Author: Andre Coleman

Tourism if often referred as the worlds largest industry and regarded as a means of achieving community development Sharpley, 2002. According to the World Tourism Organisation (2009), tourism is one of the world’s fastest growing industry and one of the global engines of development. One of the most popular topics of tourism is tourism impact studies toward the community. The understanding of community’s perceptions on tourism impacts is important (Ap.1992). A main reason for the rising interest has been the increasing evidence that tourism can both positive and negative impacts on local communities involved (Lankfort & Howard, 1994). Different perception from different residents can provide insight into the nature and degree of tourism impacts towards the respective tourist destination. The community perceptions on tourism impacts are likely to be an important planning for successful community development (Ko & Stewart, 2002).

The social conflict theories see society as providing a setting that generates conflicts and change. In fact, this approach emphasizes on equality and look at the extent to which such factors as race, ethnicity, gender and age are linked to unequal distribution of money, power, education and social prestige. (Macionis,2000). Equation involved a number of cases where communities are engaged in struggles with tourism developments. Social change forced by challenges of tourism can be negative as well as positive. Indeed the positive example described above went through set-backs and conflicts as part of the process. However, in several cases, increased conflict is more than a temporary blip. Conflict has arisen both within and between communities.

2.1 Doxey’s Irridex Model

In 1975, Doxey devised a theoretical model which has come to be considered as one of the most important contribution to tourism literature. In this model, Doxey states that an increase in the numbers of tourists and a more developed tourism industry at the destination results in irritation in the host community. In other words, this can lead to incompatibility of the host and the guest. This irritation can take the form of unfriendly behavior personified as resentment from the local community towards tourism. In this case the perception of the residents varies from ‘euphoria’ (a feeling of happiness or comfort) to ‘apathy’ when locals start losing interest in tourism; to ‘annoyance’ after the numbers of tourist and the unfavourable impacts have increased; and finally ‘antagonism’ (a generation of hostile reaction against tourism) (Cordero 2008).

Moreover there are cases where tourism developments have been initiated by an individual resident, or an outsider has sought to form an alliance with one or two locals, so stimulating internal community conflict. The impact of changes in social capital on sustainable livelihoods is hard to assess. But there is no doubt that particularly in such arid and relatively isolated areas, a household’s membership of the community, and the organization strength of that community, influence their livelihoods. Rural households need effectively functioning community institution to manage and mediate relations between households, and the land, natural resources, social networks and informal markets on which they all depend, and represent the community’s interest to others.

2.2 Butler’s Tourism Destination Lifecycle Model

According to Cordero (2008), although Butler’s Tourism Destination Lifecycle Model (2006) suggests that every tourist destination experience similar stages of development: “exploration involvement, development, consolidation, stagnation, decline and/or rejuvenation”.

Figure 1: Butler’s Tourism Destination Lifecycle Model (Source: Butler 1980)

The first stage in the destination lifecycle starts with small numbers of tourists who visit the area gradually due to limitation such as accessibility to the area. The numbers of tourists increase rapidly as development assume several forms depending on such factors as the availability of information, marketing activities in the area and the existence of various services and facilities. The numbers of tourists then start to decline because of the destination reaching its full carrying capacity. Butler’s model has been supported by scholars such as Akis (1996), it has been contradicted by others such as Dyer (2007). Both Butler’s Destination Lifecycle Model and Doxey’s Irridex Model are limited by their unidirectional conceptualizations.

2.3 Ap’s Model For Understanding Residents’ Reactions

According to Eagly (1993), attitude is defined as a “emotional tendency that is articulated by evaluating a particular entity with some degrees of favor or disfavor”. Development stages here are described as “embracement, tolerance, adjustment and finally withdrawal” (Ap 1993). Similar to Doxey’s and Butler’s models, this model describes the way in which tourism development affects local people’s attitudes towards tourism. Embracement takes place when local people, especially those who benefit from tourism, accept it and feel positively about its impacts. In the tolerance stage, local people start feeling more of the impact of tourism. They become divided between being for or against tourism. Depending on the degree of their involvement in tourism, some of them adjust as per the adjustment stage while others do not. Finally, withdrawal takes place when local people can no longer cope with the impact of tourism and so their negative perceptions take over.

