Quiz The following are the national airlines from which countries: • Air Canada • Aer Lingus • LOT • Aeroflot • Cathay Pacific • KLM • Qantas • SAS • Tarom • El Al
Making sense of all those changes • Possible approach 1: • Changes affecting SUPPLY (i.e. industry corporateintegration, airline alliances etc) • Changes affecting DEMAND (i.e. market customerswho are more aware & knowledgable) • Possible approach 2: By theme: externalenvironment (PEST/STEEPLE model – factors and variables)
PEST model There are several versions of this model – am using: • Political factors • Economics (and globalisation) • Socio-cutural factors (and demographics) • Technological changes • This is all about the external environment (macro-environment). • This is our framework for the rest of today
Economics Blog question: How canitbearguedthat the currentrecessionactually has beneficialeffects on tourism and hospitality?
PARADOX – the recession can be quite good(for us). UK perspective: a (very) good year for the tourism and hospitality industry, for several reasons: • Weak £ (against euro) • Decrease in outbound tourism • Increase in domestic tourism • Increase in inbound visitors
Globalisation Severalmeanings, depending on perspective: • Cultural globalisation creation of a «global tourism culture » (e.g. Hilton) / Americanisation, Westernisation • Financial globalisation countries’ national systems are integrated and dependent • Political globalisation countries have to worktogether (cannotoperateindependently) • Business globalisation large firmsthat are present in many countries (MNCs)
Globalisation • Tourism contributes to globalisation (flows of tourists around the world, creation of a global tourist culture, development of multinational corporate organisations like Hilton and Accor) • Globalisation contributes to tourism (increasing free circulation of people and services: ideas of liberalisation and market economy)
Task --- on your own, 3mn Giving examples, outline 4 socio-cultural factors that lead to changes in the tourism and hospitality industry. Example: Increase in urbanisation (e.g. in France 85% of the population is urban) https://www.cia.gov/library/publications/the-world-factbook/fields/2212.html means that many tourists will seek nature-based holiday (but expecting sophisticated services like in towns)
Socio-cultural factors • Increase in discretionary time (for leisure purposes) • Increase in discretionary income (enabling tourism) • Democratisation of tourism (not the privilege of an elite anymore) // ETYMOLOGY OF WORD “TOURISM” • New attitudes towards tourism: its benefits (esp. psychological benefits for the individual) are recognised • Development of a fashion system towards destinations • Emergence of new markets and new niches for example ‘gay and lesbian tourism’
Demographic changes • Numbers: Global population increase will lead to an increase in tourism demand and in demand for leisure services. • Demographic trends in Western societies: • Increased life expectancy and aging population (“grey tourism”) • Reduced family size and more childless couples (less demand for “family holiday resorts”) • Urbanisation (interest in nature-based tourism but with sophisticated services)
Technological changes • Transport: e.g. A380 (« superjumbo ») Air France 1st commercial flight: Nov 2009 • E-tourism (this morning’s article) • Product innovation – examples such as « fly drive » • Example: Sabre http://en.wikipedia.org/wiki/Sabre_(computer_system) http://youtu.be/fPoTchaSqRA
Technological changes & MARKETING How can technology affect all aspects of the marketing mix for tourism and hospitality? • 3mn on your own • 5mn in pairs
Technological changes Impacts on the marketing mix: • New products (e.g. fly-cruise) • New pricing strategies (e.g. yield management) • New places (distribution: e.g. e-booking) • New promotion (e.g. e-marketing) • New people needs (e.g. training) • New process (e.g. e-tourism) • New physical evidence (e.g. design)
PEST model About the external environment (macro-environment) • Political factors • Economics (incl. globalisation) • Socio-cutural factors (incl. demographics) • Technological changes
STEEPLE model • Socio-cutural factors (incl. demographics) • Technological changes • Economics (incl. globalisation) • Ethics • Political factors • Legal factors • Environmental protection
3 other aspects • Ethical factors impacting on tourism • Legal factors impacting on tourism • Environmental factors impacting on tourism • Choose 1 of those three categories • Carry out some research on the internet and choose a relevant webpage / or web article – 15mn (examples on next page) • Post on blog a summary and ref to the impacts 5mn (examples on next page)
Example: - A legal issue: the impact of changes in VAT rates on tourism. http://blog.euromonitor.com/2011/01/impact-of-the-vat-rise-on-uk-tourism.html - According to this article (dated January 2011), the increase in VAT rate (from 17.5% to 20%) on 4 January 2011 is very bad for accommodation, attractions and car rentals. - This may result in fewer tourists to England -- or in smaller margins for the providers (if they do not pass the increase).
