Introduction to tourism

Tourism, being one of the largest industries, plays a key role in achieving the socio-economic goals of the development plans of a nation. It is an important service-oriented sector which has made rapid strides globally in terms of gross revenue and foreign exchange earnings. It is a composite of service providers, both public and private, which includes travel agents and tour operators; air, rail and sea transportation operators; guides; owners of hotels, guest houses and inns, restaurants and shops; etc. They are involved in meeting the diverse interests and requirements of domestic and international tourists. The tourism industry provides incentives to foster the quality of environment, generates more employment opportunities (particularly in remote and backward areas) as well as develops necessary infrastructure facilities like roads, telecom and medical services, in the economy. 

Facts and figures

From 1950 to 2005, international tourism arrivals expanded at an annual rate of 6.5%, growing from 25 million to 806 million travellers. The income generated by these arrivals grew at an even stronger rate reaching 11.2% during the same period, outgrowing the world economy, reaching around US$ 680 billion in 2005. While in 1950 the top 15 destinations absorbed 88% of international arrivals, in 1970 the proportion was 75% and decreased to 57% in 2005, reflecting the emergence of new destinations, many of them in developing countries.

Tourism Statistics  

Tourism is one of the world's fastest growing industries at present and holds the status of the world's number one industry.  The tourism industry as a whole is presently estimated to earn over US$ 3.5 trillion worldwide.  The industry creates a job every 2.4 seconds with every one of those direct jobs creating another 11 indirect ones.  Spending on tourism amounts to 5%-10% of total consumer, spending in a year worldwide.  India's share of the total market is a pittance at 0.51%. The non-tourist countries like Malaysia and Indonesia get much more tourists than India. The tourism sector of Indian economy is at present experiencing a huge growth. The tourism sector of Indian economy has become one of the major industrial sectors under the Indian economy. The tourism industry earns foreign exchanges worth ` 21,828 crore. Previous year the growth rate of the tourism sector of Indian economy was recorded as 17.3%.  

Types of tourism

1. Ecotourism

Ecotourism also known as ecological tourism, is a form of tourism that appeals to ecologically and socially conscious individuals. Generally speaking, ecotourism focuses on volunteering, personal growth, and learning new ways to live on the planet. It typically involves travel to destinations where flora, fauna, and cultural heritage are e the primary attractions. Responsible ecotourism includes programmes that minimize the negative aspects of conventional tourism on the environment and enhance the cultural integrity of local people. Therefore, in addition to evaluating environmental and cultural factors, an integral part of ecotourism is the promotion of recycling, energy efficiency, water conservation, and creation of economic opportunities for the local communities. 

2. Medical Tourism

Medical tourism can be broadly defined as the provision of 'cost-effective' private medical care in collaboration with the tourism industry for patients needing surgical and other forms of specialized treatment. India is considered as the golden spot for treating patients mostly from the developed countries and Far East for ailments and procedures of relatively high cost and complexity. India is also aggressively promoting medical tourism in the current years and slowly now it is moving into a new area of "medical outsourcing", where sub- contractors provide services to the overburdened medical care systems in Western countries. Government and private sector studies in India estimate that medical tourism could bring between $1 billion and $2 billion US into the country by 2012. 

3. Domestic Tourism

In domestic tourism, people travel outside their normal domicile to certain areas within the country as compared to travelling outside the boundaries of a country in international tourism. The tourist activity of residents of a country within their own countries, which does not cross the boundaries of the country, is known as internal or domestic tourism. 

The domestic travel becomes an easier affair. Since the travel takes place within the limits of the boundaries of a country. The barriers of currency exchange, language, passport, visas, health, documentation, etc., are not to be faced by the domestic tourist. 

The domestic consist is generally regarded as a person travelling for the purpose other than exercising a gainful activity of settling at the place visited. There is not yet internationally accepted definition of domestic tourism. For statistical purposes the them 'domestic tourist' designates any person who travels within the country where he resides to a place other than his usual place of residence for at least 24 hours or one night for the purpose other than exercising a gainful activity and which may be classified under one of the following headings. 

a) Leisure, i.e., recreation, holiday; 

b) Business family, mission, meeting, etc. 

