” to travel by personality traits or

individual needs and wants, and “pulled” to travel by
appealing attributes of travel destinations.
 Pull factors pull consumers towards a particular destination.
Pull factors can help the tourist choose the destination
which best meets their motivations.
 Push motivations are useful for explaining the desire for
travel while the pull motivations are useful for explaining the
actual destination choice.
Cook, Hsu & Taylor, 2018
An additional and particularly appropriate personality
trait theory that relates to tourism is optimal arousal theory.
Optimal Arousal Theory - Each person has a unique arousal level
that is right for them. When our arousal levels drop below these
personalized optimal levels, we seek some sort of stimulation to
elevate them.
When we become overly aroused, we seek soothing activities
that help calm and relax us. If we become bored, we head in
search of more invigorating activities that will energize and
arouse us.
It's all about striking the right balance, but that balance is unique
to each individual.
 Maslow’s Hierarchy of Needs
 Abraham Maslow provided a good general framework for
describing human needs in his classic model depicting the
hierarchy of needs. Physiological needs consist of food, water,
clothing, shelter, and sleep.
 Next are safety needs, which consist of protection, security,
and the comfort we seek from familiar surroundings.
 Belongingness needs include love, friendship, affiliation, and
group acceptance.
 Esteem needs include the desire for status, self-respect, and
success.
 The highest level in Maslow’s hierarchy of needs is self-
actualization or the desire for self-fulfillment.
 Physiological (Tour packages that offer frequent rest stops; Easily
accessible food outlets in theme parks)
 Safety (Reservation service provided at government-approved
agencies; Tour guide services provided in exotic or unfamiliar
locations)
 Belongingness (Group tours with people having similar interests
and/or backgrounds)
 Esteem (Elite status in frequent-user programs; Incentive travel
awards for superior company performance)
 Self-Actualization (Educational tours and cruises; Learning the
language)
 The motivation process

Only if the perception of the need and the attraction match will a consumer be
motivated to buy the product.
Pearce’s Travel Career Patterns (TCPs)
 The TCP is based on Maslow’s hierarchy of needs, but it goes
further by providing more detailed insights into specific tourist
behaviours.
 According to Pearce, tourist motivations can be illustrated as
three layers, where each layer consists of different travel
motives.
 The most important common motives (e.g., novelty,
escape/relax, and enhancing relationships) are found at the
centre in the core layer.
 The next layer, surrounding the core, includes the moderately
important travel motives.
 The outer layer consists of common, relatively stable, and less
important travel motives
 Plog’s Psychocentric– Allocentric Continuum

 Allocentrics – those seeking variety, self-confident, outgoing and experimental.

 Psychocentrics – those who tend to be more concerned with themselves and the small
problems of life.
 Mid-centrics- most holidaymakers are likely to fall somewhere between the extremes –
thus mid-centrics make up the largest sector of the market.

Tourist typology and travel destination

choice – Plog’s Allocentric and
Psychocentric scale

Stanley Plog
McIntosh et al. (1995) categories of Motivations
McIntosh et al. (1995) summarised these different tourism
motivations into four categories: physical, cultural,
interpersonal and status and prestige.
A bundle of benefits, a particular package holiday, or a
particular destination, can be shown to provide the
range of benefits sought, the more attractive that
holiday will appear to the tourist compared with other
holidays on offer.
Terms of the day
• Acculturation
• Carrying capacity
 Acculturation

Those phenomena which result when groups of

individuals having different cultures come into
continuous first hand contact, with subsequent
changes in the original culture patterns of either or
both groups.” (Redfield, 1936)
 Carrying capacity

