MACRO PERSPECTIVE

OF TOURISM &
HOSPITALITY
Relationship of Tourism and Hospitality
Tourism and hospitality industries go hand in hand even though
considered to be independent from other this is because both
industries strongly affect one another.

The hospitality industry acts as the main supplier of safe and satisfying
products and services for tourism (supply chain integration).
 Examples
Products and services offer are Accommodation,
transportation, food and beverage, leisure and recreational
activities.
Tourism on the other hand is the activity of tourist where engage in travelling to other places
where they can experience different activities where most of the time avails products from
the hospitality industry.

Components of tourism and hospitality which constitute the tourism and hospitality
interconnection include:

Food and
Beverage
a. Food and Beverage services
b. Accommodation or Lodging services
HOSPITALITY
Recreatio Lodging
c. Leisure and recreation services n services
AND
TOURISM Services
d. Tourism services
Tourism
services
A. Food and Beverage component
The food and beverage sector begun from simple origins: as people travelled from their
homes, going about their business, they often had a need or desire to eat or drink. People
always look for foods and drinks everywhere- hotel, restaurant, shopping malls, and as
there is increase in personal and social events such as birthday parties, business meetings
and increase in population, large number of people visit establishments who caters food
services.

Two distinct types of establishments that offer food and beverages:

• First are commercial food services, which comprises operations whose primary business
is food and beverage
• Second are non-commercial foodservices where food and beverages are served but they
are not the primary business.
One important factor in food and beverage is catering which is
the process of preparing, presenting and serving food to
customers.

Global and domestic competitiveness in the hospitality and

tourism industry and as people demandMore choices in food and
beverages helped evolve and create more diverse way of
delivery of this service.
There are the establishment of commercial restaurants (fine-
dining restaurants, full-service restaurants) that offer different
foods for breakfast, lunch, dinner and snacks.
There is the establishment of cultures which
offer food depending on the country
- Samgyupsal for Korean Foods
- Tokyo-Tokyo for Japanese foods
- Songkran for Thailand foods

Quick service restaurant or what Filipinos

often call?
Fast-Food chain – Jollibee, KFC, McDonalds, Chowking, Mang Inasal etc.

Aside from restaurant there are also Vending machines, food stall and food
carts.

Services in the Food and Beverage components

1. Table Service
2. Family Service
3. Plate Service
4. French Service
5. Gueridon Service
6. Silver Service
B. Lodging component
• Lodging means accommodation for a period or a place to sleep for
overnight or long-term services to people. Lodging may also include
accommodation of customers looking for other activities such as
entertainment (casino hotels) or for recreational activities (resort
hotels). Because of this, the lodging industry has greatly increased its
services to different types and needs of the people.
• Not only tourists but business travelers, leisure travelers, government
travelers as well.
C. Recreation and Entertainment Component Recreation

Any activity that people do for rest, relaxation, and enjoyment to make
them free from the demands of work and duty.
Sports and
Physical
recreation

Play and
Five components of Arts and
Entertainment
Leisure
activity-based
leisure
leisure Industry Industry

Country side Home based

Recreation leisure
1. Sport and Physical Recreation: Sport is a form of physical activity which involves
some element of competition between two or more groups and usually is
governed by rules or uncompetitive activities. Physical activity are sometimes
not only for recreation but aimed at improving health and witness as well.

Physical recreation can be divided in two types:

A. Based on role of the person

1. Active or participative
2. Passive or watching a game

B. Based on location of Physical activity

1. Land based recreation
2. Water Based recreation and Tourism
2. Arts and Entertainment: Arts and entertainment are the things that take place outdoor
which entertain you.
These include: theatre and musical plays, opera, recitals, fireworks, concerts, ballet show,
,

cinema, cabaret, stand-up comedy in bars, art galleries/viewing, exhibitions and festivals.