There are three elements which are commonly used in defining domestic tourism. These elements are:  

• Place of residence  

• Geographic setting of travel, and  

• Duration of travel 

Two further elements are common in most definition of domestic tourism:  

• Distance travelled, and  

• Travel motivation 

With to distant travelled, some countries specify a minimum distance. This may vary between two and 100 miles. The concept of travel motivation is considered important by most countries. The domestic tourist is considered as a person travelling for a purpose other than exercising a gainful activity at the place visited. 

Characteristics of tourism industry  

1. Inflexibility

The tourism industry is highly inflexible in terms of capacity. The number of beds in a hotel or seats on a flight is fixed so it is not possible to meet sudden upsurges in demand similarly, restaurants tables, hotels beds and flights seats remain empty and unused in periods of low demand. 

2. Inventory/Perishability

It is related to the fact that travel products are intended to be consumed as they are produced. For example, an airline has seats to sell on each flight; a hotel has rooms to sell for each night. If the airline is not able to sell all its seats on its flight, or a hotel is not able to sell its rooms for the night then the opportunity to sell the product is lost forever. Service sector cannot keep inventory like products. To overcome this problem, the travel industry has come up with various marketing strategies. One is to overbook. An airline overbooks its seats to a certain extent in anticipation that even though certain customers do not turn up but the flight will be fully seated. Another strategy is multiple distributions. For example, a customer can buy an airline ticket from an airline, tour operator or from a travel agent. The chances of perishability are reduced. If the tourist cannot visit the place, the opportunity is lost. Hence, this becomes one of its important characteristics. 

3. Inconsistency

A general norm is that in Travel and Tourism industry the product or the package of the tourism can be standardized, i.e., for example of two days three nights in so and so hotel, but the actual experience of consuming this package is highly inconsistent. We hear a lot of travel stories which becomes a portrayal of a lot of bad experiences for example the tourist guide may not be good, the hotels lodging and boarding was bad, etc., Therefore, there is high level of inconsistency prevailing. 

4. Intangibility

Travel products cannot be touched as they include flight experience on an airplane, cruise on an ocean liner, a night's rest in a hotel, view of the mountains, a visit to a museum, a good time in a night club and much more. These products are experiences. Once they have taken place they can only be recalled and relished. The tangible products on an airplane, a bed in a hotel, food in a restaurant are used to create the experience but these are not what the customer is seeking. The customer wants intangible experience like pleasure, excitement, relaxation, etc. The tangible products that are purchased provide the access to intangibles. 

5. Inseparability

Most travel products are produced and consumed at the same place and at the same time. This is the opposite of the tangible products, which are produced at a different place and time and consumed at a different place and time. In contrast, most travel products are sold first and then simultaneously produced and consumed. For example, an airline passenger consumes the flight as it is being produced, and a hotel guest uses a hotel room as it is being made available for the night's sleep. Thus, there is simultaneous consumption and production. This creates certain inter-dependence between suppliers and customers as the interaction between the supplier and customer takes place on the supplier's premises. The interaction shapes the travel experience. For example, the customers could not take the cruise home with them; in fact they have to leave their home. 

Marketing Mix 

Product 

Product is the combination of tangible and intangible elements. The tourism product, which is mainly the destination, can only be experienced. The views of the location travel to the destination, the accommodation and facility as well as the entertainment at the destination all form the tourism product. Thus, it is a composite product combination of attraction, facilities and transportation. Each of these components has its own significance in the product mix and in the absence of even single components; the product mix is incomplete Components of Tourist Product 

1.2 Product Levels 

1.3 Service Flower

Price

In pricing decisions, the product or the service mix of the tourist organization is important. They have to set prices in line with the quality of services to be made available to the customers and the type of customers they are targeting. 

Methods of Pricing in Tourism Industry  

1. Cost-based pricing

The price charged must be sufficient to cover fixed and variable cost to have a reasonable return on investment. Organization resort to price fixation at marginal cost to attract more customers. 

2. Demand-based pricing

Refers to balancing costs and revenues. This pricing will suit to the seasonal characteristics as at peak times many leisure facilities have excess demand so firms use high price as tactic. 

