Direct Elements of the Tourism Industry Essay Example

yachting and jet boating have expanded to fulfil this demand.

Air

Advances in aviation technology has meant that travel by air is now relatively safe, economical, quick and reasonably comfortable. The development of the jet airliner after World War II to the first jumbo jet, the Boeing 747 in 1970 led to rapid falls in seat cost per passenger kilometre.

The advances have continued with the Airbus ‘super jumbo’ A380 a double-decker aircraft seating between 550-800 passengers enters service in late 2007 with Singapore Airlines operating the aircraft on the London

Singapore – Sydney route.

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mage:Airbus_A380_cross_section. svg A380 cabin cross section showing economy class seating

There are two basic type of air transport operation:

1. Scheduled services
2. Charter services

Scheduled services operate on defined routes, domestic or international, for which licences have been granted by the governments concerned. The airline must operate on the basis of their timetable regardless of the passenger loading. Fully state owned carriers such as Singapore Airlines and the Emirates are known as the national flag-carriers.

Even when the carrier has been privatised as in the case of British Airways the airline is still seen as the national flag carrier. Air New Zealand was privatised but after the 9/11 disaster 80 per cent of the carrier was returned into public ownership. Air transport is very important to the national economy of a country and a government will often assist in times of crisis. Low Cost Airlines LCA’s or LCLF (low cost low fare) carriers has been a major development in scheduled services in the last decade.

A total of 80 million people travelled on European no-frills carriers in 2004 up from 47 million in 2003. These airlines create

a cost-competitive advantage by using some of the following means:

• operate from secondary airports which have lower landing fees and are less congested allowing quicker turnarounds and more flights
• operate on high density, short-haul routes with one class of seating
• charge passengers for food, drink and entertainment sell only via the Internet
• tickets are inflexible – generally non-refundable

not operating frequent flying programmes and keeping airport passenger services to a minimum Charter services do not operate according to a published timetable and so do not have to operate with uneconomical loadings. They are not advertised or promoted by the airlines themselves as they are usually charted by intermediaries – usually tour operators.

Many charter flights are sold as part of a package holiday in which the price paid includes flights, accommodation and other services.. Such packages are frequently cheaper than regular schedule airline fares. Furthermore charter airlines frequently operate on routes, or to airports, where there is no scheduled service. Much of the traffic through small and medium sized airports in the United Kingdom consists of charter flights, and the survival of these airports often depends on the airline landing fees they get from the charter companies.

Although charter airlines typically carry passengers who have booked individually or as small groups to beach resorts, historic towns, or cities where a cruise ship is awaiting them, sometimes an aircraft will be chartered by a single group such as members of a company, a sports team, or to travel to a major event. Many airlines operating regular scheduled services (i. e. , for which tickets are sold directly to passengers) have set up charter divisions, though these have not always

proved competitive with the specialist charter .

In New Zealand, Freedom Air was established by the Mount Cook Group in response to the competition from the charter airline, Kiwi Air (went in to voluntary liquidation in 1996). Freedom Air now operates as a scheduled airline from smaller airports eg Dunedin and Hamilton. The economics of charter flights demand that the flights should operate on the basis of near 100% seat occupancy. Land Transportation[edit] Land transportation can be used for travelling from home to a host destination, within the destination and between the host destinations.

Motorcars Tourists can use privately owned cars for independent and flexible holidays both domestic and international. They can take day excursions or longer trips. The explosion in private car ownership has changed the tourism industry by establishing a need for motels, bed and breakfasts, home stays, roadside cafes and car ferry services particularly in Europe. The car rental business is divided into two categories, the large international companies e. g. Hertz, Avis, Budget and the small, locally based companies.

The larger companies will have contracts with airports and railways maintaining a desk at the location for easier collection of vehicles, links with airlines and hotels, (some large hotel chains offering desk space in their reception area) and access to their business through a computer reservation system (CRS) and website. Rail Rail travel has declined in popularity because of the rise in ownership of private vehicles, the advent of jet aircraft and the failure of rail operators around the world to adapt to changing tourists needs.

