chapter9 Commercial Recreation and Tourism
Welcome to the World of Commercialism in Recreation • Consists of 90% of the leisure industry. • Is the overarching umbrella to the leisure service industries aimed at profit or financial self-sustainability. • Is a gigantic industry where businesses compete for a customer’s discretionary dollars. • Tourism organizations may also run as nonprofit or public operations.
Leisure Industry Model • Local commercial recreation includes the following: • Entertainment • Activities and programs • Retail products • Travel and transportation includes the following: • Ability to move people • Services • Hospitality includes the following: • Accommodations • Food and beverage • Amenities • Facilitators in each area are from a variety of employment sources: travel agents, wholesalers, and visitor and convention bureaus, to name a few.
Defining Types of Commercial Recreation • Commercial recreation: The provision of recreation-related products or services by private enterprise for a fee, with the long-term intent of being profitable. • Commercialized public recreation: The provision of selected recreation-related products or services by a governmental or nonprofit organization in a commercial manner, with much or all of the costs covered by fees, charges, or other nontax revenues. (continued)
Defining Types of Commercial Recreation (continued) • Entrepreneurial recreation: The actions of a recreation-related organization that searches for trends and changes in its environment, then brings together and manages resources to exploit those changes as an opportunity. • Intrapreneurial recreation: Creating and providing innovation of any kind within an organization; working in a bureaucracy, such as a governmental agency, to capitalize on opportunities.
Tourism Defined • Tourism: Activities of people traveling to and staying in places outside their usual environment for leisure, business, or other purposes. • Tourist: • One who travels at least overnight for business, pleasure, visiting relatives and friends, or other purposes outside of the traveler’s residential area. • May travel for extended amount of time, up to a year. • After a year, may be considered residents of the place traveled to.
Challenges of the Tourism Industry • One tourist’s expectations may be so different from another’s that it is difficult to satisfy all of the needs and expectations of the travel experience. • Because of the cost of travel, a visitor may be very disappointed if the experience is less than perfect. • There is constant pressure to organize services so that the traveler experiences maximum enjoyment.
Types of Travel • Pleasure: • Accommodations and food are essential. • Locations of experiences must be convenient. • Tourists engaging in “new” recreational experiences may put their health and well-being at risk. • Business: • Supports business needs. • Visits to sites must conveniently fit into the business day or period. • Travel for other purposes: Educating residents about attractions is an important way to attract this group of travelers who may be visiting with family.
Characteristics of a Tourist • Mass tourists prefer to be with large groups: • Will follow the crowds to events, attractions, and other mass approaches. • Happy being bussed, carted, fed, and thrilled with millions of others. • Individual tourists enjoy individualized pursuits away from the crowd, e.g., a skilled canoeist wants to be alone or nearly alone on a river.
Characteristics of the Tourism Industry • Accommodations include myriad lodging opportunities. • Food service provides for one’s need for food. • Transportation moves people from place to place. • Recreation and amenities are the variety of leisure activities that attract travelers. • Managing the tourist experience includes two major systems for coordinating travel for tourists: • Destination management organizations (DMOs) • Meeting management organizations (MMOs)
Types of Tourism • Ecotourism:Responsible travel to natural areas that conserves the environment and improves the well-being of local people. • Agrotourism: Diversification of the agriculture industry to incorporate a tourism focus, e.g. wineries. • Sport tourism: Travel to participate in sport or to observe sport. • Cultural tourism: Being involved in the cultural heritage of alocale.
Commercial Recreation and Tourism Segments • Singles (individuals and groups for social bonding) • Families (with or without children) • Students (affluent teens) • Elderly (55+) • Diverse segments (multicultural) • Lifestyle segments (hobbies and clubs) • Ability (Americans with Disabilities Act)
Running a Commercial Recreation or Tourism Enterprise The differences between a leisure enterprise and a typical manufacturing enterprise include the following: • A service is less tangible than a product. • Chief value of leisure experience is in doing and reliving. • Has a 3- to 5-year profit window compared with a manufacturing business profit window of 1 to 2 years. • Presents the challenge of constantly responding to change and being proactive with services as customers move from activity to activity and fail to stay loyal to a standard set of experiences.
Leisure Services As a Product • Leisure experience can be produced and consumed simultaneously. • Product itself is intangible and therefore hard to measure. • It is difficult to measure one’s satisfaction. • Leisure consumer is hard to figure out. • Factors of leisure experience are often not figured into a marketing plan.
Elements of Success • Business data. Use it to make organizational decisions. • Product. Market a sound idea or concept to a definitive population. • Demographics. Identify the right combination of characteristics to market. • Management. Develop a business concept that can be effectively and efficiently run. • Finance. Determine and secure sources, projections, and ways to organize. • Location. Find an accessible site that attracts people.
Organizational Aspects of Commercial Recreation and Tourism Enterprise The business plan is important for the following reasons: • Is the heart of a business enterprise. • Determines how a business will receive and use fiscal resources to gain a profit over a projected period. • Includes marketing and financing projections that turn into a work plan for the business start-up and continuance.