Legal factors • Industryishighlyregulated • Legallevel largely national (thoughalso international and local ones) • Ultimateaim: protection (mainlyprotectingcustomers, but alsoprotecting the environmente.g. biodiversity) • Legal issues are political (as they are usuallypassed by electedpoliticians) • Legal issues may have economic dimensions (e.g. VAT rates)
Environmental factors Several factors An important one is climate change and global warming – e.g. http://www.bbc.co.uk/news/world-middle-east-16018453 Read text on website (« Tuesday »): « Tourism and global warming » As you go along, list (or underline) some points/ideas that are new to you (or interesting…)
Blog activity You are attending an event (e.g. a conference) for hospitality managers. Someone challenges you, arguing that tourism is evil because it is one of the main causes of global warming. What can you reply? Post your answer on the blog
Ethics of global tourism • Text on website (“Tuesday”) • Read it (5mn) • As you go along, underline some points/ideas that are new to you (or interesting…) • Answer the following question on the blog: Why do hospitality managers need to have some knowledge and understanding of tourism ethics?
Tourism & hospitality industry Economics factors Legal factors Ethical factors Political factors Technological factors Socio-cultural factors Environmental factors
Tourism & hospitality industry ? ? ? ? ? ? ?
Starting point: four videos 1. a short introductory video from the WTO http://www.youtube.com/watch?v=MWXVxgBoGFM 2. a (biased) video about Florida http://www.youtube.com/watch?v=C0u9s0LWxqo 3. a video more critical of tourism http://www.youtube.com/watch?v=d9BsJNUdr7o 4. A case study from Mexico: « Tourism in Cancún: Success or Disaster? » http://youtu.be/ipUfiI8pU-Y
Some initial notes… - From the four videos we have seen, and using your own knowledge, list the key impacts of tourism and hotel development (on your own, 3mn) - Compare your answers in pairs (2mn)
Making a simple framework Three types of impacts: • economic • environmental • socio-cultural Two sorts of impacts: • positive impacts (‘benefits’) • negative impacts (‘costs’) CBA = Cost Benefit Analysis framework (a very common tool for project appraisal)
POSITIVE economic impacts of tourism/hotel development • Economic benefits explain why many destinations (even whole countries) have pursued tourism development as a tool for economic development. • Economic benefits are readily quantifiable • One can distinguish between: • Revenue (direct and indirect) • Employment (direct and indirect) • Integration and linkages • Regional development
Direct revenue • Money obtained directly from tourists: • immediate expenditures at the destination (incl. merchandises) • earlier expenditure (e.g. when booking a package tour) • Taxes (e.g. departure taxes, bedroom taxes, entry visas, gaming licences…) Both public sector and private sector benefit financially!
Examples of “Income Multiplier Effect” for some destinations Income Multiplier Country or Region Income Multiplier Country or Region United Kingdom Sri Lanka Jamaica Egypt Cyprus Malta Antigua 1.73 1.59 1.27 1.23 1.14 1.00 0.88 Gibraltar Western Samoa Iceland Barbados Grand County, USA Door County, USA Republic of Palau 0.66 0.66 0.64 0.60 0.60 0.55 0.51
Employment (direct and indirect) Like for revenue, one distinguishes between: • direct impacts of tourism-dependent jobs (e.g. chef in a restaurant) • indirect impacts of tourism-related jobs (systems of backward linkages and integration e.g. the local farmers who supply the restaurant).
Integration and linkages • Integration of tourism and hospitality in the local economy. • Sectors that provide goods and services to the tourism and hospitality industry: - agriculture & fisheries - construction - entertainment • Tourism and hospitality stimulate local economic development and diversificationbeyond the mere presence of money-spending tourists; they constitute a growth engine for the whole region.
Regional development • Tourism & hotel development usually benefits regions (areas) and not just a single location • 3S (4S) tourism has contributed to the development of regions such as SISODs that otherwise had few resources. The role of the public sector is here important: • Some countries (e.g. in Mexico and Indonesia) have designed and followed explicit policies and strategies to develop tourism at a regional level.
Economic impacts of tourism • We have seen many POSITIVE ones. • What can be the NEGATIVE ones?
NEGATIVE economic impacts of tourism development • Direct financial costs (esp. for public sector and its activities such as promotion, feasibility studies…) • Indirect financial costs esp. revenue leakage: imported goods and services, payments abroad (e.g. for a foreign-owned hotel and enclave resort situations) • Fluctuations in intake and unpredictability (major problems for tourism-dependent jobs and areas) • Competition with other sectors: depreciation of traditional employment sectors such as agriculture • Employment problems: unskilled nature of many jobs, few opportunities for upward mobility and few training opportunities etc.
Activity • On our course website www.savignac.info download and save the Word document called “CBA framework”. • Write your name and choose a destination (that you know well) • Identify the economic impacts of tourism development on that destination (be specific; carry out research online e.g. to get numbers/factors) 20mn