Author: Andre Coleman

Ecotourism is responsible travel to perfect and usually protected areas. With the purpose to teach the traveler, supply capital for ecological conservation and ensure economic development and political authorization, it also promotes value for different cultures and for human rights. Countries in Africa are now focusing on tourism as a cause of growth and diversification, but with limited policy guidance from most donors, despite the sector’s potential. Ecotourism has become one of the fastest-growing sectors of the tourism industry, growing annually by 10-15% worldwide (Miller, 2007). One definition of ecotourism is “the practice of low-impact, educational, ecologically and culturally sensitive travel that benefits local communities and host countries” (Honey, 1999).

South Africa as one of the countries in Africa is obtaining considerable economic remuneration from ecotourism, although negative consequences including removing people from their homes, infringement of fundamental rights, and environmental hazards – which according to Miller far outweigh the medium-term economic benefits (Miller, 2007).A great amount of money is being exhausted and human resources are continually being used up for tourism in spite of the negative effects, and a larger amount of money is put into public relation campaigns to dissolve the criticism from the locals and public.

Tourism directs resources away from other schemes that could possibly supply maintainable and realistic results to pressing social and environmental tribulations. “The money tourism can generate often ties parks and managements to eco-tourism” (Walpole et al. 2001).However there is worry concerning the changes in land-use rights, false hope in the delivery of community benefits, damage to the environment and plenty other social impacts. Indeed it’s an argument to consider eco-tourism as neither ecologically nor socially beneficial, but it is still a strategy for. Indeed many argue repeatedly that eco-tourism is neither ecologically nor socially beneficial, this is somewhat true but it too persists as a strategy for preservation and growth.

“WTTC/WEFA forecast that tourism and travel would account for over 11% of GDP in Sub-Saharan African countries in 1999 and has a growth rate of over 5%.” The tourism system has tremendous financial and political influence. It is said that Funding could be used for field studies aimed at finding alternative solutions to tourism and the diverse problems Africa faces in result of urbanization, industrialization, and the over exploitation of agriculture (Kamuaro, 2007). Tourism has has become the source of conflict regarding the control of land, resources and profits made. It has therefore caused harm to the locals and the topic of profit distribution is one that’s not desired as it leads to

At the local level, ecotourism has become a source of conflict over control of land, resources, and tourism profits. In this case, ecotourism has harmed the environment and local people, and has led to conflicts over profit distribution.

In a perfect world more efforts would be made towards educating tourists of the environmental and social effects of their travels. Very few regulations or laws stand in place as boundaries for the investors in ecotourism. These should be implemented to prohibit the promotion of unsustainable ecotourism projects and materials which project false images of destinations, demeaning local and indigenous cultures. Tourism is often considered volatile. As a global industry, all destinations face the heightened risk of terrorist attacks, which, together with civil strife, war and natural disasters, can terminate demand for the product for a prolonged period. Crime and poor public health standards in a specific destination can greatly reduce demand for an indefinite period after it is evidenced. There are some advantages to Tourism.

Tourism is labor intensive with some two employees required per hotel room in developing countries, depending on the type of hotel and local skill levels. Comparisons of investment costs per job in tourism compared with manufacturing, presuppose that countries have a free choice between these alternatives, as well as comparable market entry for each activity. Nevertheless, there is some evidence that tourism is more labor intensive than manufacturing and employs a higher proportion of the low skilled and women. Only in a few small, resource-rich developing countries will the opportunity cost of such labor equal the wages payable in tourism.

An often-neglected facet of employment in the sector is that tourism, in fact, creates “good jobs”. Physical working conditions are healthier and safer than in sugar cane, mining, logging and, often, manufacturing, among other economic activities. But, also, hotels and tourist services create jobs such as waiters, maintenance engineers, and drivers, which are relatively well paid, particularly when supplemented by tips. Finally, it appears that tourism can generate more than sufficient taxes to compensate for public investments. Although, it is said that the negative effects of tourism outweigh the positive ones. There seems to be a lot of resentment and feelings of inferiority amongst the locals.

The government should have to choose one over the other (and the priority should be the culture and the people over financial revenue). Even if it means less money will be received from tourists by portraying a culture like that of the Philippines. The government cannot attempt to do both. One of the real issues in tourism everywhere in developing countries is how to extend the benefits to the poor and to local communities.

Although ecotourism is intended for small groups, even a modest increase in population, however temporary, puts extra pressure on the local environment and necessitates the development of additional infrastructure and amenities. The construction of water treatment plants, sanitation facilities, and lodges come with the exploitation of non-renewable energy sources and the utilization of already limited local resources. Aside from environmental degradation with tourist infrastructure, population pressures from ecotourism also leaves behind garbage and pollution associated with the Western lifestyle.[17] Although eco-tourists claim to be educationally sophisticated and environmentally concerned, they rarely understand the ecological consequences of their visits and how their day-to-day activities append physical impacts on the environment. Ecotourism is now also considered to be playing a role in this depletion. While the term ecotourism may sound relatively benign, one of its most serious impacts is its consumption of virgin territories (Kamuaro, 2007).

These invasions often include deforestation, disruption of ecological life systems and various forms of pollution, all of which contribute to environmental degradation. In some cases, the resentment by local people results in environmental degradation. As a highly publicized case, the Masai nomads in Kenya killed wildlife in national parks to show aversion to unfair compensation terms and displacement from traditional lands.[ One of the most powerful examples of communities being moved in order to create a park is the story of the Masai. About 70% of national parks and game reserves in East Africa are on Masai land (Kamuaro, 2007). The first undesirable impact of tourism was that of the extent of land lost from the Masai culture. Local and national governments took advantage of the Masai’s ignorance on the situation and robbed them of huge chunks of grazing land, putting to risk their only socio-economic livelihood.

Ecotourism often claims that it preserves and “enhances” local cultures. However, evidence shows that with the establishment of protected areas local people have illegally lost their homes, and most often with no compensation (Kamuaro, 2007). Pushing people onto marginal lands with harsh climates, poor soils, lack of water, and infested with livestock and disease does little to enhance livelihoods even when a proportion of ecotourism profits are directed back into the community. The establishment of parks can create harsh survival realities and deprive the people of their traditional use of land and natural resources. Ethnic groups are increasingly being seen as a “backdrop” to the scenery and wildlife.

While governments are typically entrusted with the administration and enforcement of environmental protection, they often lack the commitment or capability to manage ecotourism sites effectively. The regulations for environmental protection may be vaguely defined, costly to implement, hard to enforce, and uncertain in effectiveness. The increased contributions of communities to locally managed ecotourism create viable economic opportunities, including high level management positions, and reduce environmental issues associated with poverty and unemployment.

Because the ecotourism experience is marketed to a different lifestyle from large scale ecotourism, the development of facilities and infrastructure does not need to conform to corporate Western tourism standards, and can be much simpler and less expensive. There is a greater multiplier effect on the economy, because local products, materials, and labor are used. Profits accrue locally and import leakages are reduced.[19] However, even this form of tourism may require foreign investment for promotion or start up. When such investments are required, it is crucial for communities for find a company or non-governmental organization that reflects the philosophy of ecotourism; sensitive to their concerns and willing to cooperate at the expense of profit.

In conclusion, Ecotourism and Tourism in Africa as a whole should be reconsidered. The depletion of natural resources and cultures is a drastic change that’s most of the time now worth the finance and is irreversible. The bad outweighs the good and Tourism should be accepted and its effects should be reduced.

The internet has provided opportunities for travelers to book their travel directly online thereby circumventing the traditional travel channels i.e. travel agencies. Nowadays even airlines have started encouraging travelers to book tickets directly on their websites thus avoiding having to pay 10% commission to the travel agents. Thus it has made it an urgent need for traditional travel agents to find new methods and strategies to stay in business (Yamanouchi, 2004).

While serving as an intermediary channel between travelers and travel service providers, what the internet has done is to eliminate the relevance of the traditional intermediary (travel agents) or at the very least make that traditional role very different in today’s practice (Taylor, 2003). Today, would-be travelers can arrange for their own travel by booking straight from the providers themselves via the internet (Law, Leung & Wong, 2004). Online travel websites more or less eliminates the need for traditional middlemen, who as Law, Leung & Wong (2004) notes; are debatably on the verge of extinction.

Internet mediation may ultimately lead to disintermediation of travel agencies since the travel service and product providers can sell their services and products directly to the travel clientele. Yet, the internet and its travel websites does not portend only doom for the travel agents. Travel agents still have the advantage of providing personalized services especially in offering advice to travelers with a personal touch. This ability to make services personal will guarantee that the role of travel agents remains secure. (Law, Leung, & Wong, 2004).

The internet has become a distribution channel in the travel industry such that the role of traditional intermediaries like travel agents has also changed. Yet rather than be patients of the internet, travel agents have seized the opportunity to employ the internet in their daily operations. Travel agents are using the internet to market themselves and to advertise their services. They are also offering some of their services online (Vrana, & Zafiropoulos, 2004).

The travel agents themselves have found it easy to make arrangements and bookings over the internet for their clients thus reducing their operational costs. The internet adoption among travel agents has made their services more efficient and timely and gaining a reliable means of communication with their contacts and clients (Vrana, & Zafiropoulos, 2004).

Literature Review
How Travel Agencies Take Advantages of the Internet and Avoid Its Negative Effects on Their Business

Travel agents are nowadays using the strategy of ‘If you can’t beat them, join them’. They have started using the internet to their own advantage by using the internet to market their own services online and by contacting travelers via their own websites. They also provide services that travel sites cannot provide like personalized services and complex travel arrangements and iteneries (Vrana, & Zafiropoulos, 2004).

Travel agencies also nowadays focus more on building lasting relationships rather than trying to maximize their profits. They do this by providing quality personalized services. This is a strategy adopted by most travel agencies in Japan (Zhang, 2004).

By so doing, travel agencies are today exploiting the internet opportunities such as virtue communities, to build what travel websites cannot, personalized relationships with clients (Maurer, 2002). This way, they can exploit the benefits that come with the internet, and avoid losing their role in mediating travel, by making their services uniquely personalized. Travel agents form networks, create newly branded travel services, exploit the internet to market themselves, get specialist packages and products unveiled by online agencies and seek to provide consumers with competitive deals if they have to survive (Downes, & Legg, 2006).

Why People Book Over the Internet

Customers mainly book over the internet since it is convenient, cost saving, and resourceful. It is more accessible and less expensive. Travelers also can compare the various rates offered by different service providers and thus make a much more informed choice. Online service providers offer more competitive rates and better discounts due to the low operational costs. Customers can also access extensive amount of information on the internet. It is also very useful for working professionals who do not have time to go and meet travel agents to make their travel plans when they can just do their booking when they are at work or at home (Heung, 2003).

Customers also have the opportunities of learning more about the places they are visiting from the internet and thus able to book hotels online. The bottom line that one is able to make all arrangements needed before traveling without involving any intermediary as long as he or she has access to internet. The advent of internet has also been coupled with people acquiring personal computers and internet providers thus bringing the technology closer to the people (Lewis, Ira, Semeijn, Janjaap, Talalayevsky, & Alexander, 1998).

Why People Book with Travel Agents

The main reasons why customers book via travel agents are the security concerns (credit card scams), interpersonal communication i.e. face to face transactions, human contact in transactions, and ability to make custom made travel packages as opposed to by travel websites (Vrana, & Zafiropoulos, 2004).

Travel agents are able to make all arrangements for their clients unlike in travel websites for example hotel bookings, sightseeing bookings, airport drop and pickup, and flight tickets, something they might not be able to or might lack the time to do (Buhalis, & Licata, 2002). Most clients who go to travel agents are also those who want to build relationships with their travel facilitators and those who need the guarantee of human element in transactions (Cheyne, Downes, & Legg, 2006).

There are some circumstances where by customers are left with no choices other than using the agents. This happens mostly in situations whereby one has to pass through different destinations. It is very hard to do several online bookings when one is traveling as it means dealing with many different entities. When one has to pass through different destinations, it is easier to use the international agents who have offices in different places around the world. By doing this one is able to deal with one company because he just have to state his or her demands to the agent and all his needs will be taken care of. (The Travel Insider, 2010).

Repeat Clients in Online Booking

Customers will go to the same website and online portals or directly to particular service providers using the internet if such providers have created brand name of products, built global marketing, have lower cost due to discounts, facilitates labor saving means and if they have standardized processes, products and service delivery (Vrana, & Zafiropoulos, 2004). Improved service delivery and competitive website features are the main ongoing preferences for online service providers in Hong Kong (Chu, 2001).

Another reason why customers repeatedly use one online service provider is that they were initially satisfied with the service that was provided and do not want to research another serviced provider (Cheyne, Downes, & Legg, 2006).

Repeat Clients for a Travel Agent

Customers mainly repeatedly book via travel agents due to the relationship that they have built with that travel agent (Vrana, & Zafiropoulos, 2004).

Therefore travel agents in Japan are using this strategy of building lasting relationships with customers to improve business rather than just focusing on maximizing profits by trying to attract more customers (Zhang, 2003).

If a customer is satisfied with a travel plan that a particular travel agent has made for them they prefer using the same travel agent to make all their future travel plans. Therefore providing good quality service also generates repeat clientele for travel agents (Wyne et al., 2001).

Demographics Characteristics that Predetermine Online Booking and that of Travel Agency Booking

The choice of internet and travel agent booking is influenced by sex, age, education, income, and occupational characteristics of customers (Furr, & Bon, 1998). Studies indicate that internet bookings are mainly made by females aged between 21 and 30, educated and earning high incomes and working in education related professions who prefer commercial lodgings during travel and who predominantly prefer to travel by air (Heung, 2003).

On the other hand the demographics of non- internet travel agent users is mainly married men traveling with families on a long vacation from medium earning brackets aged between 36 to 45 years. This is mainly because when traveling with families travel agents can provide much more extensive information on the types of hotels and which types of hotels offer certain types of services and also they provide information on the different types of sightseeing options and which one would suit the family’s requirements best (Heung, 2003).

Effects of Airlines on Internet Bookings

The industry of travel agency involves communication and processing information of its clients. Initially, the agencies had access to details of flights so the customers had no alternative. The fact the airlines are able to do their advertising online and directly to the customers and the customers are able to apply for their travel tickets online has affected the travel agencies a lot. It is also of paramount importance to note that airlines have realized this trend and have thus reduced fares, as they no longer pay the commissions they used to pay the agents (Bennett, Marion, Lai, Chi-Wen, & Kevin, 2005).

The customers needs have also changed significantly in their demands due to the development in IT since one is able to learn all the exotic places there are to visit at the touch of a button. It is more convenient for a customer to do his or her research at the convenience of his or her sitting other than going to an agent. It is worthy noting that it is cheaper to book online since one will be dealing with the airline directly without involving an intermediary. The airlines are also happy to serve their customers directly for they will be able to understand their needs more. The advent of the internet technology gave the airlines an opportunity to be close to their clients and they realized that the need for an intermediary is not that important. (Frias, Rodrigueza, & Castanedaa, 2008).

It is important to note that a minute means a lot in the amount one may pay for an air ticket since the fares change from time to time. When one is passing through many points, it is less demanding to use the agent for they will be able to fix his or her time according to the lowest fares possible. By doing this you end up saving money and time since you will be having someone who will be taking care of your travel plans. When one is doing booking, it is important to do research so as not end up paying more than what he would have paid through an agent (Farooqui, 2010).

Refernces

Bennett, Marion; Lai, Chi-Wen Kevin (November 2005)The impact of the internet on travel agencies in Taiwan http://www.ingentaconnect.com/content/pal/thr/2005/00000006/00000001/art00002

Buhalis, D., & Licata, C. (2002). The future of eTourism intermediaries. Tourism

Cheyne, J., Downes, M., & Legg, S. (2006). Travel Agent vs Internet: What influences travel consumer choices? Journal of Vacation Marketing. 12(1), 41

Chu, R. (2001). What online Hong Kong travelers look for on airline/travel websites? International Journal of Hospitality Management. 20(1), 95-100.

Farooqui, S. (2010, April 20). Travel Agent and Internet Marketing – Impact, Benefits, and Planning. Retrieved June 9, 2010, from http://ezinearticles.com/?Travel-­Agent-­and-­Internet-­Marketing-­-­-­Impact,-­Benefits,-­and-­Planning&id=4141656.

Fields, J. (2007). Great weather, deserted beach, wonderful holiday. The Sunday Herald. March 25.

Frias D. M, Rodrigueza M. A., Castanedaa J. A,(Feb 2008) Internet vs. travel agencies on pre-visit destination image formation: An information processing view , Retrieved June 09,2010, from http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6V9R-4NKJ174-1&_user=10&_coverDate=02%2F29%2F2008&_rdoc=1&_fmt=high&_orig=search&_sort=d&_docanchor=&view=c&_searchStrId=1364306231&_rerunOrigin=google&_acct=C000050221&_version=1&_urlVersion=0&_userid=10&md5=192643fd560ef019b68e8e8f888325e2

Heung, V. (2003). Internet usage by international travellers: reasons and barriers. International Journal of Contemporary Hospitality Management. 15(7), 370-378

Law, R., Leung K., & Wong, J. (2004).The Impact of the Internet on Travel agencies. International Journal of Contemporary Hospitality management. 16(2), 100 – 107.

