INTRODUCTION TO HOSPITALITY

MANAGEMENT
Fifth Edition

CHAPTER 9
Tourism

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Introduction to Hospitality
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 Chapter Objectives

• After reading and studying this chapter,

the student should be able to do the
following:
1. Summarize the historical impact of
transportation on tourism.
2. Define tourism and describe the
important international and domestic
tourism organizations.
3. Describe the benefits and prospects of
tourism. continued on next slide
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Introduction to Hospitality
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 Chapter Objectives

• After reading and studying this chapter,

the student should be able to do the
following:
4. Describe the economic impact of
tourism.
5. Identify the promoters of tourism.
6. Summarize the sociocultural impact of
tourism.
7. Describe ecotourism.
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 Highlights of Tourism

• It is difficult to determine when tourism

began because, centuries ago, very few
people travelled for pleasure or
business as they do today.

continued on next slide

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 Highlights of Tourism

• We can trace some travel destinations

since ancient times.
– In 2012, international tourism produced
$1.3 trillion in export earnings for the
United States, while international tourist
arrivals increased by 4%.
– This number is expected to increase an
additional 4.3% in 2014.

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 Transportation: Pre-Industrial
Revolution
• As early as 5,000 years ago, travelers
were sailing or trekking from country to
country in the name of peace and
tourism.
• Records of ancient travels have been
etched on walls in temples and
pedestals across Europe, Asia, and
Africa.

continued on next slide

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 Transportation: Pre-Industrial
Revolution
• Travel in the Middle Ages was mostly
for religious or trade reasons.
• People made pilgrimages to various
shrines: Muslims to Mecca and
Christians to Jerusalem and Rome.

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Coach, Rail, and Automobile Travel

• Rail travel influenced the building of

towns, and cities, caused hotels to be
built near rail depots, and opened up
the West.

continued on next slide

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Coach, Rail, and Automobile Travel

• Auto travel produced the motel and a

network of highways, while the
commercial jet created destination
resorts in formerly remote and exotic
locations, and made the rental car
business a necessity.

continued on next slide

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Coach, Rail, and Automobile Travel

• Although long-distance travel has

always been fairly comfortable for the
wealthy, it was not until the
development of the railroad in the
1830s that travel became comfortable
and cheap enough to be within reach
for the masses.

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 Traveling by Train

• One of the main factors that led to the

development of railroads in the United
States was the need to move goods
and people from one region of the
country to another.
• Long-distance travel became both
cheaper and faster, making the horse
and ship seem like overpriced snails.

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 Traveling by Train

• The decline of rail travel started as

early as the 1920s for two main
reasons: the bus and the car.
• Although World War II brought a new
surge in passenger numbers, people
were seldom traveling for pleasure, and
at the close of the war, the decline
continued.

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 Traveling by Train

• Automobiles were again available, and

people had the money to buy them.
• By 1960, airplanes had taken over
much of the long-distance travel
market, further reducing the
importance of the train.

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 Rail Travel Abroad

• France’s TGV trains (Trains a Grande

Vitesse) are perhaps the most famous
of them all, serving more than 150
cities in France and beyond, and
traveling at about 201 mph.
• Several European nations have banded
together to offer visitors unlimited first-
class rail service for a reduced lump
sum.
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 Rail Travel Abroad

• However, if you want to use Eurail, be

sure to purchase it before you leave
home as the pass is only sold outside of
Europe.
• Travel and tourism can bring economic
and social development, yet it can also
damage local cultures and
environments.

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 Traveling by Car

• The internal combustion engine

automobile was invented in Germany,
but quickly became an American
obsession.
• The automobile remains the most
convenient and rapid form of
transportation for short and medium
distances.

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 Traveling by Car

• In fact, it is not uncommon for an

American to drive 20,000 miles a year.
• Travel by car is by far the largest of all
segments in the ground transportation
sector of the travel and tourism
industry.

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 Rental Cars

• Some 5,000 rental car companies

operate in the United States.
• The larger companies do 50% or more
of their business with large corporate
accounts.
• The pleasure traveler, however
constitutes about 30% of the rental car
market.

