The purposes for this essay are to present the structure of the travel, tourism and hospitality industries. Firstly, we need to know what the definition of tourism is. As the World Tourism Organisation (WTO), tourism is ‘the activities of person travelling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes’ (World Tourism Organisation, 1993). Therefore, the tourist is a person who travels to another place outside of their normal place of residence at least 100 miles for more than 24 hours and less than 12 months. Travel and tourism does not necessary involve travelling abroad. It could be in domestic tourism such as people’s home country, on visits to attractions, city breaks, trips to business meetings, sports events or concerts, and visits to friends or relatives.
According to Weaver & Lawton (2002, p.3), tourism includes the businesses that provide goods and services wholly or mainly for tourist consumption such as restaurants and food/beverage services, and lodging. Hence, it linked to hospitality industry which including accommodations segments, food services segment and other hospitality operations segments.
Structure of the travel, tourism and hospitality industry
The travel, tourism and hospitality industry is one of the largest industries in the world. It includes many sectors that we need to go through each part of the industry on its own. The key sectors in the travel and tourism industry can be distributed into three different parts. They are public, private and voluntary sectors.
Figure 1: Tourism industry
The private sector
The public sector
The voluntary sector
The private sector is generated of commercial operators run or owned by individuals or companies such as travel insurance, travel press, travel marketing, private colleges, tour operators or travel agents, whose main purpose is to produce benefits from the facilities and goods, which they deliver to their consumers.
In addition, these agencies play a very important role in the development of the travel and tourism industry. They are the components which communicate directly with customers. For instance, they arranged a group which understand the demands of visitors and advertise their packages at different tourist locations through interactive methods of communication such as distribute brochure or advertise in their websites.
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Accommodations are the basic needs in tourism industry which including hotels, resorts and timeshares or condominiums, conference centres, camp and park lodges, food and beverages. For example, resorts offer good services such as spa, massage, hot tub for customers who come to relax on holiday. They gain high benefits due to customer’s consumptions when they provide good services. Therefore, the private sectors are commercial businesses with the objective of making a profit for shareholders and owners. They run businesses at all levels of the distribution chain – suppliers, wholesalers and retailers.
Public sectors are major groups who decide on the strategy and leadership for the growth of the tourism sector. This is the government body which supporting the tourism industry. The role of this organisation is to work with the industry and provide the required amount of support.
The services offered by the public sector are delivered to the public and paid through government. Public sector includes NTO’s and RTO’s (national & regional tourist offices). It may also be “suppliers”, especially in transportation and visitor attractions. Most of the public services are non-profit-making.
Voluntary sector contains different bodies involved in the lobbying and being the force factors who work for the benefit of the tourism sector and the benefit of the respective associations they represent. They are namely National Parks Association, YHA (Youth Hostels Association), National Trust, ANTOR (Association of National Tourist Office Representatives), FTO (Federation of tour Operators), ATOC (Association of Train Operating Companies), Museums Association, UK Inbound Tourism, Tourism Concern and PSA (Passenger Shipping Association).
Organizations of the voluntary sector are controlled and ran mainly by volunteers. These organizations are usually not making profit or contributively. This creates some financial benefits that may include reduced rates and VAT, income tax exemption for investments, covenants and bank deposits. Voluntary sector organisations that register as contributions have to satisfy specific terms. Their purposes must be charitable, non-profit-making, for the education’s improvement or for other aims beneficial to the society.
According to Weaver & Lawton (2002), horizontal integration takes place when firms reach a higher level of consolidation or control within their own sector. Horizontal integration is where an organisation owns two or more companies, on the same level of the buying chain. For example, EasyJet took over Go! in 2002. It was a case of one budget airline taking over another no-frills airline. Although the two companies became one, they could have retained their different brand names. In fact in this case, EasyJet rapidly re-branded all of Go!’s planes with their own distinctive livery.
Figure 2: Horizontal integration
Vertical integration occurs when a company achieve greater control over elements of the product chain outside its own sector (Weaver & Lawton, 2002). This integration can be forward in the direction of the chain, or backward against the direction of the chain.
Forward vertical integration is more common. Company gains greater control over distribution. It helps them getting closer to the customer. For example, an airline sets up a subsidiary to distribute or market products to consumers such as buying-out a hotel chain or car rental operation.
Figure 3: Forward vertical integration
Backward vertical integration is buying upward in the distribution chain. In contrast to forward vertical integration, company gains greater control over supplies using backward vertical integration. For instance, First Choice is a tour operator which also has an airline named First Choice Airways, or Thomas Cook Holidays setting up Thomas Cook Airways.
