Annals u/7iunrm Research, Vol. 17, pp. 600-605, 1990 0160.7383190 $3.00 + .

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REJOINDERS AND COMMENTARY

This Department 1s intendedto accommodateshort re@dm, commentarm, and rebuttalson the contentsofAnnals,
especiallyfeature articles, book reviews, research notes and. reports. Attempts should be made to submit such
contributions immediatelya&r each issue of Annals appears so that they are published in the subsequent issue.
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or editedform) tn this~&mal.

Partial Industrialization of Tourism Systems

Neil Leiper
Massey University, New Zealand

Stephen Smith’s “Defining Tourism: A Supply-side View” (Annals 15:179-

190, 1988) presents a challenging discussion which leads to an exercise pur-
porting to identify and measure the tourism industry in Canada, and a con-
cluding claim to have provided a “consistent, credible and useful answer to the
question, ‘what is tourism?“’ (p. 190). The exercise is a forceful and detailed
attempt to support four linked beliefs widely held among tourism boosters.
The primary one is that tourism is an industry. From this stem the observa-
tions that it is a virtually ubiquitous industry, manifested throughout the
economy wherever tourists spend money; that it is very large; and that it is a
fragmented industry.
Several items in Smith’s discussion deserve comments. This will provide an
opportunity to show how the primary belief is based on illusions. The follow-
ing discussion will also clarify two publications strongly criticized by Smith
(Leiper 1979, 1983). The main comments I offer are, first, that Smith’s meth-
odology does not constitute a “supply-side view.” Second, his discussion, sup-
posedly based on “accepted definitional standards used by other industries” (p.
182), ignores the literature on the subject and common business practices.
Third, his apparently detailed critique of my publications ignores my observa-
tion that tourism systems tend to be partially-industrialized, an issue directly
relevant to Smith’s theme. Other shortcomings in his discussion can be identi-
fied, which may help explain why Smith confused supply and demand per-
spectives and why he overlooked the partial-industrialization concept. This
commentary does not extend to all of Smiths work, for his recent book (1989)
contains, in my opinion, very useful material where he sets out 36 techniques
for quantitative analysis, showing how each can be applied.
Dogma. My choice of expressions referring to “dogma” (Leiper 1983) propa-
gated by tourism boosters and their “acolytes” may have suggested, as Smith
inferred, “academic prejudice.” However, the expressions reflected cynicism
rather than prejudice, and practical participation rather than an academic
perspective.
Between 1972 and 1983, I was involved in dozens of consultancy projects
dealing with. issues of tourism policy. Over the decade, the line of thinking

600
 REJOINDERS AND COMMENTARY 601

proposed by Smith was regularly advanced by tourism boosters, claiming in

effect that tourism was a wholly industrialized phenomenon, a huge industry
but somehow a “fragmented” one. But aspects of governmental tourism poli-
cies seemed in limbo, for officials were able to rebuff the boosters by saying
that such a large industry should be self-sufficient, not requiring government
support. The reaction was perennial complaints that “tourism is at the cross-
roads,” but no realistic explanations for the condition. These sentiments were
heard at many conferences sponsored by organizations interested in develop-
ing tourism. Thus, the references to “dogma” and “acolytes” were deliberate,
being, in my opinion, accurate descriptors. They were also designed to pro-
voke thinking and/or reaction.
Reaction from Smith indicates further evidence of dogmatic beliefs on this
issue. He claims that the deficiency in other writers’ definitions of tourism is
that they “do not adequately reflect the fact (sic) that tourism is an industry”
(p. 181). Is it, in fact, “a fact?” Several writers, including a few members of
Annals’ editorial board, see the essence of tourism as a category of human
behavior-the behavior or activity of people in touristic roles (e.g., de Kadt
1979; MacCannell 1976; Mill and Morrison 1985; Przeclawski 1986). Smith’s
contention is not about “a fact” (a generally-accepted truth), but his own
opinion or perception.
SeparateConceptsAssociatzd with Tourism. Smith reviewed a list of definitions for
tourist, tourism, tourism studies, tourism systems, and tourism industry. He
seems to imply that these things may be regarded as synonymous when he
remarks “tourism has so many definitions because there are so many uses for
definitions” (p. 180). Of course, they are all associated with tourism, but they
are conceptually distinct. The problem for academic work is not that there are
“many uses for definitions,” but that writers continue to make a single word-
tourism - stand for several different things.
Research and scholarship (in any subject) is aided by distinguishing con-
cepts and the different contexts in which any of them might be applied, which
may require differentiated constructs. But there is also a need for consensus,
within a community of researchers or scholars, relating to each context. For
instance, after several years work, the World Tourism Organization has virtu-
ally achieved a standard technical definition for statistical purposes referring to
international tourist.
Smith attributes to me a “goal -a single, comprehensive and widely ac-
cepted definition of tourism,” which he rightly notes would be “beyond hope of
realization” (p. 181). The attribution may have stemmed from Smith’s imagi-
nation: I cannot see where it can be identified in my work. My 1979 article did
set out a definition with a suggestion that it would have broad uses; and it has.
Flaws or shortcomings in that article have not obscured its core ideas, which
have been widely used internationally by teachers and researchers from several
disciplines dealing with different perspectives or topics about or relating to
tourism. One flaw in this article was its title where “A Definition” implies a
single one for “Tourism,” “Tourist” and “Tourism Industry.” A flaw in the dis-
cussion was defining tourism as a system. A more useful and realistic approach
is to recognize how tourism (the behavior of tourists) gives rise tu tourism
systems. Other shortcomings could, no doubt, be identified.
A ‘Supply-Side Vtiw.” Wanting a construct for a tourism industry, Smith
asserts that “a supply-side definition had to be developed [to be] compati-
ble to other industrial definitions” (p. 183). The assertion makes sense; indus-
tries are suppliers and the only way of identifying “an” industry precisely is from
a supply-side view. But while Smith’s definition is expressed as a supply-side
construct, the data informing his view and measurements stem from the de-
mand side. The Canadian project used FAMEX (Family Expenditure Survey)
to extract data about tourists’ expenditure. From demand-side data, Smith
602 REJOINDERS AND COMMENTARY

