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Introduction to Hospitality, 6e and Introduction to Hospitality Management, 4e. Tourism. John R. Walker. Chapter 9. What is Tourism?. World’s largest industry! World Tourism Organization: A specialized agency of the United Nations The leading international organization in the field

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Introduction to Hospitality, 6e


Introduction to Hospitality Management, 4e


John R. Walker

Chapter 9

What is tourism
What is Tourism?

  • World’s largest industry!

  • World Tourism Organization:

    • A specialized agency of the United Nations

    • The leading international organization in the field

    • Plays a role in the

      • Development of sustainable tourism.

      • Development of universally accessible tourism.

      • Continuation of economic development.

      • International understanding, peace, prosperity, and respect for human rights and freedoms

What is tourism1
What is Tourism?

  • For many developing countries, tourism represents a large percentage of GDP and a way of gaining a positive balance of trade with other nations

  • “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.”

    • From the UNWTO definition of Tourism

What is tourism2
What is Tourism?

  • The WTO and the World Travel & Tourism Council declare the travel and tourism industry to have the following characteristics:

    • 24 hours a day, 7 days a week, 52 weeks a year economic driver

    • Accounts for 9.1% of the GDP = Gross Domestic Product - Worldwide

    • Employs 259 million people (8.8% of the global workforce)

    • Leading producer of tax revenues

Benefits of tourism
Benefits of Tourism

  • Tourism:

    • Provides governments with substantial tax revenues

    • Offers the greatest global employment prospects

    • This trend is caused by:

      • The opening of borders.

      • An increase in disposable income and vacations.

      • Reasonably-priced airfares.

      • An increase in the number of people with time and money.

      • More people with the urge to travel.

Long term prospects tourism 2020 vision
Long-Term Prospects: Tourism 2020 Vision

  • International arrivals expected to reach over 1.8 billion by 2030

  • Europe, East Asia, the Pacific, and the Americas are the top receiving areas

  • There is interdependency between the various segments of tourism: Travel, lodging, foodservice, and recreation

    • Each segment is, to an extent, dependent on another for business

The five ages of tourism
The Five Ages of Tourism

  • The historical development of tourism has been divided into five distinct ages or periods:

    • Pre-Industrial (prior to 1840)

    • The railway age

    • The automobile age

    • The jet aircraft age

    • The Cruise ship age

Pre industrial revolution
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 or Rome

Rail automobile and coach travel
Rail, Automobile, and Coach Travel

  • Changes in the technology of travel have had widespread implications for society in the United States

  • Rail travel influenced the building of towns and cities caused hotels to be built near rail depots, and opened up the West

  • Auto travel produced the motel and a network of highways

Traveling by train
Traveling by Train

  • One of the main factors that led to railroads in the U.S. was the need to move goods and people from one region of the country to another

  • The train made mass travel possible for everyone

  • Cars and buses caused a decline in rail travel

  • Facing a possible collapse of passenger rail services, Congress passed the Rail Passenger Service Act in 1970 (amended in 2001)

Rail travel abroad
Rail Travel Abroad

  • Taking the train makes good sense in densely populated areas such as those in Western Europe and parts of Asia, and high-speed networks are already well developed, often drawing most of the traffic that formerly went by air.

  • Several European nations have banded together to offer non-European visitors unlimited first-class rail service for a reduced lump sum.

Traveling by car
Traveling by Car

  • Began in 1895 in Germany

  • Today, it is the American way of life

  • Largest segment of ground transportation

  • Creates accessibility to remote locations

  • Rental Cars

    • 5,000 rental companies in the U.S.

    • 75% of car rentals take place at airports

    • The top five rental car company agencies in the United States are Hertz, Avis, Enterprise, National, and Budget

Traveling by bus
Traveling by Bus

  • Convenient and economic mode of travel

  • Allows travelers to relax and enjoy the ride

  • Types of bus service:

    • Local, charter, tour, commuter, airport, urban, and rapid transit

  • The largest and most recognized is the Gray Line


  • An integral factor in travel and tourism

  • 5,500 planes are in the air over the U.S. any day

  • Competition between airlines to provide lower fairs has had a significant impact on increased air travel

  • Travelers are paying less, but carriers are spending more on fuel and other costs (cutbacks and layoffs)

  • Projected travel:1 billion by 2012!


  • Airline alliances will allow them access to each other’s “feeder markets” and to resources that will enable them to flourish in what will ultimately be a worldwide deregulation

    • A feeder market is a market that provides the source—in this case, passengers for the particular destination

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

  • The hub-and-spoke system has two main benefits:

    • Airlines can service more cities at a lower cost

    • Airlines can maximize passenger loads from small cities, thereby saving fuel

New airplanes
New Airplanes

  • Boeing’s first new airplane model in several years, the Dreamliner 787, takes advantage of huge advances made in aviation technology

  • Is capable of flying long-haul routes using up to 20 percent less fuel

  • Up to 50 percent of the primary structure of the plane, including the fuselage and wing, is made of components such as carbon fiber, which reduces the weight of the plane

New airplanes1
New Airplanes

  • Able to fly up to 9,700 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.

  • Richard Aboulafia, chief analyst with Teal Group, comments, “If you look at it from an airline standpoint: you don’t have a choice. If you don’t have a 787-class aircraft and your competitor does, he can under price you and out-profit you.”