Figure 4: Backward vertical integration
Key historical developments
Leisure time: Tourism currently very popular and it is widely acknowledged as a global social phenomenon. In most advanced developed countries, the natural of society has now changed from an economy based on manufacturing and production to focus on the services and consumer industries. Simultaneously, the disposable income and the amount of leisure time and holiday in many countries increased in the post-war period. Therefore, employees have the opportunity to engage in the new forms of consumption such as tourism.
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Incomes/holiday taking: The income is produced from wages, profits and interest, has increased every year. The UK economy is one of the strongest in Europe, levels of disposable income and consumer credit are rising and expenditure on leisure is growing at around 6 per cent. Depend on that, employee’s life is improved. They can spend time to enjoy their life such as travel without worry too much about money. Most people today will have travelled abroad and expect to take at least one holiday a year. When tourists are willing to pay for travel, tourism industry will generate more profit.
Car ownership: By the early 1900’s the car was being used for public transport in most cities. But it wasn’t until the 1950 when the car really took off. There were only 8,000 cars in the whole of Britain at the start of the 20th century. By the end of the century the car population had soared to 21 million. Car ownership statistics gives an indication of the level of personal mobility in a population (domestic, continental travel). In 1989 in Britain, each car was used for an average of 30 trips per week, which declined to 24 by 2006. The distance travelled by car per week slightly decreased. Car ownership in the UK has increased considerably in recent decades. It is not uncommon for a household owning two or more cars in nowadays.
Transportation is an essential need in the tourism sector. It is divided into different areas such as air, road, rail, sea. Transportation is a tool to assist travellers to get to where they want to go.
Sea: Up until the 1920’s the only way to travel abroad was by boat. It used to take days/weeks to travel abroad. Nowadays, ships are mainly used for ferries to mainland Europe and for cruises.
Road: Road travel is the first method people used to travel. In the past, people used to travel by horses, camels, or even humans carrying goods over dirt tracks that often followed game trails. The most famous road in the past is Silk Road. The start of the Silk Road was on 2nd century BC when Chinese ambassador Zhang Qian visited the countries of Central Asia with diplomatic mission. Thus, travel by road is the pioneer in tourism. Nowadays, road travel can be buses, private cars, bicycles, motorbike, etc. People using those transportations to travel are much faster than in the past.
Rail: After sea and road, rail is the third method people use to travel. By the end of the 2nd world war (1940’s) the rail network covered nearly every town and village. Japan is the country famous for mass and high-speed trains. Moreover, Japan has an impressive number of subway systems.
Air: Travel by air is the latest and fastest transportation in the world. The first commercial flight from the UK was to Paris in 1919, but it was very expensive. In the 1970 the introduction of the Boeing 747 brought flying cost down dramatically and open doors to mass tourism. In our time, people can travel from one place to another place very convenience. For example, a flight from Singapore to Vietnam only need 4 hours including food and beverage in the plane, while traveling by sea needs days.
As we can see, tourism cannot develop without technological. It is a part has a great contribution to the tourism industry.
Airlines/air travel: Airlines or air travel play a very important role in the travel and tourism industry. Early forms of technology in the travel and tourism industry were systems which linked tour operators to travel agencies via terminals and allowed travel agents to make bookings through the system. Meanwhile, airlines developed computer reservation systems (CRS). Airlines started to use computers in the 1950s to store and change the huge amount of information they needed to access. The CRS was used internally by airlines, and agents would use the OAG publication to look up flight times etc., and then telephone the airline to make a booking.
Tour operators: The role of tour operators is to put together all the different components that make up a holiday and sell them as packages to the consumer. They make contracts with hoteliers, airlines and other transport companies to put the package together. All the holiday details are incorporated into a brochure which is distributed either to travel agents or directly to customers. In simple terms, they organise and package different elements of the tourism experience, then offer “the product” for sale to the public through different mediums like leaflets, brochures, advertisements, etc.
Travel agents: The role of travel agents is to give advice and information and sell and administer bookings for a number of tour operators. They also sell flights, ferry bookings, car hire, insurance and accommodation as separate products. Thus, they are distributors of products. Increasingly, travel agents also do a little tour operating, for example putting together a holiday for a group. Some industry professionals believe that the role of the travel agent is in decline as many people are booking their own holidays and travel on the Internet or by telephone directly to tour operators.
In conclusion, this assignment helps me know more about the structure of travel, tourism and hospitality and key historical developments of its industry. Hence, I will know how tourism and hospitality work.
Briefly, tourism and hospitality industry is one of the largest industries in the world. It plays a very important role in the industry. There are many sectors which contribute and help to generate the tourism and hospitality industry. They are indispensable parts of the travel, tourism and hospitality industry.
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