resumed that all the suppliers, the recipients of tourists’ expenditure, constitute
a tourism industry.
A true supply-side view would focus on the suppliers, not their customers,
investigating whether each supplier formed a unit in a distinctive industry. The
fieldwork necessary to apply that view is cumbersome, and very expensive at the
national level. Euq organization in an economy would have to be included in the
population to be surveyed, because any one might be in that industry. This point
was recognized by consultants in the 1970s when the present methods for monitor-
ing tourism in Australia and New Zealand were developed. A simpler and cheaper
alternative was adopted, surveying people about their role as tourists. Similar
demand-side surveys have been developed in several countries and form the most
common means of estimating the scale and trends in tourism. Making assump-
tions about suppliers’ lines of business and industry from the demand-side data is
risky, a risk ignored if the overriding aim is to find data supporting a belief that the
tourism industry is very large.
Concepts ofBusiness and Industry. Smith claims that his perspective is consistent
with “the accepted definitional standards used by other industries” (p. 182). To
see the need for such a claim is a sound point. Unique concepts for tourism
would remove any comrrwnsense from the phrase “an industry.” But what are
these standards? Smith offers no literature survey on the questions of how to
identify a line of business and industry. Moreover his own suggestions are at
odds with those found in frequently cited works, such as Abel1 (1980) and
Porter (1980). Saying that a firm is in the tourism business or industry merely
because it has customers who can be described as tourists is a notion that the
literature on business management and industrial economics would dismiss. It
is analogous to observing red-heads among the customers of the butcher,
baker, and candlestick maker and deducing the existence of a “red-heads in-
dustry.”
Identifying the line(s) of business or industry that each particular oqanization is
in can be a difficult task, requiring careful analysis case-by-case (Abel1 1980;
Drucker 1968; Levitt 1985). The problems are greater where market segmen-
tation is practiced, where, for instance, an organization has tourists among
other customers. The literature (e.g., Kotler and Cox 1980) and the consistent
practice of marketers in the field show that just because some attribute (such as
“tourist”) can be attached to a subset of customers does not mean that it
constitutes a market segment. This is not a matter of to what extent the
organization is “dependent” on tourists, as Smith implies in his Tier l/Tier 2
bisection. The vast majority of firms and organizations serving the public have
tourists among their customers, and many are dependent to varying degrees
on that source of income, but this is frequently an incidental factor in the
market.
My case studies reveal a common difficulty, faced by managers thinking
about tourists as market segments, is that they are impossible to reach effi-
ciently with promotional and distributive activities. If so, tourists cease to be a
market segment, remaining an incidental attribute in the organization’s mar-
ket. One case concerns the Summit Restaurant revolving on the 49th level of
the Tower at Australia Square in Sydney. In the 197Os, it was probably the
city’s most popular restaurant for tourists, but its management correctly did
nothing significant to deal with tourists in any aspect of the restaurant’s mar-
keting mix. The Chairman of Summit Restaurants publicly stated that he did
not regard the restaurant as being in the tourism industry. For this view he was
criticized by tourism boosters, who thought he was mistaken in principle and
in practice. In the mid 198Os, his policy changed, because of substantial
changes in the composition of tourists in Sydney. The dependence of The
Summit on tourists is probably no different now to 1979. An organization’s
business and industrial lines are not linked to that question.
 REJOINDERS AND COMMENTARY 603