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 Rental Cars

• The five big rent-a-car agencies in the

United States are Hertz, Avis,
Enterprise, National, and Budget.

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 Rental Cars

• The agencies maintain some 625,000

rental cars, which are usually new and
are sold after six months to reduce
maintenance costs and help avoid
breakdowns.

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 Traveling by Bus

• The major reasons for selecting the bus

over other modes of travel are
convenience and economy.
• In addition to routes between towns
and cities, bus travel includes local
route service, charter, tour, and special
services; commuter service; airport
service; and urban and rapid transit
service.
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 Traveling by Bus

• Founded in 1910, Gray Line is a

franchise operation based in Colorado.
• The company assembles package tours,
customized stores, and arranges rail
and air transfers, as well as meeting
and convention services.

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 Traveling by Bus

• The Gray Line 150-member

organization carries about 28 million
passengers a year at more than 200
destinations.

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 Travel by Air and Sea

• Hotels, car rental agencies, and even

cruise lines depend heavily on airplanes
for profits.
• For instance, lower airfares result in
more passengers, and hence a higher
occupancy at hotels.

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 Travel by Air and Sea

• Whole towns and cities can and do

benefit from this concept by receiving
more taxes from tourists, which leads
to better public facilities, better
schools, and even lower local and
property taxes.
• In the United States, there are, at any
one time, about 5,500 airplanes in the
skies.
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 Travel by Air and Sea

• By 2012, total passenger traffic

between the U.S. and the rest of the
world is projected to reach 1 billion
flights annually.
• U.S. airlines have lost billions of dollars
in the past few years, in part because
of their inability to compete effectively
with international carriers.

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 Travel by Air and Sea

• Several of the major U.S. airlines have

been and are in financial trouble, so
they are charging an additional fuel
surcharge on tickets and for checked
bags, food, beverages, and selected
seats just so that they can stay in the
air.

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 Travel by Air and Sea

• Many of the world’s major airlines are

grouped with either Star Alliance, Sky
Team, or One World.
• Alliances of this nature will allow
airlines access to each other’s feeder
markets and to resources that will
enable them to compete in what will
ultimately be a worldwide deregulation.

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 Travel by Air and Sea

• A feeder market is a market that

provides the source—in this case,
passengers for the particular
destination.
• Ultimately, any major European airline
without a strategic alliance in the
United States will only limit its own
horizons and lose market share.

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 Travel by Air and Sea

• To reduce losses brought about by

deregulation and high labor, pension
plan, and fuel costs, major carriers
have eliminated unprofitable routes,
which are often those serving smaller
cities.

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 Travel by Air and Sea

• New airlines began operating shuttle

services between the smaller cities and
the nearest larger or hub city. This
created the hub-and-spoke system.
• The hub-and-spoke system enables
passengers to travel from one smaller
city to another smaller city via a hub or
even two hubs.

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 The Hub-and-Spoke System

• Similarly, passengers may originate

their travel from a small city and use
the hub to reach connecting flights to
destinations throughout the world.
• The airlines have worked to decrease
losses through the creation of the hub-
and-spoke system.

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 The Hub-and-Spoke System

• The two main benefits of the hub-and-

spoke system are:
– Airlines can serve more cities at lower
costs.
– Airlines can maximize passenger loads
from small cities.

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 New Airplanes

• Able to fly up to 9,400 miles without

refueling, the Boeing 787 Dreamliner
could easily manage a flight between
New York and Moscow, Manila, or Sao
Paulo, or between Boston and Athens.
• From an industry executive, “…If you
don’t have a 787-class aircraft and your
competitor does, he can under price
you and out-profit you.”

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Components of Airline Profit and
Loss
• Airlines have both fixed and variables
costs.
• Examples of fixed costs are the lease of
airplanes, the maintenance of airline
owned or leased terminals, interest on
borrowed money, insurance, and
pensions.

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Components of Airline Profit and
Loss
• Variable costs include wages and
salaries, advertising and promotion,
fuel costs, passenger food and drink,
and landing fees.
• The biggest single cost for airline
operations is labor, which is typically
30% to 45% of total operating costs.

