Unit 1 Structure of Travel and Tourism Sector Assignment
Diploma in Travel and Tourism
Unit Number and Title
Unit 1 Structure of Travel and Tourism Sector
One of the main industries in the world today is the tourism sector. In 2001 the World Travel and Tourism Council indicated that ten percent and 1 in 10 jobs are created by travel and tourism sector worldwide.The assignment describes in its first task thehistory and structure of travel and tourism industry, in the second task the information about the influence of local and national government agencies and international agencies, in the third task the factors affecting demand and supply on the travel and tourism sector and in the forth task gives the details of the impacts of tourism on the economy and the environment.
P1. Understanding the history of travel and tourism sector
P1.1 Explain key historical developments in the travel and tourism sector
Each year places like Buckingham Palace, the Tower of London and St Paul’s Cathedral are visited by millions of tourists as London being one of the world’s leading tourism destinations attracts around 30 million visitors every year. In this task we are going to get a brief about the history of travel and tourism industry in London. The modern day tourists visit the above mentioned places the most but what were the places where the tourists of 19th century would have visited and what are the factors that helped travel and tourism sector to evolve.
- The first period is 1830-1840: During this period tourists used to visit Queen’s Bazaar in Oxford Street to see The Royal Clarence Vase which was made for King George IV in 1820’s and it took 15 workmen more than 3 years to make a gold, glass and enamel object weighing a hefty eight tonnes and the tourists used to pay 1 shilling to view this dazzling and gorgeous object. Another great attraction during that period was Regent’s Zoological Park covering more than 15 acres land provided the tourists with a variety of tropical plants and exotic bird and animal.
- Period of 1870-80: Skating emerged out as a new attraction for visitors to London. During winters many sites attracted people for ice-skating. Rifle shooting, archery and croquet also became popular among the people and these were enjoyed and played at Finsbury Park and Battersea. (Fatihah, 2014)
- Period of 1880-1910: This was the period when people wanted to explore new cultures and many exhibitions were held at places like Earls Court in West London and the Crystal Palace in south London where visitors can witness a wide variety of products at different stalls.
- Period of 1920-40: Around this period visitors started visiting Buckingham Palace where they would witness the changing of the guard which happened daily. Other notable places where the tourists used to visit were the dog cemetery in Hyde Park, Barrister’s wig shop n temple and the sheep kept in Green Park which used to remind of the country side.
- Period of 1950-70: At this point of time visitors were exploring alternatives of expensive places and the young visitors would visit places like Club Tahiti on Shaftesbury Avenuewhich was affordable at that time. Tourist’s guidebooks started providing different guides to London and separate guide for women.(Randle, 2013)
P1.2 Explain the structure of the travel and tourism sector
- Structure of the travel and tourism sector: The tourism sector can be broken up into different sector because it is a huge industry. These could be categorised as mentioned below:
- Transportation: Transportation is most essential factor of tourism as it the means of reaching the destinations for tourists. People use different types of transport service which include Airlines, Railways, Taxis, Cruise liners etc.
- Accommodation: Another important aspect of the travel and tourism sector is the accommodation. Tourists travelling away from home need a place where they can stay and this consist of different organisations which provide accommodation with some extra services like food & beverages and entertainment services to the visitors. Hotels, resorts, camping grounds are some examples of accommodations provided by the organisations.
- Information and coordination: When tourists visit a new place they require some information about that place and in the tourism industry there are many subsectors where the tourists can get important support services like: Tourists information centres, travel guide publications, tourism authorities, tour guides etc.
- Tour operations and wholesalers: Tour operators and wholesalers hold a large place in travel and tourism sector because they provide bulk services in the form of packages to the tourists, for example Thomas Cook provide services which includes flight expenses, accommodations, tours, attractions, tickets in a combined travel package. These wholesalers provide travel packages locally and for overseas destinations. A day trip to a specific attraction or region is the tours provided by the local tour operators.
- Government: Although government is not classed as a sector of tourism industry, it has a major influence on this industry because it plays an important role in tourism planning, advising, promotion and regulating the industry. (Wilcockson, 2014)
- Attractions: Attractions are the primary motivations for the tourists to travel. Tourists lure for attractions to travel to a destination. Many tour operators combine different attractions into a packaged tour for the tourists while some attractions are sold as standalone tour to the tourist. Attractions could be classified into different categories. Some are free while some comes at a price. Attractions can be segmented into:
- Natural for e.g. parks and zoo
- Historical e.g. Buckingham palace
- Cultural e.g. Art galleries, theatres
- Manmade e.g. Madam Tussads
- Entertainment e.g. cinemas, amusement parks
- Meeting and events: Large scale corporate enterprises conduct meetings, conferences and exhibition tourism across the globe. In this competitive industry a sector which conduct these types of events contribute significantly due to the size and cost involved in staging these events. MICE is a term given to meetings, incentives, conferences and exhibition tourism.