3. Competition-based pricing

In case of new tourism product, if the strategic objective is market penetration, then prices must be set very competitive to attract more customers. In case of niche strategy, the price should portray this aspect complimented with additional benefits of the service offer 

4. Multi Segment industry

Pricing in tourism is a complex process. It is a multisegment industry.Pricing includes the prices of other services like Air travel, Bus, Railways, Hotels, etc. All are included in tourism package. E.g., Air price changes tourism package also changes, if Hotel charges change then also tourism package changes 

5. Internal and external factors

Pricing decisions are influenced by internal factors like pricing policy of the company, and external factors like the destination itself. The tourism professionals are supposed to watch the emerging trends in both the markets.  

6. Discounts

The tourism packages may include discounts for cash payments, seasonal discounts, trade discounts, etc. But while offering the discounts, it is not to be forgotten that it may also create image problems since some of the value sensitive tourists may doubt the quality.  

7. Geographic location

Geographical location of the destination affects the pricing decision. Different locations differ in prices depending upon the standard of living there, the transportation in that place, the monetary policy of the place, the different tax system, etc. 

Place

Place or distribution management is concerned with two things such as availability and accessibility 

One-stage system

The one tier or the one-stage system focuses on the direct selling of services by the providers to the ultimate users, such as the airlines selling directly to users through their own offices and reservation counters.

Two-stage system

In the two-tier or a two-stage system there is an involvement of middlemen between the providers and the users, i.e., the Travel Agent. The traveller while receiving professional services can also buy other products like airline ticket, hotel accommodation and transportation facilities. Besides he/she gets a single bill for all the services.

Three-stage system

The three-tier or the three-stage system involves two middlemen, a retail travel agent and a wholesaler or a tour operator. 

Four-stage system

This system is similar to the three-stage system, but it has an additional middlemen. Known as Specialty Chancellor he is found instrumental in the development of tour packages. 

Promotion

Creation of awareness has a far-reaching impact. The tourist organizations bear the responsibility of informing, persuading and sensing the potential tourists in a right fashion. The marketers need to use the various components of promotion optimally so that they succeed in increasing the number of habitual users. Promotion helps in maximizing the duration of stay, frequency of visit by offering new tourist products in the same country to areas, which have remained untapped or partially tapped. The various dimensions of tourism promotion are as follows: 

Advertising

Advertisement gives important information to the actual and potential tourists. Its coverage is wide. Advertising is aimed at the public to create awareness of the travel offers available on a resort and its attractions to influence their business decisions. Intangibility can be compensated with the help of visual exposure of scenes and events. We can project hotel bedrooms, well-arranged restaurants and cafeterias, swimming pools etc.

Publicity

It focuses attention on strengthening the public relations measures by developing a rapport with media people and getting their personalized support in publicizing the business. It helps in projecting the positive image of tourist organizations since the prospects trust on the news items publicized by the media people. The publicity programme include regular publicity stories and photographs to the newspapers, travel editors, contact with magazines on stories, etc., advertising is a part of publicity.

Sales promotions

Sales promotion measures are the short-term activities seeking to boost sales at peak demand periods to ensure that the firms obtain its market share and are used to help launch a new product or support an ailing or modified one. The tool of sales promotions is designed to appeal particularly to those customers who are price-sensitive. There are a number of techniques to promote sale and the tourist professional need to use them in the face of their requirements vis-à-vis the emerging trends in the business. Eg: In the tourism industry, a travel company offers give-aways to their clients, such as flight bags, wallets for tickets 

Word-of-mouth Promotion

In the tourism industry it is found that the word-of-mouth promoters play the role of a hidden sales force, which helps the process of selling. The high magnitude of effectiveness of this tool of promotion is due to high credibility of the channel, especially in the eyes of the potential tourists. The sensitivity of this tool makes it clear that tourist organizations need to concentrate on the quality of services they promise and offer. The marketers or the tourist organizations need to keep their eyes open, identify the vocal persons or the opinion leaders and take a special care of them so that they keep on moving the process of stimulating and creating demand. 

Personal Selling

The development of travel and tourism has been possible due to well-educated and trained sales personnel. The development of tourism business has been influenced by the services rendered by the travel agents and travel guides since they work as information carriers. Personal selling is the personal presentation of a tangible product or intangible services or ideas to the customers. It is important to mention that in the tourism industry, the personnel who attend tourists form an essential ingredient of the product, such as sales personnel are found responsible for dealing with customers behind the counter, the resort representatives cater to the need of tourists when they reach the destination, etc., all of them play a vital role in ensuring that the tourism products satisfy the tourists. 