 The maximum number of people that may visit a tourist

destination at the same time, without causing
destruction of the physical, economic, sociocultural
environment and an unacceptable decrease in the
quality of visitors’ satisfaction” (UNWTO 1981).
 Getz (1983) splits it into six categories:
 The physical is the maximum use of a resource by tourists before it begins to be
unacceptably degraded.
 The economic is the maximum use of a resource by tourists before leading to an
unacceptable level of economic dependency.
 The perceptual is a measurement of tourists’ perceived level of carrying capacity in
a resource, beyond which it is perceived as overcrowded.
 The social refers to the maximum use of a resource without causing unacceptable
levels of negative feelings towards tourism among the locals.
 The ecological is the maximum use level without causing unacceptable damage to
the natural environment of the resource.
 Finally, the political refers to the maximum use of a resource without causing
political instability, such as conflicts over land rights or control of the incomes from
tourism.
 Business of Tourism

Introduction to tourism Demand

and Supply
Outline

The Economic Determinants of Demand

The Social Determinants of Demand
The Psychological Determinants of
Demand
 Tourism demand may be defined for a particular destination as the
quantity of tourism product (i.e. combination of tourism goods and
services) that consumers are willing to purchase during a specified
period under a given set of conditions. Tourism demand is a
measure of visitors’ use of a good or service.
 Companies such as airlines, tour operators, hotels, cruise ship lines,
and many recreation facility providers and shop owners are
interested in the demand for their products by tourists.
 All industries are interested in risk reduction. However, this need
may be more acute in the tourism industries than for other
industries with other products, for the following reasons:
 Perishable, inseparable from the production-consumption process, Customer
satisfaction depends on complementary services, Leisure tourism demand is
extremely sensitive to natural and human-made disasters.
 The Economic Determinants of Demand
 Economic factors such as higher levels of income, levels of prices
and exchange rates are important enabling variables.
 There is a link between income and motivation because any higher
income removes some of the uncertainties of life, thereby freeing
people from the need to continually concern themselves with the
need for shelter, warmth and food.
 From an economist’s perspective, it is the enabling function of
variables such as prices and income that are important as being
both measurable and of predictive use.
 From the pragmatic stance of those wishing to build roads, hotels,
attractions and infrastructure, the potential use of such information is
of obvious importance.
 Demand function for the tourism product in destination i by residents of origin j is
given by

 Qij= f(Pi, Ps, Yj, Tj, Aij, Ɛij)

 Qij Quantity of the tourism product demand in destination i by tourism from
country j
 Pi is the price of tourism for destination i;
 Ps is the price of tourism for substitute destinations;
 Yj is the level of income in origin country j;
 Tj is the consumer tastes in origin country j;
 Aij is advertising expenditure on tourism by destination i in origin country j;
 Ɛij is disturbance term that captures all other factors which may influence the
quantity of the tourism product demanded in destination i by residents of
origin country j.

More reading:
Book- Tourism Demand Modelling and Forecasting : Modern Econometric Approaches (IIM Sirmaur Library access)
In conventional micro-economic theory, the demand for any product or
service can be defined in terms of:

 Dt = f(Pt , P1 ... Pn , Y, T)
Where Dt = the demand for tourism
 Pt = the price of tourism
 P1 ... Pn are the prices of other goods
 Y = income
 T = taste
 It can be hypothesised that, as incomes increase, so the demand
for tourism is also likely to increase.
 However, studies show that, for the developed world and for
most of the second half of the twentieth century, the demand for
tourism increased faster than the growth of National Income
(Cooper et al., 1993).
 But in many instances the causes of a reduction in demand for
travel to and from any group of countries has been due to non-
economic, exogenous factors.
 The Social Determinants of Demand
 The growth of tourism demand has been fuelled by an increase in
income, but another important factor is the increase in leisure time
permitted.
 The tourism/work ratio swung towards tourism as the number of hours of
taken holidays increased, and the number of hours worked decreased.
 As the number of hours of leisure available to people increased, so too,
arguably, the tourism/leisure ratio also changed, as other forms of leisure
began to compete with tourism.
 The trade-off hypothesis- From this viewpoint there is an inverse relationship
between work and leisure time. Consequently there is a choice between
working longer hours and generating more income, or working fewer
hours and having less income.
 The compensation hypothesis- The compensation hypothesis argues that
leisure is the means by which people compensate for the deficiencies in their work. If
work is boring, repetitive, dictated by the speed of the machine or
subdivided into smaller tasks so that the worker never sees the whole,
then leisure is the means by which the worker recreates the sense of
being human.
 The Psychological Determinants of Demand