Lewis, Ira, Semeijn, Janjaap, Talalayevsky, Alexander(June 22 1998) The impact of information technology on travel agents. Retrieved June 09, 2010 from http://www.allbusiness.com/technology/695794-1.html

Machon, N. (2008). “High-street travel agents are losing out to their online rivals (Survey)”. New Media Age. Available at http://www.nma.co.uk/opinion/analyst-speak-high-street-travel-agents-are-losing-out-to-their-online-rivals/39912.article

Management. 23(3), 207-220.

Maurer, E. (2002). Internet for the Retail Travel Industry. London: Delmar Cengage learning.

Monaghan, K. (2006). The Travel Agent’s Complete Desk Reference. New York: The Intrepid Traveler.

Murray, M. (1999). Tripped-up travel agents. National Journal. 31(49), 34-79.

The Travel Insider (15 May 2010) Airfare Wars – Internet vs. Travel Agencies Retrieved June 09,2010, from http://thetravelinsider.info/2002/0614.htm

Vogel, H. (2001). Travel industry economics: a guide for financial analysis. Cambridge: University of Cambridge Press.

Vrana, V., & Zafiropoulos, C. (2004). Tourism agents’ attitudes on internet adoption: an analysis from Greece. International Journal of Contemporary Hospitality Management. 18 (7), 601-608

Wyne, C. Et al. (2001). The impact of the Internet on the Distribution Value Chain: The Case of the South African Tourism Industry. International Marketing Review. Vol. 18 (4). pp. 420 – 431.

Zhang, Z. (2004). Organizing customers: Japanese travel agencies marketing on the Internet. European Journal of Marketing. 38(9/10), 1294-1303

Introduction

The hospitality industry is one of the most important industries globally since it generates billions of dollars across the world. This industry is large and it indirectly and directly employs staff in different professions including hotel industry, tourism industry, air travel industry and other industries. The hospitality industry mainly relies on disposable income of clients and presence of leisure time since many services in this industry are enjoyed during leisure time (Beaver, 2002). This industry is an important revenue earner in different economies especially those which rely on tourism as a major source of government revenue. However, the hospitality industry is a very sensitive industry which thrives on economic and political stability of various destinations and economies. Political and economic instability has a direct adverse effect on this industry and may lead to drastic revenue losses by such economies (Clifford, 2008).

It is therefore important to analyze this industry in relation to available opportunities and present threats in order to predict future trends. This paper will assess the future trends in the hospitality industry. The available opportunities and present threats will be used to ascertain these trends. The paper will focus on both a global approach and an approach from the United States business environment. Recommendations on what should be done to improve the future of the hospitality industry will also be given. The discussed issues will be summarized at the end.

Future trends
Short term decline of industry due to economic crunch

The hospitality industry is one of the most affected industries as far as the global economic crunch is involved. This industry relies on disposable incomes of families and due to the effects of the crunch; people are no longer able to afford holidays and leisure activities. Almost all countries experienced adverse effects of the crunch and the tourism industry was one of the most affected. For instance, tourism in Europe declined by over 5% over the past three years, due to effects of the financial crisis (Theobald, 2008). In the US, the industry declined by 3% in terms tourist arrivals. Worldwide, the tourism industry declined by an average of 4% over a similar period, which translated to 880 million tourists (John, 2010). Although many economies are struggling to reduce the effects of the crisis, the hospitality industry will be among the last to enjoy the benefits of massive financial injections to economies by governments. This is because services in the hospitality industry are considered luxuries by many households and luxuries are the final needs satisfied by rational beings after all other needs are exhausted.

Long term growth due to massive investments

In the long run, the hospitality industry is expected to grow largely due to the massive investments which are being undertaken around the world. One of the destinations where there is heavy investment in the industry is the Middle East and specifically Dubai. Billions of dollars have been invested in Dubai with the purpose of developing infrastructure needed to make it a world class destination. Investment in hotels, properties, golf courses, transport, buildings, cultural museums and other tourist attractions have been realized in recent years. This includes the worldaa‚¬a„?s tallest building and a seven star hotel (Conrad & Alison, 2009). Other governments which rely on tourism as an industry for revenue collection have also made massive investments. This shows that in the long run, consumers will have a larger variety of leisure activities to choose from, which will encourage the growth of the hospitality industry.

Implementation of total quality management

There has been a gradual improvement of service provision in the hospitality industry due to the implementation of total quality management. This strategy involves improvement of the quality of services provided to increase efficiency, reduce costs and meet the needs of all stakeholders in the industry. The Malcolm Baldridge Awards introduced in recent years has helped improve quality of service in this industry since it targets total quality management of firms in the industry (Christine, 2006). The Ritz Carlton hotel was one of the first to win the award, and to set new standards in provision of service in the hotel industry. Many firms in the hospitality industry have recognized the importance of improving service provision due to intense competition and market awareness of products offered. The improvement of service provision is likely to encourage the growth of the industry in the long run.

Potential threats and opportunities

There are various opportunities which can be exploited in the hospitality industry. There are also various threats to this industry and these should be mitigated to ensure the industry is successful in the long run. These opportunities and threats will be discussed below;

Opportunities

The major opportunity in the hospitality industry is investment in infrastructure needed to fuel the growth of the industry and target new and emerging markets. It has been discussed that many governments and private firm are investing in the industry especially in the Middle East. It is important to encourage consumers to demand such services if the effects of the global economic crunch are to be mitigated. This can be done through providing markets with unique services which were previously not offered and reduction of product prices to encourage local tourism in different countries (Jacques, 2000). Local tourism has a very large potential in many destinations, although it is underexploited in most cases. Packages which encourage local tourism should be developed and services which meet local needs made available in order to enable long term growth of the industry.

Threats
Global economic crisis

One of the greatest threats to the future of the hospitality industry is the global economic crunch. The global economic crisis has led to reduction of the growth and development levels of most economies. This crisis has also led to massive unemployment and reduction of the disposable income of many families (Lennon & Malcolm, 2008). It was previously discussed that the hospitality industry thrives on disposable income of clients and presence of leisure time. The global economic crunch has reduced the disposable income of families. It has also led to reduction in leisure time since many employees strive to work for longer hours in order to earn higher salaries which can mitigate effects of the crisis. The reduction of incomes and leisure time has led to a decrease in purchase of services in the hospitality industry by consumers. Fewer people are able to travel for leisure or have meals at restaurants and hotels since they consider these services to be luxuries. Unless adequate steps are taken to reduce the effects of the global crunch, many firms in the hospitality industry may face losses in the long run.

Implications of the trends on hospitality industry

The implication of these trends in the hospitality industry is a short term decline and a long term growth of the industry. Although the industry has declined recently due to the effects of the financial crunch, there is potential for growth in the future due to massive investments and consumer awareness of products offered. However, the private sector and government have a responsibility of cooperating of this growth is to be achieved. Massive investments, innovation of unique services and consumer awareness of products offered is key to achieving this growth. It is important to make the following recommendations if long term growth of the hospitality industry is to be achieved in future.

Recommendations
Government interventions

There are various government interventions which should be implemented if the hospitality industry is to grow and develop in future. Government interventions should mostly involve measures which stimulate economic growth and development as well as the creation of an environment which encourages the growth of the hospitality industry (Cooper, 2005). This includes a financial package which is geared towards encouraging more public investment and economic stability of firms especially during the current global economic crisis. It should also involve development of infrastructure which will ensure that the hospitality industry is able to meet the diverse needs of clients.

Product differentiation

Product differentiation is important in meeting unique market needs across different environments. It involves developing unique products to meet diverse needs in different environments. Firms in the hospitality industry should undertake research on market needs and develop products which meet unique needs across different environments (Wilkerson, 2003). This will ensure that customersaa‚¬a„? needs are satisfied and they remain loyal to providers of such services. In turn, the hospitality industry will enjoy long term profitability.

Terrorism has deep history since the cold war but this issue became most salient after terrorist attacks in September 11 2001 and July 7 2005. According to U.S department of state (2002), more than 3000 people of different nationalities were killed in the terrorist attacks in September 11, 2001. These attacks were the conspicuous example of terrorism on global level. Terrorism affects businesses around the world in both the long term and short-term. Czinkota (2004) cited that terrorism influenced long-term karma of entire industries, for example tourism, retailing and manufacturing industries. There are number of definitions of terrorism, which are complex and deliberate different dimensions. Alexander et al (1979) define terrorism as “a threat or absolute use of enforcement and inclemency to achieve a political goal bye means of intimidation fear, and coercion”.

The beginning of 21st Century changed the world drastically and the first reason behind this was the incident, which occurred on September 11 2001. The devastating terrorist attacks on the World Trade Center in New York. On this date, the whole world came into shock when America was under attack. The second incident, which happened on 7 July 2005 in London added fuel to fire. As both these countries are the main economies of the world, these incidents had a hue impact on businesses all around the world.

In this assignment, we will try to find the overall impact of these incidents left on the United Kingdom businesses. We will also focus our attention on the changes and new developments which happened, after these two events, in UK organizations.

This threat of terrorist attacks poses a continuous atmosphere of risk for all businesses in UK. This risk itself creates extension for treatment of risk in management theories. The majority of management literature theories adopt the term ‘uncertainty’ as a factor of unpredictable environment, which may influence the performance of organization in certain ways. The environment effected by terrorism also has a factor of unpredictability in it.

2. Effects of terrorism on UK economy and businesses:

According to the European Commission 2001 report, terrorists direct their attacks against businesses for more than any other target. Terrorism can bring any organisation or economy to its knees because of its fear and businesses fear for more attacks may happen, so they afraid to operate as normal. Increasing cost of security and putting new systems in place can cost huge amount of money to businesses ultimately decrease in the market value of businesses? Terrorism has its massive effects on UK economy and business activities. It affects deleteriously on businesses strategies and most businesses operating in the effected areas gets impact from the thrust of government policies to quell terrorism.

Businesses internationally and locally are particularly affected by terrorism because when incidents like 9/11 happen, it disrupts the supply chain and disturbs business activities in addition to interrupting information flows. It also effected on the industrial demand as well as consumer demand. This falling demand may have different outcomes which may comprises of losses of customers contracts, customer trust, reduced share of the market and a significant decline in sales, all of which could lead to business failure. For example according to the report of BBC 22 July 2005, Bombs will cost just UK tourism alone; ?300 million.

Terrorism has direct effect on UK organizations, somehow indirectly affects on buyers, which definitely declines in buyer demand creates unpredictable shifts, interruption in supply chain, disruption in the flow of policies, regulation and also has a wide impact on the macroeconomic factors of the country. Czinkota et al (2004) cited that over all every factor in economy gets the impact of terrorism and definitely responds to the action of terrorism. Modern terrorism is particularly onerous, because of characteristic of its time. The impact of terrorism on macroeconomic is crucial, customers feel themselves in stress and some kind of continuous fear, which definitely effects the spending patterns.

When terrorist attacks happened in New York and London, they affected businesses in a direct and indirect way and disrupted the economic process. Both of these attacks were on the main economic cities of the world trade. To make the effects of the terrorist activities stronger, terrorist groups targeted public and private organizations. Businesses are more attractive target for terrorist as their presence is everywhere and their aftermaths are deeper on society and on the economics.

2.1 Direct effect of terrorism on businesses:

Direct effects of terrorism comprise of instant and immediate consequences of terrorism. According to London Chamber of Commerce and Industry 2005 report, after the World Trade Center attacks, the IFM downsized its forecast of UK economic growth by 0.6% from 2.4% to 1.8% and according to Office of national Statistics data UK actual growth was 1.6%, which was weakest economic growth for more than a decade. According to the Institute of Directors report in 2002, after New York attacks 20% of private organizations had increased business security, 52% of organizations carried regular risk assessment to assess their vulnerability to attack.

The effects of 7th July 2005 London bombings on UK organizations was even severe than the September 2001 attacks. The business confidence in London has slumped to the lowest levels not seen since the eve of Iraq War 2003. Number of UK organizations was expecting that the economy will improve in coming year but a dramatic slump given the -16% balance seen in the first quarter of the year. In August 2005, The Bank of England reduced Interest rates by one-quarter percent to improve economic conditions. The attacks brought bad time for the London not just in seasonal but economic term as well. According to Time Online (2005) UK’s economic growth was seen to be the weakest since 1993. Many organizations respondents reported that their employees were scared to travel on public transport and preferred to travel by cars or taxies which lead to increased travel costs. For the people and organizations, which effected individually the loss was quite tragic. Moreover, direct effects include sudden increase in cost of product, decrease in production and output of firm, and loss of valuable human capital.

2.2 Indirect Effect:
2.2A Change in consumer demand heterogeneously:

While the indirect effects of terrorism in UK include prominent decrease in buyer demand, unplanned shifts and negative interruption in supply chain. Its also compel authorities towards the new policies and their immediate implementation. Indirect effects also include foreign relations of the UK organizations and country’s governments, which affects trade. According to Loewenstein et al (2001) specifically indirect effects contains demand of consumer that may interrupt the deal of purchase or supply. It is evident that industry operates according to the demand of buyer. This is infecting a widespread of common fear of individuals, which in results decline in demand of industrial goods. Daniel Steel (2008) narrates that economic research also has roots in correlation and among behaviour and emotion. The negative emotions like state of fear definitely effects consumer behaviour, even after the happening of those events

Czinkota et al (2004) narrated that there may be need of making of policies, laws, and regulations for public and private organization in reaction to these terrorist attacks. Whilst these actions are intended to improve security conditions, they also cause delays in efficient business operations.

2.2B Indirect effects on organizational operations:

The other indirect effects of terrorism on UK organizations was discontinuity in supply of essential goods, services and resources and sometime unplanned shifts. These problems cause serious impact on the operation of organizations. In July 7 London terrorist attacks on local transportation and logical system (supply chain) effects badly on businesses around London. Due to suspension of supply chain all businesses struggled and also decrease in efficiency of organizations. It is common problem, while in terrorist attacks, the short-term shortage of services, good, input raw materials and components occurs; it took certain time to recover from this kind of shortage.

2.2C Macro economic phenomenon:

The macro economic phenomenon of London and New York terrorism was visible decline in per- capita income, decrease or sudden change in stock market value and increase in unemployment. Such trend affects the UK economy and consumer expectation. The long run impact was decrease in export and declines in GDP and tax revenues and the living standard of people.

3. Dealing Terrorism Shaped BCCM Planning:

In this part we will critically analyse the different management approaches and strategies, which could be helpful for organizations to deal with the global crises like September 11 2001 and London Bombing 2005. In this part of the assignment will evaluate performance and adaptation of suitable strategy by organizations on different kind of business activities and scrutinize the different business strategic views, which an organization can adopt for minimizing the effects of terrorism. We will also discuss different ways that organizations can benefit in term of increase in profit and minimise the impact of terrorism. With the threat of terrorism, organizations have to focus on the particular resources which are available to deal with these threats. Except terrorism, there are some other threats (financial and non-financial) which are also effect the organizational performances at the same time, organizational management have confine resources and mental steam to deal with effects of terrorism.

3.1 General strategy:

According to Alexander Dean C (2004), terrorism is a possibility, or it leads toward appearance of other possibilities. This kind of act effects producer and as well as consumer psychology, its behaviour of consumption and its buying patterns. The impact of terrorism effects specifically in economic, industrial, political and legal context of external environment.

3.2 Consider Terrorism as a factor while planning:

Within the significant increase in risk of terrorism and uncertainty in the field, now all UK organizations are making policies or developing future strategies by considering terrorist threats. Organizations also need to include terrorism as a risk factor; selecting and targeting the potential threats and indentifying the different sources of threats are the most important tasks for organizational managers, while developing future strategies to grow and run the business locally or globally.

3.3 Sourcing, production and distribution:

By considering the operation of the organization in value chain that directs it toward production of products and their development. Increasingly most of the UK organizations are getting their supplies from all over the world. The bitter risk of terrorism affects the internationally complex system of value chain. Mostly terrorist groups attack on the sites of organizations and their logistic system directly or indirectly. The indirect impact of terrorism is the imposition of new rules and regulations, which emerges suddenly in the reaction of attacks by the government sectors which cause disruption in value chain movements. Due to the negative interruption in supply chain, it causes difficulties for organizations to fulfil the production orders and customer demand.

Due to tight security regulations at borders of all countries, a lot of the businesses have difficulties while fulfilling their operations. For example, Royal Mail suspended vehicles from moving between central London sites and in and out of London for the bulk of the day in July 7 2005. At least 25% of UK’s mail move through London every day even if the final destination is elsewhere. The distribution and logistics are one of the most important direct and in direct impacts of terrorist attacks on UK organizations, that’s why this became the duty of senior managers to incorporate the risk of supply chain in their future planning.

