You are on page 1of 46

Chapter 5 Tourism Industry

Learning Objectives
Explain the interdependencies between the
different sectors of tourism industry.
Identify the important sectors of hotels, food
services, transportation, and travel services
required for a tourism destination.

Overview
The sectors of tourism industry:
1. Hotels;
2. Food services;
3. Travel services;
4. Transportation;
5. Infrastructure.

Operating Sectors of the Tourism


Industry
rade
el T
v
a
r
T
or
Sect

Acco
mmo
d
Secto ation
r

Transportation
Sector

Ev
ent
s

Sec
to

sm
uri s
To rvice
Se

cti
Attra
tor

En
te r
t
Se ainm
cto en
t
r

ec
ons S

Ad
ve
Re nture
c re
at i & O
on utd
Se
ct o o o r
r

ices
Serv
d
o
Fo ector
S

1. Hotels Accommodations Structure


Accommodations

Non-Commercial

Non-Profit
Non-Profit

Commercial

Institutional

Motels
Motels

Hotels
Hotels

(Chains/Independent)
(Chains/Independent)

Private
Homes

Home
Exchange

Hostels

College/
University

Resort
Hotels

Upscale

Shelters

Spas and
Health
Care
Facilities

Mid Range

Deluxe

Suite
Hotels

Luxury

Spa

Meetings &
Convention
Hotels

Extended
Stay

YM /
YWCA

Upscale

Economy

Mid
Range
Casino

Budget

Budget
Airport
Hotels

Bed
Bed &
&
Breakfast
Breakfast

Time
Time Share
Share
Facilities
Facilities

hospitality and related services


Introduction
Providing overnight accommodations for travelers goes back
into antiquityit is the worlds oldest commercial business.
Guest rooms were first part of private dwellings.then came
caravansaries and guest quarters provided in monasteries.today,
lodging and food service activities are enormous in economic
importance.many lodging places provides meeting rooms,
convention facilities and services,restaurant ,bars, entertainment,
gift shops, gaming, health clubs, and other accommodations
industry.

Hotels classifications
Different systems are used to classify hotels.
The five-star rating system is preferred.

Five stars;
Four stars;
Three stars;
Two stars;
One star.

Grading criteria are given by national tourism


organization.

Top 10 hotel chains and brands by AHMA 2004


Hotel chains

Brands

Inter-Continental Hotel Group

Candlewood Centra Crowne Plaza Forum Hotel Holiday


Inn Holiday Inn Express Holiday Inn Garden Court Holiday Inn
Select Inter Continental Parkroyal Posthouse Staybridge Suites
by Holiday Inn & Sunspree Resorts

Cendant Corporation

Amerihost Inn Days Inn Days Serviced Apartments Howard


Johnson Howard Johnson Express Knights Inn Ramada Ramada
Limited Super 8 Thriftlodge & Wingate Inn

Marriott International, Inc.

Choice Hotels International, Inc.

Hilton Hotels Corporation

Courtyard by Marriott Fairfield Inn by Marriott Marriott Conference


Centers Marriott Executive Apartments Marriott Hotels and Resorts
Ramada Int'l Plaza Ramada International Hotels &
Resorts Renaissance Hotels & Resorts & Residence Inn
Clarion Comfort Inn Hotel & Suites Econo Lodge MainStay
Suites Quality Inn Hotel & Suites Rodeway Inn & Sleep Inn
Conrad Doubletree Doubletree Club Embassy Suites Embassy
Vacation Resort Hampton Inn Hampton Inn &
Suites Hilton Hilton Gaming Hilton Garden Inn & Homewood
Suites

Best Western International

Best Western

Starwood Hotels & Resorts Worldwide, Inc.