2.4 Social Exchange Theory

Social exchange theory (SET), used here, suggests that residents are likely to support tourism as long as the perceived benefits exceed the perceived costs. SET is based on the principle that human beings are reward-seeking and punishment avoiding and that people are motivated to action by the expectation of profits (Skidmore, 1975). SET assumes that social relations involve exchange of resources among groups seeking mutual benefits from exchange relationships.

There are a number of factors influencing resident’s attitudes towards tourism development related to its social, cultural, and environmental implications that have been examined using social exchange theory. SET is concerned with understanding the exchange of resources between parties in an interaction situation where the objects offered for exchange have value, are measurable, and there is mutual dispensation of rewards and costs between actors (Ap, 1992; Madrigal,1995).

From a tourism perspective, SET postulates that an individual’s attitudes towards this industry, and subsequent level of support for its development, will be prejudiced by his or her valuation of resulting outcomes in the community. Exchanges must occur to have tourism in a community. Residents must develop and promote it, and then serve the needs of the tourists. Some community residents reap the benefits, while others may be negatively impacted. Social exchange theory suggests people estimate an exchange based on the expenses and profit incurred as a result of that exchange. An individual that perceives benefits from an exchange is likely to evaluate it positively; one that perceives costs is likely to evaluate it negatively. Thus, residents perceiving their benefiting from tourism are likely to view it positively, and visa versa. Overall, we may conclude that residents are likely to participate in an exchange if they believe that they are likely to gain benefits without incurring unacceptable costs. If locals perceive that the benefits are greater than the costs, they are inclined to be involved in the exchange and, thus endorse future development in their community.

2.5 Aspects of Conflict

Thus, by rejecting the fact that society functions to promote solidarity and social consensus, conflict theorists put forward that society is about competition for scarce resources. This competition is reflected in the social institutions themselves and allows some people and organisations to have more resources and maintain their power and influence in society. Also, residents may experience a sense of elimination and isolation over planning and development concerns of the village and they may even undergo a loss of control over the community future as ‘outsiders’ take over establishment and new development. Hotels built in massive quantity or restaurants with standardized franchise designs might collide with local standards and disrupt the aesthetic appearance of the community, harm the unique community character, and spread equality.

Moreover, as the tourism industry has expanded, there have been an increasing number of incidents whereby local people are denied their traditional rights of use to beaches, land and sea. The locals often claim that they are chased away from their lands and are denied their exclusive rights to use the beach, land and sea. The farmers are forced to move away from their original farms as soon as the area is earmarked for tourism development.

2.6 Tourism and Sustainability

Sustainability, for tourism comprises of three interconnected aspects: Socio Cultural, Economical and Environmental. Sustainability implies permanence, so sustainable tourism include optimum use of resources, including biological diversity; minimization of ecological, cultural and social impacts, and maximization of benefits to conservation and local communities.

However, the promotion of tourism development in many contexts often takes place without balancing short term economic but in fact priorities with longer-term environmental and socio cultural objectives. The tourism development study repeated emphasizes the importance of people’s participation through power sharing, social cohesion and knowledge enhancement (Prentice, 1993; Frumn, 1998; Timothy, 1999; Tosun, 2000; Mitchell and Reid, 2001).

Thus the justification of this study was to probe the different type of conflicts and consequences arising from tourism in the village of Belle Mare. Tourism’s socio cultural, economical and environmental impacts are example, from the perspective of the “host” community, of the problem caused by tourists.

