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Ch. 12- Tourism Components & Supply

Terms in this set (33)

=Natural components of a destination such as: (Water, air, climate, physiography, land forms, flora and fauna)

=Vital to destination competitiveness: (natural resources are the main reason people travel)

=Importance of sustaining natural resources: Who is going to travel to an area with polluted beaches?

Many combinations of factors relating to natural resources can create environments attractive to tourism development. Thus, no general statements can be formulated. Probably the most noticeable factors are the pronounced seasonal variations of temperature zones and the changes in demand for recreational use of such areas. To even out demand, the more multiple-use possibilities, the better. For example, it is more desirable that an area be used for golf, riding, fishing, hunting, snow skiing, snowmobiling, mushroom hunting, sailing and other water sports, nature study, and artistic appreciation such as painting and photography than for hunting alone. The wider the appeal throughout the year,
the greater the likelihood of success.
Another highly important consideration is that of location. As a rule, the closer an area is to its likely markets, the more desirable it is and the more likely to have a high demand. User-oriented areas
(e.g., golf courses) should be close to their users. By contrast, an area of superb natural beauty, such as a U.S. national park, could be several thousand miles from major market areas and yet have very
satisfactory levels of demand. Productivity of the natural resources of the area for tourism is a function of the application of labor and management. The amounts and proportions of these inputs will determine the quality and quantity of the output. The terrain, vegetation, and beaches of the natural resources will be affected by the intensity of use. Taking such concentrations of use under consideration and planning accordingly for permanent aesthetic appreciation will help to maintain the quality of the natural resources for the enjoyment of present and future users. The quality of the natural resources must be maintained to sustain tourism demand. Proper levels of quality must be considered when planning, and the maintenance of quality standards after construction is completed is absolutely necessary for continued satisfaction of the visitor. In fact, tourism is very sensitive to the quality of recreational use of natural resources, and unless high standards are maintained, a decrease in demand will inevitably result. Thus, ecological and environmental considerations are vital.
Providing an ample tourism supply to meet anticipated demand is a challenge for the tourism planner or manager. Supply functions are always constrained by demand. The following formula can be used to calculate the number of hotel rooms (or other types of lodging) required:

Room demand/night(100% occupancy) = No: tourists X % Staying in hotels X Average stay
365 X Average number of persons per room

R = T x P x L /// S x N

R = room demand per night, at 100 percent occupancy
T = number of tourists
P = percentage staying in hotels
L = average length of stay
S = number of days per year open for business
N = average number of persons per room (obtained from hoteliers); total number of guest
nights divided by the number of guests, during any period of time
O = hotel occupancy used for estimating; for 70 percent occupancy, divide number of rooms needed at 100 percent occupancy by 70 percent