Telemarketing

In tourism, the travel agents, offices of airways, receptionist, and secretaries can't work efficiently if the telephonic services are not up to the mark. Also recruiting a person considered to be professionally sound, personally-committed sales personnel having an in-built creativity, innovation and imagination is very important 

Exhibitions

The participants include state and national tourism promotion boards, travel agents and tour operators, airlines, car rentals, cruise liners, holiday financiers, technology providers, hotels and resorts, educational institutions in the field of hospitality and tourism. Over the years the participation of foreign tourism promotion boards like the Dubai Tourism and the Mauritius Tourism, etc., has increased in order to aggressively promote their respective countries. 

People

It plays a most important part in tourism. In people, local people are very important, that how they treat tourist. The travel agents, guides, staff of travel companies, sales staff, etc., they are the people. Travel company also like Railways, Air, etc., is included in people. Normally a tourist assures a tourism quality like hotels, travel company. 

The tour operators who attend to the needs of the tourists form an essential ingredient in tourism marketing. The sales personnel are responsible for dealing with the customer behind the counter. The airline and transportation crew interact with customers while travelling. The resort or hotel representatives enter to the needs of the tourist when they reach the destination.

The tourist guides, who interact with the customers at the tourist location, all form the people element in tourism marketing. These contract persons must be trained on inter-personal skills as well as knowledge of the product. In the tourism industry the travel agents and the travel guides are the two most important people who speak a lot about the industry. Hence, it is imperative that they have to be at their best at all times. Travel guides especially, are expected to have a lot of patience, good sense of humour, tact to transform the occasional tourists into habitual ones, thorough knowledge of the places, linguistic skills, etc. 

Market Segmentation 

Though there are a number of bases for segmentation of tourists, one of the most important is lifestyle. Travelling decisions are fantastically influenced by changing lifestyles. They are also affected by other factors such as level of income, availability of leisure time, etc. Such segmentation is useful when deciding the offerings to target a particular segment. 

For example:

• The mass market consists of vacationists that travel in large groups and prefer all-inclusive tours, generally conservative.

• The popular market consists of smaller groups going on inclusive or semi-inclusive tours. This group includes retired people.

• The individual market consists of chairmen, senior executives, etc.

• As the lifestyle changes, consumption of services might change. For example, a newly married couple might prefer romantic holidays, but once they have children they would prefer family vacations where there are plenty of activities to entertain kids.

• Teens and youth might prefer adventure holidays, whereas senior citizens would probably prefer more relaxing vacations. 

Physical Evidence

The tourist attraction, which is an expensive for the customer must be tangibilised with the help of tangible items like, comfortable seats while travelling, layout, and design of the resort, natural service scope, etc., the sign posts that indicate directions, route maps, information regarding rules and regulations of the tourist spot and the sign regarding the public utilities like toilets, telephone booth also form a part of the physical evidence. 

Printed matters such as brochures also play an important role in the development of tourism. As the product, in tourism is intangible. There is a need to describe fully the product, which is done by providing an elaborate brochure, which shows how different elements of the programmes are carefully planned to include all necessary information to make holiday establishes expectation of quality value for money, product image and status, which must be matched when the product is delivered 

Process

The operation process of the tourism firm will depend on the size of the tourism firm. The sequential steps involved in the delivery of the tourist products are:

• Provision of travel information: The information regarding the travel is provided at a convenient location where the potential tourist seeks clarification about his proposed tour.

• Preparation of itinerants: It is a composition of series of operations that are required to plan a tour.

• Liaison with providers of services: Before any form of travel is sold over the counter to a customer; contracts have to be entered with the providers of various services including transportation companies, hotel accommodation, coaches for local sightseeing, etc.

• Planning and costing tours: Once the contracts and arrangements are entered into, then the task of planning and costing the tour, this will depend on the tour selected as well as individual requirements.

• Ticketing: The computerized reservation system has in recent years revolutionized the reservation system for both rail and air travel.