The Orient Express (www. orient-expresstrains. com), the Trans-Siberian Railway and the Tranz Alpine railway (www. tranzscenic. co. nz) are all

well known for their sight seeing appeal and are attractions in their own right. Rail can provide efficient links between airports and city centres and can carry large numbers of passengers and luggage. E. g. London, Frankfurt, Paris and Rome. Trains often have an advantage over coach travel as they are a lot faster. Inter-city express services operate in Britain, Europe, U. S. A. and Japan.

For rail travel within a city, tourists tend to travel by underground trains such as the ‘Tube’ in London, Le Metro in Paris and the ‘Bart’ in San Francisco, Hong Kong, Singapore, Rome and Prague also have their own underground rail systems. Tickets offering unlimited travel by train, marketed to inbound tourists and only sold prior to departure, have boosted sales of rail travel. These included Eurailpasses in Europe and Britrail pass in Britain. Campervans These are becoming increasingly popular both in New Zealand and overseas especially in the USA where more than 25 million Americans make use of them each year.

While not cheap to hire, they have the advantage of flexibility and independence providing both transportation and accommodation. Coach Coach operations can be categorised as follows:

• express coach services, domestic and international
• private hire services
• tour and excursion operations

transfer services Greyhound in the USA is one of the most famous inter city express coach operators but must compete with budget airlines and AMTRAK rail services for its customers. In New Zealand, the Intercity bus service operates between major cities. Coaches can be hired by groups to travel to special events e.

Millbrook concerts or for educational purposes e. g. tourism students educational tours. Escorted package tours are the most visible

use of coaches in the travel industry where there is a combination of accommodation, sightseeing by coach and transportation between cities. E. g. Trafalgar Tours, Contiki Tours. The majority of coaching holidays are booked by the over-45s. City sightseeing tours for half-day or full-day are usually undertaken by coaches or mini-buses. They can be specialised coaches such as London’s double-decker buses or open-decked used in Auckland.

Transfers from airports to hotels are often by provided coach transportation especially when the distance makes the cost of travelling by taxi prohibitive. Some accommodation providers will also provide complimentary transfers by mini-coach or they will be included in the cost of the package holiday.

Accommodation

The accommodation sector provides an enormous variety of accommodation types to suit a wide range of visitors. Accommodation ranges from luxury 5 star hotels which provide facilities and services such as 24 hour room service, gyms, swimming pools etc. o camping grounds where the visitor is provided with a patch of ground on which to pitch a tent. Classification of different types of accommodation is very difficult as they can mean something different in another country. In the USA, the meaning for an ‘inn’ is hotel or motel style accommodation usually operated by a chain e. g. Holiday Inns. In Britain, and ‘inn’ would describe pub-style accommodation offering bed and breakfast style accommodation.

Grading Systems

There are many grading systems recognised by visitors and the accommodation industry.

Grading Systems are used to encourage and ensure a consistency of quality. Systems may be administered by public organisations or privately by organisations such as accommodation chains and franchises. The most recognisable of these grading systems is the “star” system where individual

accommodation is rated depending on its levels of service, cleanliness, decor and facilities. For instance most people recognise that a 5 star hotel will have excellent service, be exceptionally clean and tidy with housekeeping staff on call 24 hours, have up to date, luxurious decor and have a wide range of facilities on offer.

A 3 star hotel on the other hand will have fewer facilities, less luxurious decor and more limited service, e. g. a limited 24 hour room service menu instead of the entire restaurant menu. While this “star” system is recognised internationally it is not administered at an international level, but rather at a national or in some cases regional level. This leads to inconsistencies as to what the star grades actually mean. Many national tourism organisations are now actively developing standardised grading systems and encouraging accommodation providers to allow their accommodation to be graded.