2.7 Socio-Cultural Impacts of tourism

Social Impact tends to consist change occurring in the everyday life of the society and the adaptation to the existence and operation of the tourism sector. Socio-cultural transformations engendered by tourism on host communities include changes in traditional lifestyle, value systems, family relationships, individual behaviour and community structure (Ratz 2000). Social Impacts are transitory changes with cultural impact tend to take place in the long term (Teo 1994). Substantiation from numerous assessments of tourism impact reveals that tourism activity and development have both positive and negative impacts on local communities and their cultures. In simple term, Wolf (1977:3) states that Socio Cultural impacts are “People Impacts”; they refer to the positive and negative effects on the Host population of their direct and indirect association with tourist. An extensive interest emerged as early as 1970’s in the mechanism providing significant changes in the human environment leading to either an ameliorations or deteriorations in the quality of life of the local population

Socio-cultural impacts relay to changes in societal value systems, individual behavior, social relationships, lifestyle, mode of expression and community structures. The focus of socio-cultural impacts tends to be on the host community, i.e., the people who reside in tourist destinations, rather than the tourist-generating region. Mathieson and Wall (1982), state that socio-cultural impacts are the effect on the people of host communities, of their direct and indirect associations with tourists.

The socio-cultural impacts of tourism can be both positive and negative (Swarbrooke 1999). He argues that the negative or positive impacts are determined in accordance with factors such as the structure of the local community and its own culture, the facilities subsidized by the public sector to reduce the negative impacts, the nature of tourism at the destination and the degree of socio-economic development. Thus the perception of impacts can differ by factors such as community attachment, dependency on tourism, age, gender and education. With regard to community attachment, most studies have accomplished that the longer, a host has been resident in the area, the less they like tourism that is they are less ‘attached” to tourism (Jurowski 1997, Weaver 2001, McGehee and Andereck 2004)

It has been found that there are many researched conducted in the field of socio-cultural impacts, with conclusion being divides into the following categories: the negative consequences (Dogan 1989), the positive consequences (Brunt 1999) and no real social impacts (Liu 1986). Various studies assert that tourism can make both positive contribution to the sustainability of local communities particularly by increasing levels of economic welfare and well being. But at the same time it can interact with the common activities of the local communities which is potentially harmful. In general, residents appeared to be strong agreement that tourism brings both positive and negative impacts. But at the same time the overall positive attitude towards the social impacts is not surprising and can be explained by social exchange theory which assumes that potential beneficial outcomes will create positive attitudes towards tourism (Jurowski and Gursoy 2004). Similar findings were reported by Lankford et al (2003) who found that residents’ attitudes will be positive if they can use tourism resources or else it would become a trouble for them.

2.7.1 Positive Cultural Impacts of Tourism

Throughout history, culture is a significant motivator in arousing Man’s curiosity to travel from one country to another. Tourists want to appreciate the uniqueness of aspects of culture of various sections of our heterogeneous population. However, in the very broadest sense, culture can be understood as the whole way of life that is vital for the survival of a specific group or people living in a specific society. Thus, culture can be the dominant values that give direction for the day-to-day activities of people in society, comprising of the symbolic values and beliefs, intellectual and artistic achievements, traditions and rituals as well as the dominant patterns of living.

Arts and Handicrafts

From one side of the coin, tourism contributes in the conservation of Archeological and Historical sites, Arts and Handicrafts, Customer and Traditions in our country. Special mention should be made to Arts and Handicrafts for tourism in Mauritius as it has paved the way for the success of this particular sector. Every year the arts and Handicrafts sector produce a variety of ‘souvenirs’, higher-quality carvings, and hand made Artefacts to satisfy the demands of our foreign visitors. In order to attract more tourists, architectural and historical sites are restored and protected (Inskeep, 1991; Liu and Var 1986).

Souvenir is perceived as authentic reminders of a particular place are powerful signifiers of ideological meaning. It can be used as reminder of a particular place, as a symbols of certain cultures and religions and also as a reflex of social processes, interest and power relations. In certain societies the souvenir is important, not only as a cultural artifact but also as an analytic tool for understanding complex social processes.