Mentzer (2001) cited that most of the organizations have established system of value chain, which may helps organizations in getting raw material and goods from their suppliers and necessary components from all over the world. This is common practice for various organizations, due to globalization decrease in trade barriers and a secure supply chain infrastructure and advance telecommunication sources. The risk of terrorism is a major threat and challenge for the supplier organizations. As long as the organizations are expending their businesses around the world, the impacts of risk are also increases on the operations of the organizations. Accordingly, organisations have to plan the arrangements to reduce the thrust of terrorism and its consequences on the supply chain structure of companies. According to Ghemawat and Del Sol (1998) overall the companies focuses themselves to find out the other possibilities in order to make available the supplies for dealing in the competitive environment in the emergent of risky conditions. Flexibility directs towards versatility, which is a potential to act alter activities and apply adapted activities, for fulfil the need of the specific situation.

3.4 Consequences of terrorism on Pricing:

Organizations have to change price plans according to change in environment. Pricing is one of the fundamental factor which effects with the impacts of terrorism. For example in UK after Terrorist attacks, the insurance rates charged by insurance firms in big cities (like London, Manchester) where terrorist attacks occurred or had a higher chance of occurring, were much higher compare to small cities. Transportation companies may also charge a higher rate for carrying goods from or to risky areas. Similarly, uncertain environment of business pulls organizations to think about their pricing strategy.

The sudden effect of terrorism is increase of necessary products like oil and food supplied etc. because of their shortage. Transportation companies charge higher fairs because of high risk to move into that area. Organizational management have to keep in view uncertainty while defining and developing the pricing strategy. The situation of commodity market is relatively different, where prices may fluctuate quickly with the flow of information, the price must soften in for those commodities.

3.5 Global strategy vs. multi domestic strategy:

All UK organizations those who adopted multi domestic strategies had relatively less impact of terrorism of 07 July 2005 and 11 September 2001 terrorist attacks than those adopted global strategy. As far as the risk and fear of terrorist attacks increases, the theories emphasise more on multi domestic strategy in contrast with global strategies, which establish more meaningful ways to deal with uncertainty. According to Ghemawat and del Sol (1998) some of the resources may reduce the flexibility of organizations which in results cause interruption in performance of the business internationally, these resources are highly location specific and according to the demand of local markets.

4. Conclusion

London is an economic centre and making the capital safer to do business in should be national priority for the Government. Different research suggest that London business community is not safer than it was before 07 July 2005 attacks. According to LCCI report, majority of UK organizations still perceive that there is very high risk of terrorist attacks in London again. This perception has fallen since last year and more than half of UK organizations have contingency plan in place to deal with terrorism effects on business.

Studies show that the economic impact on UK organizations has not been as severe as initially feared. Many organizations resumed services on 7 July 2005 and next day they started delivering as normal. Many organizations, those who had no contingency plans, started work to have one and other started to update their existing plans to minimise the effects of these attacks.

However many UK organizations revealed that 9/11 and 7/7 terrorist attacks had vary little tangible impact on them and business confidence had affected for the short period. However, it had huge impact on very important sector of London economy such as tourism, transport (trains and airlines) and retail sector.

UK employment market has not increased since 7th July 2005 attacks but employment terms were already bleak in London before attacks. Many organizations were expecting unemployment would increase in coming years before July 2005 attacks. Nevertheless, in reality London economy shook off the impacts of 11 September 2001 and 7 July London terrorist attacks.

It is evident from history that an unexpected and lengthy critical situation affects performances of organizations. The terrorist attacks in London and New York gave deep shocks to the businesses. Sometimes messages from these terrorist groups, that they can attack anywhere with extremely harmful weapons, results in businesses losing confidence and increased costs to the businesses and economy. Many organizations still have fear of terrorist attacks on the businesses although the UK government is trying to protect the public and private organizations. The targets of the terrorist are usually both kind of locations, public buildings like agencies etc, and private sector like business offices of staff of companies. At present majority of organizations are well prepared for any sort of sudden and unexpected terrorist event compared to July 2005.

The basic purpose of this study is to identify the impact of terrorism on businesses and how BCCM planning can help UK organizations to reduce the impact of terrorist attacks. For minimizing the impacts of terrorism managers develops different kind of strategies and sometimes managers can easily recover loss and can get continuous increase In profit if they choose right strategy for pricing in the response of terrorist attack.

5. Recommendations:

All organizations need to provide educational programs to all staff regarding terrorism and help them to prepare themselves for unexpected events like terrorism.

Government needs to provide intelligence support to help deal with terrorism effectively.

Businesses need to strengthen the relationship between themselves for detecting and fighting terrorism.

To encourage organizations, government need to offer disaster recovery loans and other loan guarantee programs to help organizations to recover form destruction of terrorism.

As the threat of terrorism increasing, so while evaluating international and domestic marketing strategies, managers have to consider effects of terrorism on businesses. In order to targets markets managers have to select those markets and industry zones where the threat of terrorism is at lowest or comparatively less effected.

As the rapid increase in the risk of terrorism, it is necessary for organizations to discover and develop the methods of supply chain and other channels of distribution, and adopt new strategies for logistics related channels.

For long term, prospective organizations may bring diversification in their supplies, by increasing in the number of supplier.

The hospitality industry is in the waist of venturesome ,verdicts .there are two challenges , which are effecting hospitality industry, the first challenge is globalization and second one is economical recession.

Hospitality industry is hit by the global financial crisis, mostly tourism is involved with money, during economic recession, people don’t like to spend much money for entertainment, they are started to think for saving money for basic needs like food shelter and family necessities.

Any way because of recession hotel industry is in risky position, according to economical data the hospitality industry need, find away to bring normal position.

Organization Background:

Marriott is most popular and leading hotels in the world, first Marriott was opened by J Willard and Alice S Marriott, in Washington D.C (U.S), in 1927.also Marriott has more than 2800 properties, almost in 70 countries.

Marriott planning to open more hotels and resorts different places in different countries. they plan to target the business strategies; Marriott developed the” courtyard by Marriott concept” approach to new product development. Marriott gives customer card (for regular customers) it gives 30%discount on the bill. The major in come for the hotels is from rooms Marriott is very good at there.

1. Events: Weddings and meetings: Marriott gives different types of packages for the weddings, Marriott is one of the best places to celebrate the weddings, and Marriott provides special accommodation for the couple, Marriott gives more facilities for sports, it’s provided the golf court in Resorts, They provide number of banquet facilities with, qualities service. They main theme is give good service to the customers and build-up the business strategy.

2. Inquiries: Marriott hotel handles the business inquiries from all over the world, Marriott’s human resources is exhausting survey of local market requested by U.K hotels in U.K. local knowledge of local staff is most comprehended for the local inquiry.

Rationale for the chosen topic:

In this research on proposed topic due to my previous working experience in hotel Marriott, Hyderabad, India, there my position was a supervisor, during that time, my hotel was affecting by the economy crunch, not only that hotel but almost all hotels were facing same problem, the business has been getting down.

The human resources were having more problems, instead of taking new staff, they were using same staff for extra work, they cutting the jobs, and decreasing the salaries. And there were more competitions between other hotels, Therefore this topic persuade to research on the specified objective below.

Research objectives:

The research objective is to critically investigate the affects of global recession on the tourism and hotel industry, in this process how hotel industry seek away from recession.

The research objectives are listed below:

1 .The first objective is to recognize the several challenges, lying in hotel industry.

2. The second objective is resolving the different, solutions to economic recession and constructs the intensity.

3. The third objective is to produce several strategies, which is allocated in the economic recession challenges, with another shove.

Research questions:

This proposed research aims to answer the following questions: How can the credit crunch and recession change the hotel industry as a whole? Answering the above question will lead to the subsequent questions like: How would the Hotel Marriot take it up as a challenge? And what steps would it follow to overcome the recession? Why and how are they planning to reduce the accommodation tariffs? What are the reasons for the credit crunch and recession? And finally what procedures would they put in place in order to overcome the present recession?

Literature Re-view:

In this recession period competition started between the hotels, the competition is depend on, quality of restaurants and type of acommbidation and tariff ,hotel Starwood, Hilton, Inter Continental, the Accor groups are the main competitors for Marriott hotel.

“In recent years the global tourism and hospitality industry has experienced many serious crises and disaster, including terrorist attacks political instability, economical recession”. Ref: (Boniface and Cooper, geography of travel and tourism 476).

This proposal agree the above article ,according to author ,the hotel and tourism industries has been reaching problems with political and economical recession.

The economy is depending up on the state, when the economy is decreased the recession will happened. People taken the more loans and houses on mortgage, they couldn’t know whether they can return or not, during the economy slumps they were unable to return the money to banks, at the same time the banks are started to get loses, hence the recession started.

After 9/11 attack the hotel industry has suddenly changed, they have lost major part of income.

Hotel industry is depended with luxury and expensive, during recession people have started to change their thinking’s, as enjoyment is just part of life, instead of spending money for enjoyment they started saving money to important necessities. And people have no money, most of the employees are losing their jobs, they just scaring about their future.

During the recession the hotels has been facing more problems, because they can’t afford the own money to run their business, and banks are not lending the money to any, business organizations.

“Unfortunately, the growth in the U.K sector has not been matched by the provision or detailed analysis of information sources. Typically supply side statistics are usually limited to room stock, where as demand side statistics are usually confined to occupancy percentage”. Ref: (Paul, A. Phillips hospitality management 147-154).

According to author the hotel business is depended with occupancy percentage, when the room Occupancy rooms high automatically the profit would be high. According to research above statement shows, credit crunch and economical recession.

Credit crunch: where the low money to lending for business and interest rates are very high is called credit crunch. During the 2007 their for successful business, most of the business consumers facing more problems by credit crunch. Banks are scared to give loans for business, at the same time, customers also not depositing their money in banks, because the customers also fearing about credit crunch and they are keeping money with them. And high rates of interests also struggling business companies, no chance to start big business organization hotels. So credit crunch is affecting the major hotels.

“Although hotel insolvencies have increased by over 150% from the end of 2006 to October 2008 there will be further failure in 2009 when the full impacts of reduced demand will be felt”. Ref: (Stephen Broom, Financial Times, nov23, 2008).

According to author, Hotels are loosing their profit by offering low rates of acommbidation; Marriott has been getting down the over all profit.

People taken the more loans and houses on mortgage, they couldn’t know whether they can return or not, during the economy slumps they were unable to return the money to banks, at the same time the banks are started to get loses, hence the recession started.

During the recession the hotels has been facing more problems, because they can’t afford the own money to run their business, and banks are not lending the money to any, business organizations. Hotels are loosing their profit by offering low rates of acommbidation.

“Assesses changes occurring in the UK hotel market during 1997 and relates these to current and predicted future developments. Identifies the key issues affecting supply and demand, competitive success and likely impacts and influences on the UK market during 1998”. Ref: (Trevor Ward, Contemporary Hospitality Management 270-273).

According to Ward the key issues are raising on product and demand , most of the hotels following same way, just they decrease the room cost, they aim to attract the customers in the recession by the same way they has been gaining loses.

“The general economic factors also affect the hotel industry, bad whether, the credit crunch and a decline in job, work against the industry as holiday travel is curtailed or eliminate”. Ref: (Roo Sadegi Financial Times, n.d.).

According to Roo, the hotel industry is affecting by whether and economical recession, most of employees are losing their jobs during the recession. It is hardly affecting the industry, employers also, not interesting to recruit the new staff, why means they are unable to pay wages to staff, so they are cutting jobs frequently. Not only in U.K most of countries affecting by economical recession.

Data collection method:

1. Primary data collection method

2. Secondary data collection method

Primary Data Collection Method:

This primary data contain in-dept interview with the assistant general manager of hotel Marriott and customers, the interview for manager will be conducted by telephone, and whole conversation will be tape recorded.

This interview estimated to between half an hour to an hour, questions will be prepared advance in a particular schedule. The questions will be having clear idea about area, what we have to cover. This is research of process is devolved by (Gill and Johnson 1991).

Secondary Data Collection Method:

Information will be gathered through online, books and news papers. This research proposal contains more information from online because no much literature about this research (Saunders, Lewis and Thorn hill). The data collection methods give brief idea about above research proposal.

Methodology:

Research methodology performs the important function in explaining the type of research strategy that the researcher may assume pass leading a research and it clarifies how the research is departing. The research is very important so it has main intention as information of the examiners, examine and normal (Jankkowicz, 2005). It explains how data would be collected, and gives idea about which methods to be used.

As the principal indented of the researcher is to ”investigate the affects of global recession on hotel and tourism industry with hotel Marriott, allocate access would be principally inductive in character. The data collecting method in-depth interview (Saunders, Lewis and Thorn hill, 2007), this interview will not be the prepared questions, it will be according participant, and would be very clear ideas (Alyan Bryman, Emma Bell, 2007).

Data Analysis:

The research process contain both qualitative and quantitative data analysis approach, this is developed by (Saunders, Lewis and Thorn hill, 2007), data gathered through, in-depth interviews in telephone. This research will developed, based on grounded theory, use of this proposal is data analysis could carry out in a minor formalized.

This research could also create of the data management, statistical analysis software such as statistical package for the social sciences (SPSS). This software is admittance from the center; it will be used great full presentation of graphs, tables.

Resources Requirement:

For this research proposal, required largely from on-line. And need library facilities for declared copies, books and literature Re-view. Even tough, its not obtain much literature review. The beginning of the ground work will presume the comprehensive utilize of telephone amenities. It is primary proper to the lengthy way to approach into Hotel Marriott and models supply by the organization. Following interviews of customers also carried by telephone or internet rely on the interviewees` priority.

Time Scale:

Table: Gantt- Chart (Feb 20th to Apr 29)

Can High Street Travel Agencies Survive With Online Travel Agencies?

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Contents (Jump to)

Chapter 2 – Literature Review

Chapter 3 – Methodology

Chapter 4 – Findings and Analysis

4.1 UK Travel Industry, Current Analysis

4.2 Composition of Travel

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The travel industry represents the classic example of firms operating as agents between the seller and buyers as represented by the multitude of offers that are present in the industry. The foundation for this process was established in the pre-computer era that utilized direct reservation systems. This mode inculcated the industry and became the accepted operational norm as airlines had an exterior sales force as represented by these independent operations, and customers had a means to wade through the difficult maze of airline flight possibilities. The advent of the internet brought a new variable into the scenario whereby it provided consumers with a choice as a result of the capabilities of this medium to collect and display flight availability, schedules and pricing through search engine compiling. Transaction costs were lowered as a result of economies of scale and 24 hour availability, with the heart of the process fueled by utilizing consumers to conduct the work in finding bargains.

This examination will seek to equate whether the traditional travel agencies known as High Street, representing brick and mortar operations in the industry parlance, can survive the onslaught to their business as represented by online travel agencies.

The travel industry represents a phenomenon that we are all familiar with in terms of verbiage, however, the definitive meanings as represented by specific words may not be as clear as one would think. In order to provide the necessary verbal underpinnings for this analysis of ‘if High Street Travel Agencies can survive with online Travel Agencies’, a definition of terms seems in order. Travel represents a word that emanates from ‘travailen’ in Middle English, which means to toil, and has its roots in the French word ‘travailler (Wikipedia, 2007). It, travel, is defined as (American Heritage Dictionary, 2007) 1. being transported “… from one place to another …” as represented by either a trip or journey, and, 2. the process and or time entailed in moving a person from a particular location to another. Travel can be further explained as tourism, which is the visiting of family and or friends, the process of commuting as represented by traveling to either work or other functions, the act of migration in moving one’s local or as a constant series of moves as illustrated by nomadic peoples, and as pilgrimages for religious reasons (Wikipedia, 2007). In the context of this examination, travel shall be defined by the transport of individuals for pleasure, tourism, business and personal reasons.

A travel agency “…offers its services in the capacity of an agent …” and provides “… travel and tourism related services to the public …” as achieved through the agency’s arrangements and agreements with “… airlines, cruise lines, hotels and other suppliers of travel related services” (Department of the Treasury, 2002). Travel agencies “… may contract directly …” with the aforementioned companies or through what is termed a “… coordinating body such as the Airlines Reporting Corporation …” as well as other such agencies or bodies (Department of the Treasury, 2002). In addition to the aforementioned services, travel agencies may offer varied financial related services such as traveler’s checks and trip insurance. An important segment of the travel industry is represented by tourism, which Hermann Von Schullard, Austrian economist, stated is the “ … sum total of operators … which directly relate to the entry … stay and movement of foreigners …” (MedLibrary.org, 2007).