3. Countryside recreation: Countryside recreation can take place in National Parks, Areas
of Outstanding Natural Beauty or in places that are considered heritage in a country.
Examples are mountains, hills, valleys, lakes, fields and beaches.
4. Home-based leisure: Home-based leisure is activities that can be done without leaving
your home but in the comforts of your home.
Home-based leisure includes: playing and listening to music, watching television, arts and
crafts, gardening, online gaming, reading and board games.

5. Play- and activity-based leisure: This kind of leisure is mainly associated to activities
that involve children, young adult and teens.
 D. Travel and Tourism component
The travel services and tourism components of hospitality and tourism is a
complex web of relationships between a variety of suppliers, tourism products,
and destination marketing organizations, tour operators, travel agents, and
transportation.

2 types of Travel:
1. Business travel- wherein a person travels to another place for work and
spends money on hospitality and tourism products(lodging and food and
beverages)
2. Leisure travel- wherein a person travels for recreational and entertainment.
Therefore, we can consider that the major function of the tourism is to
encourage people to travel to spend money on hospitality- food and
beverage services, lodging services and transportation.
Transportation
Is the process of making movement of people from one place to
another using primitive and simple to modern and complex means of
transportation. This may include automobiles, buses, trains, ships and
airplanes.
Components of travel services:
A. Travel agencies
* A travel agency can be small and privately owned entity and is a
business that operates as the intermediary between the travel, tourism
and hospitality industry (supplier) and the traveler (purchaser).
• Travel agency can assemble products and services into prepackaged
travel tours (bundles of related travel services offered to potential
travelers at a single price).
• The travel agency can also be the intermediary between the traveler
and the hotels and tour companies.
B. Online travel agencies (OTAS)
One of the advantages of technology can be found in hospitality
and tourism. Today, travelers can now search and book
everything they need for traveling online. Technology now plays a
big part to tourism as people can now choose to book tours that
they can fully and independently create their own itineraries.
• Examples of OTAs in the Philippines include Asiatravel, Agoda,
Expedia and Wotif.
C. Tour operators
Tour operators are companies or individuals who package all
components of offered trip or tourism and hospitality services and
then sell them to the traveler personally or through retail outlets
or travel agencies. Tour operators have close work relationship to
hotels, transportation providers, managers of attraction sites and
restaurants in order to purchase or have a better deal in each
component of the tour. Tour operators sell to the leisure market.
Tour operators may be inbound, outbound, or receptive:
- Inbound tour operators: Tour operators that bring travelers into
a country as a group or through
individual tour packages
- Outbound tour operators: Tour operators that work within a
country to take travelers to other countries
- Receptive tour operators (RTOS): These are not travel agents
and they do not operate the tours. Instead these are operators
that work as a liaison and booking agent of various products to
tour operators in other markets such as Philippines to U.S.A.
D. Destination marketing organizations (DMOs)
This includes national tourism boards, government agencies such as
Department of Tourism, city or provincial tourism offices and
community tourism offices. DMOs promote "the long-term
development and marketing of a destination, and the maintenance of
such places.
E. Other organizations
This may include other organization that not only focuses in
leisure travel but also business trips and other functions.
 Definition of Tourism
• Tourism is a social, cultural and economic phenomenon which entails
the movement of people to countries or places outside their usual
environment for personal or business/professional purposes. These
people are called visitors (which may be either tourists or
excursionists; residents or non-residents) and tourism has to do with
their activities, some of which involve tourism expenditure. (United
nations World Tourism Organization , 2008)
 Component of Tourism

As discussed, Tourism and hospitality is a coordinated summation of many

components. It involves accommodation, recreation, sight-seeing and different
services. Tourism also has its own components and highly depends on all of these
factors which are known as the 5'As.

5 A's of Tourism:

1. Accommodation
2. Accessibility
3. Activities
4. Amenities
5. Attractions
1. Attraction:
Considered to be the most important basic component of tourism. Attraction means any things or any
places that a person desires. Attraction determines the choice of the tourists to visit a destination or
choose a particular thing to buy rather than others.

2. Accessibility:
This component means the reachability of the place of destination the tourists wants to visit via various
means of transportation. It is the primary service that the tourist needs to make travel possible.

