Business of Tourism Essay

According to the United Nations World Tourism Organisation, often identified by many as the UNWTO (Lickorish & Jenkins, 1997), define the term ‘Tourism’ as “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” (Tuberkugurlu, 2012).The term ‘supply and demand’ is often recognised in economics, According to Gans, King and Mankiw (2012) they refer to supply and demand as the difference in individuals behaviour when they interact with another individual in competitive markets, this broad definition can support and help emphasise the factors influenced by supply and demand within the tourism industry.

Supply and demand is widely understood as distinctively different concepts, and is often examined separately.However the two terms are always in one form or another strongly connected and is often described as having a complimentary relationship towards the tourism system, as well as other industries throughout the world. The essay will analyse the differences these two concepts pose within the tourism system, with each independent concept being thoroughly evaluated, in relation to the beneficial factors, as well as the drawbacks and disadvantages of the concepts, followed by an in depth investigation covering the strong interconnectivity and relationship the two separate concepts have in conjunction with one another within the tourism system.A detailed analysis of the tourism industry is said start with the basic understanding of three fundamental elements. Within the three components, two are said to influence and interact with the marketplace directly which refer to the terms demand and supply. Consumer conduct, which is related to ‘demand’, focuses on the ‘purchaser(s)’.

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In regards to the tourism industry it will be considered as the ‘tourist(s)’ and their behaviour on whether they consider consuming or not to consume a particular product or service provided by those who ‘supply’ for them within the tourism industry.Each ‘purchasers’ behaviour will inevitably define their outcomes, for example, in relation to what they purchase and how much they are willing to pay (Beech & Chadwick, 2006). Therefore the thorough knowledge of the various behaviours in which tourist can carry out and the indicators to why they carry out these actions must be understood in order to be successful and to have a competitive edge within this fast growing, high earning global industry. However due to the fact that each tourist has a different behaviour to one another, following a demand-led method within the tourism system is exposed to both benefits and drawbacks.An example of a benefit for following a demand-led environment within a tourism system is the idea of being relatively easy to track over time. This statement is in relation to a model which was established by Beech and Chadwick (2006), within their model which shows a representation of the demand structure of the tourism market, clearly indicated that all travellers, either an overnight tourist or a day visitor are connected to a specific purpose. There are said to be six categories in which each tourist’s purpose of travel is classified into.World Tourism Organisation’s recommendations suggest one category is in relation to business or professional matters while the remaining five other ‘purposes’ are associated with personal reasons, such as leisure and VFR, visiting friends and relatives.

This can be referred to easy to track over time through the use of surveys on a national scale, where vital information is obtained where estimates were established on a monthly, quarterly and yearly basis (Eurostat, 1996).On a much smaller scale, demand led organisations such as hotels, can implement a customer feedback programme which entitles them to receive first hand, responses in regards to their experience at the establishment thus helping the organisation improve on elements which may have affected the customers experience negatively which went unnoticed to staff members of the hotel which can as a result in avoiding dissatisfaction by other customers.This refers to the idea that with the ability to track trends and profiles of tourists who visit the area, those who continue a demand led approach has the ability to understand the necessities and intentions of their target audience; international tourist visitors. A clear drawback in regards to a demand-led environment within the tourism system is described by Egyankosh (n.

d. ) which states that with the primary ocus given to the tourists and their intention ties within a demand-led organisation, their key aim, unavoidably rests on those who come from international locations, who travel and stay in a location which is outside their typical, day to day environment. Not considering those who are domestic residents of the surrounding area. An example of this is from Western Europe countries, where they are stepping forward in attracting those from Asia, specifically China and India as it is home to over a combine total of 2. 5 billion people.Therefore being a potential ‘opening’ within the tourism system in Europe to increase the number of Chinese and Indian tourists. Another negative impact of a demand-led approach is in relation to one of the six nature of markets that a tourists visit is classified in, which is in simpler term the purpose of their visit, Beech and Chadwick (2006) notes that Italy is said to be a a major tourist destination in regards to its beautiful historic physical heritage which is still a major draw card for international tourists to this day.

