Unit 1 Revision Guide

Homewood Travel and Tourism ALA (2007)

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Homewood Travel and Tourism ALA (2007) The unit is assessed by you sitting a 90 minute exam which is marked out of 90, in short a mark a minute! The unit is divided into 4 categories: 1. The nature and characteristics of travel and tourism and the travel and tourism industry 2. The development of the travel and tourism industry 3. Structure of the UK travel and tourism industry 4. Scale of the travel and tourism industry This revision guide provides an overview of these four areas that you should use with your own class notes to revise for the exam.

The Nature and Characteristics of travel and tourism and the travel and tourism industry Definition of Tourism You will need to know the accepted definition of tourism below: “..the short term movement of people to destinations away from the communities which they live and work, and their activities during their trip, including travel, day visits and excursions.” Understand the nature of the industry in that it is perishable and intangible. Perishable A travel and tourism service can not be stored for later. Your seat on a plane or bed in a hotel are only available once at a set time. If they are not used they will perish.

Intangible You can not touch or test a holiday or trip before you pay for it. Tour Operators and Travel Agents must convince the customer that a real product or service (tangible) will be provided. They do this by using brochures, virtual tours, ticket, receipt and confirmation e-mail

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Homewood Travel and Tourism ALA (2007) Types and Purposes of Tourism You must be able to describe each of the types of tourism below, give an example and understand differences between them. Tourism Type Incoming

Domestic

Outgoing

Business

Leisure

Excursions

Adventure

Package

Independent

Description Travellers arriving in a different country than their own. Known as “inbound” tourism. Travelling around your own country. Known as “internal” tourism.

Example Arriving on your annual holiday in Madrid, you would be an incoming tourist to Spain. A family from London going on a one week coastal holiday to Brighton. Travellers leaving their A British couple going own country to go on a long haul holiday abroad. Known as to New York or short “outbound” tourism. haul to the Spanish “Costas” Travellers go abroad An English businessman for the purpose of travelling to Munich work. for a business conference. Leisure travel can be Leisure tourism cuts as little as a day trip across all types of to a park or beach, or tourism – holidays, as much as world tour short breaks, long haul lasting 6 months. trips. An excursion is simply A day trip on a coach a trip away to a tourist for older people to destination. Brighton. Are usually for the Ice climbing in the purpose of challenge, French Alps. White exploration, skills Water rafting in development or thrills. Wales. Arranged by a tour A family package operator and includes holiday brought transport and through a Travel Agent accommodation. to the Costa Del Sol, Spain. Opposite to package Common with gap year 3

Homewood Travel and Tourism ALA (2007)

Visiting friends and relatives (VFR)

travel, where people book their holiday themselves. People have always travelled to visit friends and relatives.

university students inter-railing around Europe. Bank Holiday Monday visit to your cousins house in Manchester.

Characteristics of the Travel and Tourism Industry You should be able to give examples if these characteristics in the UK Travel and Tourism industry research into the operations of different types of organisation. 1. The industry is private sector led - Normally aim to generate a profit and increase market share - Provide customer with products and services - Often household names: Virgin Airways, P&O Ferries - Large companies hold 50% of market 2. The majority of businesses in the industry are small and medium sized but the industry is dominated by a number of large organisations. - Multiples – name given to the largest companies which have multiple outlets such as Going Places Travel Agent, they tend to dominate the industry. This has made travel and tourism more affordable for customers but mass tourism can have negative impacts on the environment, local culture and smaller businesses who can not afford to compete. - Small and medium sized enterprises (SMEs) can trade globally from an internet site but tend to serve customers on a regional or local basis. Usually fewer than 250 employees. Tend to focus on niche markets such as adventure holidays. 3. The industry makes use of new technologies such as ICT (Information Communications Technology. - New technology has had a huge impact on the industry. - The internet has changed the way we book holidays. Independent travellers are now happy to book individual elements direct using online booking systems or via email with SMEs i.e. hotels abroad and low fare airlines.