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Components of Airline Profit and
Loss
• Others are landing and take-off
charges, and passenger servicing costs,
such as reservations, ticketing, food,
baggage handling, and an amount for
additional security and fuel.

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Components of Airline Profit and
Loss
• Capacity control is one yield-
management technique for maximizing
sales income by lowering the price of
seats according to expected demand.

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 Load Factor

• A key statistic in analyzing an airline’s

profitability is the “load factor” which
means the percentage of seats filled on
all flights, including planes being flown
empty to be in position for the next
day’s schedule.
• The load factor, like the occupancy rate
of a hotel, is an indicator of efficient or
inefficient use.

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 Cruise Ships

• A cruise ship is often referred to as a

floating resort.
• Various types of entertainment from
exercise classes to cabarets to charm
classes to shuffle board tournaments
and all night dancing are available;
thus, there is plenty for travelers to do.

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 Cruise Ships

• Cruise ship accommodations range

from luxurious suites to cabins smaller
than most hotel rooms.
• The cruise market has increased
dramatically in recent years.
• About 20 million people cruise each
year.

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 Cruise Ships

• Rates vary from a starting point of

about $95 per person per day on
Carnival Cruise Lines to $850 on the
Seabourn Yachts.
• Some 215 ships provide mostly ocean-
going cruising.
• In 2014 alone, about 20 million
passengers vacationed on a ship.

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 Cruise Ships

• And approximately 19.9% of the U.S.

population target market had taken a
cruise, but millions more intended to
cruise in the next few years.
• The nationality of the ship’s crew
contributes to its ambiance.

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 Cruise Ships

• Reasons that most cruise ships sail

under foreign flags include:
– U.S. labor costs are too high to compete
in the world market.
– U.S. ships are prohibited from operating
casino-type gambling.
– Many foreign shipyards are subsidized
by their governments.

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 Cruise Ships

• In addition, cruise ships sail under

foreign flags (called flags of
convenience) because registering these
ships in countries such as Panama, the
Bahamas, and Liberia means fewer and
more lax regulations and little or no
taxation.

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 Cruise Ships

• Employment positions for Americans

are mainly confined to shore-based
activities such as sales and marketing.
• On board, Americans sometimes serve
as cruise directors and pursers.

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 The Cruise Market

• Mass Market: Income: $35,000 -

$75,000.
– Cost of Cruise: $99 - $195 per day.
• Middle Market: Income: $75,000 -
$89,000.
– Cost of Cruise: $175 - $350 per day
(750 to 1000 passengers)

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 The Cruise Market

• Luxury Market: Income: higher than

$100,000.
– Cost of Cruise: average more than $300
per day (700 passengers).

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What is Tourism in the Twenty-
First Century?
• Tourism is a dynamic, evolving,
consumer-driven force, which is the
world’s largest industry if all its
interrelated components are placed
under one umbrella.

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What is Tourism in the Twenty-
First Century?
• The United Nations World Tourism
Organization (UNWTO), is vested by
the United Nations in promoting the
development of responsible,
sustainable (environmentally
responsible), and universally accessible
tourism.

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What is Tourism in the Twenty-
First Century?
• UNWTO plays a role in promoting
technology transfers and international
cooperation, stimulating and developing
public-private sector partnerships, and
encouraging the implementation of the
Global Code of Ethics for Tourism.

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What is Tourism in the Twenty-
First Century?
• The UNWTO’s definition of tourism is,
“Tourism comprises the activities of
persons traveling to and staying in
places outside their usual environment
for not more than one consecutive year
for leisure, business, and other
purposes.”

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What is Tourism in the Twenty-
First Century?
• For many developing nations, tourism
represents a large percentage of gross
national product and a way of gaining a
positive balance of trade with other
nations.

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Benefits and Prospects of Tourism

• International tourism is the world’s

largest export earner and an important
factor in the balance of payments of
most nations.
• Tourism has become one of the world’s
most important sources of
employment.

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Benefits and Prospects of Tourism

• It stimulates enormous investment in

infrastructure, most of which helps to
improve the living conditions of local
people as well as tourists.
• It provides governments with
substantial tax revenues.