The introduction of internet based online travel information, booking and ticketing systems introduced a new variable into the market which allows consumers to research ticket prices, schedules and related aspects at discounted prices as a result of the lower commissioning fees online services charge airlines for acting in their capacity as middlemen. This phenomenon caught on with the public and market share increasingly shifted in favor of online travel services as lower prices, instant access and no frill airlines captured their imagination. High Street travel agencies are thus caught in a battle for survival as a result, however there are market variables that indicate the penetration rates of online travel agencies has been slowing, but massive damage has already been done. If High Street travel agencies are to survive, they will have to capitalize upon inherent facets of customer attitudes and preferences as well as what their service type offers that can not be duplicated by computerized access that does not offer human problem solving skills for complex travel related problems that exist in varied circumstances.

Chapter 2 – Literature Review

The rapid pace of changes and developments in the travel industry as a result of travel packages, consumer attitudes, economic variables, utilization histories with varied forms of booking methodologies and related aspects rendered the examination of the subject matter as contemporary. The research methodology deemed best suited to this study was ‘descriptive’ in that it is based upon the use of data, information, facts and associated resources to reveal the way things are. To this end, this examination relied heavily on Internet sources to provide the aforementioned.

The definitions utilized herein to provide a basis for understanding of travel agencies as represented by the statement provided by United States Department of the Treasury was used as it represented a definition honed from a governmental classification of an industry sector which represented the culmination of intensive study to arrive at its meaning in a universal sense that is applicable. This same approach was utilized to conduct data and survey research which entailed the collection of information from the Tourism Society of England, the International Air Transport Association, ITB Berlin and IPK International, Internet World Stats and other sources. In conducting the research on the question as to whether High Street travel agencies can survive with online travel agencies, the first aspect that was noted is that the various travel and tourism books offered information on each sector from a dated perspective that did not take into account new developments, many of which appeared in 2005 through 2006 as new travel packages and the a new travel sector, cruises, emerged as an industry force.

The preceding contention is supported by the data uncovered by surveys conducted by Travel Weekly in the United Kingdom that asked respondents in the travel agency sector direct questions regarding their impression and view of their industry. Such a source represents more viable research that was conducted during 2006, offers a more comprehensive base of industry information on how things actually are as it asked the experts in the field of study, travel agents themselves. Their responses on what they viewed as the emerging segment of most importance, cruises, which also represents their most viable revenue stream is data which was not found in the numerous research studies conducted by the World Trade Organization, PricewaterHouseCoopers, Accenture and World Stats. These sources were extremely valuable in providing supporting data on trends, patterns and other facets of the travel and tourism sector, however, information from industry insiders in the High Street sector represented the foundation for the question being examined.

ITB Berlin and IPK International offered invaluable information concerning the breakdown of consumer utilization of travel agency sectors, as did PriceWaterHouseCoopers and Internet World Stats. Accenture’s research gave depth to the previous information as it provided data on how and what consumers do in the process of seeking travel services. Michael Porter’s Five Forces Model provided the means to correlate all of the indicated data and survey information into a concise summary of High Street and online travel agency competitive points to hone in on the variables and factors that the prior sources offered.

Chapter 3 – Methodology

In examining the context of whether High Street travel agencies can survive with online travel agencies it was determined that the research would have to delve into the nuances of the travel and tourism sector to determine the following:

Components of the industry from an historical perspective
Key aspects of varied consumer attitudes, preferences, trends and views
Travel industry product components, trends, developments and projections
Trend of High Street and online travel agency market share progressions
Relationships and importance of differing travel segment components in both sectors in relationship to their inherent strengths and weaknesses as applied against each service model
Variables and factors at work, along with developing trends that might have a bearing on the examination

To accomplish the foregoing the methodology selected entailed the utilization of secondary research of a limited historical nature to provide background information to understand the context of the industry sectors and their changing relationships. The preceding was accomplished through the use of books and journals along with statistical information. Since changes in any industry occur quickly the reliance upon books and journals for contemporary developments was deemed as inappropriate and inconclusive. Therefore, to determine the present status of both sectors, the research and operative methodology centered upon the analysis of data as well as trends and inherent characteristics. To accomplish the preceding quantitative research was determined as the methodology as it “… generates new information about the world …” by virtue of (University of North Carolina, 2007):

Objectivity, whereby the potential for bias that could potentially affect and or influence the outcome is kept to a minimum through the collection of varying points of view from a number of differing sources.
Rigorous, in that the researcch process utilizes data to uncover obvious as well as obsure information, with attention to accuracy and detail as underlying precepts.
Systematic, in that the conduct of research seeks coherent data and information in order to equate the true undercurrents of what is the case as opposed to what appears to be the case in the study and analysis.

The subject under examination represents a puzzle that is ruled by the governing question (International Research Network, 2007). The preceding helped to determine the reseach process, the identification of the sources of data as well as information, and the methodologies to be utilized. Kravitz (2006) states that there are differing types of research which can be used in a study. The one selected for this examination included descriptive along with quantitative as it entails the collection of information and trends through the review of data, surveys and examination of varied sources. Kravitz (2006) indicates that this research type is best at describing the way things are, and that the review of prior research aids in the process, along with contempory information.

Chapter 4 – Findings and Analysis
4.1 UK Travel Industry, Current Analysis

As of 2002 there were 3,181 travel agencies in the United Kingdom, representing a growth rate of minus 17.2% that generated $11, 659 billion in sales (International Air Transport Association, 2002). Globally, the travel industry generates in excess of one trillion USD annually and is the largest industrial sector (Vogel, 2006, pp. 50-59). The Tourism Society of England indicates that domestically this segment of the industry generates 75 billion pounds in a highly fragmented industry (Tourism Society, 2007).

In polls conducted by Travel Weekly, the British based industry travel magazine, travel agents were asked their views on a number of areas (Travel Weekly, 2007). 47% indicated that cruises would represent the biggest growth area in travel in 2007, followed by long haul trips at 32%, and domestic breaks at 21% (Travel Weekly, 2007). The implications of the preceding seemingly bode well for travel agencies in that these types of trips consumers seek the aid of professionals to aid them with arrangements, features, pricing and the varied packages that are available, which can be quite extensive. Travel agents indicated that they were worried, however regarding the state of the travel industry entering 2007, registering 61%, with 26% indicating confidence and 13% checking indifference as their response (Travel Weekly, 2007). Travel agent responses provide a valuable insight as to how they feel concerning various aspects and as the most up to date informational source such is being utilized to provide a gauge on the prospects of High Street travel agencies and their battle for market share with online travel agencies. A significant response to the polls in this regard can be found in what travel agents thought about the price wars lowering High Street fares. 36% indicated that they believed that such would end up in lower prices, while 42% replied no, with 21% indicating probably (Travel Weekly, 2007).

With respect to the dollar to pound exchange rate that has increased in favor of the pound, travel agents indicated that they felt Christmas shoppers would benefit the most, 51%, followed by New York City retailers at 23%, High Street travel agencies, 15%, and online retailers and airlines at 11% (Travel Weekly, 2007). The preceding represents an indication of travel agent’s attitudes toward High Street travel agencies that mirrors their responses concerning their battle for market share. This view was also confirmed by travel agent responses to if there is any future for independent High Street travel agents. 54% stated that they felt there would always be room for independent agents, with 27% indicating the affirmative but as part of a larger buying group, and 19% stating that they would not be able to compete against the larger companies (Travel Weekly, 2007). When asked about the importance of cruises to their industry, travel agents responded in the following fashion. 53% indicated that this area is growing in importance, with 21% stating that it represents the one area that they make money (Travel Weekly, 2007). 17% indicated that this segment is too complex and that they do not sell cruise packages, and 9% stated that cruise business is vital to their business only if they sell these via self packaging (Travel Weekly, 2007). Given that 47% indicated that the cruise business will enjoy the largest segment of growth in the industry in 2007, that seemingly indicates that High Street travel agencies are factoring in this segment as an important revenue stream.

The utilization of the Internet as a booking method has seen high growth in Europe, mostly in flights as well as accommodations (ITB Berlin and IPK International, 2006, p. 13). The foregoing represents an approximated one/third of all outbound trips and also entails online booking for some segments of an individual’s trip as represented by hotel and vehicle reservations (ITB Berlin and IPK International, 2006, p. 13). ITB Berlin and IPK International (2006, p. 13) reports that the utilization of the internet is primarily the mode used for airline ticket purchases, with accommodations second, however, vehicle reservations leads both categories as a percentage of sales of the total.

Table 1- Travel Bookings in Europe, January Through August 2006

(as a percentage of pre-bookings in total travel)

(ITB Berlin and IPK International, 2006, p. 13)

Total

Internet

Accommodations

78%

37%

Flight

63%

38%

Travel insurance

23%

6%

Bus/coach

15%

2%

Rental car

15%

10%

Ferry

9%

7%

Train

7%

4%

Others

5%

3%

Interestingly, travel agents utilize the internet as a source of information and the use of tour operators in placing their rates and packages online represents a key reason for the preceding (ITB Berlin and IPK International, 2006, p. 13). Consumers utilize the Internet for a large percentage of their travel arrangements, especially in the area of airline, accommodation and auto rental, as shown by the following:

Table 2 – Information Sources Used by European Outbound Travelers, January through August 2006

(ITB Berlin and IPK International, 2006, p. 14)

Source

% share

Internet

45

Travel agency

20

Friends/relatives

17

Travel guide

8

Travel brochure

7

Newspaper

3

Tourist office

2

TV

2

Others

5

The preceding seemingly indicates that incursions by Internet based booking in the cruise travel segment is going to remain low as a result of the complexities encountered in making selections and wading through the complex data and choices. As the main revenue source and growth area for High Street travel agencies, consolidation of the services offered in this area represents a strong foundation to be built upon. The consumer climate in the United Kingdom exceeds the confidence of travel agencies with respect to their outlooks. Travel Weekly’s (2007) poll in this segment indicated that 26% of them were confident, while ITB Berlin and IPK International (2006, p. 18) found that the United Kingdom and Spain are at the top of its consumer confidence survey as well as percentage of household consumption. Termed as a willingness to buy, said factor represents increased demand in the UK during 2007, and as the United Kingdom’s placement in this category has consistently been at the top, bodes well for the continued growth forecast in the industry.

The growth in eCommerce has shifted the manner and way individuals utilize travel services. Originating in a paper on packet switching by Leonard Kleinrock of the Massachusetts Institute of Technology in 1961, the theoretical underpinnings of Klienrock’s work set the stage for the ARANET which was the distant forerunning to the internet (Internet Society, 2007). That beginning has reshaped the manner of global commerce, information availabilities, and created an entirely new set of industry classifications. One such manifestation is illustrated in the travel industry. The ability to search large quantities of data easily and instantly through varied online web sites, and travel agencies without any sales or pressure tactics makes the internet a technology that is ideally suited to the travel industry. In this medium consumers can search and explore at their leisure at any time reviewing all manner of destinations, travel times, pricing and comparative offers. This used to be the exclusive domain of travel agencies, the search for fares, times, routes, seating, destinations and packages, through information networks that were unavailable to the public. Consumers do not have to queue at call centers, telephone or take a trip to High Street travel agencies, they can simply click online and search easy to find categories from their Internet browser. Online travel agents are able to offer 24 hour access to information that consumers can access and compare at any time, representing a boon to locating the best prices, dates, deals, destinations and packages.

The online travel industry is just a decade old, however the impact of online agencies has been tremendous (Economist, 2005). The benefit of the Internet to consumers and travel providers such as airlines, hotels, car rentals and associated sectors is that it saves administrative costs enabling them to offer lower fares and rates (Economist, 2005). There are 37,600,000 internet users in the United Kingdom estimated for 2006 against a population of 60,000,000 people representing a 62.5% penetration rate with user growth rising by 144% between the period 2000 and 2006 (Internet World Stats, 2007a). The UK ranks 6^th globally in the total number of Internet users (Internet World Stats, 2007b), and ranks 20^th on terms of penetration rate (Internet World Stats, 2007c).

Table 3 – Top 20 Countries with the Highest Number of Internet Users

(Internet World Stats, 2007b)

Rank

Country

Internet

Users

Population

(2006 est.)

Internet

Penetration

1

United States

209,024,921

299,093,237

69.9%

2

China

123,000,000

1,306,724,067

9.4%

3

Japan

86,300,000

128,389,000

67.2%

4

Germany

50,616,207

82,515,988

61.3%

5

India

40,000,000

1,112,225,812

3.6%

6

United Kingdom

37,600,000

60,139,274

62.5%

7

Korea (South)

33,900,000

50,633,265

67.0%

Table 4 – Top 20 Countries with the Highest Number of Internet Users

(Internet World Stats, 2007c)

Rank

Country

Penetration

(% Population)

Internet Users

Latest Data

Population

(2006 Est.)

1

Iceland

86.8%

258,000

297,072

2

New Zealand

76.3%

3,200,000

4,195,729

3

Sweden

74.9%

6,800,000

9,076,757

4

Portugal

74.1%

7,782,760

10,501,051

5

Australia

70.7%

14,663,622

20,750,052

6

Falkland Islands

70.4%

1,900

2,699

7

Denmark

69.4%

3,762,500

5,425,373

8

United States

69.3%

207,161,706

299,093,237

19

Netherlands

65.9%

10,806,328

16,386,216

20

United Kingdom

62.5%

37,600,000

60,139,274

The significance of these figures is that online travel agencies effectively are accessible to 62.5% of the UK population, which becomes more imposing when one considers that 16.7 million United Kingdom residents traveled outside of the country during 2006 (National Statistics, 2007). The utilization of travel outside the UK is utilized as internal country travel represents means generally using short air trips, train, car and coach for brief trips and stays and does not factor into the type of business profile utilized to a high percentage by High Street travel agencies. The impact of the Internet has caused a dramatic decrease in the number of brick and mortar travel agency locations in the United Kingdom as a result of shifting consumer booking patterns. During 2005, the intrusion of the Internet into the brick and mortar travel agency business caused 28 travel agency companies to fail, not to mention the numerous closing of the offices of the larger chains (m-travel.com, 2005). In 2005, the number of brick and mortar travel agencies totaled 6,124, down considerably from the 7,513 in 1989 (m-travel.com, 2005).

The good news is that cruise ship travel is up substantially, and the travel / tourism industry has been experiencing solid growth. However, the cruise ship segment is the sector of the industry that has shown the most dramatic gains. Lines such as Carnival, Princess, Celebrity and Royal Caribbean have either ordered or put into service over 30 ships in a few years representing a tremendous capital investment (Prestige Travel Systems, 2007). The lure of cruise ships lies in their first class accommodations and immersing passengers into a totally contained package of luxury, gourmet meals, on ship shops, athletics, movies, entertainment, restaurants all while cruising to destinations. Carrying in the area of 4,000 passengers, with 10 to 15 decks, the typical cruise ship boosts in the area of 10 restaurants, 250 waiters, and most are the same size or larger than the Queen Mary 2 (Guardian Unlimited, 2006). Industry executives in the cruise ship sector report that projections in cruise ship travel forecast it to increase in 2007 (Cruise Critic, 2006). The growth of this segment is good news to brick and mortar travel agencies as airline travel booking has been and is shifting to the online sector.

The airline travel segment as a result of the Internet, and user penetration in the UK, 62.5%, has seen an increase in online bookings to the point where it now registers 53%, according to a survey conducted by Accenture (2005). The Report stated that 63% of respondents have booked hotels online, and that nearly two-thirds of those responding to the survey indicating that they expect to increase their use of low cost airlines where price is the primary consideration (Accenture, 2005). One of the key facets uncovered is that consumers are highly price sensitive and that since the 2003 survey it was noted that there has been a significant shift to online bookings from a live agent (Accenture, 2005).

Table 5 – Primary Method of Booking Business Travel

(Accenture, 2005)

Online

53%

Phone with a live agent

27%

In person

12%

Other

8%

Table 6 – Internet Use for Flight Arrangements

(Accenture, 2005)

Research flight times and availability

79%

Purchase airline tickets

66%

Update and or change reservations

28%

Specify personal flight preferences

26%

Airline check in

22%

Access account history or receipts online

19%

None of the above

12%

Other

2%

Table 7 – Personal Travel Preferences, Airline Type

(Accenture, 2005)

Major network carriers

48%

Low cost airlines

46%

Not applicable

5%

Other

1%

The foregoing indicates a high do it yourself mode in airline bookings whereby the comparisons are rather straight forward. Features incorporated into online sites such as arranging your own seating has proved to be extremely popular, as has the printing of boarding passes and tickets (Economist, 2005). In fact, many online travel agencies are offering more than simply travel tickets and accommodations. Some have gifts shopping, hotel ranking sites, comments from other travelers, tickets to events and more, all in the effort to make the experience personable and get consumers to either remain on the site longer or return (Economist, 2005). As indicated under Table 6 – Internet Use for Flight Arrangements, 79% of Internet users utilize online sites to research flight times and availability, while 66% actually purchase tickets. Naturally the more comfortable one

A marketing environment comprises of macro and micro elements. Marketers should consider both internal and external environments to understand the whole of the market in which they want to sell their products or services (Masterson and Pickton, 2004).