Four Points Hotel by Sheraton Sheraton St. Regis/Luxury Collection


W Hotels & Westin

Accor International

Century Coralia Etap Hotel Hotel Formule 1 Hotel


Novotel Hotel Sofitel Jardin Libertel Mercure Hotel Pannonia
Parthenon & Suitehotel

Carlson Hospitality Worldwide


Accor North America

Country Inns & Suites by Carlson Park Inns & Suites Park Plaza
Suites Radisson & Regent Hotels
Coralia Hotel Novotel Hotel Sofitel Mercure Hotel Motel 6 Red
Roof Inn & Studio 6

Top 20 Hotel Chains (2000)


Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

Corporate Chain

Cendant Corporation
Bass Hotels & Resorts
Marriott International
Accor
Choice Hotels International
Hilton Hotel Corporation
Best Western International
Starwood Hotels & Resorts
Carlson Hospitality Worldwide
Hyatt Hotels/Hyatt International
Sol Meli
Hilton International
Wyndham International
Compass Group (Forte Hotels)
Socit du Louvre
FelCor Lodging Trust
TUI Group
MeriStar Hotels & Resorts
Extended Stay America
U.S. Franchise Systems

Rooms

Hotels

541,313
490,531
390,469
389,437
350,351
317,823
307,737
227,042
129,234
86,711
82,656
64,647
62,262
59,928
53,083
50,000
49,801
48,767
41,586
41,177

6,455
3,096
2,099
3,488
4,392
1,895
4,065
738
716
201
338
223
242
453
868
186
204
225
392
505

*Rankings are based on total rooms


Source: Hotels, July 2001. Hotels magazine, a Cahners Publication, 2000 Clearwater Drive, Oak Brook, IL, U.S.A. 605230

Trends
1) Merges and acquisitions. They have been in the lodging
industry for some time, but now are current merge mania. And
consolidation will continue to take place both domestically and
internationally.
2)Hotel chains.Chains can most effectively use training
programs, employee selection programs, major equipment with
different layout, prices, advertising, technology, marketing, and
so on.
3) Franchisees. The advantage is that they receive a known
name,the knowledge,advice,and assistance of a proven
operator,and it also spreads the costs of promotion, advertising,
and reservation systems over all outlets, making the unit cost
much lower.
4) Management contracts.More large properties will be operated
under management contracts.

2. Food Services Structure


Food Services

Cafeterias

Fast Food
Restaurants

Independent

Specialty
Ethnic

Local

Chain

Specialty
Broad Menu

Traditional
Restaurants

Independent

In-Hotel
Minimal
Service

Ethnic
Local

Full Service

The Food Service Industry


Like the lodging industry ,the food service industry is a very
old business.Such a service came out of the early inns and
monasteries.In cities,small restaurants began serving simple
dishes such as soups and breads.
With the development of stagecoaches,taverns began providing
food and lodging along the early road and in small
communities .Some believe that these roadside taverns were
really the beginnings of the American hotel industry.As cities
grew so did eating establishments.Some names of historic
restaurants in the 1820s in New York City were Niblos
Garden ,the San Souci,and Delmonicos.

Kinds of the food service


1)local restaurants . That include fast-food units,coffee
shops,specialty restaurants,family restaurants
cafeterias,and full-service restaurants.
2)travel food service. It contains food operations in hotel
and motels.
3) contract institutional food service.
4) vending

Fast food
Fast food chains have enjoyed great success in part .
Reasons:
1)limited menus.It gives customers purchasing power, less waste,
more portion control.
2)Lower operating costs.Most fastfood operations use disposable
paper and plastic,so incline the costs.
3)Specialization. The employees have becoming specialists ,and
they work efficiently.
4)Good reputation. Chain firms are household words: like
McDonalds, Kentucky Fried Chicken.

3 Travel services Channels


Suppliers
Transportation providers, Accommodation Food Service Resorts
Recreation, Entertainment, Etc.

Specialty
Direct

Tour

Specialty

Specialty

Channel

Wholesaler

Channeler

Channeler

Via

Retail Travel

Telephone

Agent

Suppliers
office

Tour

Specialty

Channeler

Tour

wholesaler wholesaler

Wholesaler
Retail Travel

Tour

Retail Travel

Agent

Wholesaler

Agent

Retail Travel
Agent

Customers
Individuals Pleasure Groups, Business Groups, Etc

The ways of travel distribution channel


Travel agents
Internet
Consolidators
The tour wholesaler
Specialty channeler
Automated distribution

Travel Agents
The definition of travel agent:
A travel agent is a middleman --a business man or person selling the travel
industrys individual parts or a combination of the parts to the consumer.
In marketing terms: a travel agent is an agent middleman, acting on behalf of the
client, making arrangements with suppliers of travel(airlines,hotels, tour
operators), and receiving a commission from the suppliers.
In legal terms: a travel agency is an agent of the principalspecifically,
transportation companies. The agency operates as a legally appointed agent,
representing the principal in a certain geographic area. The agency functions as a
broker( buyer and seller together) for the other suppliers , such as hotels, car
rentals, ground operators, and tour companies.
A travel agent is thus an expert , knowledgeable in the schedules, routing, lodging,
currency, prices, regulations, destinations, and all other aspects of travel and travel
opportunities. In short, the travel agent is a specialist and counselor.