 Essentially tourism is not a purchase of the physical, but a means

by which the holidaymaker acquires experiences and fulfils
dreams.
 The holiday is seen as the culmination of a year’s work.
 Ryan (2002) has also noted that much of the psychological
literature pertaining to tourism is based on a tradition of
humanistic psychology. This is partly because, unlike other
psychiatric concerns, it is a study of ‘normal’ people, not a study
of those who are psychologically dysfunctional.
Motivation for Holidaying

 The escape motivation

 Relaxation
 Play
 Strengthening family bonds
 Prestige
 Social interaction
 Educational opportunity
 Self fulfilment
 Wish fulfilment
 Types of Tourist
 Organised mass tourists- These are the least adventurous tourists. On
buying their package holiday, they remain encapsulated in an
‘environmental bubble’.
 They adhere to an itinerary fixed by the tour operators, and even their trips out
of the complex are organised tours.
 The individual mass tourist- These are similar to the organised mass
tourists in that they utilise the facilities made available by the tour
operator, but they have some control over their own itinerary.
 They may use the hotel as a base and hire a car for their own trips. However,
many will tend to visit the same places as the mass organised tourist in that they
will visit the ‘sights’.

Cohen in 1972
The explorer- The explorer arranges his or her own trip
alone, and attempts to get off the beaten track. Yet
such tourists will still have recourse to comfortable tourist
accommodation.
The drifter- The drifter will shun contact with the tourist
and tourist establishments, and identify with the host
community. Drifters will live with the locals and adopt
many of the practices of that community.

Cohen in 1972
 Business of Tourism

International Tourist Market, Economic

Data & Statistical Measurement of
Tourism
An important part of the maturing process for any
science is the development or adaptation of
consistent and well-tested measurement techniques
and methodologies which are well-suited to the types
of problems encountered in practice.
The statistical measurement of tourism is a relatively
recent activity.
Without a reliable historical and ongoing quantitative
account of tourism, its development as an area of
study would be severely hampered.
 What kind data would be
important for tourism industry?
why is it important?

What can be the possible sources

of tourism data?
Tourism statistics are typically measurements of arrivals,
trips, tourist nights and expenditure, and these often
appear in total or split into categories such as business
and leisure travel.
They are normally estimates, often based on sample
surveys, and are liable to large errors.
Tourists are by definition highly mobile individuals, thus
making it difficult to ensure in any sampling procedures
representative or probabilistic samples.
It is recognised that ‘intentions studies’ (where
measurement is taken before travel) are likely to produce
information that is at variance with the reality that occurs
at a later date.
Data collected during travel represent a mixture of
actual and intended behaviour, and post-travel
measures involve problems of identifying and locating
respondents as well as those associated with individuals
finding difficulty in accurate recall.
 Measuring domestic tourism
 Demand for accommodation and other services and facilities by
domestic tourists may complement or compete with that by
tourists from abroad.
 Majority of trips do not involve the crossing of international
boundaries. However, compared to the statistics available for
international tourism movements, those for domestic tourism are
extremely poor both in terms of quality and quantity.
 Generally figures underestimate true domestic movements, as
visits to friends and relatives, the use of forms of accommodation
other than hotels (for example, second homes, camp and
caravan sites) and travel by large segments of a population from
towns to the countryside are for the most part not included.
 Demand side data are gathered on characteristics of trips
(purpose, duration, modes of transport, main destination, types
of accommodations, organization of trips – packaged or not,
related expenditure) and characteristics of tourists (age,
gender, marital status, nationality, citizenship, level of
education, place of residence, occupation, household
income).
 Supply-side statistics are usually gathered from establishments
in various locations. The most common data gathered are on
receipts/sales/revenues, operating expenses, employment,
taxes paid, capacity, location, prices, occupancy, and
amenities.
Travel & Tourism remains an important driver for job creation across the world and a dynamic
engine of employment opportunities (WTTC):