Culture Expression

Tourism is the edge for cultural exchange, facilitating the communication between residents and visitors (domestic and international). Economic benefits aside, outside contacts draws awareness to the host community. People want to interact with other culture, learn about traditions and even confront themselves with new perspectives on life and society. Tourism has brought villagers into closer contact with the outside world; residents come into contact with ideas of the wider world, partly by talking with tourists. Tourism also helps to encourage interest in, and conserve aspects of, the host’s cultural heritage, which contribute for additional income for the destination as well as for the individuals and local business. Moreover, many people of different cultures come together by means of tourism facilitating the exchange of cultures (Brayley et al, 1990).

Tourism is normally an experience driven industry, and local culture is a sole experience, more so local personality, hospitality and food than “built attractions”. The more one knows and learns about a destination or its culture the more fulfilling the experience will be. Tourism can also help to promote a sense of community pride when they visit a specific location for a reason. However, community pride is generally related to economic prosperity with prosperous community more likely to take pride in their district. Well-presented towns and well-maintained facilities help visitors to feel welcome and can contribute to community pride, as Belle-Mare is one among them.

2.7.2 Negative Cultural Impacts

Negative socio cultural impacts are sometime the result of direct contact and the demonstration effect and these can distort the traditional behavior and customs. Tourism has also been criticized because it creates anxiety and can be a source of inter-generational stress. There are also other instances where cultural tourism has resulted in the commercialization of customs and traditional ceremonies. Tourism may also be related to increased crime, drug, prostitution and aids beyond a certain volume it can be a source of antagonism (Doxey, 1975). As stated by McNaughton (2006), tourism has the potential to create inequality and social tension. Sing-Cheong (2007) state that the tourism industry and globalizations are crossing borders between nations and cultures, resulting in many socio-cultural consequences.

Trivialization

It refers to the conversion of aspects of culture into a commercialized form of entertainment for tourist. A very famous example of trivialization refers to the sega in Mauritius.

The sega is mostly from the African music of the old slave days. It was being sung by the slaves to lament their loss of freedom and removal from their homes or loved one. Today the sega is a commercialized form of entertainment performed in a “polished style” by professional troupes in Hotels and Restaurants. The traditional musical instrument – The Maravanne, The Ravanne, The tambourine, and The Triangle have been replaced by sophisticated contemporary influences and instruments with a view to develop culture. The sega has lost its natural beauty, they turned out to arouse the inner feelings of the tourists.

Religion

The World Tourism Organization recognizes religion as significant motivator in arousing Man’s interest to visit religious sites of country to country. Holy places such as, Jerusalem, Mecca and Medina are famous religious visiting sites of the world. In Mauritius the Grand Bassin sacred lake remains a famous visiting site for tourist. It is essential to organize marketing campaigns so as to raise awareness of other religious sites such as la Cathedrale Saint Louis, Le Temple Kaliamen (Kalaysson), La Jummah Mosquee, Le Marie Reine De La Paix and Le tombeau De Pere Laval in Mauritius. To recall tourists in Mauritius are free to visit any religious shrines – provided they are dressed properly i.e mo shorts, no mini skirts, removal of shoes at the temple and mosques are expected code of behaviour for visitors.

Tourist Behaviour

Tourists often, out of ignorance or carelessness, fail to respect local customs and moral values, when they take a quick snap shot of the labourer or fisherman without asking their permission. When they do so, they can bring about irritation and stereotyping and can also invade the local peoples’ lives.

Crime, Prostitution and Sex Tourism

The relationship between tourism and crime is hard to ascertain. But crime rates naturally increase with the growth and urbanization of an area, and growth of mass tourism is often accompanied by increased crime. The existence of large number of tourists with lots of money to spend, increases the attraction for criminals and brings with it activities like robbery and drug dealing. The commercial sexual exploitation of children and young women has paralleled the growth of tourism. Belle-Mare has become a victim of this act as apartments are being rent on a timely basis. There are as well sources of contact, prostitutes and pimps are commonly citied as sources of aids in Mauritius. Though tourism is not the cause of sexual exploitation, it provides easy access to it.