Due to this fact, those in the tourism industry would want to provide the most for what the tourist want as more tourists has a positive economic affect as it generates revenue and income not only for the organisation itself but for the community. Furthermore Andriotis, (2000) writes that with great demand on these valuable, significant attractions, sustainability of these national treasures becomes a primary concern, to ensure protection and preservation and to minimise deteriorate of these monumental figures of Italian society is essential.But not only is it the physical deterioration of the historical sites themselves, but also in relation to the physical impacts which arise from litter and congestion due to high numbers in tourists, this has a negative impact due to the fact that the ‘policy makers’ within the market place are so concentrated on the customers and tourists themselves they overlook all the major environmental effects associated with the high demand of a specific product which prevents sustainable tourism and may result in the product to become so fragile it may no longer be available for tourism related activities. Within the three fundamental elements to understanding the foundation of tourism which was mentions previously, the second component which directly interacts with the tourism marketplace is identified as supply. Supply can be related to the idea of a ‘supplier conduct’ which is associated with the attitudes and behaviours the suppliers carry out, where the (suppliers) consider what products and services will be on offer which are to be consumed by the purchaser / tourist.

Therefore the suppliers’ actions can determine what products and services are available for purchase and to what extent they are willing to set the price at (Beech & Chadwick, 2006). On the other hand supply is said to also be understood by the division of three categories as stated by Sinclair and Stable 1992, as cited in Page and Connell (2009). The first category is referred to the description of the current management, marketing and operations that are currently associated within the industry.The second category is considered to be explained through the spatial geographical development of an industry which characterises the differences when tourism is viewed on a local, national or international level. The third element is in relation to both the positive and negative effects, which occur as a result from the constant process of change in the tourism industry. The term suppliers according to Beech and Chadwick (2006) can also be divided up into categories characterised as Producers and Support services.

Produces include those who provide transportation, accommodation and man-made attraction services to the tourists such as transport operators, hotels and theme parks, all of which fit under the ‘core tourism services’ umbrella. Secondly the Support services are those of which are influences both publically and privately such as retail and wholesale businesses, banks, medical specialists and automobile mechanics, all of which are incorporated in either category three of two of the business in tourism classifies by impact on operations model.However Parlett, Fletcher and Cooper (1995), refer to the two categories as direct and indirect suppliers. Direct is strongly related to the ‘producers’ referred to those who own or have establishments where the staff members of the organisation interact directly face to face with the tourist in which they spend money to purchase the product or service. With the second group classified as indirect suppliers, in other words the ‘support system’, is regarded as businesses that purchase roducts from other organisations within the tourism market to produce their product or service. A clear indication which illustrates a benefit of a supply-led approach within the tourism system is the understanding of the concept competitive advantage.

Investopedia (2012), explain it as, when an establishment has a sense of superiority over its fellow competitors, regarding that organisation is to produce a higher number of sales and to have a busier flow of customers compared to its competition.If an establishment has a competitive edge over its rivals in regards to providing its customers with a product or service which is unique and of significance, something which is of a differentiating factor to all others, can act as a revenue earning factor obtaining a heavier influx of customers to the establishment.Not only can competitive advantage be applied in terms of a particular product or service, a supply led approach can also be related to the thorough understanding of the business in itself, what methods enable the best performance in regards to managing resources, marketing, people and operations, Positively influencing the business as a whole.However the drawback of a supply-led understanding is the constantly changing nature of the tourism industry, this refers to the power of trends within tourists and tourism which occur on a regular basis with the ability to build up within a very short period of time, which is heavily incorporated within the demand-led approach, by not understanding the evolving possibilities of the purchasers wants and needs, supply-led establishments will always, if not very likely fall back into the ways of thinking and revolving their business around the products and services they have available for consumers to purchase rather than having a system and operation where the customers are the key factor and component when developing new ideas to be put forward.Without a doubt it is evidently clear that if a marketplace within the tourism system is concentrated solely on either a demand-led environment or a supply-led environment, disadvantages are impossible to avoid, therefore in order to understand and gain the best outcome within a tourism system in egards to focusing on either demand or supply, is to understand the two differentiating concepts at equilibrium, by focussing on quality, quantity, price and range (Liu, 2003) by evenly distributing the focus on both the necessities and intentions, the needs and wants of both the tourists (demand) and the tourism system itself (supply).