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Benefits and Prospects of Tourism

• Tourism, the world’s largest industry,

offers the greatest global employment
prospects, such as:
– The opening of borders.
– An increase in disposable income and
vacations.
– Reasonably priced airfares.

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Benefits and Prospects of Tourism

• Tourism, the world’s largest industry,

offers the greatest global employment
prospects, such as:
– An increase in the number of people
with more time and money.
– More people with the urge to travel.

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Long-Term Prospects: Towards
Tourism 2030 Vision
• Tourism: 2030 Vision is the UNWTO’s
long-term forecast and assessment of
the development of tourism for the first
twenty years of the new millennium.
• International arrivals are expected to
reach over 1.8 billion by 2030.
• Tourism is a mature industry but a
young profession.

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Long-Term Prospects: Towards
Tourism 2030 Vision
• There is interdependency between the
various segments of tourism, travel,
lodging, foodservice, and recreation.
• Hotel guests need to travel to reach the
hotel.
• They eat in nearby restaurants and visit
attractions.
• Each segment is, to an extent,
dependent on another for business.
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The Economic Impact of Tourism

• The World Travel and Tourism Council

suggests that the revenue from travel
and tourism was 7 trillion
(approximately 3%) of gross domestic
product (GDP) in 2013 and will rise by
4.2% annually through 2023.
• The total contribution of travel and
tourism to GDP is forecast to be $10.4
trillion by 2023.
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The Economic Impact of Tourism

• Total contribution of travel and tourism

to employment, including indirect jobs,
was 266 million in 2013 and is
forecasted to rise to 323,826,000 jobs
(9.7%) by 2021.
• Tourism accounts for 7.72 million jobs
in the United States.

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The Economic Impact of Tourism

• The United States is second to France

in the number of tourists (59.7 million)
but first in tourism revenues.

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 The Multiplier Effect

• Tourism produces effects beyond

travel, hotels, restaurants, and
souvenirs.
• The money earned by transportation
companies, hotels, and shops is used to
purchase more goods, pay wages, etc.

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 The Multiplier Effect

• This chain reaction continues until the

money is used to purchase something
outside of the area, which is called
leakage.
• In most economic impact studies to
date, developed economies have a
multiplier effect of between 1.5 and
2.0.

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 The Multiplier Effect

• This means that the original money

spent is used again in the community
between 1.5 and 2.0 times.

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 Promoters of Tourism

• The Pacific Area Travel Association

(PATA) unites its 34 member countries
toward the goal of excellence in travel
and tourism growth.
• Asia Pacific has become the world’s
largest travel market, reaching $351.9
billion in 2013.

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 Promoters of Tourism

• China, India, and Southeast Asia have

continued to be driving forces in
international travel and are constantly
setting new records.

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 Tour Operators

• Tour operators promote tours and trips

that they plan and organize.
• A tour is a trip taken by an individual or
group of people who travel together
with a professional tour manager/escort
and follow a preplanned itinerary.

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 Tour Operators

• Most tours include travel,

accommodations, meals, land
transportation, and sightseeing.
• Tour operators also offer vacation
packages to people traveling alone.

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 Travel Agencies

• A travel agent serves as a middle

person who provides travel counseling
and sells services on behalf of airlines,
cruises, hotels, car rentals, etc.
• The American Society of Travel Agents
(ASTA) is the world’s largest travel
trade association, with more than
26,000 members in more than 140
countries.
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 Travel Agencies

• Agents use computer reservation

systems (CRSs) to access service
availability and make bookings.
• In the United States, the main vendors
of CRSs are Amadeus, Sabre, Travel
Sky, Worldspan, and Galileo.

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 Travel Agencies

• In addition to selling tickets, agents

arrange transportation, prepare
itineraries, book accommodations,
meals, tours, and special events, and
handle and advise on matters such as
foreign exchange.

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 Travel Agencies

• The travel business has changed,

resulting in a sharp decline in the
number of travel agents, because there
is less need for the traditional travel
agent in the age of the Internet.
• Internet travel services such as
Travelocity and Expedia have changed
the way we book travel.

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 Destination Management
Companies (DMCs)
• DMCs are service organizations that
offer programs and services to meet
the needs of their clients.
• They concentrate on selling the
destination to meeting planners and
incentive companies.