The Demonstration

The main impacts of the tourist host relationship are the demonstration effect, when the host behaviour is modified in order to imitate tourists (Duffield and Long 1981; Crandall 1987; Pearce 1989). Youth are particular susceptible to demonstration effect particularly in term of changing dress behaviour, spending extravagantly on consumption and so on. As such tourist host interaction constitutes only one factor for change in attitudes, values or behaviour. There are as well other significant agents of demonstration effects such as radio, internet, print media, increased traveling, television and videos.

Access to Beach

Though Mauritius has a number of potential inland attractions, beach visitation remains a popular leisure activity of Mauritians. The rapid expansion of hotels and campement along the coastline has snatched away the rights of the citizens to walk freely or enjoy the attractiveness of their beaches. These are subtle mechanisms at work to deter locals to access quality of the beach. The residents are as such not against tourist but rather against the restriction. The local people express a feeling of fear and frustration as more hotel and campement construction will impinge further Right of Future Generation.

2.8 Economic Impacts of tourism

Tourism was encouraged first because of its economic impacts. Tourism is an engine for generating a range of new private and public income opportunities. The most immediate and direct benefit of tourism development is the creation of jobs and the opportunity for people to increase their income and standard of living in local communities. Hence local communities turn to tourism as a means of raising income, increase employment and living standards (Akis et al., 1996). These impacts are observable as tourists interact with the local economy, and community. Hence, it is apt to consider the impact of tourism under the heading of economic impacts. The economic impacts of tourism are the most widely researched impacts of tourism community (Mason, 2003). Economic impacts are easier to research in local community because it is small and generally easier to assess. The impact can either be positive, beneficial, or negative and detrimental to local community. Tourism can have positive economic effects on local economies, and are visible impact on national GDP growth. It could also an essential component for both community development and poverty reduction (Ashe, 2005). The economic impacts of tourism are therefore, generally perceived positively by the residents (Tatoglu et al., 2000).

Economic impacts are one of the most researched areas of tourism. As Pearce (1989) put out:

“Studies of the impact of tourist development on a destination or destinations have been the largest single element of tourism research

aˆ¦aˆ¦much of this is predominantly the work of economists and has concentrated on the effects of income and employment.”

Tourism has many linkages with other economic sectors, and if incorporated into national development plans with sufficient provisions for inter sectoral linkages, it can contribute to the growth of all tourism-related activities in all of the major economic sectors – agriculture, including fishing, manufacturing and services, including transportation. Hence economic impacts are associated to and cannot be easily alienated from other types of impacts. All economic developments pertaining to tourism have effects on the society, economy and the environment.

2.8.1 Positive Economic Impacts of Tourism

Tourism has been a landmark in the development of Mauritian economy. Our country has passed through several distinct phases and in the process, has successfully diversified from a Monocrop culture highly dependent on the Export of sugar into Manufacturing, Tourism and Financial sector.

Contribution to GDP

The National income or Gross Domestic Product (GDP) is one of the most important measures of the pecuniary consequences of Tourism. As the largest component of tourism industry, hotels and restaurants, inevitably reflects a fair idea of overall tourism contribution on the economy. Data from the Bank of Mauritius indicate that gross tourism receipts for the first nine months of 2010 were Rs 28,167 million, i.e. an increase of 9.7% compared to Rs 25,685 million for the same period of 2009, (Table 1).

Increase Opportunities for Shopping

Another argument for the growth of tourism industry is that it gives local people the opportunity for more shopping. This is so because with the development of tourism, there are more and more shopping centers, supermarket, shops, restaurants and many other business units which are setting up in Belle Mare, as providing them with first class services for both the local as well for the foreigners.

Tourism As An Employer

Tourism as a highly labour intensive service industry offers a wide range of Direct Employment and Indirect Employment. With the setting up of different hotels, restaurants, bungalows, shopping centers, supermarkets and many other businesses in Belle Mare, have help to curb the unemployment problem. According to the survey of Employment and Earnings conducted by the Central Statistics Office, direct employment in hotels, restaurants and travel and tourism establishments employing 10 persons or more stood at 27,161 at the end of March 2010 showing an increase of 0.6% over the figure of 27,002 for March 2009. Of this number, 20,847 or 76.8% were engaged in hotel, (Table 2).