With the demand heavily dependent on the quality and quantity of the supply, who currently exist within the market place, in addition to the supply greatly reliant on the public and private sectors within the tourism system that have the flexibility and ability to adjust the tourists (purchasers) preferences and expectations.Another source which highlights the importance of both elements to be connected together is establish by Zeithaml, Bitner and Gremler (2009) who suggest the flexibility in shifting the level of demand in order to attain the ‘capacity’, the tourists. Referring to a model, titled ‘strategies for shifting demand to match capacity’, enforces the idea of reducing demand when the demand for a particular product or service is at its peak, which involves actions such as communicating and informing customers which the usual peak times are so they are familiar with peak times enabling then to avoid delay, waiting in line or crowding, and as well as organisations to focus on altering the hours to cater to their audience and to modify their location which may be associated with enforcing an online accessible page for the customer or providing a self-service machine, easing congestion.An example of time is in relation to flight check in procedures at Auckland Airport, where customers have the ability to use self-serve check in kiosks provided by the airport, to ease the congestion of customers who may be checking into a flight which can help customers avoid having to wait in line for a few hours just to get checked in. furthermore increasing the demand when the capacity may be low is another approach, considerations such as utilising the space/facility to its advantage in regards to the time, month, year and season, which can be associated with movie theatres, where the option for members of the public to rent out theatres during the afternoon on weekdays (off peak times).

These possible approaches can be applied to enable a smoother running operation of the business itself enabling to gain a higher revenue with the demand to distribute more evenly especially during ush our times as well as increasing the flow of customers during off peak times, which is highly beneficial to a business’s product and service ‘purchasers’, as constant implementations are carried out to improve and to satisfy the tourists and business’s requirements. According to Weaver and Lawton (2006), a balance in both supply and demand requires the understanding of two factors which affect each other on an equal level, these include fixed costs which is often related to costs which have little flexibility in terms of the ability to change over a short time period, and variable costs which in comparison is the opposite involves the ability for movement, flexibility and adjustment of costs within a short time period. The understanding of both factors corresponds to the strong relationship they have with each other, as without one or the other.Another source which also contributes to the idea of the strong connection between these two factors states there are three segments which can be associated with the understanding of the overall tourism system, the first correlates to demand, sharing the same idea of a primary generating region within the market place, the second is referred to as the destination region, this can be applied to the idea of the supply category, the last and most important elements is regarded as the transit route, this third and final element can be considered as the key proportion of this understanding, which reflects upon the combination of both the two opposing fundamentals to share a strong relationship, identifying that without the other one cannot operate affectively and that the two factors which may seem contrary to one another when analysed individually are in fact constantly feeding off each other (Leiper, 1989 as cited in Hall, 2003).To conclude, the intention of this essay was to firstly provide a thorough understanding of the two comprising factors influencing a tourism system, demand and supply, and providing examples of environments which is dominated by one of these elements or the other, reflecting on the benefits and drawbacks which are associated with each approach when analysed individually, But upon further understanding of both fundamentals, facilitated in the understanding of balance and harmony required between each other, and the indication that the relationship between the two aspects, undoubtedly must be understood on an equal degree to comprehend the entirety of an effective tourism system. Word count excluding reference:2623 .Reference ListAndriotis, K.

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