Travel Agents
Types of Travel Arrangements Made
As would be expected, the most common type of travel arrangement made is for
air transportation. In 1997, 56 percent of the total dollar volume was for air
travel. Cruise sales accounts for 18 percent up from 14 percent in 1995. Much
smaller proportions of the total dollar volume are attributable to lodging, car
rentals, and miscellaneous arrangements; these activities accounted for 27
percent of total agency dollar volume.

Travel Agents
The future of travel agents
There is a question being raised today: Will there be a travel agent in the future?
Some so-called experts have been predicting for years that intermediaries would
disappear and that with the current level of education, technology, and communication,
consumers could conduct business directly with suppliers, and middlemen would
gradually disappear because they were no longer needed.
.

Some other reason why this question has being raised:


The Internet
Commission caps :
The maximum dollar amount an airline, or other supplier, will pay as commission regardless of the actual price of the
ticket or the standard commission rate. (From: http://www.hometravelagency.com/dictionary/index.html)

Commission cuts
The changing world of travel

Travel Agents
Whats the fact?
Actually ,intermediaries are doing more business than ever before, while
in the same time there has been an increase in the direct selling. Thats
because travel agents are adapting to new ways of doing business. They
are shifting their revenue source from the airlines toward other suppliers,
they are increasing in size, they are charging fees. And travel agents are
joining consortiums. They are creating their own web sites. Despite
Internet is the rival of travel agencies, travel agencies can make use of it,
for example: agents can use Internet to research travel products or
destination, and through Internet travel agencies can greatly expand their
reach.
And the most important thing that make travel agents survive is they are
certificated by the clientthey do really save time and money for the
customers.

Travel Agents
Travel Agency Organization
ASTA : The American Society of Travel Agents
ARTA: The Association of Retail Travel Agents
NACOA: The National Association of Cruise Only Agencies
ICTA: The Institute of Certificated Travel Agents

Travel Agents
The American Society of Travel Agents (ASTA)
Brief instruction of ASTA:
It is the largest association of travel and tourism professionals in the world with
26500 members in over 165 countries. It was established in 1931, ASTA continue to
serve the best interests of the travel industry and the travel public.

The purpose of ASTA:

To promote and encourage travel among people of all nation.


To promote and encourage the use of professional travel agents worldwide.
To promote and represent the views and interests of travel agents to all levels of government
and industry.
To promote professional and ethical conduct in the travel agency industry worldwide
To serve as an information resource for the industry worldwide.
To promote consumer protection and safety for the traveler.
To sponsor and conduct educational programs for travel agents on subjects related to the
travel industry.
To engage in any lawful activity that the members of the association shall deem fit and
appropriate for the promotion of their common welfare.

4. Transportation
A complete transportation system consists of four elements:
Modes
road, sea, air, and rail.

The way
roadways, seaways, airways, and railways.

Terminals
coordination between the three modes of air, rail, and bus.

Technology
Intelligent Transportation Systems (ITS) can help manage the
ground transportation.

Passenger Transportation Structure


Transportation

Air

Road

Bus
Bus

Auto
Auto

Motor
Motor
Bike
Bike

Other

Water

Rail

Inland
Inland

Vehicles
Vehicles
Used
Used for
for Accommodation
Accommodation

Maritime
Maritime

Foot

Motor
Home

Charter

Scheduled

Privately
Owned

Private
Scheduled

Charter
and
Tour
Operator

Rental

Private

Truck
Camper
Travel
Trailer
Tent
Trailer
Other

Private

Commercial

Snowmobiles

Private

Commercial

Commercial

Charter

Charter

Scheduled

Scheduled

Bicycles
Horse
Drawn
Vehicles
Aerial
Tramways
and Ski Lifts

Passenger transportation
Introduction
( ) The position of various mode of passenger transportation

Air travel dominates longdistance and middledistance tourism.