3. Accommodation: Another important component of tourism is accommodation which is the primary

service that the tourist needs at the destination. Accommodation is a place where the tourists can find
food and shelter. It is a comfortable place where the tourist after a long exhaustible day of touring can
relax.

4. Amenities: Amenities are extra facilities that can add attractiveness, accessibility and accommodation
for the tourists. This may include room service, hot tub, and spa and so on.
5. Activities
Definition of Hospitality

The word hospitality is derived from the Latin word "hospes", which means guest. Hospitality is the
friendly and generous reception and entertainment of guests, visitors, or strangers and providing them
food, beverages, lodging and abode.

The Three Perspective of Hospitality

a. The Guest Perspective: This is the perspective wherein as people who serve and give products
must have achieved the expectations of their guests- receive good hospitality making customers or
the guest feel comfortable and well-served.
b. The Operator Perspective: In a hospitality setting, the guest exists to serve.
To be able to be considered as hospitable, the operator must be successful
in making guests feel comfortable and well-catered to.
c. The Tech Perspective: The increase in the needs of the people results to increase in demand of
tourism and hospitality services such as restaurants, lodging and car rentals. This causes problem
such as long lines in waiting to be accommodated, slow serving of products, shortage of materials or
of human be resources and these problems may lead to unsatisfactory reactions from guests and
customers. With technology, restaurants and hotels use reservation, seating, and guest management
tools to reduce such problems.
Meaning of Tourist
The origin of the word 'tourist' dates back to the year 1292 A.D. 'Tourism' or
'Tourist' word is relatedto the word 'tour' which is derived from the latin word
"tornus" It means a tool for describing a circle-or aturner's wheel. It is from the
word "tornus" the notion of a "round tour" or a "package tour" has come in vogue.

Two classes of visitors:

A. Tourists-are temporary visitors staying in a place at least or more than 24
hours.
B. b. Excursionists-are temporary visitors staying in a place less than 24 hours
in the destination that they have visited.

The United Nations World Tourism Organization (UNWTO) states that tourists
can be:
a. domestic tourist b. inbound touristc. outbound tourist
Consumer Behavior in Tourism

A. Factors Affecting Tourist Behavior

• Geographical Factors: Some physical factors like geographical and climatic conditions, facilities and
amenities available at the destination, advertising and marketing conducted by tourism business alter the
decision making of the tourists.
• Social Factors: A few social factors such as a person's social network, which provide first had information
that can alter a person's decision of visiting or not visiting a particular place.
• Place of Origin: There can be a broad spectrum of tourist behavior depending upon the place they belong
to. North Americans like to follow their own cultural framework. Japanese and Korean tourists like to visit
places in groups.
• Tourism Destination: It is a major contributing factor altering tourist behavior. If a destination has all basic
provisions such as electricity, water, clean surroundings, proper accessibility, amenities, and has its own
significance, it largely attracts tourists.
• Education of Tourist: The more educated the tourist is the wider range of choices, curiosity, and the
knowledge of places he would have. This drives the decision making when it comes to choosing a
destination.
B. Plog's Model of Tourist Behavior

Three categories :

1. Allocentric (The Wanderers): A tourist who seeks new experiences and adventure in a wide range of
activities. This person is outgoing and self-confident in behavior. A person prefers to fly and
to explore new and unusual areas before others do so and the enjoy meeting people from foreign
or different cultures. They prefer good hotels and food, but not necessarily modern or chain-type
hotels. For a tour package, an allocentric would like to have the basics such as transportation and hotels,
but not be committed to a structured itinerary. They would rather have the freedom to explore an area,
make their own arrangements and choose a variety of activities and tourist attractions.
2. Psychocentric (The Repeater): A tourist falling in this category is usually non-adventuresome. They
prefer to return to familiar travel destinations where they can relax and know what types of food and
activity to expect. Such tourists prefer to drive to destinations, stay in typical accommodations, and eat
at family-type restaurants.
3. Midcentric (Combination): This category of tourists covers the ones who swing between the above
said
two types.
Henley Centre Model of Holiday Making