Normally, in a time of recession, customers do not spend too much money on overseas holidays (Mintel, 2009), because they see them as a luxuries. One could expect, therefore, customers would prefer take short city breaks or a domestic holiday. Businessman also may choose budget priced accommodation for their business trips.

Moreover, consumer-spending power has diminished, as they have had to ‘draw-in’ their purse strings, although levels of personal disposable income have been maintained to a degree because of historically low interest rates. Mintel(2010) estimates that personal disposable income stagnated between 2004 and 2009. The hotel industry has been notably affected by the recession.

Environment analysis using such models as, PRESTCOM, Porter’s Five Forces, SWOT Analysis and Segmentation can be used to examine the effect of the recession upon the hotel industry and for this reason models will be used in this report.

2.1.1 POLITICAL

Up to 1978, the hotel industry developed rapidly but after that date, the economy increasingly became market-oriented. This improvement created a much better environment for the industry in which to develop (Hornsby, 1990).

According to Kotler (1996), the political environment strongly affects the hospitality industry. The political environment is comprised of laws, government agencies and pressure groups that influence and limit the activities of various organisations and individuals in society.

Furthermore, the EU has proposed plans to sponsor holidays for individuals who do not have enough money to travel. According to Travel Weekly (2010), these plans assist many customers with financial problems to have a holiday. For example, young persons aged from 18 to 25, disabled people and pensioners, etc. The idea to help these people travel was put forward by Antonio Tajani, the EU Commissioner for Enterprise and Industry, who declared that a holiday is a human right.

Therefore, this proposal could actually stimulate consumption and offer individuals more opportunities to have holidays. Perhaps this might be good news for the hotel industry during the recession.

2.1.2 REGULATORY

An environment that is regulated protects companies from each other. While most businesses praise the virtues of competition, they try to counteract it when it affects them. Another way is try to restrict a company’s unfair dealings and illegal transactions. Furthermore, regulation also aims to protect consumers from unfair business practices. If unregulated, firms might provide unsafe, low quality products, poor services, be untruthful in their advertising or deceive through packaging and pricing.

VisitBritain, the body, which aims to promote UK tourism, has launched a ?6.5 million advertising campaign outside the UK to promote the affordability of Britain as a destination. However, it calls for this investment to be matched by the UK government have so far been unsuccessful (Mintel, 2009).

Moreover, hotel and restaurant taxes have become a popular source of revenue for local government. Hotel taxes are supposed to be used to support tourism; however, how this money is spent has been subject to liberal interpretation. Therefore, hotel managers should make sure that these taxes, which are designated to promote tourism, are used properly and effectively.

2.1.3 ECONOMIC FACTORS

One factor that complicates the situation is the weakness of the pound against the Euro and Dollar. Sterling has lost value rapidly over the last year. In July 2008, one pound would still buy $2 but by November 2008, it was worth only $1.48, the lowest level for 6 years. Similarly, at one point the pound was almost equal in value to one Euro. While this is bad news for people buying goods or travelling outside the UK, it also means that UK goods and services become more attractively priced from the point of view of Euro Zone or USA travellers (O’Grady, 2008)

The economical environment is comprised of the following factors:

Wage inflation: During a recession wages might increase. It is depends upon decisions to cut or increase wages that are made by employers. Therefore, hotel managers should pay more attention to income distribution as well as average earnings.

Price inflation: In a recession, if the economy declines then commodity prices will rise. This factor will influence the decisions customers make whether to travel or not.

Gross domestic product per capita (GDP): The most important economic factors are customer’s purchasing powers and spending patterns. GDP can indicate the magnitude of these factors, because total purchasing power depends on current incomes, prices, savings and credit. Hotel managers, therefore, must be aware of major trends in income and changing consumer-spending patterns.

Exchange rates: The UK economy has weakened, the value of the pound against the Euro has decreased and therefore, customers might choose domestic tourism for their holidays.

Even during a recession, customers still holiday but prefer to take short breaks to reward themselves. Mintel’s Annual Survey of Spending Priorities in 2009 showed that holidays remain the leading concern for consumers, despite the recession.

Furthermore, all other leading consumer priorities showed little change compared to pre-recessionary times.

Specifically, hotels in the UK appear relatively cheap since the fall in the value of sterling and hence more attractive to inbound travellers and tourists. At the same time, this means it is less attractive for UK holidaymakers to travel to the Euro Zone or USA and more attractive to stay at home.

2.1.4 SOCIAL FACTORS

The age profile of the UK population is increasing. Furthermore, Mintel’s (2009) exclusive consumer research reveals that older adult usage of budget hotels is slightly below the national average; however, it is somewhat more than for young people.

However, even during the recession, some people remain unaffected and they still stay in luxury hotels, such as, the Ritz or the Hilton. They do not care about the cost because they lead a luxurious lifestyle. Although these people have not changed their pattern of consumption, however, most customers will be affected by the recession and they might prefer to choose budget and not mid-range hotels when they travel.

2.1.5 TECHNOLOGICAL FACTORS

Technology has a significantly affected the hotel industry in many ways, for example, Travelodge launched a free iPhone application that allows users to locate their five nearest Travelodges by GPS. They can see the availability, prices and book rooms. Moreover, customers can reserve their accommodation or check-in by via internet. In addition, they can obtain information via new platforms, such as, Facebook or Twitter. These and other technological advances help companies to become more effective in the marketplace, however, internet penetration levels and demographic breakdowns might make operators use of this distribution channel ever more viable. If firms adopt useful technological advances, they will gain a competitive edge.

2.1.6 COMPETITION FACTORS

Since hotels are a service industry, human resources have become an indispensable element of the market. If the turnover ratio of employees is low, the centripetal of employees will be strong. As a result, the company will have the advantage of competition.

The main substitutes who could replace the customers’ decision in the UK hotel market are those from other countries. Foreign customers may plan to visit the UK from places where they live, such as, France and Spain. However, Country House or Bed & Breakfast hotels and so on which could also threaten substitutes in the UK domestic hotel industry.

Hotels find themselves with different problems compared to their entrants. These problems include a high barrier of exit and entry costs with the investment. Thus, the large capital investment required to build a hotel represents a sunk cost.

Hotels may not meet all their debt payments, taxes and other fixed costs but they can produce enough profit to cover their costs. Even they are perhaps prepared to operate at a loss rather than close their doors completely. However, when there is an oversupply of hotels but the total number of rooms remains the same, the result will be a price war within the industry.

2.1.7 ORGANISATIONAL FACTORS

A Hotel manger should decide how to engage with the process of hostelry management using his/her capability and skills and be able to adjust and develop it to adapt to customer needs and preferences. For example, if a hotel could provide a high quality service or promote a particular customer-desirable activity then client return ratio will be increased. However, the problem that faces the hotel industry is recruiting qualified staff that can satisfy the standard of service required by customers. Most service employees lack the knowledge and skills to provide a service that meets international standards. This may be because employees have not received adequate training in the skills that are required.

For instance, Whitbread has decided to open 1,700 Premier Inn rooms across the UK during 2009 and 2010. Whitbread is planning to increase their market share of the UK hotel industry. It will attempt to achieve this by building up its market position and providing customers with cost-effective packages (Mintel, 2009). It also plans to develop their booking platform, enhance their sales and put into place the next phase of its revenue management system.

2.1.8 MARKET FACTORS

In the market sector, the most important thing is the customer; firms should affirm the clients they want to reach and their market segmentation.

At the end of 2007, the UK hospitality as well as the hotel industry worldwide had been hardly affected by the recession and many commentators predicted that this would last until at least 2010. In the course of a few months, by early 2009, consumers had radically changed their attitudes and consumption. The optimism that had been expressed earlier could not be sustained (Mintel, 2009).

The number of business travellers choosing budget hotels for their commercial trips is increasing. Moreover, the start of this trend corresponds to the beginning of the recession in 2008. Many companies have reduced their budget for commercial travel in response to recessionary conditions; therefore, commercial travellers now use budget hotels rather than mid-market ones.

‘Green holidays’ and the effect of frequent air travel upon the environment are being raised as concerns (Bainbridge, 2009). Customers who want to reduce the effects of their pollution upon the environment choose to holiday within the UK (Bainbridge, 2009). However, these concerns are not entirely beneficial for the UK hospitality industry because overseas tourists share these beliefs, so this could reduce inbound tourism into the UK.

Saving the environment, however, is currently a relatively low priority for most consumers but studies indicate that ‘green issues’ will gradually become more important in the future (Key Note, 2009).

A previous study has claimed that more customers prefer to holiday in the UK because of ‘green’ considerations and as an alternative to flying abroad. Therefore, in 2008, travellers might choose the ferry to holiday as a ‘greener’ alternative (Key Note, 2009).

Budget hotels have made important investments in order to close the gap with mid-market brands. The three top most improved brands in terms of advertising awareness are Premier Inn, Travelodge and Holiday Inn Express.

2.2 SWOT analysis
2.2.1 Strengths

The UK, like many other countries, after rapid economic growth with an open policy has now become one of the world’s most attractive places for travellers. On a positive note, the hotel market in the UK is a strong and sophisticated one that offers a wide range of options, which could meet different types of customer needs. This includes internationally famous brands as well as smaller individual enterprises. Moreover, there is a powerful promotion and support system in place for tourists through organisations, such as, VisitBritain.

Moreover, the range of hotels offering different prices could meet individual consumer needs. Luxury, middle range, budget and even the country house hotel could satisfy every consumer. In addition, the growth of the budget hotel sector opened up a wider range of clients to the hotel market.

In the past ten years, due to the rise in the level of consumers’ disposable incomes, the short – break leisure market has grown. This phenomenon has allowed customers to have more domestic holiday choice and encourage travel within the UK. This trend has proven very positive for the hotel industry.

Another factor that has strengthened the hotel market is the online reservation system. Customers are able to search for information, accommodation and book rooms online. This system is not only convenient for customers it is also efficient.

2.2.2 Weaknesses

Profitability is a major concern for hotels. They worry about losing money during the course of chain operations. In addition, there remains an absence of an efficient system to monitor hotel management, which includes employees and retired employees etc (Gavin, 1997).

The existing weaknesses in the hospitality industry are described below.

Recession has been the influential factor from 2004 to 2009. As noted by Keynote (2010), the number of visits peaked in 2007 but fell during 2008 by one million.

In the face of room oversupply, occupancy rates averaged approximately sixty percent but this figure fell by eight percent during 2007 to 2008 (Keynote, 2010). In an attempt to counter this fall, prices were reduced but this may diminish profitability.

Mid-market hotels are coming under pressure, being squeezed, between budget and luxury hotels. Competition in the mid- and budget hotel market is becoming more intensive and probably there will be a price war.

The performance of the global economy has a direct influence on the cost of hotel equipment. These costs have been rising and consequentially the financial burden has become heavier.

2.2.3 Opportunities

Many tourist and hotel officials now believe that the UK will become the world’s most attractive visitor destination by 2011. This is considered an encouraging sign and a great opportunity for those who want to expand their hotel business in the UK. Any expansion is anticipated to be within the mid- or low-grade hotel sector. The demand for high star rated luxury hotels among the various hotel management groups is not expected to rise (WTO, 1999).

In late 2008, the pound fell against foreign currencies and was very nearly equal to one Euro. This means that UK services, including hotels and tourist attractions have become more attractive to overseas tourists as they get more value from their Euros or dollars.

The development of a global online reservation system will not only make hotels easily reachable but also provide an opportunity to access a wider client base.

According to Keynote (2008), the age profile of the UK population is increasing. Many consumers that belong to this enlarged senior sector of the population have disposable assets, which they use to enjoy their leisure. In addition, the number of retirees is rising, which will have a positive effect upon the hotel market.

In the next decade, due to a number of organized activities, such as, the 2012 London Olympics, more attention will be paid to the UK by the international market and it is anticipated that this will promote a growth in demand from overseas visitors for accommodation.

Few leisure facilities, for example, restaurants and bars can cope with any extra business and, therefore, they are unable to create potential sales from the local area and hotels.

2.2.4 Threats

Since 2004, the long-stay leisure market, that is, stays involving five nights or more has been in decline. Moreover, the number of long-stay hotel rooms booked in 2008 decreased by more than a half compared to 2006, at eleven million (BMRC, 2009).

The threat of terrorist activities could discourage overseas travellers to stay in the UK.

The success of the budget hotel sector is a threat to mid- and upmarket hotel chains. During the recession, customers may choose low price accommodation for their tourism. For example, self-catering and other less expenditure styles of accommodation manifest a big threat at this time.

Some budget airline companies that offer low-priced flights to travellers for short weekend breaks may compete with domestic travel in the UK.

2.3 Porter Five Forces

The structure of the hotel industry strongly affects competition between its members, which in turn directs decisions about the choice of strategies that are used by them. Therefore, Porter’s Five Forces analysis will be used to investigate the industry.

New Entrants

Government policies against entrants

Fixed cost is huge

Hard to access further credit

Investments cannot be recovered immediately

Buyers

Large hotel, power low; Small hotel, power high

Customers as a group have more power

Sign contract gain more bargaining power

Suppliers

Bargaining power depends on the size of the hotel

Unique technology and resources

Switching costs

Competitors

Competition within luxury, mid-market and budget hotels

Customers change consumption to budget hotels.

Little effect on luxury hotels

Substitutes

Camping, caravan clubs, B&B and country houses etc

Camping and Caravan clubs had their best ever year in 2008

An attractive option for the budget conscious consumer

The analysis includes the threat of new entrants, competitive rivalry within the industry, the threat of substitutes and the bargaining powers of buyers and suppliers.

2.3.1 The threat of new entrants

Suitable hotel sites are not easy to find and building costs are very high. Furthermore, investments cannot immediately be recovered, especially during the period of construction. This factor represents a strong barrier to entering this market. The UK has enjoyed some of its highest periods of growth in property prices in recent years. The construction industry has been badly affected by the latest recession.

Developers are hardly able to gain credit to support large scale building schemes; therefore, many hotel projects have stalled (Blitz, 2009).

Aside from new developments, hotel managers who are unable to access further credit are finding things more difficult. Larger operators and branded chains are able to look to the medium and long-term over which a boom for hotels and travel are predicted due to emerging markets but smaller operators have less access to the resources that they will need in order to survive the next couple of years (Blitz, 2009). As a result, the threat of new entrants into hospitality industry is limited.

2.3.2 The competitive rivalry within industry

In economic downturns, competition occurs within upmarket, midmarket and budget hotels. Mid-market hotels usually cater for tourists who do not travel a lot; also, their rooms are priced much higher than in budget hotels. In general, when the economy is in recession, consumer-spending power is less, therefore, they might choose lower priced accommodation. At the same time, budget hotels continue with their strong development plans to offer extra rooms through the expansion of new property. The development of budget hotels has eroded the mid-hotel’s market sector.

However, the upmarket hotels have been little affected. Their customers are less likely to change their consumption patterns. The lifestyles of these customers engender very high consumption. Their expenditure would not change because they are not price sensitive. That is to say, no matter how prices changes, they will continue consuming.

2.3.3 The threat of substitutes

There are some substitutes in this market, such as, camping, caravan clubs and B&B and country houses. Mintel (2009) predicted that these holidays are an attractive option for budget conscious consumers. These substitutes will benefit from an increase in the number of families who because of financial reasons elect to stay in UK in 2009 and 2010. The Camping and Caravan Club market had their best ever year in terms of recruitment during 2008 (Mintel, 2009). Camping holidays are predicted to do rather better over the next few years before the long-term trend towards decline is re-instated. However, growth in this area might not be good news for the hotel industry, as by definition ‘a stay in a hotel’ does not count as such for this type of holiday.

2.3.4 The bargaining power of buyers

The hotel industry is faced by fierce competition. Companies will possibly sign a long-term contract with consumers to retain their customer base. Therefore, customers possess a strong bargaining power.

Behind large hotel groups, there are large amounts of capital to support them to buy land and build new hotels. Consequently, the bargaining power of consumers is quite low with respect to these large hotel groups. Conversely, for small hotels, the bargaining power of consumers is much greater, which means these establishments might find it harder to fulfil customers, expectations.

However, customers will segregate into two sectors, namely, individual and group.

Customers as individuals: This sector will divide into business travellers and individual tourists. Business travellers may have a long-term contract with a hotel, therefore the price for them could be pre-negotiated but for individual tourists, their bargaining powers are almost none.

Customers as a group: Groups usually book rooms through travel agencies, involving a large number of rooms and the travel agent takes the profit. However, the price is still much cheaper than for the individual. That is to say, their bargaining power is more than the independent tourist is.

2.3.5 The bargaining power of suppliers

There are two main bargaining powers in the industry, one is furniture and fittings and the other is food and cigarettes. They are outlined below.