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 Business Travel

• Business travel is declining as a

percentage of all travel due to
economic reasons.
• Business travelers, when compared to
leisure travelers, tend to be younger,
spend more money, travel farther, and
travel in smaller groups, but they do
not stay as long as leisure travelers do.

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 Social and Cultural Impact of
Tourism
• From a social and cultural perspective,
tourism can have both positive and
negative impacts on communities.

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 Social and Cultural Impact of
Tourism
• World tourism organizations recognize
that tourism is a means of enhancing
international understanding, peace,
prosperity, and universal respect for,
and observance of, human rights and
fundamental freedom for all without
distinction as to race, sex, language, or
religion.

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 Social and Cultural Impact of
Tourism
• Seeing how others live is an interest of
many tourists, and the exchange of
sociocultural values and activities is
rewarding.

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 Ecotourism

• Ecotourism is focused more on

individual values; it is “tourism with a
conscience,” sharing many of the same
aspirations as sustainable tourism.

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 Ecotourism

• The International Ecotourism Society

(TIES) defines ecotourism as
“responsible travel to natural areas that
conserves the environment and
improves the well-being of local
people.”

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 Ecotourism

• Those who implement and participate

in ecotourism activities should respect
certain principles such as minimize
impact, build environmental and
cultural awareness and respect, provide
positive experiences and financial
benefit, raise sensitivity, and support
human rights.

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 Ecotourism

• Most ecotourism destinations can be

found in developing countries with
natural surroundings and plentiful flora
and fauna.
• The focus of ecotourism is to provide
tourists with new knowledge about a
certain natural area and the culture
that is found in it, along with a little bit
of adventure.
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 Ecotourism

• As for the local inhabitants, ecotourism

aims to help improve the local economy
and conservation efforts.
• Generally, most of the more popular
ecotourism destinations are located in
underdeveloped and developing
countries.

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 Sustainable Tourism

• The concept of sustainable tourism

places a broad-based obligation on
society: to harmonize tourism and
tourism development by improving the
quality of its environment and
resources—physical and socio-cultural.

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 Sustainable Tourism

• Sustainable tourism refers to the

environmental, economic, and
sociocultural aspects of tourism
development, with the establishment of
a suitable balance between these three
dimensions to guarantee its long-term
sustainability.

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 Sustainable Tourism

• Community-based tourism ensures that

a majority of the benefits go to locals
and not to outsiders.
• Quality tourism basically offers tourists
“good value for their money.”

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Cultural, Heritage, Nature, and
Volunteer Tourism
• The United Nations Educational,
Scientific, and Cultural Organization
(UNESCO) has designated a number of
World Heritage Sites worthy of
protection and preservation because of
the outstanding value to humanity of
their natural and cultural heritage.

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Cultural, Heritage, Nature, and
Volunteer Tourism
• What makes the concept of world
heritage exceptional is its universal
application.
• World Heritage Sites belong to all the
peoples of the world, no matter where
they call home.

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Cultural, Heritage, Nature, and
Volunteer Tourism
• Cultural tourism:
– These trips are motivated by interest in
cultural events such as feasts or
festivals or activities such as theater,
history, arts and sciences, museums,
architecture, and religion.

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Cultural, Heritage, Nature, and
Volunteer Tourism
• Heritage tourism:
– This type of tourism is motivated by
historic preservation— a combination of
the natural, cultural, and architectural
environment.
• Nature tourism:
– These trips are motivated by nature,
such as a visit to a national park.

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Cultural, Heritage, Nature, and
Volunteer Tourism
• Culinary tourism:
– Gastronomic tours of Europe and Asia in
places like Florence, Italy, and Bangkok,
Thailand, have an appeal to the
“foodies” among us.
• Volunteer tourism
– These trips provide travelers with an
alternative to standard commercial
vacation options.

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 Trends in Tourism

• Continued growth in tourism is

anticipated with increased interest in
ecotourism, sustainable tourism, and
heritage tourism.
• Internet bookings will continue to
increase with the advancement of
technology, heightened government
awareness of tourism as an economic
and, also as a social/cultural force.

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