The benefits of this are:

1. Visitors can easily choose accommodation which will suit their needs and budget, while being assured of quality.
2. Accommodation providers have a clear understanding as to what standards are expected of them.
3. Accommodation providers can use their rating on their promotional material.
4. As more accommodation businesses join the grading scheme the over all quality of a destinations accommodation improves.
5. This gives visitors an overall impression of the destination as one of quality.

http://www. qualmark. co. nz/images/qualmark_animated. if NZ Qualmark New Zealand uses the Qualmark model to grade its accommodation. This model is recognised internationally and uses a Qualmark star grading of 1 to 5.

Accommodation is rated by type:

• Hotel
• Backpacker
• Holiday home
• Holiday park
• Student accommodation
• Self contained & serviced
• Exclusive

In the United Kingdom, accommodation is

graded according to stars, diamonds or crowns. In the USA a 5 star hotel would be graded as ‘deluxe’ then to ‘first class’ to ‘superior’ and the minimum grading would be ‘tourist’ or ‘budget’. -

Activities and Attractions

All destinations require features that will attract tourists to come and see and experience these activities and attractions. They can range from physical features; beauty of the mountains to the quality of a beach to activities such as jet boating down a river or shopping and entertainment. Attractions can be categorised as either natural which includes mountains, geothermal areas, forests or constructed attractions which must be created and maintained.

Examples of constructed attractions are amusement parks, museums and art galleries, wildlife parks, events, staged entertainment, cultural exhibitions, gardens and historical buildings.

Sales

Also known as the travel sector, sales involves the distribution of tourism products to the consumer through retail travel agents, tour operators and wholesalers. As already demonstrated the tourism product is diverse and includes transport, attractions/activities, accommodation and ancillary services.

The sales sector is especially important in tourism because the customer and the service are geographically separated.

For example, a customer in Brisbane may purchase the bulk of their Central Otago skiing holiday at home, before they leave, including:

• air tickets,
• transfers,
• hire car,
• hotel accommodation and
• ski passes.

The tourism product can be sold in a variety of ways:

• The customer purchases directly from the supplier (principal) Many companies such as Air New Zealand are encouraging their customers to do this, especially for domestic flights.

The growth in internet use and the ease of gaining information and booking via the web means more and more visitors are choosing to book tourism products themselves.

Advantages for the supplier are more profit as no commission has to be paid to intermediary, save time and reduce possibility of mistakes and supplier maintains control of sale e. g. a hotel could offer an upgrade to a suite to promote future business with customer. Disadvantages would be increased cost to supplier in establishing an office to promote their product and can antagonise intermediaries

• The customer accesses the supplier through an intermediary Intermediaries include retail travel agents, conference planners and information offices (I-Site in New Zealand).

Sometimes organisations usually considered to fall within the other sectors may also act as intermediaries e. g. a hotel booking guests into an activity and taking payment, or a tour company booking clients into accommodation. Intermediaries usually gain a commission of between 10 and 20% for making bookings. An intermediary will provide a service that adds value for the traveller.

For example, a travel agent may negotiate with an airline for special rates or conditions, or they may offer value in other ways such as providing specialised knowledge or a greater range of choices for itinerary planning. Travel agents may specialise in particular destinations, modes of travel or provide services for niche market segments.

• The customer accesses the supplier through two intermediaries.

Travel agents will often use wholesalers to book products for their clients. Wholesalers negotiate with suppliers and sell products such as all-inclusive tours. Many retail travel agencies have wholesaling arms e. g. the retail travel agency chain House of Travel has the wholesale arm Travel Plan. Wholesale tour operators put together tours combining transport, accommodation, activities and in the case of fully inclusive tours ancillary services such as food

etc. These tours are usually sold via a travel agent. Some tour operators do deal directly with the public i. e. Contiki. The travel agents role is different to other retailers because they do not purchase a product for resale to their customers. Commission

Travel agents and tour operators can earn their income from commission paid by the service provider they are representing, and not by the purchaser. Airlines are reducing the levels of commission they currently pay to agents making it necessary to sell more to make larger amounts of commission these days. Examples of commission rates to travel agents include 5-9% on international air tickets, 10% for a tour package, cruise or accommodation (this can be more depending on the preferred status held with the supplier), and 33% for travel insurance.