GLOBAL ECONOMIC IMPACT & TRENDS 2021, WTTC

TOP 15 LARGEST COUNTRIES IN TERMS OF TRAVEL & TOURISM GDP CONTRIBUTION

GLOBAL ECONOMIC IMPACT & TRENDS 2020, WTTC

 WTTC’S research
highlights that Travel &
Tourism will be the key
sector in driving the
recovery of the global
economy post COVID-19
by generating new jobs
and driving visitors back
to destinations.
Importantly, the sector
will also have a positive
economic domino effect
on suppliers across the
entire supply chain.
 According to the World Travel and Tourism Council the global
tourism industry (considering international and domestic travel)
accounted for 10.3 percent of global GDP.

TRAVEL & TOURISM GDP GROWTH COMPARED

WITH OTHER SECTORS

GLOBAL ECONOMIC IMPACT & TRENDS 2020, WTTC

 Regional Performance, 2020

Regional Performance, 2019

 Top destinations
10 destinations by international tourism receipts, 2019
10 destinations by international tourist arrivals, 2019

International Tourism Highlights, 2020 Edition, UNWTO

 Doblin Ten Types of Innovation

• Coopetition

• Singapore
City Mall

• Free Wi-Fi,
• Outsourced • Customisa • Big Picture
• Multi-Year,
Dishwashing ble Space
Multi event Visual
• Variable • Specific experience
deals,
cost for employee
• Churches for • Food
items as single
weekend presentation
washed touch
point
Brand Asset Valuator
BAV measures a brand value under the 2 broad
(Young and Rubicam)
heads of:
1. Brand Vitality which refers to the current and future
growth potential that a brand holds in it.
2. Brand Stature which refers to the power of a
brand.
Differentiation: It is the ability of a brand to stand
apart from its competitors.
Relevance: How closely can the consumers relate to
the brand’s offering and is a significant driver for a
brand’s penetration.
Esteem: Consumer perception about the brand.
Whether a brand is popular or not, whether it delivers
on its stated promises.

Knowledge: This refers to the degree of awareness

about a brand in the minds of its consumers.
Brand Personality- Brand personality is a set of human characteristics that are
attributed to a brand name.

There are five main types of brand personalities with

common traits:

Excitement: carefree, spirited, and youthful

Sincerity: kindness, thoughtfulness, and an orientation
toward family values
Ruggedness: rough, tough, outdoorsy, and athletic
Competence: successful, accomplished and influential,
highlighted by leadership
Sophistication: elegant, prestigious, and sometimes even
pretentious
Tourism Area Life Cycle

Butler's Tourism
Area Life Cycle
(1980)
1. Exploration- The area remains unspoilt and tourist facilities are minimal. The area
attracts few visitors.
2. Involvement- Additional facilities are provided by locals and small businesses. A
tourist season starts to get recognition.
3. Development- The area is now acknowledged as a tourist destination. The host
country may start to actively advertise and develop the area.
4. Consolidation- The area retains its visitor numbers, although increase in tourists
may not be as rapid as before. Tensions may develop between the locals and the
tourists.
5. Stagnation- The destination may show a decline in facilities, and therefore a
decline in tourist numbers. This is often due to facilities becoming outdated and run-
down, and receiving little maintenance.
6. Rejuvenation- The area may receive funding or invest in itself in order to
rejuvenate and gain back its image. Visitor numbers may start to increase again.
7. Decline- The area will continue to decline. The tourism industry will decrease,
resulting in job losses. The overall image of the destination will be negatively
impacted.