A British Consultancy of Futurology, Henley Center has divided the tourists into four phases:

a. Phase 1- Bubble Travelers: They do not have much money as well as knowledge. They prefer
packagedtours. They long to observe different cultures without being a part of it. They travel mostly out
of
curiosity.
b. Phase II- Idealized Experience Seekers: They are confident tourists with the experience of foreign
tours. They are flexible and comfortable. They prefer tour offers made for individuals.
c. Phase III- Seasoned Travelers: These tourists are more affluent than the idealized-experience seekers.
They are more confident to experiment and experience different places and environments. They
aremore adventurous and prefer individualistic tours.
d. Phase IV- Complete Immerses: These tourists have an intention of immersing completely into the
foreign culture, heritage, culinary experience, and language. Their holidaying is well-planned but not
well-structured.
Elements of Travel

1 .Reason for Journey: This is a crucial element of travel as if there is no reason for
a person to visit a place then there would be no any travel or journey. Some of the
reasons for travel may be classed as:

a. Work or business
b. Outdoor recreation- boating, fishing
c. Visiting family and friends
d. Holiday celebration
entertainment-sports and theater
f. Personal- wedding, funeral, medical
g. Conventions and meetings
 2. Distance to travel:The distance of travel is another important element and can
determine what form of transport would be taken to complete the journey. Under this
the tourist must consider the difference between local and international traveling.
Preparing and planning may differ from local traveling- which may include using local
money (Philippine peso), using the right transport mechanism and choice of clothes;
international traveling-convert local money to the currency of the place to travel,
transport such as planes or ships.
3. Length of stay at the destination: The definition of tourists and excursionists by
UNWTO is directly associated to this element.
4. Residence of the tourist: This is an important element for the destination's
government for them to monitor which country or race visits their country frequently.
This will be analyzed statistically and may help the destination's government to plan
for better development of tourism and hospitality sectors available in their country
and to help them attract more tourists.
5. Form of travel: The last element of travel is the forms of transport which is also
considered to be a crucial element to travel and as mentioned before the other factors
can contribute to what form of transport is selected.
 Nature of a Tour
To understand fully the nature of tour we must first revisit the meaning
of domestic and international tourism.
- Domestic tourism involves traveling exclusively within the residents'
own country with the benefit of having no problem in language
barrier, currency, documentation barrier and socio-cultural
differences.
- International tourism involved traveling outside of the country and
may show possible problems in language barrier, currency,
documentation barrier (visas, passport) and socio-cultural differences.
ECONOMICS OF TOURISM AND
HOSPITALITY
THE ROLE OF TOURISM AND HOSPITALITY IN ECONOMIC DEVELOPMENT

• The tourism and hospitality sector is one of the largest components of the global
company. Consumption of tourism and hospitality products and services even
supersede that of most other goods and services. . It is projected to create 328 million
jobs and support 10 percent of the work force of the world, by 2022. The tourism and
hospitality is one of driving force in expanding economic opportunity especially in
developing countries, which enables people to manage their assets in ways that
generate incomes and options-such as investing in tourism and hospitality businesses.
• . The role of tourism and hospitality is very dynamic that it made great impact to
social-economic evolution generating huge revenues from money-making concepts of
the industry. The contributions of tourism and hospitality in social and financial
growth are so significant that economists called it “invisble export.
• Tourism is invisible in the sense that as an export product, It is not
produced,packaged,shipped or received like the ‘’hard’’ goods instead as
intangible goods.
• Another aspect of tourism which is uncharacteristics to the export of goods is the
way it is marketed. Products and services can be displayed in export trade show
and can be bought there physically while tourism and hospitality are not sold by
the products and services being there.
• It is sold by agents who represent the product-such as tourist sites, sophisticated
hotels, beautiful resorts, etc.
• Through visual aids such as brouchures,posters,slides,films or video
tapes
Other reasons include:
• The travelers or tourists buys product in the country they are visiting thereby exporting the
product from the specific country to their country of origin without paying freight costs for
exportation or other taxes.
• Tourism and hospitality bring not only monetary value but also non-monetary benefits which are
vitally important part of the company; social education, culture preservation and exposure and
environmental awareness and benefits.
• The tourism and hospitality industry is a multidimensional industry that affects many other
industries such as industrial businesses, engineering, architecture, government and even the
health sectors.
• The demand for tourism and hospitality is highly seasonal. This means that in some of the
month’s activity is great while in other months it is not.
• The demand for tourism and hospitality are also influenced by outside and unpredictable factors
such as currency exchanges rates, political unrest and changes in weather.
ECONOMIC IMPACT
When travelers go to destination sites and expends money in that place for
goods,service and products, the tourism and hospitality industry acts as an
export industry by bringing revenues from outside sources. The activity of tourist
in the destination sites also creates and mobilizes economic growth and
development for the benefit of their own country.