With the current changes to the commission system such as a single capped fee, direct booking over the phone or internet and e-ticketing, agents are working harder to make their commission. The focus on selling domestic fares is lower as there is very little to be made on these bookings now days and more concentration is taking place on the add-ons to the international flights. Some travel agencies also generate income from bureau de change or traveller’s cheque operations. Traditionally, this has been a significant source of income for some major travel chains such as Thomas Cook and American Express.

However, with electronic banking, direct booking and the introduction of the Euro, their income is also decreasing. It represents a saving for the consumers who are benefiting by saving on commission. Insert diagram – Principles of Tourism

Ancillary Services

Otherwise known as support services Food and Beverage[edit]

One of the most important experiences while on holiday for a lot of travellers is the consumption of food and beverage, enhanced when the food and drink in question is exceptional and/or exotic which is often the case on holidays abroad.

Countries with well-established reputations for their food and drink have ensured that these attractions are promoted prominently in their tourism campaigns. Tours are now from New Zealand offering tuition in French cooking and the many food and wine festivals around the world attract both domestic and international tourists. One of the most famous Festivals is Oktoberfest, held annually in Munich, Germany for 2 weeks. The Speights brewery tour in Dunedin is world renowned with tourists having to book in advance.

Research conducted by Tourism New Zealand has shown that ‘Interactive Travellers’ to New Zealand are especially interested in experiencing the country’s local food and wine. The dominance in the UK and around the world of transnational corporations such as McDonalds, KFC and Burger King has changed the eating habits of travellers. The more unadventurous of tourists can now be comfortable eating food similar to the food at home. Research conducted by Tourism New Zealand has shown that ‘Interactive Travellers’ to New Zealand are especially interested in experiencing the country’s local food and wine.

Shopping

Shopping can be both an attraction and a basic facility which tourists will expect at a destination. This can include souvenir shopping or purchasing basic necessities such as shampoo. Products which identify with a destination are always popular. In New Zealand, anything to do with the kiwi is sold in huge numbers in Hawaii its pineapples and macadamia nuts.

Insurance

Insurance is a very important aspect

of a tourist’s travel arrangements.

Most policies will cover the following:

• medical care and hospitalisation
• personal accident
• cancellation/curtailment of holiday delayed departure
• baggage loss
• money loss
• personal liability

The traveller must ensure that medical coverage is sufficient to meet their needs particular in countries where hospital care is very expensive. In the USA, costs in excess of $1 million are not uncommon for serious illnesses.

Foreign Transactions

The cost of an international trip can be substantial and often difficult to estimate in advance. Several factors can influence this with the key one being fluctuating exchange rates. Local taxes and tipping may be add-ons to prices that were not anticipated in advance.

It is also important to consider the e cost of living between countries and how that contributes to the travellers perceptions of value. An example of cost of living in countries would be those who want to travel to Scandinavia. The cost of living is very high especially when buying food. In somewhere like Bali the cost of living is not as high – food and souvenirs are much cheaper but it must also be remembered that tourists help to boost the economy. Hence, after the bombing in Bali in 2003 the economy took a dive until tourists deemed it safe to travel there again.

International travellers have an increasing number of ways they can pay for goods and services while in a foreign country.

These include:

• Taking cash from home. However, this may lead to theft or loss, and some countries have restrictions on the import or export of their currencies.
• Taking traveller’s cheques. Used widely around the world, traveller’s cheques provide security with compensation for theft and loss. Standard
  

premium charge of 1%.