The private automobile dominates for short trips and is the most popular means
of travel for most domestic journeys,and is the very important in region and
international tourism.

Rail travel plays a more limited role than it did in the past ,but it could increase
its market share ,especially in Europe.

Motor coach can reach many places that are not serviced by any other public
mode ,but it account for a very small percentage.

5) Cruises are becoming more popular and are the fastestgrowing segment
of tourism,although it is still small quantitatively.

Passenger transportation
( ) The pressures on transportation putted by world tourism
growth
Urgent Transportation Problems:
1. Congestion.
Serious congestion affects most passenger transportation
modes,particularly on roads and at airports during peak
periods.
2. Safety and security.
This is a basic requirement of tourism.
3. Environment.
An increase in traffic may harm the environment if an area
does not have the carrying capacity for additional tourists.
4. Seasonality.
Seasonal patterns of tourism demand create overcrowding
at certain times.conversely,low occupation and load factors
will occur at other periods.

Airline Industry
World airline industry carries over 1 billion
passengers per year.
The U.S. airline industry in 2000
* Employed 679,967 people
* Carried 1.6 million passengers each day
* Recorded revenues of $129.5 billion
However, during 1990 - 1993, U.S. carriers lost more than
$12.8 billion. A weak air transportation system affects the
rental car business, hotels, and attractions.
In 2001 carriers suffered record losses.

The Airline Industry


Important position
The worlds airline industry now carries over 1billion
passenger per year.There are about 800 air carriers in the
world,and they employ more than 3 million people and
fly from 14000airports,and recorded 109.5billion dollars
in revenues in 1997.
Guests
A 1997 surge of air travelers by the Gallup Organization revealed
that a record 80% of the entire adult population in the United States
had flown. Two out of every five U.S.citizens flew during 1997.
The surge found that 53% of airline trips during 1997 were for
pleasure or other personal reasons, and 47% were for business.

The Airline Industry


Advantages
Rapidness. The airline revolutionized travel,and the range and
speed of jet travel has greatly expanded what tourist or
business travelers could accomplish with the equivalent time
and funds at their disposal.
Convenience. The system is very efficient.You only need
make a call to an airline or a travel agent and purchase your
ticket,then all you have to do is go to the airport and check
your bags to your desired destination.

Safety. According to National Transportation Safety Boards


date, U.S. air carriers provide scheduled service have an
enviable safety record.

The Airline Industry


Disadvantages

Some people fear of flying .

Lacking of geographic accessibilitymany communities in the


country era not serviced by air transportation.
An additional problem is the length of time spent getting to and
from the airport.Frequently,this time exceeds that spent en
route.
It is a point to point travel,not a surface travel,so it must be
joined with other modes.

The Airline Industry


Deregulation and Alliances
Under deregulation, the airline industry has undergone
dramatic change. Looking back , we can see that it led to
significant consolidation, hub systems, low airfares in
competitive situations, and high airfares where competition is
lacking. (Airline Deregulation Act issued in 1978)
A wave of alliances. And it based on equity positions, to code
sharing, to frequent flyer programs reciprocity and other joint
marketing arrangements.

Rail Industry
Reached its peak volume
in the U.S. in 1920.
Major railroads want out of the passenger service
business (except commuter service). Passenger service
depends on Amtrak. The situation is similar in Canada
with passenger service dependent on VIA Rail.
Passenger rail service is much more important outside of
North America. Efficient, economical, high speed trains
provide an alternative to air travel.

The Railway Industry


History and nowadays
Railway station transportation , once the major mode of travel
in the U.S., reached its peak volume in 1920. And today the
survival of service depends largely on Amtrak.

The Railway Industry


Amtrak
It is the marketing name for the National railroad Passenger
Corporation, the controlling stock of which is owned by the
U.S. government through the U.S.Department of
Transportation. Amtraks business is providing rail passenger
transportation in the major intercity markets of the U.S..
Although it receives financial support from the federal
government , Amtrak is not a government agency. It is a
corporation structured and managed like other large business
in the U.S. and competes with all other modes in the
transportation marketplace.