The tourism and hospitality industry’s economic impact provides; increase in the
gross domestic product of the country by increasing tourist arrivals the tourism
revenues increase as well, generation of employment, foreign exchange and
creation of economic opportunity and even poverty reduction.
The overseas development institute(ODI) World bank identified three main
pathways of how the tourism and hospitality industry impacts the economy
of a country:
A. Direct effects- The wages and earnings of those who participate directly
in the sector as workers or entrepreneurs which directly receives the actual
payment or income from tourist expenditures.
B. Indirect effects- Occur through the tourism value chain. The money
received from the tourist expenditures will be used in turn to buy supplies
such as raw materials,food,beverages, and materials for construction,
transporation, and furniture and so on. This is also known as secondary
effect.
C. Dynamic effects- Tourism and hospitality can affect the livehood
strategies of local households, The business climate for small enterprise
development,patterns of growth of the local or national economy and the
infrastructure natural resource base of the destination.
TOURISM MULTIPLIER
The total direct and indirect effects of an infusion of an external source of income into
area are termed the “multiplier”. Multiplier can be generated in terms of sales, income,
employment or payroll. The initial spending of money by a tourist will generate more
income in the community. The money generate can be either saved or spent.

The extent to which business people part of their income is termed as the marginal
propensity to consume (MPC) while the extent to which business people will save of their
income is termed as the marginal propensity to save (MPS). The more self-sufficient the
community, the less will be the imports and the more the MPC. These conditions will lead
to a circular flow of income and spending.
Everything is connected. Money that is earned flows from one person to another and
most of it gets spent again not just once but many times by the local tour operators, store
owners, hoteliers and taxi operators. This process continues until the additional income
generated by a new round of spending essential becomes zero. “leakage, is the value of
goods and services that must be imported to service the needs of tourist and hospitality.
The multiplier effect is an economic term, referring to the proportional
amount of increase, or decrease, in final income that results from an
injection, or withdrawal, of capital.
What this means is that small increases in spending from consumers, investment or the government
lead to much larger increases in economic output.
For example, when a tourist makes an initial expenditure into the destination:
-David Galiste- a tourist from Japan -Aliza Aquino- woods and raw material suppliers
-Arcel Ibarra- hotel owner
-Jomar Solomon- furniture supplier

If David went to the Philippines and spends 7,500 pesos for a room in a hotel owned by Arcel, then
Arcel earns an additional 7,500 pesos. Arcel also has needs and wants. She wants to invest in her hotel
and so she buys furniture to jomar at the price of 3,000 pesos. The money is an additional income for
Jomar, and so he has the money to spend to buy more raw materials for him to be able to create more
furniture. So he spends 2,000 pesos to buy nails, woods and other raw material from Aliza. As seen, the
initial expenditure of David led to two more rounds of spending with smaller amounts each time. In this
case, 3,000 pesos spending of Arcel led to an increase in economic output of 3,000 + 2,000 = 5,000
pesos.
Undesirable Aspects of Tourism

Even considered to be one of the world's largest in and advantaindustries in the

world and gives many benefits ges. The tourism and hospitality industry still have
some potential undesirable effects and aspects such as:
1. Negative Environmental Effects of Tourism and Hospitality
In today's society we can see some negative impacts of tourism and hospitality
industry in the environment.