Components of airline profit and loss
Components of Airline Profit and Loss

  • Fixed costsdo not change:

    • Lease of airplanes, the maintenance of airline-owned or leased terminals, interest on borrowed money, insurance, and pensions

  • Variable costs rise and fall:

    • Wages and salaries, advertising and promotion, fuel costs, passenger food and drink, and landing fees

    • The biggest single cost for airline operation is labor—which is typically 30–45% of total operating costs

  • A key statistic in analyzing profitability is the load factor—percent of seats filled on all flights, including planes being flown empty to be in position for the next day’s schedule

Cruise ships
Cruise Ships

  • The cruise market has increased dramatically in recent years

  • About 9 million Americans cruise each year

  • Rates vary from about $95–$850 per person per day

  • Carnival Cruise Lines is the most financially successful—netting about 20% of sales

Cruise ships1
Cruise Ships

  • Most cruise ships sail under foreign flags because they were built abroad for the following reasons:

    • U.S. labor costs for ships, officers, and crew—in addition to maritime unions—are too high to compete in the world market

    • U.S. ships are not permitted to operate casino-type gambling

    • Many foreign shipyards are government subsidized to keep workers employed, thereby lowering construction costs

Cruise market
Cruise Market

  • Mass market: Consists of people with incomes in the $35,000–$74,000 range; average cost per person is $95–$195 per day

  • Middle market: Consists of people with incomes in the $75,000–$99,000 range; average cost per person is $175–$350 per day

  • Luxury market: Consists of people with incomes higher than $100,000; average cost per person is more than $400 per day

The economic impact of tourism
The Economic Impact of Tourism

  • International travelers spend $94 billion in travel in U.S.

  • $100 billion generated in tax receipts

  • 59.7 million international travelers visit the U.S. each year

  • Tourism industry represents 1 in 10 jobs generated

The multiplier effect
The Multiplier Effect

  • When a tourist spends money to travel, to stay in a hotel, or to eat in a restaurant, that money is recycled by those businesses to purchase more goods, thereby generating further use of the money

  • In addition, employees of businesses who serve tourists spend a higher proportion of their money locally on various goods and services

Promoters of tourism
Promoters of Tourism

  • National Tourism Organization (NTO)

  • Travel Industry of America (TIA)

  • State Offices of Tourism

  • City-Level Offices of Tourism

  • Convention & Visitors Bureaus (CVBs)

  • National Offices of Tourism (NOT’s)

  • Pacific Area Travel Association (PATA)

  • Tour operators

  • Travel agencies

  • Travel corporations

  • Tour Wholesalers and Consolidators

  • Destination management companies

Business travel
Business Travel

  • Business travel has declined due to the general economic climate

  • In addition, increases in airfares, incidences in terrorism, and businesses reducing their travel budgets have negatively affected business travel.

  • Business travelers tend to be younger, spend more money, travel further, however they do not stay as long as leisure travelers

Social and cultural impact of tourism
Social and Cultural Impact of Tourism

  • Tourism can have both positive and negative impacts on communities

  • 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

  • Provided the number of tourists is manageable and they respect the host community’s sociocultural norms and values, tourism provides an opportunity for social interactions


  • Ecotourismis focused more on individual values—it is “tourism with a conscience”

  • Those who implement and participate in ecotourism activities should follow the following principles:

    • Minimize impact

    • Build environmental and cultural awareness and respect

    • Provide positive experiences for both visitors and hosts

    • Provide direct financial benefits for conservation

    • Provide financial benefits and empowerment for local people

    • Raise sensitivity to host countries’ political, environmental, and social climate

    • Support international human rights and labor agreements


  • Generally, most ecotourism destinations are located in underdeveloped and developing countries

  • Ecotourism projects tend to be developed on a small scale

  • They are kept small in order to allow more in-depth tours and educational opportunities

Sustainable ecotourism
Sustainable Ecotourism

  • According to the UNWTO definition, 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

  • The increasing number of tourists visiting destinations has heightened concerns about the environment, physical resources of the place, and sociocultural degradation

Sustainable tourism
Sustainable Tourism

  • Places a broad obligation on society

  • Sustainable tourism should:

    • Make optimal use of environmental resources that constitute a key element in tourism development.

    • Respect the sociocultural authenticity of host communities, conserve their built and living cultural heritage and traditional values, and contribute to inter-cultural understanding and tolerance.

    • Ensure viable, long-term economic operations.

Cultural heritage nature and volunteer tourism
Cultural, Heritage, Nature,and Volunteer Tourism

  • Culture andheritageare “our legacies from the past, what we live with today, and what we pass on to future generations. Our cultures and natural heritages are irreplaceable sources of life and inspiration.”

  • 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

  • There are 19 sites within the U.S.

Cultural heritage nature and volunteer tourism1
Cultural, Heritage, Nature,and Volunteer Tourism

  • Cultural tourism: Motivated by interest in cultural events

  • Heritage tourism: Motivated by historic preservation

  • Nature tourism: Motivated by nature

  • Culinary tourism:Culinary adventures are at least a contributing motivation

  • Volunteer tourism:Motivations include opportunity to travel safely and cheaply and to experience different cultures


  • Ecotourism, sustainable tourism, and heritage tourism will continue to grow

  • Tourist arrivals will continue to increase

  • Governments will increasingly recognize the importance of tourism

  • More bilateral treaties signed

  • The promotion and development of tourism will move more from the public sector (government) to the private sector (involved industry segments)

  • Technology will continue to advance

  • Marketing partnerships and corporate alliances will increase

  • Employment prospects will continue to improve

  • Ticketless air travel will continue to increase


  • Ticketless air travel will continue to rise

  • Increased Internet bookings

  • Managing destinations will continue to be a challenge

  • Low-cost, no-frills airlines will continue to gain market share

  • Airlines will entice travelers to book trips via the airline’s website

  • Automatic airport check-ins will become more popular

  • Cruise industry will continue to expand

  • Increase in alternative cruises

  • Increased concern for the health and safety of travel and tourism

  • Nature, culinary, and volunteer tourism will increase