The Railway Industry


Amtrak
Serving 44 states and 500 destinations on its 23000mile route
system, Amtrak carried more than 20 million intercity passengers
in 1997. In addition, Amtrak carried more than 48 million
commuters on trains operated under contract. Amtrak employs
223000 people. Amtrak generated a recordmaking revenue of
1.67 billion dollars in fiscal year in 1997. About 22000 of its
employees are represented by 14 different labor organizations.
But threats are also here for Amtrak. Especially for the
competition with airline. This is what it does :
(1) modernize services.
(2) improve the speed of rail travel.

Motorcoach Industry
Intercity bus passengers tend to be lower income nonbusiness travelers who are very price sensitive.
Intercity bus service is becoming less important due to
increased auto ownership and aggressive airline pricing.
Bus travel is characterized by:
More travel to and from rural areas and small towns than
other modes of transportation.
Lower average ticket revenues than other modes.

Intercity bus industry is a small-business industry with a


great deal of flexibility.
Many bus companies focus primarily or exclusively on
charter, tour or commuter operations.

The Motorcoach industry


Introduction
The American Bus Association reports that there are between
26000 and 28000 commercial buses in use for charters, tours ,
regular route service, and special operations in North American.
The amount of time that motor coach fleet buses spend in
charters is 66.6%, in tours 22.5%, and in regular route scheduled
service 10.9%.
According to the U.S.Department of Transportation, the 17
carriers in the U.S.reported 33.7million revenue passengers in
1996, and overall operating revenue for them was 835.8 million
dollars in 1996.

The Motorcoach industry


Advantage
1) Cheap and convenient.
2) Energyefficient.As reported at the 1993 White House
Conference on the Globe climate Change ,intercity bus
service is the most energyefficient passenger
transportation mode.
Two largest companies
Greyhound Line Inc. is the only nationwide bus carrier for
regular route service.
The Trailways National Bus System , is a federation of
independently owned bus companies , and covers a large
portion of the U.S..

The Motorcoach industry


Charters and Tours
Both domestic and international travelers are heavy users of
motor coach because coach travel gives them to see and experience
sights with a group of friends without having to deal with traffic
and road maps. About 1/3 of U.S. motor coach and tour operators
polled by ABA report an increase in overseas visitors. Sales of
tours and charters are expected to grow in the 3 to 5% range.
Trends
(1) merges and acquisitions
(2) improve service ,change the image

Automobile
Most popular mode of travel in the world because of
affordability, flexibility, and convenience.
In the U.S., the Travel Industry Association of America
reports that 80% of person- trips are made by auto.
Rental car industry growing in importance.
* Grosses approximately $24 billion per year.

The Automobile
Position of auto
Most of the travel in the world takes place in the automobile.
The National Travel Surge reports that 80% of the person-trips
are made by auto (includes rental cars ,truck, and RVs) in 1996
in the U.S..

Advantages
(1) affordability
(2) flexibility
(3) convenience

The Automobile
Kinds of auto
(1) Recreation Vehicles
(2) Private Cars
(3) Rental Cars
(4) Taxi and Limousine Service

Cruise Industry
Fastest growing segment of the travel industry.
Since 1980 had average annual growth rate of 8.4%.
Expanding fleets.
Adding new ports of call.
Seeing consolidation.
Served by the Cruise Lines
International Association.

The Cruise Industry


The position of the cruise industry
Cruise Lines International Association states that cruising is
the currently the fastestgrowing segment of the travel industry.
It is experiencing a surge of growth in passengers, ships, and ship
passenger capacity. Since 1980, the industry has had an average
annual growth rate of 7.6%.
Although ships have been a means of transportation since early
years, the cruise industry is young, and it is barely 20 years old.
Its purpose is really to provide a resort experience rather than
pointtopoint transportation.

The Cruise Industry


Clientele
Historically, most of the cruise company have focused their
marketing efforts on North American clientele. However, with a
marked increase in recent years of European, South American,
and Asian vacationers taking Americanstyle cruise, those
company have begun to par more attention to the international
markets, especially for European clientele.
Repeat business
No other vacation kind can touch a cruise for produce
satisfaction and repeat business. Of those who have cruised in the
last five years,the average number of cruise per person is 2.4, or
one cruise every two years.

5. Infrastructure

It consists of all the underground and surface


developmental construction of a region.
The important part of tourist infrastructure:

Water system;
Power sources;
Communication network telephone and/or internet
access;
Drainage and sewage;
Health care the type of health care facilities based
on the number of visitors, ages, the type of activities;
Security system.

The End !