- Travel Agents: We approach a travel agent when we plan to visit a new place or country because they act as an intermediary to the customers by selling tourism services provided by other businesses. Travel agencies provide services like travel advice, ticket sales, visa information and insurance needs by targeting different consumers like general public or corporate markets. (Mendiratta, 2009)
P2. Understand the influence of local and national governments and international agencies on the travel and tourism sector
2.1Functions of government, government sponsored bodies and international agencies on travel and tourism
“For the first time government has a tourism strategy that reaches right across Whitehall, looking at policies from a tourism perspective. From cutting red tape on business, to visa applications and airport queuing times, planning and infrastructure, this strategy encompasses all the areasthat have big impact on both the people holidaying in this country and the business organisation so vital to the sector”. (David Cameroon, 2011)
Government plays an important role in the functioning of tourism sector. Strategic decisions taken by the government ensures social and economic growth. But the development and growth of a successful tourism sector is not about just about successful tourism strategy. Government’s involvement in the tourism industry is necessary as in any relative industry. The government must mobilize the tourism sector as a critical driver of
Development of the destination for its people and their future:
- Local government: Earlier there was solely the local government who were responsible for the growth of tourism sector. In the early days of pioneering when railway was emerging out to be a better transportation service, tourism started gaining popularity. Local government functionedin a way similar to the national government. The tourism sector is privatised industry and the growth of large resorts and hotels in UK encouraged the development of local tourism administration to carry out the responsibilities of the host destination.
- International organisations: There are a number of international bodies, both governmental and government sponsered, with tourism interests. Government bodies reflect the national government's interest in, and political will regarding, tourism intervention. In the industrialized countries, the tourism priority tends to be low. Because of the wide range of tourism activity the number of organizations with some concern or responsibility is great, but coordination and often cooperation as at the national level is weak. Furthermore, consultation with industry and operating sectors is often inadequate, as the sector's voice is weak. The main sector industry bodies inevitably present the case of their own trade, sometimes as in modes of transport in a competitive situation. Thus the collective tourism approach is hard to organize and sustain, even when cooperation at the operating level is effective
- United Nations World Tourism Organization: The World Tourism Organization (UNWTO/OMT) is a specialized agency of the United Nations and the leading international organization in the field of tourism. It serves as a global forum for tourism policy issues and a practical source of tourism know-how (UNWTO, 2007)
The WTO has made efforts recently to strengthen its links with commercial and non-government partners through its system of affiliate membership which should help in the provision of practical guidance and as a basis for cooperative action. (Penrose, 2011)
2.2 Influences of local and national economic policy on the success of the travel and tourism sector
The success of the travel and tourism sector is influenced by the economic policy in a number of ways.
First, we would understand the factor with a help of an example. Suppose a building of a hotel or resort in a particular town is subsidised by the local government, the tourism industry will presumably take benefit of this advantage. This is one of the ways an economic policy of the government directly impacts the tourism industry and this type of impact would occur when explicitly aimed policies are made by the government aiming towards tourism industry.
Secondly, economic policies of the government which affect the tourism indirectly. Monetary policies of the government are mostly not aimed at tourism industry, but these monetary policies cause a fluctuation in the exchange rate of its currency, and if the currency falls, tourism will eventually increase because the vacation in the country will become less expensive for people in other countries.
2.3 Implications of political change on the travel and tourism sector in different countries
Tourism has been proclaimed the largest industry in the world. “According to the World Tourism Organization, international tourists’arrival reached 922 million worldwide in 2008 and isforecasted to reach 1.6 billion by 2020. As such, tourism is acknowledged as an important economic sector for many countries.”(Suntikul and Butler 2010)
Change is normal in politics as it is in tourism. Politics and tourism share a relationship consisting of relatively small sub-field of the social science of tourism. Tourism is affected by global economic and political trends and relation between nations. In recent years, tourism has become closely implicated in political action and activism and the reason is that tourism is now seen and used as a tool for economic and political change. Tourism is used to initiate political discussions, increased pressure for fair trade and poverty reduction through tourism clearly reflect the growing link between these two fields. A greater politicisation of tourism has happened with a complex political context. The economic and social consequences of the fall of communism in Eastern Europe and the adaptive re-invention of Communist societies in Asia continue to have repercussions on the global stage and at the level of specific destinations within these regions, as does the rapid changes in the European Union.