Furniture and Fittings: When hotels purchase furniture; they typically establish criteria that they use. The number of pieces of furniture purchased is usually in bulk rather than separate items. Thus, orders must be relevant to the number of rooms they operate. For this reason, furniture is supplied by specialist contract providers, which are dedicated departments of businesses that already cope with the domestic market as well.

Food and Cigarettes: Many food and cigarette manufacturers have their own specialised sector that supply and deal with the demands of the hotel industry.

However, bargaining power is dependent on the size of the hotel. If a company has very many hotels then its bargaining power with its suppliers is enhanced. Conversely, if the company has few hotels then its bargaining power will be limited.

2.4 STP process—Segmentation, Targeting and Positioning
2.4.1 Segmentation

According to Swarbrooke and Horner (1999), the tourist market is divided into demand characteristics within a number of the different segments, which are described below.

Family market: The definition of family means two parents with one to three children. The preference of many families is to minimise the cost that is required to meet their desire to have a vacation. However, these needs will depend on those of their children.

Hedonistic tourist: According to Kozak and Andreu (2006), the number of hedonistic tourists has increased in recent years. They prefer a place with sun, sand and sea, such as, Ibiza. In fact, they have a desire for physical pleasure and a social life.

The backpacker market: Backpackers generally keep their expenditure to a minimum; they have the time and want adventure as part of their holiday. Moreover, this tourist usually travels independently rather than in a group.

VFR (visiting friends and relatives): People do not stay in commercial accommodation and usually domestic travel is involved (Swarbrooke and Horner, 1999). This form of tourism could also relate to weddings and funerals. In particular, their budget is limited in a similar way to that of a normal holiday.

Excursionists or day-trippers: In general, these travellers do not travel far and it involves domestic transport. They would do not usually stay overnight.

Educational tourists: They usually travel to other countries, for example, for foreign culture, student exchanges or attending language classes.

Religious tourist: This form of tourism can be seen as obligation or duty for those who have faith and belief but recently traditional religious tourism has become, in part, a sightseeing tour, which visits churches and cathedrals (Swarbrooke and Horner, 1999). However, they usually visit the place at a specific time, such as, the Haj.

The snowbird market: The ‘snowbird’ refers to a tourist that travels during the winter, in order to avoid the cold weather. Retired people normally take this type of vacation because they have the time to travel.

Tourists with disabilities: According to Swarbrooke and Horner(1999), there are many kinds and degrees of disability, which include the following:

Mobility problems: These individuals are confined to a wheelchair and may have difficulty in climbing stairs.

Sight problems: These individuals have minor eye impairments and unclear vision.

Hearing difficulties: These individual have injuries to their ears and their hearing is impaired.

It is important that hotels have regard for these conditions and have someone available to assist them.

The short break market: This means tourists use their two-day weekend to have a vacation. According to Mintel (2007), the short break market is continuing to grow despite an overall stagnation in the growth of domestic tourism. It is forecast that the volume of the short break market will increase to 9.5 million and its monetary value will be ?2.5 billion by 2011.

Commercial travellers: They usually travel for business and generally involve domestic travel.

2.4.2 Targeting

In order to relate to the research objectives of this report as described in earlier in this chapter, the researcher will inquire into the budget hotels to investigate their target market.

Budget hotels focus upon three types of domestic tourists during economic downturns: commercial, family and short break. Budget hotel characteristics are relevant to these three types of tourists in terms of limited cost, clean and comfortable accommodation in which to live. In addition, the fact that there many chains are available in this sector means that travellers can be reassured regarding expectations and quality as they are buying into a brand name (Brotherton, 2004).

2.4.3 Positioning

According to Baines, Fill and Page (2008), positioning is important for a business because it differentiates it from other competitors. As Mintel (2010) argues, the first physical attributes of budget hotels for customers is that they have quality standards, consistent service and are located in many places, which are convenient to access. According to (Brotherton, 2004), the second positioning elements for budget hotels as perceived by customers are value for money, cleanliness and have a great brand reputation.

Marketing communication can be used to position brands as a strategy to attract customers (Shimp, 2003). Budget hotels position their brand, products and services via three basic consumer needs, such as, functional, symbolic and experiential (Keller, 1993). These are described below.

Functional needs: Budget hotel marketers adopt new technology and season sales to appeal to consumers’ needs for convenience, value for money, physical comfort, etc. These wants can met consumers’ functional needs and brand satisfaction.

Symbolic needs: Budget hotels appeal to symbolic needs with their desire or self-image to associate with the brand. For example, tidiness, cleanliness and efficiency, etc.

Experiential needs: Budget hotels use quality standards for accommodation to address the experiential needs for consistency and hygiene.

For a marketer, it is important to recognize that brands benefit by fulfilling these needs, even by a combination of any two. This project will investigate consumer attitudes toward the budget hotel market during a time of economic downturn and analysis how the recession affects consumers’ consumption patterns and budget hotel strategy.

Do major events bring lasting benefit to host community?
Introduction

Most promoters of bids for major events, such as the Olympic and Commonwealth Games or the world cup, submit as part of the reasoning behind the decision to bid the lasting benefits that it will bring economic benefit to the host community in the short and long term. Furthermore, this argument is used as a justification for the considerable involved in staging such events. For example, as can be seen from the budget and capital cost reports from Beijing, which is hosting the 2008 Olympics Games, whilst the operation of the games itself is targeted to make a small profit (see appendix 1, table 1), the construction and infrastructure costs have been estimated at over $1.4 billion (see appendix 1, table 2), which the BOCOG^[1] and Chinese government state will be recovered as a result of the longer term economic benefits that these costs will bring to the area, in terms of increased trade, employment, tourism, international and local trade and other local social community benefits.

However, whilst researchers of this issue appears to agree, at least for the immediate area where the event is located, for example Beijing, there is an immediate economic benefit during the staging of the events, there is a significant difference of opinion as to a) whether there is a economic benefit for the wider geographical area and b) whether there is a lasting economic benefit for the host community subsequent to the event. Within this paper it is intended to concentrate upon the latter of these two questions in an effort to prove or disprove the following hypothesis: –

“Events provide no lasting benefit to the host community.”

To assist with this analysis, it is intended to use data from the Olympics in Atlanta (1996), Sydney (2000), Athens (2004), together with brief references to the Beijing 2008 Olympics. To assess whether the case is true in relation to other major events, which may not have such a global attraction, the Manchester Commonwealth Games of 2002 have also been included within the selection.

Overview of Events

As can been noted earlier the operational costs of hosting a major event is sizable and, due to increasing concerns in areas such as security, which includes prevention of terrorism, these have increased significantly over the years (Baade and Matheson. 2002a, p.5). In terms of this expense Baade and Matheson (2002a, p.6) with Salt Lake City as spending $300 million, which must cast doubt on the appropriateness of the $50 million Beijing is planning to spend on this item (see appendix 1, table 1). Thus, it is not surprising that there has been a chequered history in terms of the profitability of staging such massive events. In recent history an example of these extremes can be foun, with Montreal recorded a $1 billion loss for the 1976 games whilst Los Angeles made a profit of $250 million for hosting the same event in the 1984. Nevertheless, in most cases the majority of these operational costs, with careful planning, marketing and promotion, are expected to be recovered from sponsorship and TV rights, which has the potential of bringing in over $1 billion in revenue in today’s terms, if measured against the past expectations CBS (1998).

These figures pale into insignificance when compared to the capital and infrastructure cost, which runs into Billion’s of dollars, the return on which cannot be so easily calculated. Thus, in order to achieve a national government commitment to assist with the funding of the event, it is the task of the promoters to attempt to show that these costs will have long-term economic benefits for the community. The following is a brief overview of the capital and infrastructure costs incurred by the four locations chosen for analysis.

Based upon 1996 prices, the total direct cost of the Sydney Olympics was calculated to be around A$8.4 billion, (Madden 2002, p.9), which relates to around US$4 billion, although when final figures were available this showed a similar increase against budget as Atlanta. In his study into these costs, Madden (2002, p.9), allocated them over a 12-year period from 1994/95 to 2005/06 as indicated in the following graph: –

As can be seen from this the majority of the monies post the event was spent on international tourism. Of these costs about $600 million was spent directly upon games visitors, and these would therefore have been recoverable from the games revenues. This leaves approximately $7.8 billion to be quantified as costs that should have a lasting economic benefit, in addition the benefits incurred during the event.

Athens 2004

The cost of the games in Athens, originally budgeted to cost $5.6 billion, actually rose to over $8.5 billion Associated Press (2004). Part of this additional cost was caused by an exceptionally large security costs which, being the first games to be held post the 9/11 tragedy, soared to $1.5 billion.

With Beijing budgeting to spend $14.25 billion on capital and infrastructure and $1.625 billion on operating costs making a total of just under $16 billion, although many experts are predicting that this figure will increase to over $20 billion, it is clear from the following graph that the costs of the games will have doubled with every staging of the event over a twelve-year period (see figure 1).

In 2002 Manchester played host to the Commonwealth games. Originally the budget for this event was set at around ?25 (approximately $50), but the final amount climbed to between ?70-80 million ($140-160 million). Of this amount ?17 million was spent on a performance legacy programme, deliberately targeted to produce long-term benefits for the community.

As the Olympic Games increases are significantly higher than the rate of inflation that any of these areas have suffered during the same period, it is apparent that the accuracy of forecasting the longer term economic benefits is becoming even more critical to both the organisers and the regional and national governments that are being asked to help fund these costs. Furthermore, as has been demonstrated with all of these events, the calculations of initial budgeting show considerable under-estimation when compared with the final costs, which suggests that the reliability of the organisers costs in relation to the longer term benefits

Long-term Economic Benefits

To determine whether the capital and infrastructure cost of an event has a long term benefit to the host community, the assessment of this process can only bet determined by the future economic development that occurs within that geographical location (Fort and Fizel 2004, p.91). Therefore to evaluate the hypothesis set at the commencement of this research, it is intended to use three of these factors, these being increase in GDP, employment and tourism activity.

GDP

Growth domestic product is an indicator that shows how well the economy is growing, usually based upon a per capita figure. One of the main arguments of those promoting the benefits of hosting an event is that it will contribute significantly towards improving that figure over future years. In reality, this does not appear to be the case when analysing the result for the events indicated.

In all cases there were economic improvements in terms of GDP during the periods leading up to the staging of the events, although in some instances, these were not as high had been projected. Similarly, in the longer term, these increases were not sustained. For example, taking Sydney and New South Wales as an example, as can be seen from the following graph, whist there was a significant rise in GDP during the years from 1994/05 to 2000/01, immediately the games were over, this fell back sharply to a year on year decrease.

Studies conducted by researchers into the Atlanta and Athens games, including Baade, Robert A. & Victor Matheson. (2002) and Gratton and Henry (2001) have shown a similar reaction in relation to the GDP in each of these cases, with rising levels during the build-up period to the games, but little to no benefit for the following periods.

This position also appears to be relevant to the economic effects of lesser events, as can be evidenced by the research into the benefits of the Manchester Commonwealth Games in 2002 (Eurotec 2007). The initial impact was encouraging, as was noted by one of the organisers at the time, who said: –

“We estimated that ?22m in business benefits across the northwest derived from the Games at the time,” says Rosin. “There was ?2.7m added value for every ?1m invested. There has been investment in the financial sectors, in the city centre and in particular in east Manchester. Associated retail development and the creation of employment for local people in this area can be directly attributed to the Commonwealth Games” (Editorial (2007).

However, a graph of the impact on output of the games and legacy programme in this case (see figure 4) shows that, as with the Olympics, despite the initial benefits achieved prior and during the time the event was staged, in this case exceeding expectations, the longevity of this was short, with it falling away rapidly within one year.

It is apparent from these findings that the significant improvement to GDP would only be temporary in nature and as a result contributes little to the long term improvement of the local community environment (Fizel et al 1999, p.75). Assuming that a study of other events of a similar magnitude to those identified operated upon a similar basis, it is therefore apparent that the GDP benefit would be condensed into the period of the event and limited thereafter,

Employment

Tourism

Tourism is another area against which the success of the games can be measured. Whilst, in most cases there is an increase in the physical numbers of tourists visiting the area in the years leading up to the event and subsequently, the benefit of this has to be evaluated against the additional facilities that have been provided as a part of the capital and infrastructure costs. For example, if one looks at the Beijing games, the intention is to build sufficient hotels in the area to be able to offer 130,000 (BOCOG 2007). As this represents an increase of around 20% of the number of rooms that are available, whilst an increase in tourism will have an impact upon the local economy in some areas, unless it is in excess of 20%, it will have a detrimental impact upon the hotel and catering sector, which will either force down the unit price per room or result in a decrease in occupancy, either of which will reduce the fiscal benefit.

Thus the measurement of costs can be evaluated by either their socio-economic, environmental or the estimated direct future impact they will have on a countries gross domestic product (GDP). For Beijing, all of these improvements will therefore provide a useful economic legacy of the games if managed correctly. However, in addition to the intangible benefits, there are the intangible costs that also need to be measured, both in real terms and potential. These can be defined into two main areas being, local but external to the event, future but unanticipated.

In addition to the determinants outlined above, there are others than need to be taken into the equation to provide a more detailed analysis. For example, there is the potential displacement issue related to local residents at the time of the event, where homes are lost to make way for the additional infrastructure projects (Fizel 1999, p.72). Secondly, there is the long-term use of the facilities. In the case of Sydney, the authorities are still paying around $46 million a year to maintain facilities that have remained uneconomic since the event (Owen 2005). Finally, the impact that the event has on trade outside of the area also needs to be considered. Research has show that, whilst the immediately area businesses benefit from the event, others further away from its location tend to show a downturn during that period when events are being staged. (Owen 2005). These represent hidden costs that are a) not always taken into account by the bid promoters and b) difficult to quantify in terms of amount and the length of time that they should be calculated over.

Conclusion

The research conducted for this paper has been limited in terms of the events covered and the timescale over which these have been studied, being restricted to five events over a 12 year period from 1996 to 2008. However, from the analysis of the events used within this paper it can be seen that in the main, the hypothesis set at the commencement of this paper has been proven. Whilst most of the events showed an immediate economical benefit, this did not last for a significant period. Therefore, on balance of probabilities. we would agree with the statement made by Baade and Matheson (2002, p.28) which stated that “the evidence suggests that the economic impact of the Olympics is transitory, onetime changes rather than a ‘steady-state’ chane.,” Similarly, with the increasing costs of operating and staging these events showing every sign of continuing to escalate, the opportunity to reverse this trend will become even more difficult in the immediate to long term future, especially when one takes into account the fact that even the cost of the London Olympics has exceeded the budgeted estimates.

There appears to be two main reasons for the differential between the projected benefits and the actuality. The first of these relates to the accuracy of initial estimates, which as has been shown within the costings of the events studied, is significantly lower than they should be, which could be result from an effort to make the bids more attractive to the community and nation hosting the event or as a result of problems being experienced within the project management process. Secondly, it would appear that the economic determinants being used by the organisers are failing to pay enough attention to the results of previous events when creating their own model. All of these issues need to be addressed when making such projections and it will be interesting to revisit the issue following the Beijing games in 2008 to see whether any lessons have been learned in this respect. These issues have to be managed correctly if they are to stand a chance of producing a long term economic benefit (Humphreys and Hummer 1995, p. 6).

References

Arthur Andersen, Hospitality and Leisure Services, “The Sydney Olympic Performance Survey: The Sydney Olympic Games on the Australian Hotel Industry,” Mimeograph, November 2000, pp.1-7.

Associated Press (2004). Games cost Athens over $8.5 Billion. Retrieved 30 November 2007 from http://www.msnbc.msn.com/id/5761646/

Baade, Robert A. & Victor Matheson. (2002). Bidding for the Olympics: Fool’s Gold? In Transatlantic Sport, edited by Barros, Ibrahim, and Szymanski. Edward Elgar Publishing. New York, US.

Baade, Robert A. & Victor Matheson. (2002a). Mega-Sporting Events in Dveloping Nations: Playing the Way to Prosperity. Retrieved 30 November 2007 from http://www.williams.edu/Economics/wp/mathesonprosperity.pdf

CBS (1998). Television, sponsorship revenue could top $800 million. CBS Sportsline wire reports. Retrieved 27 November 2007 from http://cbs.sportsline.com/u/olympics/nagano98/news/feb98/revenue2398.htm

Country Update (2004). Practicality is the New Watchword as Beijing Olympics Projects Move Forward. Eunited Stataes Embassy, Beijing, China.

Editorial (2004). Beijing Olympiad: Profit or Loss? China Today. 5^th November. Retrieved 25 November 2007 from http://www1.china.org.cn/english/sports/111340.htm

Editorial (2007). Glasgow 2014 – the bid legacy – after the event. Glasgow Business Guide. Retrieved 1 December 2007 from http://www.glasgowbusinessguide.co.uk/show_article.php?artID=156

Eurotec (2007) An Evaluation of the Commonwealth Games Legacy Programme. Retrieved 2 December 2007 from http://www.manchester.gov.uk/downloads/Evaluation_of_Commonwealth_Games_Legacy_programme.pdf

Finance (2007). BOCOG Budget. Retrieved 26 November 2007 from http://images.beijing-2008.org/upload/lib/bidreport/zt5.pdf

Fizel, John., Gustafson, Elizabeth and Hadley, Lawrence (1999). Sports Economics: Current Research. Praeger Publishers. Westport, US.