Tourism can often cause environmental damage with risks like erosion, pollution,
the loss of natural habitats, and forest fires. Even if tourists behave responsibly, the
sheer number of them can cause damage. Ancient buildings; monuments, and
temples often struggle to cope with increased traffic and suffer inevitable wear-and-
tear. Reefs and other natural tourist attractions can suffer permanent damage.
Other negative impacts include: invasive organism, depletion of natural resources
and negative effects of human interaction with wildlife.
2. Negative Economic Effects of Tourism and Hospitality (Economic Instability)

a. Foreign Poaching- just like in the Philippines most of the tourism and
hospitality companies are owned by big foreign companies. They are the
one receiving and benefiting and taking major profits instead of the local
businesses.
b. Tourism Dependence- Local owners of businesses depend only in tourism
and hospitality industry as the main source of income neglecting other
ways. But during vulnerable times such as in cases of unexpected and
unforeseeable events such as political problems, terrorism and natural
disasters the tourist arrivals may decrease and so local owners and small
businesses will have temporary loss of source of income. The more
dependent a destination is on tourism and hospitality the more the
impact will be felt and the longer it will take the country to recover.
3. Negative Social Effects of Tourism and Hospitality

While tourism can help preserve cultures, it can also be the cause of its
trailing down due to commercialization and the effect of what we call
"Crab-mentality." Local traditions that have a rich cultural heritage are
reduced to wearing costumes and putting on acts for the tourists in
return for money.
How to Maximize the Economic Effect of Tourism and Hospitality?

According to the proponents of the theory balanced growth, supply creates its own
demand. If, in the under-developed countries, investment is made simultaneously in a
large number of industries, incomes of a large number of workers engaged in these
industries will increase. This will create demand for goods produced by one another and
production will increase. The objective of the balanced growth theory is to integrate
tourism and hospitality with other economic activities. To obtain maximum economic
benefit, tourism and hospitality goods and services should be locally produced.

Supporters of the unbalanced growth theory have criticized the theory of balanced
growth. They contended that what is needed is not balanced growth, but a strategy of
judiciously-Planned unbalanced growth wherein they stressed that investment in
strategic sectors of the economy is more appropriate especially to most underdeveloped
countries instead of all the sectors simultaneously. According to this theory other sectors
will form automatic link to other sectors to what is termed as "linkages effect."
Economic Strategies
To maximize the economic contribution of tourism and hospitality,
economic strategies have been adapted such as import substitution,
incentives and foreign exchange. The main objectives of these
strategies are to: brand and campaign development of tourism and
hospitality businesses, marketing of local assets and make
collaborations to maximize economic impact.
a. Foreign Exchange. Tourism and hospitality is not only the world's leading service
sector but also considered to be an important foreign exchange earner around
the world and the largest export industry. Global tourism and hospitality is one
of the major elements of the foreign trade globally and for several states it is
now become the most beneficial export business and recipient of foreign
exchange. When one country buys something from another country it is an
import; when one country sells something to another country it is an export.
b. Import Substitution. Import substitution is usually used by developing countries
or emerging-market nations that seek to decrease their dependence on
developed countries. It imposes the protection, development and production of
globally competitive and high quality local products. This process makes local
economies, and their nations, self-sufficient.
c. Economic Development Incentives. An incentive is an object, item of value, or
desired action or event that encourages the influx of capital, both local and
foreign, necessary to develop tourism and hospital supply. Some forms of
incentives include: Tax holidays and Government subsidies.
 Activity
1. Discuss the roles of tourism and hospitality in economic
development and growth.
2. Discuss the undesirable effects of tourism and hospitality
a. Economics
b. Sociocultural
c. Enviroment
3. Explain the economic impacts of tourism and hospitality in a
destination