Earlier this year UK voted out itself from the European Union. This political change is going to affect the tourism industry of UK. The number of visits by Europeans to the UK is more than double that of visits from residents in the rest of the world. European Union states are now requiringhaving visas to travel to UK likewise Britons travelling to European Union are required to have visas. For e.g. if a French family is looking to visit Spain or UK,there are pretty much chances of them choosing Spain over UK where they would not require visas, no extra costs. (Mason, 2015)
P3. Understand the effects of supply and demand on the travel and tourism sector
3.1 Factors affecting tourism demand
Tourism demand can be defined as a term which covers the factors governing the level of demand, different types of demand, important characteristics of demand and the motives behind making such demands. Demand is defined as “a schedule of the amount of any product or service that people are willing and able to buy at each specific price in a set of possible prices during some specified period of time”.(Cooper, 2004)
Individuals are responsible for generating tourism demand in a particular place called “tourism destination”. Seasons and time are some factors which affect the demand of tourism industry.
Three types of demand are identified by Buhalis (2004) namely actual, suppressed and latent demand
Tourists directly involved in the actual process of tourism refer to the actual demand or also called effective demand. Two categories of people who are unable to travel due to any circumstances. The first category of people includes the potential travellers who may travel at a later period of time and are not able to travel at the current point of time. Second, the people who postponed their travel due to problems in the supply environment which is known as deferred demand. Latent demand which is of third type relates to the spatial and temporal expression of demand at specific destination. Some factors which motivate people to travel and create a demand for tourism industry are leisure, holidays, business and professional engagements, health and care treatments, religious pilgrimages or other personal motives. These factors create a demand for accommodation.
Depending upon the economic, psychological, geographic and political factors tourism demand could be defined in various ways.
Other factors which affect the demand for tourism are described below:
- If the income of the consumers decreases, the demand for tourism drops.
- Tastes of the consumer. This can be described with a help of an example. Let’ssay , if vacations go out of style and consumers believes that it is better to stay at home rather than enjoying vacation at an exotic destination the demand for tourism drops.
- The cost of complementary goods. Air travel is seen as a complimentary good to tourism sector, and when the prices of air travel rises up the demand for tourism will eventually decrease.
Few studies have been conducted in the UK to estimate how tourists reacted to changes in prices and taxes. Durbarry and Sinclair (2000) use an econometric model to measure the sensitivity of tourism demand in the UK to changes in price rates, exchange rates and expenditure. Due to the price changes in the UK the price elasticity of tourism demand in competing destinations is positive. It is suggested that international visitors are affected by the changes in price of tourism in UK. (Gyr, 2010)
3.2 Changes in supply to meet the effects of demand
Tourism supply has to do with the provision of the key elements of the tourism industry with the provisions of the key elements of the tourism industry by the host governments or destinations. Natural to man-made resources are required for tourism supply. Telecommunications, accommodation and transportation are the infrastructure required in tourism industry. Travel agencies, tourist offices, visitor manager and hire companies are other services required in tourism industry. A concept of “tourist supply chain” originated from economics which is used to explain how different businesses enter into contractual agreements to supply services, products and goods. A wide range of suppliers providing services to the tourism sector are well suited in the supply chain.
Tourism supply can also be explained through the distribution system in tourism analysis. There are four components in the distribution system namely suppliers of tourism services, the distributors of information, travel intermediaries and consumers.
Supply components comprises of four different elements:
- Natural or environment resources which involves environmental awareness, nature conservation, eco-tourism and natural resources which are used to ensure the sustainability.
- Built or man-made resources which include constructions such as water supply systems, sewage disposal systems, power lines, road, etc and other recreational facilities
- Transportation which is an essential factor of tourism industry, as without it tourists can’t reach any destination.