Infrastructure factors in supply will be determined largely by the number of guest rooms as well as restaurants, stores, and similar installations. Infrastructure appropriate to the size of the development
is an engineering problem and is readily ascertained as the plans are developed. Transportation equipment is generally supplied by commercial firms as well as publicly owned or quasi-public transportation facilities and services.
Regarding hospitality resources, the recruiting and training of staff for the various elements of supply is a critical one. The traveler generally enjoys being served by unsophisticated local persons who
have had proper training and possess a hospitable attitude. Such persons may be recruited through government and private employment agencies as well as through direct advertisement to the public.
Newly hired employees must be indoctrinated in the importance of tourism, how it affects their own
personal welfare as well as that of their community, the importance of proper service to the visitors, and how their economic welfare is closely related to their performance. Museums, art exhibits, festivals, craft shows, and similar cultural resources are usually created by community cooperation and the willing assistance of talented people. A chamber of commerce or tourism body is the best mechanism for organizing the creation of these hospitality resources.
Tourism supply components are classified into four broad categories for discussion in this chapter.
1. Natural resources and environment. This category constitutes the fundamental measure of supply—the natural resources that any area has available for the use and enjoyment of visitors. Basic elements in this category include air and climate, physiography of the region, land forms, terrain, flora, fauna, bodies of water, beaches, natural beauty, and water supply for drinking, sanitation, and similar uses.
2. Built environment. This includes the infrastructure and superstructure discussed in Chapter 1. This component has been developed within or upon the natural environment. One of the most basic
elements of the built environment is the infrastructure of the region, which consists of all underground and surface developmental construction, such as water supply systems, sewage
disposal systems, gas lines, electrical lines, drainage systems, roads, communications networks, and many commercial facilities. The tourism superstructure includes facilities constructed primarily to
support visitation and visitor activities. Primary examples are airports, railroads, roads, drives, parking lots, parks, marinas and dock facilities, bus and train station facilities, resorts, hotels, motels, restaurants, shopping centers, places of entertainment, museums, stores, and similar structures. For the most part, the operating sectors of the industry are part of the built environment and provide
much of the superstructure or facilitate access to the physical supply.
3. Operating sectors. The operating sectors of the tourism industry represent what many of the
general public perceive as ''tourism.'' First and foremost, the transportation sector, comprising
airlines, cruise lines, motorcoach companies, taxis, limousines, automobiles, aerial tramways, and
so on, typify the movement of people in travel (see Chapter 5). Because nothing happens until
someone plans to leaves home, transportation is a critical component. Without transportation,
the tourist would be unable to reach and enjoy the natural and built environment. Tourists need a
place to stay and be fed, so the accommodation sector and the food service sector are important
supply components (see Chapter 6). Attractions are the reason people travel. Without attractions
(see Chapter 8) drawing tourists to destinations, there would be little need for all other tourism
services such as transportation, lodging, food, distribution, and so on.
4. Spirit of hospitality and cultural resources. Pervading all of the foregoing physical elements of
the built infrastructure and superstructures is the social foundation of the destination—its culture,
which consists of the language, food, customs, and religions of the residents of the region, as well as
their work-and leisure-related behaviors.Itisthepeopleandtheculturalwealthofanareathatmake
possible the successful hosting of tourists. Examples are the tourist business employees' welcoming
aloha spirit in Hawaii, the attitude of the residents toward visitors, courtesy, friendliness, sincere
interest, willingness to serve and to get better acquainted with visitors, and other manifestations of
warmth and friendliness. In addition, the cultural resources of any area are included here: fine arts,
literature, history, music, dramatic art, dancing, shopping, sports, and other activities.
A wide range of tourist resources is created by combining cultural resources. Such examples would
be sports events and facilities, traditional or national festivals, games, and pageants.
The ground and service installations described as infrastructure are of paramount importance to
successful tourism. These installations must be adequate. For example, the diameters of the pipes in
various utility systems should be ample for any future increase in use. Electrical installations, water
supply systems, communications installations, waste disposal, and similar service facilities should be
planned with a long-term viewpoint so that they can accommodate future expansion. Airport runways
should be built to adequate standards for use by the newest group of jets so that future costly
modifications will not be necessary.
Hotel or lodging structures are among the most important parts of the superstructure. The goal
should be to produce an architectural design and quality of construction that will result in a distinctive
permanent environment. A boxlike hotel typical of any modern city is not considered appropriate for a
seaside resort dominated by palms and other tropical vegetation, nor is it likely to attract tourists.
A tourist is often more attracted by a facility designed in conformance with local architecture as a
part of the local landscape than by the modernistic hotel that might be found at home. Attention must
be given to this subject because people often travel to immerse themselves in an environment totally
different from their own. Modern amenities such as air-conditioning, central heating, and plumbing,
however, should be used in buildings otherwise characteristic of a particular region.
Interior design should also be stimulating and attractive. Lodging structures need local decor and
atmosphere as well as comfort. To minimize the expense of obsolescence, high-quality materials and
furnishings and first-rate maintenance are necessary. Infrastructure is expensive and requires
considerable time to construct.
Lodging comes in many forms aimed at satisfying the needs of the market. The range of supply in the
marketplace is vast. From the tourist's standpoint, the primary type is the destination resort hotel
situated in attractive surroundings and usually accompanied by a large mix of services, including
entertainment and recreational activities for the travelers and vacationer. Another major type is the
commercial hotel, usually a downtown structure, located conveniently for the business traveler and
vacationer. However, while important, these types are just the beginning of the supply picture. We
also have boutique, all-suite, extended stay, conference, convention, motel, condominium, timeshare,
bed and breakfast, inn, gite (a French home available for rent), cabin, cottage, hostel, pension, farm
stay, campground, apartment, and tent accommodation to mention a number. We also have cruise
ships that have become floating resorts. Many resorts are designed especially to accommodate special
activities such as gaming, golf, tennis, skiing, and spas. There are also unique accommodations such as
the seasonal ice hotels in Canada, Sweden, and Finland.
The demand for accommodations varies according to the price that guests are willing to pay,
services required, and similar considerations. Consequently, we have luxury, upscale, mid-price,
economy, and budget market price segments to appeal to travelers.
In the United States, Smith Travel Research (STR) defines these as follows:
& Luxury—highest 15 percent average room rates
& Upscale —next highest 15 percent average room rates
& Mid-price—next 30 percent average room rates
& Economy—next 20 percent average room rates
& Budget —lowest 20 percent average room rates
Because consumers seek different levels of service, there are full-service accommodations that
offer restaurants, lounge facilities, meeting space, bell service, and room service. These are typically
mid-price, upscale, or luxury hotels. Competing with them are limited-service hotels that have rooms-
only operations or offer very few other services or amenities. These operations are in the economy or
budget grouping. Many successful tourism areas have no multistoried, expensive, contemporary-
looking hotels. For example, bungalow-type accommodations constructed with native materials, built
to modern standards of comfort and safety, and kept immaculately clean are acceptable to a large
segment of the market.