Feasibility of a Commercial Recreation Business Conduct an analysis of whether the proposed business will work according to several levels of analysis: administrative, legal, market, service, and site. • Is it administratively sound? • Will the legal form of organization work? • Is the site appropriate? • Will the financial plan work? • Is the market appropriate?
Legal Formation of Business • Sole proprietorship. Owners take financial and legal responsibility for the business. One’s personal finances are at risk. • Full and limited partnership. Two or more people either fully share the financial burden or assign the financial responsibilities to limit liability. Risk is either fully shared by the partners or divided by agreement. (continued)
Legal Formation of Business (continued) • Corporation. A corporation lowers tax liability and personal legal responsibility and assigns it to the corporate entity. It is usually selected once profits are being earned. • Franchise. A franchise consists of a chain of existing businesses that allows owners to buy into the business. The franchiser makes available many resources for start-up. (McDonald’s is a form of franchise.)
Elements of Marketing 1.Substitution. Plan for changes in consumer interests. Prepare business for new activities that may be substituted for those that are no longer popular. 2. Niche. Identify unique feature of your business and promote it. 3. Guerrilla marketing. Aggressively market to uncover new markets and other ways to get to the customer. 4. Value. Consider value system of each niche group and play to those values in promoting services. 5. Campaigns. Plan long-range and short-range campaigns that increase volume and customers.
Funding Sources • Venture capital. Provided by companies and investors willing to take a risk on a new enterprise that may not necessarily have a strong track record. • Personal. Comes from personal sources such as friends, relatives, and personal savings. Money is put up as a part of the total investment against loans applied for through small-business investors or banks. (continued)
Funding Sources (continued) • Bank loans and other sources. Start-up finance, cash-flow funding, and inventory funding are available through conventional financing or Small Business Administration (SBA) funding. • Going public. A business that is successful eventually may go public by selling stock to investors. This source of income results in a sharing of corporate wealth with “shareholders,” who buy stock and receive a return on investment.
Alternatives to Traditional Financing • Franchises: • Have already provided a proven product and make low-cost financing and resources available to the franchisee. • Low-cost loans, marketing assistance, and operational consulting during start-up may save the business owner money before realizing a profit. • Buying an existing business: • Provides collateral, reputation, and good will. • Financing is easier to secure. Start-up costs may be lower because of existing location, decor, inventory, trained staff, and other advantages. (continued)
Alternatives to Traditional Financing (continued) • Incubators: Acquisition of small grants to support product development, feasibility analyses, and other forms of start-up activity. • Extensions of an existing business: Adding a feature that will make a business more profitable and result in greater success without borrowing more money. • Public–private cooperative venture: Close cooperation with local government may yield a business partnership that involves tax breaks, use of public land instead of buying property, use of buildings, and securing investment in infrastructure.
Playground Discussion: Trends in the 21st century What will be the most influential trend(s) of the commercial recreation and tourism industry in the 21st century and why…be sure to fully support your answers?
Why Businesses Fail Poor planning, impulsive decision making, and organizational conflicts between partners contribute to failure in the following ways: • Undercapitalization • Inability to anticipate changes in economy • Poor succession management • Poor operational management • Inflexibility
Career Paths in the Leisure Industry • Recreation specialist. The programmer is essential to all leisure experiences regardless of the setting. • Meeting manager. Possess the leadership and programming skills necessary to become an excellent organizer of conventions and meetings. • Event manager. Same skills of meeting manager may be converted into a variety of events designed for small and large groups. • Tour guide. Coordinates tours for various interests. • Administrator. Moving into top management in any one of the tourist and commercial recreation segments is appropriate for one with training in recreation and resource administration.
Trends in the Commercial Recreation and Leisure Industry • Baby boomers will generate the highest volume of travel in the United States. • Tourists are willing to pay to protect the environment. • Global capacity for cruise ships will be reached in the near future. • Vacation residence ownership will increase. • Greater emphasis on partnerships with public sector will increase the number of commercial recreation businesses on public land. • Technology will affect the way people access leisure and plan for use of facilities and area. • Continued effects of terrorism are changing the nature of travel for most tourists.
Discussion: Subject “dynamic trends” • Select one of the following dynamic trends that will affect the burgeoning commercial recreation and leisure industry in the coming years: • Baby boomers will generate the highest volume of travel in the United States. • Travelers will be increasingly more willing to pay more to protect the environment. • Worldwide capacity for cruise ships will be reached in the near future. • Increases in vacation residence ownership will occur. • A greater emphasis on partnerships with the public sector will increase commercial recreation business on public land. • Technology will affect the way people access leisure opportunities and plan for use of facilities and areas. • Terrorism will continue to change the nature of the travel of most visitors. • Instructions • Identify the strategies to counteract the challenges that face the commercial recreation and tourism industry. • Then, pose questions and responses to your posting.