- Hospitality is another resource which is integral to tourism offering. (Simm, 2014)
P4. Understanding the impacts of tourism
4.1 Evaluation of positive and negative economic, environmental and social impacts on tourism
In developing countries and rural areas, tourism brings many social and economic benefits, but negative effects are also associated with mass tourism. The positive and negative impacts of economy, society and environment are discussed below:
- Positive effects: Direct employment within the tourism industry and indirect sectors such as retail and transportation are the areas of jobs created by tourism. When people spend their wages on goods and services, it creates a multiplier effect which leads to generation of more jobs. Many small scale industries in the rural communities take benefits of the tourism industry which help them generate extra revenue. The revenue generated in the form of airport taxes and hotel taxes is used for schools, hospitals and housing.
- Negative effects: Tourism jobs are often seasonal and poorly paid, however tourism can help push up the prices of local properties and the cost of goods and services. Success of tourism relies on establishing a basic infrastructure and the cost of this usually is burdened on the government, and the government makes these expenses out of tax revenues. Multinational companies such as hotel chains takes benefit of the tourism sector in a particular area and the local community does not always get the full benefits. Sometimes tourism dependent places are affected negatively by economic recession, natural disasters or terrorism.
- Positive effects: Traditional customs, handicrafts and festivals that are neglected otherwise are encouraged and preserved by the tourism and creates a pride for the local community. Global awareness issues are raised such as human rights abuses and poverty with the help of interactions between the hosts and the guests creating a better cultural understanding.
- Negative effects: Sometimes the behaviour of visitors could have a detrimental effect on the life of the local community. Crowding, congestion, drugs and alcohol problems, increased crime levels are the examples of negative effects of tourism on a society. Locals are even displaced from their land to make buildings for new hotels or even barred from beaches which are a violation of human rights.
- Positive effects: Ecotourism helps promote conservation of wildlife and natural resources like rain forests which are regarded as tourism assets. Funds generated through tourism helps maintaining animal preserves and marines parks by charging an entrance and guide fees.
- Negative effects: Environment is harmed by tourism as it poses a threat to region’s natural and cultural resources including the water supply, beaches, coral reefs, cultural heritage sites due to overuse. Pollution through traffic emissions and garbage left behind by the tourists in public places leads to harmful effects on environment.(20th Century London, 2016)
4.2 Strategies that can be used to minimise the negative impacts while maximising the positive impacts of tourism
Poorly managed tourism can severely impact the environment of a tourist destination. A new form of tourism known as eco-tourism is being adopted worldwide which is sustainable for the environment as well as beneficial for the local population.
Some strategies are discussed below by which the negative impacts of tourism are reduced:
- Tourists should be provided with an option of living with the locals instead of staying in resorts and hotels which are constructed by displacing the locals from their land. In this way tourists would be able to know how the locals live and understand their culture which could be totally different from theirs. And it would also help the local understand that the visitors come to their place to explore their culture instead of changing to the lifestyle of the tourists.
- Informing tourists how they can keep the impacts on environment low by educating them about the tourist destination.
- Local population should understand that environment protection is important for the tourism and the benefits from this sector to the local community.
- Number of tourists to a particular destination should be controlled so that their is no damage on the environment which would otherwise make the place unattractive.
- Strict laws should be enforced so that tourists should know what they can bring to the location and what they can take back with them without causing any damage.
On the other hand tourism brings many positive benefits which could be maximised to improve the sustainability of the environment. These impacts are listed below:
- Improving environmental management and planning
- Increased environmental education and awareness programs.
- Security and enforcement of environment laws and regulations should be improved.
- Financial help and contribution to develop local communities and protection of the environment.
- The areas which are affected by poverty and unemployment, economic development of these areas should be done by the government and local agencies thus creating new employment opportunities.
Sustainable tourism can turn poverty areas into thriving economic development zones and also significantly increase the revenue of the tourism business. Tour operators, hotels, resorts, and destinations can contribute towards sustainable tourism, thereby reducing poverty, improving the lives of people and improving the environment which would lead our world to a more sustainable path. (Michael, 2016)
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Tourism is a fast growing industry in the world due to the diversified culture of the world. The modern man wants to explore new horizons in terms of travel, and the tourism industry develops by creating a large number of jobs throughout the world. International travel and tourism is the backbone of market globalization and enriches the world in many ways: It promotes economic growth, increases trade, advances development, and creates higher disposable incomes. Throughout this study we understood the the tourism industry in detail and the different factors which affect the working of this sector. The current assignment gives the detailed study of the tourism sector and the influence of various segments on the sector. The effect of supply and demand on tourism and the impacts of tourism is also described the assignment.
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