Fort, Rodney D and Fizel, John (2004). International Sports Economics. Praeger Publishers. Westport, US.

Gratton, Chris and Henry, Ian (2001) Sport in the City: The Role of Sport in Economic and Social Regeneration. Routledge. London, UK

Humphreys, Jeffrey L and Plummer, Michael K (2003). The economic impact of hosting the 1996 summer Olympics. Retrieved 1 December 2007 from http://www.selig.uga.edu/forecast/olympics/OLYMTEXT.HTM

Humphreys, Jeffrey M. and Michael K. Plummer (1995). The Economic Impact of Hosting the 1996 Summer Olympics. Atlanta Committee for the Olympic Games. Atlanta, US..

Madden, John R (2002). The Economic Consequences of the Sydney Olympics: The CREA/Andersen Study. Current Issues In Tourism. Vol 5, No 1, pp.7-21.

Owen, Jeffrey G (2005). Estimating the Cost and Benefit of Hosting the Olympic Games: What can Beijing expect from its 2008 Games. The Industrial Geographer. Fall 2005

Appendices

Appendix 1

Table 1 BOCOG operating Budget

Source: from http://images.beijing-2008.org/upload/lib/bidreport/zt5.pdf

Table 2 BOCOG Construction costs

Source: from http://images.beijing-2008.org/upload/lib/bidreport/zt5.pdf

1

INTRODUCTION

Destination marketing has been proven to be a successful approach to increase visitor numbers (e.g. Blum and Fallon 2002; Cortes-Jimenez, Blake, McCabe and Pratt, 2009). Islands have long been popular tourist destinations, (Sharpley, 2001). Prevailing literature reveals that their physical and climatic characteristics, combined with the less tangible elements of ‘island-ness’, insularity, strategic location, remoteness, traditions and enclave nature, create a particular allure to ever-increasing numbers of tourists, (Conlin and Baum, 1995; Lockhart, 1997a). Such singular characteristics give them a distinctive status among global tourism markets and can hence be used to their destination marketing advantage. ‘Destination marketing is an integral part of developing and retaining a location’s popularity’, (Kotler, Bowen and Makens, 2006, p. 729) and to enhance sustained destination competitiveness, (Buhalis, 2000). Overall, destinations use a combination of marketing communication tools to support their strategies and alter themselves from others, (Zupanovic, 2007). Developments and innovations in such marketing tools have led to an improvement of marketing efficiency of small island nations, Martin, (2008). The methods of marketing tools that destinations use will depend on the types of the tourism product and the market characteristics, (Buhalis, 2000; Wang and Russo, 2007).

However, marketing efforts are being compromised as the increasing number of events and trends affecting the tourism industry in the global environment are becoming more complex and fast-paced (Faulkner, 2001). Small island destinations face particular challenges when seeking to compete in the global market, (Lopez and Baum, 2004). Destination marketers have to proactively shape, adapt to, and passively struggle (Courtney, 2001), through changes in customer preferences, fierce competitions, technological progress, (Bieger, 1998) and more recently through the prevailing global economic crisis. The biggest challenge for such economies lies in the pooling of resources especially as they face pressure on already limited funds (Gretzel, Fesenmaier, Formica and O’Leary, 2006). Nonetheless, such constraints can however be overcome by designing effective strategies with particular focus on their distinctive characteristics to adapt and survive on the global market, (Poon, 1993; Sheldon, 1997).

Tourism destination marketing is amongst the most prominent and influential means of inducing increasing visitation and maintaining stays within a destination, (Blum and Fallon, 2002; Cortes-Jimenez, Blake, McCabe and Pratt, 2009, p. 1). However, marketing activities requires intensive capital input and for small economies facing pressure on already limited funds and faced with increasing competition in the global market, the question of effectiveness emerges as a prime issue, critically in terms of assessing if and how marketing efforts affect consumer behaviour. Fotiou, Buhalis and Vereczi, (2002, p. 79), argued that islands are among the most frequently visited destinations in the world and in essence possess certain attributes that set them aside from mainland destinations.

Island tourism has been a subject of increasing interest to researchers in terms of its contribution to social and economic development and resulting impacts (Conlin and Baum 1995; Lockhart 1995; Russell 2006) as well as the debate about their sustainability (Weaver 2000; Bianchi 2004; Oreja-Rodriguez, Parra-Lopez and Yanes-Estevez, 2008) and questions of destination management (Keane, Brophy and Cuddy 1992). However, whilst destination marketing has been a relatively well-studied line of inquiry in the field of hospitality and tourism for many years, destination marketing issues and concerns for small island destinations remain relatively untouched as evidenced by the apparent lack of published research in this area. The latter henceforth provides the basis for the current study, which aims to review and evaluate the effectiveness of destination marketing campaigns in the Seychelles Islands, the challenges and opportunities faced by destination marketers and their responses to the radical changes taking place in the global environment to ensure destination marketing success in the future. In a climate where the future of destination marketing is under increased scrutiny, it is important that researchers extend this line of inquiry to all corners of the globe especially small island nations that are largely influenced and challenged by global forces.

Aims and Objectives

The aim of this study is to review and evaluate the effectiveness of destination marketing campaigns in Seychelles, the challenges and opportunities facing destination marketers and strategic solutions being employed.

Objectives

Review destination marketing activities and tools utilized in the Seychelles archipelago

Measure the effectiveness of destinations marketing campaigns in Seychelles from both destination marketers’ and visitors’ perspectives

Highlight key challenges and opportunities facing Seychelles’ destination marketers in face of the changing marketplace

Identify solutions and strategies being adopted in Seychelles for destination marketing success in the future

Relevance of Destination Marketing

With the general increase in island tourism in the Pacific, Caribbean and Indian Ocean in the last two to three decades, individual island destinations are facing increasing competition from other islands offering similar products and targeting the same markets, (Pearce, 2008). The question therefore under scrutiny is how to market or brand an island to appeal to the global market and attract international capital. Ideally, destination marketing is conducted using a combination of marketing instruments with careful management of the four P’s (Product, Place, Price, and Promotion), which is done in accordance with consumers needs to woo and capture the right audience, (Zupanovic, 2007, p. 773). According to the WTO (2004: 10) ‘aˆ¦..destination marketing covers all the activities and processes to bring buyers and sellers together; focuses on responding to consumer demands and competitive positioning; is a continuous coordinated set of activities associated with efficient distribution of products to high potential markets; and involves making decisions about the product, branding, price, market segmentation, promotion and distribution ‘.

Destination marketing is usually the function of non-profit entities, so-called Destination Marketing Organisations (DMOs), (Blumberg, 2000, p. 47) generally responsible for generating tourist visitation for a given area. However, since the destination comprise of ‘clusters’ of businesses, that offer experiences achieved through a combination of a diverse array of products and services, (Heath & Wall, 1994; Scott, Parfitt & Laws, 2000), destination marketing thus involves a plethora of stakeholders who are responsible for components of the total offer (Wang, 2008, p. 192; Goodall & Ashworth, 1997). Hence, destination is not only marketed on a collective basis by DMOs that ideally should represent the overall destination but also by individual stakeholders involved in the tourism industry who singly markets their own products, (Prideaux and Cooper, 2003, p. 37). Generally, both forms of marketing are essential but nonetheless, agreeing and maintaining a consistent image throughout individual promotions have become a concern, which thus requires DMOs to effectively consult and coordinate the conflicting interests of the different stakeholders in order to develop a destination image that is owned and utilized by all groups, (Beeton, 2005). Given the complexity and interdependency among stakeholders, (Soteriades and Avgeli, 2007, p.336), destination marketing is hence increasingly being undertaken using a collaborative approach connecting the various public and private stakeholders into working interactively and exchanging ideas, expertise and pooling of financial and human resources (Wang, 2008, p. 191; Palmer and Bejou, 1995; Selin & Myers, 1998), to provide an integrated ‘destination tourism product’. Such collaborative strategies can produce consensus and synergy, giving way to new opportunities and emerging innovative solutions and a greater level of effectiveness that would not have been achieved by solo undertakings as argued by Bramwell and Lane (2000). This is supported by Baker and Cameron (2008, p. 83) who claimed that collaboration between stakeholder is fundamental to success in destination marketing. These forms of cooperative are particular efficient especially in small island nations where a great challenge in destination marketing is often, as discussed by Bennett (1999), the lack of expertise, resources and flexibility.

Destination marketers, not exempting those of small island destinations, often use a myriad of traditional promotional sources with verbal and visual messages, (Perdue and Pitegoff 1994). Owing to the intangibility of tourism products, promotional materials are deemed significant given that they represent the ‘destination tourism product’ (MacKay and Fesenmaier 1997; Sirakaya and Sonmez 2000). Advertising is the most visible activity of destination marketers (Gee and Makens, 1985) and the most manifest form of promotion aimed at either consumers or the travel trade. Consumer advertising is mostly common, particularly using prints, television, radio, outdoor and predominantly the internet. With the increasing trend in internet use (Gretzel, Yuan, Fesenmaier, 2000, p.; Soteriades and Avgeli, 2007, p.339) and purchase of holidays online, the internet provides small island destinations to receive maximum visibility internationally and hence to help widen the scope and ways of reaching consumers from all over the world. However, one cannot disregard the crucial role of trade advertising for instance in travel magazines and newspapers. Personal selling is another prominent tool employed by destination marketers mostly conducted through travel trade for example trade shows, exhibitions and events, trade familiarization tours, training workshops, media trips, meetings and conventions, (Dore and Crouch, 2002, p. 137).

Sales promotion technique is used mainly by individual operators of tourism products whilst DMOs’ use of such technique is limited to facilitating promotional partnerships among organizations. Direct marketing methods have also been given prominence in destination marketing, (Murphy, 2003, P. 316) with increasing use of direct mail of destination brochures and visitor guides/magazines and the extensive use of global distribution systems and destination websites to facilitate communication and bookings. According to Dore and Crouch (2002, p. 137), publicity is normally seen to be of lesser importance relative to the aforementioned elements of the promotional mix. The authors argued that publicity campaigns can be useful in targeting and developing new market segments, capitalize on major events such as sporting events, to soften or reverse adverse trends such as the decline in leisure traveling following the prevailing economic crisis, or to improve poor public relations. Kotler, Armstrong, Brown and Adam (1998) identified publicity tools as news, speeches, special events, written and audio-visual materials which communicates the organization’s information to its public.

Despite the increasing use of technology, package vacations are still preferred and sought by most international tourists, (Budeanu, 2003, p. 94). For this reason, small island destinations also make use of intermediaries more particularly tour operators and travel agencies to sell their products in the international outgoing tourist markets, (Lopez and Baum, 2004, p.207). The latter further contends that tour operators have conventionally been important figures in tourism distribution channel serving small islands such as the Balearics, Canaries, and Turkey. Being an intermediary between the supply and demand sides and having higher credibility and ability to reach mass crowds, island destinations depend on tour operators to sell the existing capacity of tourism facilities, (Carey and Gountas, 1997, p. 426) given the extreme competitive rivalry in the global market. In their study on the Canary Islands, Lopez and Baum, (2004), found that organized package tours are still being used by most international leisure Europeans despite changes taking place in advances in technology of distribution.

Pricing plays an important role in determining the image of destinations. A wide range of pricing techniques are applicable to tourism destinations (Meidan, 1995; Kotler et al, 1996). However, pricing a destination is an extremely complex process because due to the fragmented nature of the tourism industry, it is determined by the pricing and marketing policies of individual firms at the destination and distributors in the country of origin, (Buhalis, 2000, p.17). Pricing can in essence deter or attract visitors, and thus pricing policies should be enforced on maintaining fairly standardized price structure. Due to their vulnerable economies, small island nations often overprice their tourism products in order to boost their profitability, (Buhalis, 1999b). For especially long haul island destinations, pricing plays a vital role in determining the willingness and ability of travelers to visit. However, as Buhalis, (2000, p. 18), argued destinations can only charge premium prices if they offer a unique experience. This can therefore justifies as Lockhart (1997, p. 4) states, ‘island tourism planners are now seeking to diversify away from the attraction of “sun, sea and sand”, which are typical of mass tourism, into special activity holidays and business travel characterized by higher spending patterns and niche segments of the market’. To support this, certain destinations e.g. Mauritius, Seychelles, are branded and promoted unique-exotic-exclusive as they are regarded to offer a unique, ‘one-in-a-lifetime’ experience and thus promoted premium prices, (Buhalis, 2000, p. 8).

Alternative marketing approach for small island destinations

In the context of small island destinations, the deployment of the basic traditional promotional mix is evidently not sufficient in face of a competitive market. Unlike developed, mainland destinations, islands rely exclusively on external markets for tourism given that their small size limits the potential for domestic tourism, (Reid and Reid, 1994, p. 42). Thus, accessing these markets using such conventional mass media tools requires substantial capital, (Ogilvy and Mather, 1988), economies of scale, management and marketing skills, presence in the electronic marketplace, among others, (Furr and Bonn, 1998; Buhalis, 1999; Main, 2002) which are already lacking in such nations. However, several authors are in consensus that small island nations have features and characteristics which give them a distinctive status among global tourism markets, (Reid and Reid, 1994; Baum, 1998; Lockhart, 1997; Lopez and Baum, 2004). These dissimilarities have strong implications upon marketing initiatives which they must utilize in order to attract visitors and thus compete in the global market, (Baum, 1998, p.121). Remoteness, perceived ‘difference’, smaller size, slower pace of life, distinct culture, exotic wildlife, and pristine environment are some of the basic distinctive attributes of islands (Baum, 1997; Lockhart, 1997). Such attributes have the potential to appeal to a particular spectrum of visitors, and often small sun-drenched, white-sanded, palm-fringed paradises like the Seychelles, Mauritius, Maldives predominates visitors’ interests in search of distant and exotic locations. Butler (1993: 71) professed that the islands’ appeal ‘may relate to the very feeling of separateness and difference, caused in part by their being physically separate, and perhaps therefore different from adjoining main-lands. Where such physical separateness is accompanied by political separateness, the appeal can be expected to increase, and given people’s desires for the different while in pursuit of leisure, different climates, physical environments and culture can all be expected to further the attractiveness of island tourism destinations’.

A major element in the success of small island destinations thus will be their ability to develop and project a unique and recognizable brand (Prideaux and Cooper, 2003), that represents value in the eye of the customer based on the above distinctive characteristics and advantages. Morgan, Pritchard and Piggott, (2002, p.335) identified destination branding as ‘the most powerful marketing weapon available to contemporary destination marketers’ due to ‘increasing product parity, substitutability and competition’. This is confirmed by several authors arguing that destination branding is a sound framework to manage the destination image ( Kavaratzis, 2004), and that branding is at the very heart of destination marketing strategy (Pike, 2004). Successful brand logos not only enhance a strategic market position but also create an emotional bond between the target markets and the destination, (Williams, Gill and Chura, 2004). This view is echoed by Morgan and Pritchard (2004) who purported that it is crucial to build a brand on values that connect a destination to the consumer in a unique way that the competition cannot surpass, as Rome and Paris have done.

Another key marketing weapon at the disposal of island destination is bringing environmental and social development responsibility to the product as suggested by Bennett (1999, p. 54). Given their geographical isolation, island destinations have more scope for preservation of eco-systems and environmental control which gives an island unique physical characteristic (Reid and Reid, 1994, p. 44). Therefore potentials of eco-tourism are great given that it is one of the fastest-growing niche markets in the travel industry, (Kotler, Bowen, Makens, 2006). The Seychelles Islands, for instance is mostly cited as a good example of eco-tourism by Fotiou, Buhalis and Vereczi, (2002) in their study ‘Sustainable development of ecotourism in small islands developing states (SIDS) and other small islands’. Moreover, while islands are constraint by their size which limits tourism growth, the same characteristics may confer a sense of community and personalized ties (Wheeller, 1991) which are essential to boost the preservation of local culture and identity, an important aspect in achieving distinctiveness. Their small size also makes it feasible to offer highly personalized service which is a key feature of small islands tourism (Reid and Reid, 1994, p. 42) and highly sought by travelers. Bennett (1999, p. 54) argued that destinations that behave responsibly in ensuring that tourism both benefits local communities and is conducted in an environmentally sound manner will outsmart those that do not.