Being in the business of tourism means that the specific organization focuses
(some aspect of) its marketing mix on some distinctive feature linked with
tourists. Being in the industry of tourism means that an organization uses
similar technologies to others in the same line of business and that its manage-
ment cooperates in some significant manner with other organizations in the
same line of business in the same market(s). That cooperation among compo-
nent organizations is fundamental to the existence (and development) of any
industry has been recognized since the pioneering work on modern industrial
economics by Marshall (1920,1923) and Macgregor (1931) and carried on by
contemporary writers in management such as Porter (1980). Accordingly, a
“fragmented industry” is a contradiction in terms; the expression’s only real
application would be to embryonic conditions, before a genuine industry had
evolved, as Porter discusses.
Academic Recognition. Smith observes that “tourism perennially suffers from a
poor reputation in the eyes of policy analysts, government officials, economic
analysts and industry leaders not involved in tourism” (p. 182). By extending
this notion to universities, he claims that if more academicians acknowledged
that tourism was an industry, more research funds would be forthcoming.
In my opinion, one of the contributing causes for the “low status tourism has
as an economic sector” (p. 182) is that this economic sector has a relatively low
level of industrialization in many national economies. The sector may be a
large one, important to the economy, but only a portion represents a distinct
industry. Drake and Nieuwenhuysen’s (1988) study for the Committee for the
Economic Development of Australia pointed out how governmental recogni-
tion and support tends to accrue to those sectors of the economy whose leaders
can demonstrate that they represent large im’ustrk. Tourism industry leaders
(and their public relations aides) make that claim, but are unable to demon-
strate its validity. What about truth? Should the primary aims of universities
be winning recognition and research grants from governments and commer-
cial interests? Even if such things are important, is not the best way to gain
support to be objective?
Par&l Industriulizution.From Smith’s critique of my article (1979) one might
assume that I had denied the existence of a tourism industry. However a
careful reading of the article would reveal otherwise.
There has been a long running dispute abut the existence and scale of a
tourism industry. The tourism boosters believe it exists and is very large. A few
others are skeptical about its existence, claiming instead that there are diverse
industries serving the needs and wants of tourists, but that a distinctive indus-
try has never materialized (e.g., de Kadt 1979; Kaiser and Helber 1978). Mill
tells of an American professor whose lectures remark that “tourism involves a
collection of business organizations in search of an industry” (personal com-
munication). In the 1979 article I suggested, in effect, a resolution of the
debate. Both sides are mistaken. The truth lies in some intermediate position,
explained by the partial-industrialization theory. The boosters extend the
scope of the tourism industry too far. The skeptics, to use an apt metaphor,
throw out the baby with the bath water.
Observations reveal that most tourists are independent to varying degrees of
any industry, when they are engaged in “non-market” activities in the phrase of
Gronhaug and Dholakia (1987). The supply-side analysis of the practices of
individual organizations reveal that many who serve tourists are not in the
business of tourism and/or not in the industry of tourism. Many other organi-
zations can be found that are in the business and industry of tourism. This
leads to the conclusion that tourism tends to be partially-industriulized. Two
chapters in a recent book (Leiper 1990) discuss this in more detail.
“Tourism” is best defined as the behavior of tourists, the ideas shaping this
and the personal (or collective) activities which follow. Tourism gives rise to
604 REJOINDERS AND COMMENTARY

tourism systems-arrangements of people, places and organizations in certain

roles. Depending on their numbers and activities, many tourists form markets
or market segments for distinctive business and industrial opportunities, while
many tourists’ activities are merely incidental in economic environments en-
countered by a huge assortment of organizations from across the economy. In
other words, the total of tourists’ expenditure in an economy may be bisected
into the sum accruing to a distinctive and specialized industry and a sum
accruing to other suppliers. The ratio represents the degree of industrializa-
tion, varying case-by-case.
Claiming that all the expenditure of tourists represents the existence of a
tourism industry is meaningful only if “industry” is taken to represent nothing
more than a sector of the macro economy. If we begin to attach notions
comparing this “industry” with others in terms of size, performance, or gov-
ernment policy, or if we begin to use this notion as a managerial concept, the
claim leads to confusion.
The partial-industrialization theory has many ramifications, beyond the
scope of this commentary. Several are outlined elsewhere (Leiper 1990), but
might be apparent from the present summary. A fundamental one is that the
environmental costs and opportunities of tourism should not be left for “the
industry” to manage. MacCannell identified the basis of this point in remark-
ing “both the pro-tourist and anti-tourist positions are ultimately based on the
same fact: tourism has developed at a much faster rate than its support institu-
tions” (1976: 166). This could not occur in a wholly-industrialized condition.
Partial-industrialization means an ongoing close partnership is desirable be-
tween industry and the communities where tourism is manifested, which re-
quires active involvement by public sector non-market agencies. A basic role of
governments is to make up for what would otherwise be the non-industrialized
parts of supply and its management. The theory explains an underlying rea-
son why governments have become so deeply involved in tourism issues in
many countries.
In summary, the notion that “tourism is an industry” is based on superficial
assumptions. It is overly simplistic and misleading. It may be useful in public
relations campaigns intended to persuade the community about the economic
significance of tourism: messages of that sort do not require precise informa-
tion. Academic research and the formulation of strategies by managers and
policy makers require more subtlety. Instead of claiming to represent a large
and ubiquitous industry, tourism industry leaders (and governments) might be
better served by acknowledging the handicaps of a relatively small industry
trying to deal with the marketable dimensions of a larger social activity. 00

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 REJOINDERS AND COMMENTARY 605

Kaiser, Charles, and Larry E. Helber

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Submitted 8 April 1990

Accepted 4 May 1990