Condominiums: Individual buyers of condominium units typically use the apartment for their own enjoyment, or they
rent it to tourists for all or part of the year. This form of accommodation has become increasingly
important in ski and beach destinations, and in some resort areas it constitutes considerable competition to the resort hotels. Real estate management firms often manage such apartments or
groups of condos within a building or complex and thus serve as agents for the owners. They rent the
condos as managers of the group, charging a fee for this service to the absent owner. Such arrangements can be made through a local travel agent in the prospective traveler's home city. The agent will book the reservation through the real estate management firm.

Timesharing: Timesharing is a technique for the multiple ownership and/or use of resort and recreational
properties. Timesharing has been applied to hotels, motels, condominiums, townhouses, single-family
detached homes, campgrounds, and even boats and yachts. It involves both new construction and
conversion of existing structures, along with properties devoted solely to timesharing and projects that
integrate timesharing and non-timesharing properties. While most programs may be classified as either ownership or non-ownership (right to use), there are wide variations in program and legal format. The attraction of timesharing is simple: It permits purchasers to own or have occupancy rights at a resort accommodation for a period of time each year for a fraction of the purchasing price of the entire unit. Timeshare owners pay for exactly what they plan on using, and when they leave they don't have to think about where they'll be vacationing next year. Another option or advantage of timesharing is the exchange program. The exchange system affords vacation flexibility by allowing owners to trade or
swap their timeshares for other locations and times. Finally, a well-designed timeshare program can be
a hedge against inflation in resort accommodations. The benefits of timesharing are substantially borne out by the high degree of consumer satisfaction
it has achieved. In a survey of approximately 10,000 timeshare buyers, conducted by the National
Timesharing Council, 86.3 percent of the respondents said they were ''very satisfied'' or ''satisfied'' with their purchase. About 40 percent indicated that they were interested in purchasing additional

Hotel Classification: Hotels are classified using a number of different systems. Then, too, many tourist countries have no
classification system whatsoever. Many in the industry prefer the five-star rating system, which grades
hotels according to specific criteria (usually by the national tourist organization) from the highest (five
stars) to the most modest accommodations (one star) suitable for travelers. Countries such as Spain
also classify non-hotel accommodations, such as pensions. Criteria used for star ratings are public
rooms, bathrooms, climatization, telephone, bar, dining rooms, and other characteristics. The Burj Al
Arab hotel in Dubai, United Arab Emirates, consistently voted the world's most luxurious hotel, claims
it is a seven-star property.
Other classifications are deluxe, superior, and good; or super deluxe, and first-class reasonable. Still
another classification is A, B, C, D, or E. Because many classification schemes are confusing or not
useful, a uniform worldwide classification truly indicative of the grades of hotels in any country would
be a real plus to tourism. Of course, differences in general standards of development in various
countries would be understood. A five-star hotel in a highly developed country would likely be more
deluxe than would a five-star hotel in a less developed area.
All factors concerning transportation should be considered in developing tourism, beginning with
taxis, limousines, and bus service from the place of lodging to the departure terminals. Such services
must be adequate and economical.