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Homewood Travel and Tourism ALA (2007) 5. The industry is vulnerable to external pressures Currency Fluctuations: Case Study: USA - the value of the pound to the dollar is currently very favourable for the British visiting the USA, meaning they will get much more for their money. http://news.bbc.co.uk/1/hi/business/6567821.stm Government Legislation: Case Study National Park Act (1949) - the act created Britain’s National Parks. In National Parks development and impact of tourism is controlled, so that negatives impacts on the environment are minimised often at an economic cost to tourism businesses. Climate Change: Case Study Maldives - it is predicted that the paradise islands of the Maldives will be under water with 100 years from the possible impacts of Sea Level Rise. Sea Level Rise is caused via the melting of the polar ice caps from global warming. http://news.bbc.co.uk/1/hi/world/south_asia/3930765.stm War and Civil Unrest: Case Study Sri Lanka - the ongoing Civil War in Sri Lanka has reduced tourism by up to 40% in 2007. As a result many airlines have suspended flight to Sri Lanka. Many tourist areas have been destroyed as the LTTE group try to destroy the economy of the country. http://en.wikipedia.org/wiki/Tourism_in_Sri_Lanka Terrorism: Case Study 9/11 - the events of 9/11 have shown vulnerabilities in the global travel and tourism industry. This has been in the form of a drop in the amount of people flying due to fears for their safety and security. http://news.bbc.co.uk/1/hi/in_depth/world/2002/september_11_one_ye ar_on/2204980.stm Economic Climate - The current strong pound and high wages in the United Kingdom has led to a growth in both domestic and outgoing tourism. However if the economic climate changes in a

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Homewood Travel and Tourism ALA (2007) negative way the industry can be severely hit because people will cut down on spending money on non-essentials often linked to leisure, travel and/or tourism. Impact on Host Environment: Case Study Peak District National Park - impacts of travel and tourism can be both negative and positive. Negative impacts in a national parks are often in “honey pot” areas: - car parking at popular spots can damage verges and spoil the views - congestion on the approach roads can annoy local people and bring pollution - the constant flow of visitors can erode pathways - visitors may bother animals in their natural habitats http://www.peakdistrict.org/tourism.pdf

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Homewood Travel and Tourism ALA (2007) The development of the travel and tourism industry You will need to know the key stages in the development of the travel and tourism industry with a particular focus on post Second World War developments and their effect of the industry. Since the end of the Second World War (1945) the Travel and Tourism industry it is regarded as the largest industry in the world. In 1998 it was estimated UK residents took over 60 million holidays both at home and abroad. This growth can be explained by the following factors: 1. Motivating factors – are the reasons why we want to go on holiday. These can be two types “intrinsic” (from within) motivation, such as having a burning desire to see the world and “Extrinsic” (from outside) motivation such as being pulled towards a place that we may have seen on television. 2. Enablers – are closely linked to motivating factors but are different. This factors allow us to travel: a. level of disposable income (money available for travel) b. level of education (knowledge of the world) c. level of mobility (ability to get around e.g. car, airport location) 3. Socio-economic factors – it is estimated that there are now 25 million cars on the road in the UK, which is nearly half the population. The increased popularity of the motorcar has led to a decline in the use of public transport: The impacts have been: 1. Congestion and pollution with no alternative as cost of public transport is high 2. New products emerged to suit car owners e.g. caravan holidays 3. Access- transport network has developed to allow access to countryside