Market characteristics

Developing a marketing mix for destinations will vary according to each destination and especially the types of target markets. Firstly, understanding destination types and characteristics is of vital importance for its marketing. Each particular destination will be able to match certain types of demand only and therefore, understanding travel motivations is crucial in order to develop appropriate products and brand destinations for the right target markets, (Buhalis, 2000, p. 5). The same author asserted that destinations should not be aware only of the needs and wants of the existing customers but also of potential ones they can attract. A product portfolio can then be developed, which will enable the maximization of benefits and adaptation of the marketing mix to the target markets, (McKercher, 1995; Tribe, 1997). A perusal of relevant consumer behavior literature reveals that tourism products are selected according to a wide range of criteria. These criteria are altered according to the purpose and features of the trip, elements of the external environment, the characteristics of the traveler and the particularities and attributes of destinations (Gilbert, 1991 and 1993; Swarbrooke and Horner, 1999; Goodall, 1988 and 1991; Kent,1991; Mansfeld,1995; Mayo and Jarvis, 1981; Sirakaya et al, 1996; Mazanec, 1989; Mazanec, and Zins, 1994; Moutinho, 1987, Ryan, 1997, Woodside, and Lysonski, 1989).

For the purpose of this research, three market characteristics have been identified and discussed. Firstly, geographic origin represents the basis for collecting and interpreting tourism data in most regions as it seems to offer information relevant to developing marketing strategies, (Reid and Reid, 1994, p. 52). Substantive differences exist in seasonal and destination visitation patterns among nations. For instance, it has been accounted that USA, Canadian, UK and European tourists to the Caribbean islands differ along several dimensions, including: average daily expenditure, length of stay, season visitation patterns, type of accommodation patronized, kind of meal package used and number of countries visited per trip (North American Demand Study of Tourism, 1983; European Tourism Demand Study Update, 1983; Caribbean Tourism Statistical Report, 1987; Bogino, 1979; U.S. Travel Service, 1978). Hence, origin markets provide destination marketers with substantial information to develop marketing strategies.

Secondly, the purpose of travel also serves as a significant variable affecting visitor behavior. Reid and Reid, (1994, p. 41) argued that given their geographical isolation and small size, island destinations appeal mostly to leisure travelers, especially the ‘allocentric’. These consumers seek authentic and unique experiences and are willing to pay a premium for such, (Buhalis, 2000, p. 17). This is supported by Baum (1998), who contended that islands do provide a sense of adventure to travelers and are perceived by visitors to offer a significantly different environment to their mundane lives. Therefore, visitors’ expectations when visiting island destination would be driven by their perceptions of an undisturbed phenomenon of nature, (Valentine, 1992), which encompasses a range of tourism experiences including adventure and ecotourism, (Priskin, 2003, p. 501). The exploitation of such differential opportunities should therefore be at the heart of marketing policies in island destination through enhancing and emphasizing on their uniqueness.

Lastly, the marketing literature reveals that visitors with different experiences (e.g. potential, first-time and repeat visitors) have different information, perception, image and demand about a destination, (Wang, 2004, p. 103). In an empirical study conducted on ‘Tourism marketing management in small island nations’ by Reid and Reid, (1994), it was argued that characteristics of repeat visitors deserve particular attention due to high repeat visitation levels reported for island destinations. Such characteristics have several implications for marketing as underlined by findings in the literature that it is more effective to attract repeat visitors than it is to gain new ones, Oppermann, (1998), as it implies lower investment in time, money and creativity in contrast to pursuing new markets. Moreover, the distinctive buying behavior signals the ability of a destination to generate loyalty in the form of repeat visits. The important issue thus is acquiring knowledge of repeat visit characteristics such as visitation frequency, visit duration and period and size market to help focus on a market concentration strategy, (Reid and Reid, 1994, p. 51). However, destinations should not ignore the potentials of expanding their market base by targeting new visitors as such can open profitable avenues for them.

Overview of Seychelles and its marketing strategies as a tourist destination

Seychelles is a Unique Archipelago comprising of around 115 islands in the Western Indian Ocean. Till-to-date, tourism remains the pillar of the country’s economy, through direct and indirect contributions to GDP and through inflows of foreign currency including tourism receipts and foreign direct investment. As a tourism destination, Seychelles offer an ever-expanding kaleidoscope of experiences to visitors seeking quality and diversity as well as unrivalled opportunities for global investors. With the islands’ distinctive natural features and home to a diversity of endemic and indigenous species, the archipelago is well-known for its sound environmental protection which forms the basis for inbound tourism. However, although much emphasis is placed on preserving the ecological marvels and natural purity of the islands, Seychelles offers a multitude of modern tourism facilities, services, infrastructures and attractions.

Promoting tourism to the Seychelles was entrusted to the Seychelles Marketing Authority (STMA) established in June 1999 as the official destination marketing organization representing the local community. Since the year 2000, Seychelles had largely been marketed under a black and white campaign using the slogan ‘as pure as it gets’, with the focal point of Seychelles’ ‘untouched beauty and natural perfection’. The brand logo of the campaign was represented by four circles symbolizing the lush green tropical islands, the white beaches, the coral reef, and the Indian Ocean. Since then, the marketing function was driven by the collective local expertise supported by international marketing experts and Seychelles Representation Offices overseas. A myriad of marketing tools was employed including magazine and website advertising as well as joint promotions with stakeholders, which featured highly evocative black and white imagery to portray Seychelles’ Unique Selling Points (USPs) and as the preferred long-haul ‘Sun, Sea, Sand’ destination for the affluent visitors.

In 2005, the destination marketing function was conferred to the Seychelles Tourism Board (STB) which in 2008 became a parastatal organization after it was handed over to the private sector whilst the government moved back to being the ‘facilitator’ of the industry. At the onset of its establishment, STB continued in pursuing the tasks of the previous DMO until 2007 where it unveiled a new tourism brand bearing the slogan, ‘Not just another place, another world’. The underlying aim was to move away from the traditional promotion of Sun, Sea, Sand, to reflecting the diversity of Seychelles as the World’s only mid-ocean granitic islands and depicting the range of attractions and activities that are part of the Seychelles experience. With this, STB embarked on an aggressive program to revise and further enhance its traditional marketing tools to re-launch the destination in a bid to ensure that Seychelles is recognized as one of the most desirable tourist destinations in the world. With this saw changes towards a fully-fledged e-marketing section, greater enforcement on Seychelles’ USPs and the launching of the ‘Affordable Seychelles Campaign’ in March 2009 at the ITB trade fair in Berlin to help promote the country’s smaller establishments under the brand name ‘Seychelles Secrets’.

Whilst destination marketing has been a relatively well-studied line of inquiry in the field of hospitality and tourism for many years, destination marketing issues and concerns of small island destinations remain relatively untouched as evidenced by the apparent lack of published research in this area. The latter henceforth provides the basis for the current study, which aims to review and evaluate the effectiveness of destination marketing tools in the Seychelles Islands. References are made to other practical researches whilst exploring the theoretical and research issues related to destination marketing

METHODOLOGY

Given the descriptive nature of the research, both primary and secondary data were collected for the study. A plethora of academic journals and books were reviewed to provide a comprehensive review of destination marketing studies in small island destinations and to present additional perspectives to the field of inquiry at both conceptual and methodological levels. Primary research included both qualitative and quantitative methods.

The sampling method of this study was twofold. First the study’s focus necessitated a sample of organizations whose roles and purpose paralleled the research topic. The first subsample thus consisted of organizations that are directly involved in marketing the Seychelles destination selected using a non-probability quota sampling. The targeted organizations were the Seychelles Tourism Board, Travel Agencies, Airlines and Hotels. The research subjects were then conveniently selected as per the size of the marketing department. A total of 25 participants were targeted for the first subsample. Secondly, a non-probability, convenience sampling was used for the second subsample which composed of tourists’ respondents visiting the Seychelles during the period with a sample population of 100 subjects. Given the size of the archipelago and the time frame of the research, the number of research subjects was assessed as satisfactory.

Two separate self-administered questionnaires were developed for the study designated for the two subsamples. The relevant literature and survey instruments developed by past researchers provided the basis for developing the questionnaires. A response rate of 64% was recorded for the organizations and 83% for tourists’ respondents. Statistics were analyzed by the Statistical Package for Social Sciences (SPSS) version 17.0. The results have been elucidated by means of descriptive statistics and cross tabulations. Content analysis was employed to analyze the data derived from open-ended questions.

Globalisation and the Internet have changed every aspect of the tourism and leisure industry – from marketing and communication channels to booking and hospitality services. Many of the previous strategies employed by the industry no longer are effective because of these new market forces. Organisations within the tourist and leisure industry must be attuned to the shift in consumer and business trends related to where they seek information and book their travel in order to maintain or grow their businesses. Companies should also be aware of how various communication channels can be leverage to attract specific regional tourist markets. This paper examines both traditional and innovative communication channels – print, media, Internet, agencies and booking companies, and word-of-mouth – to distinguish between what is effective and non-effective now and in the near future based on specific trends that are currently influencing the industry’s evolution. As the research found will illustrate, the effectiveness or non-effectiveness of each channel is linked to the travel stage – from planning and booking to the destination experience and journey home.

Traditional communication channels within the travel industry have centred on booking agencies an shops, print media and advertising, marketing collateral, and television and radio. When it comes to the destination experience, word-of-mouth, travel kiosks, and tourist centres are other traditional channels that seem to work well.^[1] These channels were – and, to a certain extent, still – able to provide brand promotion, nurture customer relationships, and offer a “value proposition.”^[2] In relation to marketing efforts, traditional channels “follow a passive one-to-many communication model, whereby a company reaches current and potential customers through the broadcasting of the same message.”^[3] However, in terms of today’s marketing strategies, there are a number of reasons why this channel is not effective: “uncustomised message to every consumer, wasted exposures to uninterested audiences, and ‘noise’ distraction from competing and conflicting messages.”^[4] Additionally, traditional mass media formats of print, television and radio do not offer the new demands for interactivity, flexibility, and accessibility.^[5]

In terms of booking travel, these channels may still attract a certain demographic of travellers, but they mediums do not reach the potential audience that might be possible if more innovative channels were utilised. This is because of a movement related to consumer preferences from the “High Street” to the Internet.^[6] In addition, these channels could also be considered ineffective based on their inability to maximise monetary resources. These channels can also be ineffective in that they do not build repeat business or encourage long-term relationships with customers because there is an inability to develop specific, customised communications. Print, television and radio tend to be more expensive while booking agencies and shops tend to produce higher overhead costs, making these more expensive than some of the newer methods of communication that rely on technology to reach more people while minimising the cost of using these channels. The traditional methods of communication tend to be more fragmented, reducing the level of brand recognition and equity that could be achieved through some of the more innovative channels.^[7]

One aspect where traditional communication channels may still be effective is with destination guides and services once travel has been booked and the trip has commenced. For example, it is estimated that 60-70 per cent of visitors to the UK will still use travel books and guides while 10-20 per cent will still seek Tourist Information Centres or related “in person” service to get their information.^[8] While 25 per cent may utilise the Internet or a mobile device while others will use a combination of traditional and technology communication channels to find information about their destination while travelling,^[9] traditional channels seem to be more effective during this part of the experience.

There are signs, however, that indicate that technology may enable these communication channels to become more effective in addressing travellers who are seeking unique destination experiences and on-demand information. While basic information, such as specifics on major attractions, hotels, restaurants, and the like, will still be sought, there may be a need to also supply information on unique places, opening and closing times, special exhibitions, and smaller attractions.^[10] As travellers become more technologically savvy, the traditional methods may no longer satisfy demand. As one study noted:

For example, growth is being realised in handheld devices that “combine cell phone voice communication, Internet access and global positioning – enabling visitors ‘en route’ to a destination to access product information and make bookings; to put together itineraries; and to relate their position quickly to nearby services (theatre, restaurants, attractions, events, etc.^[11]

Those destination service organisations currently focused on traditional communication channels may want to start strategising on how to incorporate new channels into their offering to retain their customer base.

More than other industries, tourism is an “information-intensive” industry that consists of numerous producers that need to work together to serve their clientele.^[12] As such, it was one of the first industries to widely adopt^[13] some of the emerging communication channels, such as the Internet, which has increased the “interactivity between consumers and suppliers.”^[14] Not only does it provide an inexpensive delivery channel for information, but it also “empowers the marketing and communication functions of remote, peripheral and insular destinations as well as small and medium sized tourism enterprises which become able to communicate directly with their prospective customers and differentiate their product according to their needs.”^[15] Traditional communication channels could not provide the geographic reach that a channel like the Internet has now been able to do in creating an infrastructure that enables information convergence.

One niche where the Internet has been particularly effective as a channel for the tourist and leisure industry is marketing communications and advertising by creating a “narrowcast.”^[16] In terms of addressability, those utilising this channel can also provide unique experiences for the consumer. Customisation of information and the ability to create unique sales propositions make newer communication channels, such as the Internet and database management, more effective than its traditional predecessors. The Internet can effectively mirror the benefits of personal selling techniques “but with much more flexibility, better memory and less cost.”^[17] This need for customisation comes from the growing shift in the demographics of today and tomorrow’s traveller. As one research firm noted: “More attention will need to be given to tailoring propositions to suit the ageing population, those with more time and money to spend on leisure, the childless couples seeking quality time, or the emerging traveller nations of China and Central Europe.”^[18] Strategies now must address “multi-generational needs, wants and desires.”^[19] The introduction of mobile handsets and high-tech communication channels has helped the industry “develop and leverage customer relationships and to interact with more customers across more channels than ever before.”^[20] The ability to achieve this also creates effective cross-selling opportunities that might not have been possible using traditional channels.^[21]

Related to these demographic trends, consumer and business demand is also now on an instantaneous cycle. Provide the information that they need or they will move onto the competition. Traditional methods cannot adapt to these lead times^[22], making the Internet and real-time answers via web sites a more effective method. Online travel agents are an excellent example of just how effective the Internet is as a communication channel. As one research firm explained, “The global reach of the worldwide web brings the massive network of suppliers, such as airlines, hotels and tour operators, within the reach of millions of customers.”^[23] Unlike a traditional travel agency, online channels provide 24/7 access, real-time updates, and the ability for multiple brands and travel products to be offered simultaneously for the lowest price, reducing the time that the consumer or business has to spend searching for their travel needs.^[24] There is also a degree of transparency in pricing that has never been possible.^[25] No traditional communication method can deliver this type of effectiveness.

Despite the effectiveness that the Internet and technology have brought to the travel industry, one aspect that illustrates the advantage of traditional methods comes down to personal service. Unfortunately, technology removes the intimacy of face-to-face communication channels. In response, many organisations utilising technology are providing telephone support so that customers still feel that connection.^[26]

An interesting aspect of business that is becoming a growing part of the tourist industry is environmentally based and involves Corporate Social Responsibility (CSR). This becomes especially important in new and emerging economies.^[27] In looking at other aspects of the travel and leisure industry that utilise communication channels, the use of local community groups, community leaders, and media organisations^[28] are two channels that work effectively to help develop a sustainable tourist trade in developing countries, such as those in Africa, Eastern Europe, and Asia. These channels can help create a tourist trade in less modernised areas through such “grassroots” tactics as “training; participatory workshops; community, group, and individual meetings; local radio; school newsletters; and local events.”^[29] In these areas, more advanced channels, such as the Internet, may not be effective except for attracting travellers from Westernised cultures that rely on this technology to find information. If the goal is to attract more foreign tourists, investment in tactics utilising this type of channel might then become an effective mechanism for a sustainable tourist and leisure industry. The Internet could then become an important way “to put local tourism micro-enterprises into direct contact with the global market of travellers.”^[30]

The changing levels of effectiveness in the various travel and leisure communication channels have had the greatest negative impact on smaller, niche travel agencies. They cannot compete with larger online entities that have the resources to participate in the newer, more effective channels created through technological advancements and the globalisation efforts of travel and hospitality firms. Other aspects of the travel and leisure industry can look to utilise both traditional and emerging communication channels for effective coverage and interaction with their customers by enhancing their marketing and promotional efforts while expanding the capabilities of their service offering. The tourist and leisure industry will need to continue utilising a multi-pronged approach through the power of multiple communication channels to serve all its customers.

WORKS CITED

Buhalis, Dimitrios. “Information Technology as a Strategic Tool for Tourism and Hospitality Management in the New Millennium.” Tourism Review, No. 2, 1996, pp. 34-36).

Grenna, Lucia; Hilbruner, Roberta; Santi, Emanuele; Scuppa, Gianmarco; and Vereczi, Gabor. “Communication and Sustainable Tourism.” USAID, 2006, pp. 1-27.

Kyriakidis, Alex. “Tourism, Hospitality & Leisure – Executive Report.” Deloitte & Touche UK, 2003, pp. 1-26.

Liu, Zhenhua. “Internet Tourism Marketing: Potential and Constraints.” Hotel Online. 2000. .

Raleigh, Lori. “Top Ten Issues in the Hospitality Industry for 2007.” International Society of Hospitality Consultants. November 2006. .

Wright, Tom. “Customer Contact Services.” VisitBritain. October 2004, pp. 1-33.