Air: As described in Chapter 5, the airline industry dominates public intercity transportation systems,
capturing over 92 percent of the common-carrier passenger mile market. Thus, planners looking
to improve tourism must evaluate the adequacy of air transportation. Flight frequencies as well as size and type of aircraft are important. Air service from important origins for tourists is, of course,
Airport facilities must be adequate. Major problems frequently encountered are the accessibility to
the airport, aircraft slots availability, and the passenger loading-unloading parking space sequence.
Newly built airports seem to have solved these to a considerable degree and have also reduced walking
distances because of design improvements. There is also frequent shuttle bus service for interline

Motorcoach: Motorcoaches intended for tour use should have large windows, air-conditioning, comfortable seats,
and restroom facilities. Springs or other suspension systems in the coaches should be designed so that
the joggling of passengers is kept to a minimum or eliminated. Multilingual guide service or
multilingual tape recording facilities with earphones for each passenger are useful in communities
or on tours where an interpretation of the points of interest is desirable.
Personnel assigned to buses should be selected for suitable temperament, courtesy, and spirit of
hospitality. For example, if a bus is staffed by a driver and an interpreter, the interpreter can assist
passengers on and off the bus as well as inform them of local environment, particularly attractions of
interest.Interpreters or guides should be trained and educated for this duty.Too often, the interpretation
of points of interest is superficial (and inaccurate). A program of certification for guides should be
conducted by a special school or provided in the curriculum of an institution of higher learning. In such a
program, competent instructors should educate potential guides in the history, archaeology, ethnology,
culture, and economic system of the area in which the tour is being conducted. Competency in the
various languages commonly encountered with tourists is also an essential qualification.

Ship and Boat:Water travel is a major part of tourism and contributes considerably to the development of travel on
land and by air. Forms of water travel include ocean cruise ships, river cruises, passenger travel on
freighters, ferryboats, river stern wheeler, chartered boats and yachts, houseboats, and smaller family boats and canoes.
Cruise ships and other large vessels need convenient piers and good land-air transportation connections for their passengers. Smaller boats need docks and loading-unloading ramps for easy accessibility to water. Charter boat operators must have reliable weather forecasting and ready availability of
needed supplies and repair services. Where rental canoes are popular, delivery and pickup services are
often necessary, as are campgrounds in wilderness areas where canoeists can stay overnight. Persons owning their own boats appreciate good public-access points for launching.

Rail: Travelers worldwide often prefer rail travel, particularly because of its safety record and the
convenience and comfort of viewing the scenery from an air-conditioned car. Also, the frequent
schedules of trains in many countries appeal to travelers. The recent advent of high-speed trains
further enhances their appeal. Some trains have stewards or hosts, which travelers seem to appreciate.
Adequate taxi, limousine, or bus service from the railroad station to hotels and downtown points is
essential. Such transportation service must be frequent enough to get the traveler to the destination
promptly. Conversely, the traveler should be able to get to the railroad station in ample time to make connections with the train.