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Homewood Travel and Tourism ALA (2007) 4. Technological growth – in 1969 the Boeing 747 was launched. The aircraft had the following impacts on the package market: 1. It was possible to fly further in less time, thus making long haul destinations more accessible 2. Increased capacity (400 seats) meant the price per seat was reduced this lowering prices 3. As jumbo jets were used more the smaller aircraft were available for charter operations. 4. Long haul travel was less exhausting and as a result business travel increased. 5. Product development and innovation – in the 1970 the travel and tourism industry saw huge growth in the package holiday. Resorts on the Spanish coast needed new accommodation to support the tourist boom. That factors influencing this were: 1. lifting of government restriction allowed tourists to take more than £50 abroad 2. Longer paid holidays encouraged people to take a second holiday 3. Boeing 747 introduced reducing airfares further (see above) 6. Changing Consumer needs and expectations – in the 1970’s the demand for a second holiday grew This resulted in the 1980’s of the development of the short break, in 2000 Thomas Cook reported a 30% in short break holidays. The demand grew because: 1. Due to increases in leisure time 2. Due to rises in disposable income Budget airlines have made European destinations even more accessible for the traveller. There aggressive marketing approach, low costs and ticket less travel is changing the face of air travel today. The development has caused concern to major airlines such as British Airways who appear to be losing money.

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Homewood Travel and Tourism ALA (2007) Structure of the UK Travel and Tourism Industry You will need to know about the different sectors that make up the UK Travel and Tourism industry shown below. 1. 2. 3. 4. 5. 6. 7.

Transport principals Tour Operators Travel Agents Attractions Accommodation providers Ancillary Service Providers Support Services

You will need to identify key organisations in each sector and describe the products and services they offer and their objectives and values. The industry is often divided up into the private and public sector. Private Sector Companies trade for a profit Dominate industry Range of scales from independent travel agent to International Tour Operator

Public Sector Not profit orientated and provides a service Funded by local or national government e.g. DCMS (Department of Culture Media and Sport)

Transport Principals – there are 4 main principal transport modes, aeroplanes, ships, trains and motor vehicles. Air Travel There are two main types of airline travel “charted” and “scheduled” flights: Scheduled – fly to a published timetable on fixed routes e.g. London to New York (British Airways). Ryanair and Easyjet offer no-frills scheduled flights to less busy airports giving the major airlines real competition. No-frills airlines offer less services, fly to airports with lower landing fees and turn aircraft around quicker which all helps reduce the prices of flights.

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Homewood Travel and Tourism ALA (2007)

Chartered – fly to specific destination for tourism purposes e.g. holidaymakers to Spain from the UK. Therefore often seasonal in nature and belong to the larger airlines e.g. Monarch and Air 2000. As no set timetable often fly at unsocial times. Sea Travel Ferry Companies – British ferries faced new competition when the Channel tunnel opened in 1994 and today by the budget airlines. Ferries have improved the quality of onboard products and services they offer, reduced prices and introduced faster vessels in order to compete. Cruise-ship companies – cruises are no longer for the rich and famous. With mass market operators now owning many cruise operators it is one of the largest growing markets in the travel and tourism industry. http://news.bbc.co.uk/1/hi/uk/4552269.stm Rail and Road Car holidays in and from the UK tend to be to visit friends and relatives and the annual holiday trip to Europe. Many families now hire a car on holiday to give them independence when travelling around from companies such as Hertz and Avis. Rail use in the UK is in decline with a recent history of accidents, lateness and staff strikes. Much investment has come from the UK government to raise standards to compete with the rest of Europe. Tour Operators Tour Operators are organisations that produce package holidays (transport, accommodation, transfers and ancillary services). The package is then sold directly to the public (direct sale) or via travel agents. Mass-market operators – offer a wide range of products at a variety of locations e.g. TUI