Use a credit card to purchase goods and services or for cash advances. Fees may apply and if there is a delay between purchase transaction and debit of the holder’s account, currency exchange fluctuations may alter the amount of the purchase.

Use an eftpos card to access money/make purchases. The card needs to have the internationally recognised symbol on the back of it and then funds are accessed direct from bank account and are available from ATM machines 24 hours a day.

Commission Charges

The standard commission charged is 1. 5% which can be a relatively small amount if the traveller is not purchasing much.

Therefore, there is a minimum charge which is passed on to the client of $5. 00 if the 1. 5% commission is less than $5. 00. This discourages people from only exchanging small amounts of traveller’s cheques over the counter.

Currency Codes

Currency codes are three letter standard abbreviations which identify the currency of the country. Eg. NZD = New Zealand Dollars, GBP = Great British Pounds The introduction of the EURO has reduced the number of foreign currencies now used in Europe and makes it easier for the traveller when carrying traveller’s cheques, for instance.

Currency Exchange Rates

International transactions require buyers and sellers to deal in foreign currencies. The price of one currency in terms of another is called the exchange rate. Currency exchange rates are usually floating and values fluctuate depending on supply and demand in the global marketplace. Fluctuation, either appreciation or depreciation,

depends on a number of economic and political considerations. If a country, for example, suffers a war or terrorist attack then it becomes politically unstable and people will not go there.

If it is not receiving large numbers of tourists anymore then the economy suffers and the value of the currency will drop. Changes in exchange rates are usually small in the short term, but over a period of weeks or months, trends can result in substantial differences. Changes in some currencies can have knock-on effects for others too. For example, the value of the New Zealand dollar is linked to the US dollar and the Japanese Yen. International travellers have an increasingly wide range of ways in which they can now pay for their goods and services abroad.

These can include:

• Traveller’s cheques - which are still widely used as they are readily available and recognised throughout the world and offer the security of replacement if lost or stolen.
• Both credit card and cash card usage are increasing but it is recommended that travellers also take an assortment of notes and travellers cheques in case of card theft.

Tourist publications and information

Traditionally this information has been in the form of brochures but the Internet is now an increasingly important source of information for tourists and for tourism operators.

Availability of current information for tourists is vitally important e. g. weather, local transportation, attractions etc. Travel Guides such as the Lonely Planet series are immensely popular and continue to be updated and extended each year. Some guidebooks are now taking the form of travel blogs and wikis such as wikipedia and wikitravel. Podcasts proove to be very useful as the audio information

can be downloaded over the Internet to a computer then transferred automatically to a portable audio player.

Virgin Atlantic was one of the first companies to offer this service when they launched a guide to New York. The key benefit is that it is free, can be instantaneously updated and quick and easy to use while on the move. i-SITE offices in New Zealand have a vital role in providing information on local and national visitor attractions and activities, accommodation and transport. They are operated and funded by local councils e. g. Dunedin City Council.

Entertainment

This category includes cinemas, theatres, nightclubs, bars, casinos and shows.

Many tourists will look for entertainment and expect these facilities to be available especially in cities. If it is not available, this is reflected highly in visitor’s surveys as a reason for dissatisfaction.

Indirect Elements

Infrastructural needs Infrastructure is critical to the success of the tourism product. Without suitable access to a destination whether by road or air, the tourist will not be able to visit. Airports must have certain facilities to gain status as in international airport e. g. Duty Free facilities.

Communications also play a vital role especially today when people expect cell phone coverage and internet access to keep in touch with family and friends or for business. Access to clean public toilets can be very important to the satisfaction of a tourist’s holiday. Clear signage is vital for independent travellers both within the cities to show routes to attractions, on roads to point out the way to destinations and also within and outside tourist attractions providing information. The manufacturing and building industry are vital to providing the superstructure tourists need – hotels, restaurants,

shops and attractions.