Taxis: Adequate taxi and limousine services are essential in a tourist area. Ideally, taxis should have
removable and washable seat covers so the car always presents a clean appearance to the passenger.
Also, to make the best impression, the taxi driver should dismount from the driver's seat and open the
door for the passenger. He or she also should assist in stowing the luggage in the trunk or elsewhere in
the cab and be courteous at all times.
Taxi drivers who are multilingual are highly desirable and, in fact, essential if tourism is to be an
important element of the economy of the location. Training taxi drivers in foreign languages should be
no more difficult than training tourist guides or front-desk clerks. Where taxi drivers have no foreign
language ability, hotels may provide written directions for the tourist to give to the driver concerning
the destination and the return to the hotel at the end of the excursion.
The most satisfying entertainment for visitors is that which is native to the area. In any country,
there are expressions of the culture in the music, dance, drama, poetry, literature, motion pictures,
television, ceremonies, festivals, exhibits, shows, meetings, food and beverage services, and tours (or
local excursions) that portray the best the area has to offer.
Not all forms of entertainment can be successfully described or illustrated in tourist promotional
literature. One of the best ways to bring these entertainment opportunities to the attention of the
visitor is with a social director whose desk is in the lobby of hotels, resorts, and other forms of
accommodation so that the visitor can readily find out what is going on and make arrangements to
attend. In European hotels, this desk is traditionally staffed by the concierge, who provides an amazing
amount of information concerning all types of entertainment and activities available. An appropriate
substitute is a knowledgeable person at the front desk to provide information concerning recreation
and entertainment.
Bulletin board displays or posters and verbal announcements of outstanding events made in the
dining room or other areas where guests gather can also provide entertainment information. A local newspaper that features articles concerning everyday as well as special entertainment events and
opportunities is a valuable method of distributing information. These newspapers or bulletins are
provided in popular vacation destination areas such as Miami Beach and Honolulu, but the idea is not
widespread. In metropolitan centers, a weekly magazine is normally provided to hotel guests to give
current information on entertainment, recreational, and cultural opportunities in the city. The Internet
is another information source as hotel Web sites feature and provide links to local attractions and
The procedure used in matching supply with demand is called a task analysis. Suggested steps are
as follows:
1. Identification of the present demand
a. By mode of transportation and by seasons of the year
b. For various forms of tourism such as activities, attendance at attractions, and similar categories
c. For special events such as conventions, celebrations, fairs
d. Group and tour visitors
e. Family and individual visitors
f. Business visitors
2. A quantitative and qualitative inventory of the existing supply
3. The adequacy of present supply with present demand
a. Natural resources
b. Infrastructure
c. Transportation and equipment
d. Hospitality and cultural resources
4. Examination of present markets and the socioeconomic trends
a. Geographic market segmentation and orientation
b. Demographic market segmentation and orientation
i. Population age, sex, occupation, family life stages, income, and similar data
ii. Leisure time and work patterns
c. Psychographic market segmentation
i. Motivations, interests, hobbies, employment orientation, skills, professional interests
ii. Propensity to travel, responsiveness to advertising
5. Forecast of tourism demand
a. Computer systems simulation method
b. Trend analysis
c. Simple regression —linear least squares
d. Multiple regression —linear least squares
e. Executive judgment or Delphi method
6. Matching supply with anticipated demand
a. If adequate, no further action necessary
b. If inadequate, inauguration of planning and development procedures