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Homewood Travel and Tourism ALA (2007) Independent operators – have created niche markets of special interest holiday packages. Often committed to a high level of customer service and selling the produce directly without using a travel agent, so the internet has helped their survival. Travel Agents Travel Agents – sell travel products and services on behalf of others, and therefore do not produce anything. They receive commission for selling products from the principals e.g. tour operators. They also offer ancillary services such as car insurance, car hire, airport car parking, currency exchange to increase their commission levels (income). Technology has helped travel agents by giving them fast communications and reservation systems, but has hindered travel agents by the internet offering direct access to operators and transporters making travel agents redundant. Multiples – a chain of travel agents with multiple outlets e.g. Going Places and Thomas Cook. Multiple travel agents dominate the sector and are often owned by a tour operator (integration). Independent – often one shop, they do not have the purchase power of Multiples but may offer more choice as not tied to one agent, Attractions Attractions represent what a destination has two offer. There are two main types “man made” e.g. Thorpe Park and “natural” e.g. Grand Canyon attractions. The London Eye is UK’s top paid attraction. Accommodation There is a huge variety of accommodation available in the travel and tourism industry. These can be divided into two types commercial and non commercial: Non-commercial Youth hostels Local authority campsites Home exchanges Staying with friends University halls of residence

Commercial Hotels and motels Guest houses Bed and Breakfasts Villa rentals Hired Caravans/motor homes

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Homewood Travel and Tourism ALA (2007)

Hotels dominate the accommodation sector. There are now many chains of hotels such as Best Western who aim to provide the customer with a familiar environment at as consistent standard whatever hotel they stay in. Ancillary Service Providers When people book a holiday they may need to but extra services, these are called ancillary services: • • • • • •

Travel agents selling travel insurance as part of a package holiday Airport car parking, provided by private companies Local taxi and minibus companies Limousine and chauffeur services for business travellers Car hire, whether arranged independently or via a travel agent Bureaux de Change in travel agents, city centres or airports

Support Services Support services are the extra services that are provided by the tourist organisations and the services provided by outside organisations to support the industry: • • • • • • •

local tourist boards providing training for hoteliers Marketing consultancies offering business advice to local tourist organisations Employment agencies providing seasonal staff to a tourist attraction Laundry services for hotels Printing if leaflets, timetables and menus Entertainers for clubs, bars and hotels Technical support for computer systems

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Homewood Travel and Tourism ALA (2007) Horizontal and vertical Integration

Since the 1980’s large tour operators have tried to dominate the market by integrating with other travel companies. Thus tour operators have brought hotels, airlines, travel agents and other tour operators. In doing so the own all the components of the package holiday that they sell to the public. Integration can be both horizontal and vertical. Horizontal Integration – if a tour operator buys another tour operator or business at the same level on the chain of distribution. Vertical integration – occurs when two companies at different levels on the chain of distribution merge. This can be backwards integration (tour operator buys a hotel) or forwards integration (tour operator buys a travel agent. Example case study:TUI

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Homewood Travel and Tourism ALA (2007) Chain of Distribution

The distribution chain above shows how travel and tourism services are distributed to the customer, it also shows how each area is interdependent and interrelates with each other. Direct Sale – when products and services are sold directly from the tour operator to the customer.

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Homewood Travel and Tourism ALA (2007) Scale of the travel and tourism industry You will need to learn to interpret statistics presented to you to determine conclusions about the scale of the travel and tourism industry locally, nationally and globally in terms of visitor numbers, visitor spending and levels of employment. Visitor Numbers/Spending Inbound Tourism Inbound tourism generates money for the UK economy.

Domestic Tourism Domestic tourism generates money for the UK economy.

Outbound Tourism Outbound tourism is money spent outside UK economy.

London is the most popular destination for incoming tourists.

Currently decreasing due to increase in outbound tourism.

Inbound tourism to UK: France – most visitors USA – highest spenders.

UK residents spend more than inbound tourists although inbound tourists have considerably less visits.

Outbound tourism continues to grow and has higher spending than UK inbound tourism. This is a concern for the British economy who are trying to encourage more inbound tourism and domestic holidays.

Employment There are many different types of jobs in the travel and tourism industry and they vary from sector to sector. • •

peak period in summer for many organisations who require extra staff (seasonal nature of industry) customer service industry – shift work and unsociable hours, busiest times are the weekends

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