To perform the task analysis,certain skills are required, with statistical research techniques employed
to identify and quantify the current demand. Suggestions for doing this are provided in Chapter 13.
When making a quantitative and qualitative inventory of the existing supply, the aid of specialists
and experts is usually needed. For example, the adequacy of the current supply in relation to current
demand requires the work of tourism specialists such as travel agents, tour company and hotel
executives, tourism promotion people, ground operators (companies that provide baggage transfers,taxi
services, local tours, and similar services), shopkeepers, and perhaps a sample of the tourists themselves.
Examining the current markets and the socioeconomic trends that will affect future markets
requires specialized market research activities. These should include determination of market
characteristics, development of market potentials, market share analysis, sales analysis, competitive
destination studies, potentials of the existing and possibly new markets, short-range forecasting, and
studies of travel business trends. A number of sophisticated techniques are now available. The
engagement of a reputable market research firm is one way to obtain this information.
Forecasting tourism demand is a perilous business. However, a well-structured statistical analysis,
coupled with executive judgment, is most likely the best approach to this difficult problem. See
Chapter 13 for several methods for accomplishing this.
Finally, matching supply with the anticipated demand must be done by knowledgeable planners. A
tourism development plan within the master plan is recommended. Supply items are essentially rigid.
They are elaborate and expensive and, thus, cannot be expanded rapidly. An exception would be
transportation equipment. Additional planes, buses, train cars, or automobiles could be assembled
quite rapidly to meet an unusually high demand situation.
The foregoing discussion dealt with matching supply and demand in a long-run context. Another
important consideration is that of fluctuations in demand in the short run (seasonality) and the
resulting peaks and valleys of demand This is a vexing problem.
The reason for this is simply that tourism is a service,and services cannot be placed in inventory. If a 400-
room hotel rents(sells)350 rooms on a particular night,it cannot place the other 50 rooms in inventory for
sale the following night.Regardless of how many rooms went unoccupied in the past,a 400-room property
can rent no more than 400 rooms on any given night. By way of contrast, consider the case of some tangible
good, say, television sets. If some television sets are not sold in one month, the storekeeper can keep them
in inventory and sell them the next month. Of course, the storage charges, interest payments, and other
expenses incurred in inventorying a particular item reduce the item's economic value. But in tourism, the
economic value of unsold items, such as the 50 hotel rooms mentioned, is exactly zero.
Thus, it should be clear that while, in most cases, firms selling tangible goods can deal with demand
fluctuation through the inventory process, this option is not available to firms providing travel services. In
the travel industry,an effort must be made to reduce seasonal fluctuations as much as possible.Because of
the high economic cost involved, no effort should be spared in attempting to limit the amount of seasonal
variations in demand. Nor can the problem be dealt with by simply selecting an appropriate supply level.
The following charts illustrate various supply situations associated with fluctuating demand levels.
Suppose that the demand for a particular destination exhibits the seasonal pattern depicted in Figure
12.2a. If no action is taken to ''level off'' the demand, then three possible levels of supply can be
considered. In Figure 12.2b, the level of supply is provided so that demand in the peak season is fully
satisfied. This implies that tourists coming to the destination in the peak season will be accommodated
comfortably and without overcrowding. However, during the slack season, the destination will suffer
from extremely low occupancy levels, with obvious implications for profitability. If, on the other hand,
the supply is set at a low level (Figure 12.2c), the facilities during the peak season will be overcrowded
enough to detract from the tourist experience.Visitor satisfaction will be at a low level,and the future of
such a resort area will be doubtful. Last, if supply is set in between the level of demand during the peak
season and the off-season (Figure 12.2d), the problems are somewhat mitigated. Nevertheless, low occupancy will result during low demand periods,and overcrowding will result in peak periods; neither is
desirable.To maximize customer satisfaction and to utilize the facilities year-round,some action must be
taken. Two strategies for dealing with this situation are as follows:
1. Multiple use. This involves supplementing peak-season attractions of a destination with other
attractions that would create demand for travel to that destination during off-season periods. In
effect,the peak season for the destination is extended.Examples of such efforts abound.In Michigan,
for example, the current demand for off-season travel (during the fall, winter, and spring) has been
successfully increased and sustained at much higher levels than in the past.While Michigan was once
viewed primarily as a summer destination,the development and promotion of winter sports in resort
areas, foliage tours, and superb salmon fishing in the fall and spring have created new markets for
these off-season periods.Festivals, special celebrations,conventions,and sports activities sponsored
and promoted during off-seasons are other examples of multiple-use strategies.
2. Price differential. This technique, in contrast with the multiple-use strategy, creates new markets
for the off-season periods by employing price differentials as a strong tool to shift demand away
from the peak season in favor of the off-season.Florida and destinations in the Caribbean have used
this strategy rather effectively. The prices in these destinations during the off-seasons are considerably less than during the peak seasons. In addition, the development of promotional fares by
airlines and other carriers, along with the expansion of the number, timing, and variety of price-discounted tours, have helped to stimulate demand in the off-season. Increased efficiency and
effectiveness of promotional campaigns and better marketing also tend to offset the traditional
seasonal patterns of demand. Yield management techniques used in the airline and lodging
industries are very effective in using price differentials to match supply and demand.

In addition to these strategies implemented by destination areas, some trends in the employment
and leisure patterns of Western societies contribute further to the leveling of demand between off-
seasons and peak seasons. The staggering of holidays, the increasing popularity of three-day weekends
with a holiday on Friday or Monday, and the splitting of vacations between various seasons of the year
all lend themselves to leveling the demand for travel. Once the demand is evened out, the destination
is then able to maximize customer satisfaction during the peak season and during the off-season. Also,
facilities are utilized at a considerably higher level than previously. The importance of boosting off-
season demand and, therefore, the utilization level is further underscored by the fact that in most
tourist service businesses, fixed costs are quite high in relation to operating costs. This implies that
increasing total yearly revenue, even modestly, produces proportionally larger profits. There may be
some softening of demand during the peak season due to those who might switch to the off-season
because of the lower prices (see Figure 12.3). However, this is believed to be minimal. When off-season
demand is boosted by the multiple-use strategy, peak-season demand is unaffected. Therefore, overall
demand for the entire year will be substantially higher (see Figure 12.4).