Improve Transport, Infrastructures and Public Utilities

The development or improvement of infrastructure constitutes an essential economic impact of tourism development in Mauritius. Urbanisation caused by rapid development of tourism might improve governmental and local services such as police, fire and security (MIlman and Pizam 1988). In addition the variety of social entertainment and recreational activities may increase in such areas. Usually the gains from infrastructural investment leads to good electricity and water network supply, improvements of roads networks and modernization of Airport are widely shared by other economic sector, tourist and hosts of the country

2.8.2 Negative Economic Impacts

According to Schianetz, Kavanagh and Lockington (2007), while tourism provides financial benefits, it can also generate negative effects in other areas. An impact of tourism is generally evaluated negatively, it is concern for the welfare of the community as a whole and cooperation among its citizens is decreased markedly as tourism increases and incomes rise.

The Land Market

The very expansion of tourism development has increased land values especially in some coastal tourist village. Increasing demand for accommodation, especially in tourism seasons, might push up the rents as well as the land prices for building new houses and hotels (Pizam 1978; Var et al, 1985). For example, lands for residential development in Belle-Mare were sold in 1987 at an average price of hundreds per square meter but in 2010 the land valued is within millions per square meter. Tourism is yet only one factor for escalation of land values-speculative attitudes have been endangered by the increasing influence of the host population and by a realization that land is a scarce resource in small island Mauritius are potential significant factors to take into consideration.

Inflationary Pressures

Tourism is a contributor to inflation by preempting supplies, leading to higher prices of consumer items especially fresh fruits and vegetables, and fresh fish in tourist zone. Even Liu and Var (1986) argue that the price of goods and services might go up with the increased demand from foreign customers. A vivid example of this situation is Belle-Mare where random price checks show that consumer items are up to 30% higher in the coastal region than in other village. Resident argues “Belle-Mare” has become very expensive, with the same price charged to resident and tourist alike. There exist a feeling of frustration among residents of tourist zone who felt deprive of some consumer items. Tourism make upon only one factor of inflationary pressure is the unavailability of items in Mauritius.

Important goods

There are other short-term economic costs that may result from tourism. If tourism development is heavily reliant on imported goods and services, there is a risk that existing local production may be hit adversely. This effect can be particularly significant if demonstration effect results in the local population copying tourists and increasing their consumption of imported goods and services rather than domestically produced ones.

Infrastructure Cost

Tourism development can cost the local government and local taxpayers a great deal of money. Developers may want the government to improve the airport, roads and other infrastructure, and other financial advantage, which are costly activities for the government. Public resources spent on subsidized infrastructure may reduce government investment in other artificial areas such as education and health

2.9 Environment Impact in Tourism

The environment is being increasingly recognized as a key factor in the tourism sector. In the last decade of the twentieth century, it has been noted that tourism depends ultimately upon the environment, as it is a major tourism attraction itself, or in the context in which tourism activity take place (Holden, 2000). Tourism and the environment are directly linked since the idea of tourism is based completely on man’s desire to get out and experience nature.

The term environment is often assumed to be only the physical or natural features of a landscape but according to swarbrooke, 1999, there are five aspect of the environment, namely, the natural environment, wildlife, the farmed environment, the built environment and natural resources. Among these, each component are linked together.

If tourism is not well planned it can result in the following consequences for the environment:

Land Resources

Since there is a rapid development in the tourism sector, there is a high use of land resources to cater for the demand of recreational facilities as well as construction of tourism accommodation and other infrastructure and consequently the natural landscape is threatened through deforestation.

Sewage and Littering

The construction of hotels, recreation and other facilities often leads to increase sewage and littering. Waste water has polluted seas and rivers surrounding tourist attractions, damaging the flora and fauna. There is also wide use of toxic pesticides on the beaches to control sand files and other pests. The chemical ends up in the sea in a very short time, thus sewage and littering can degrade the physical appearance of the water and cause the death of marine animals.

Pollution

Infrastructure is a broad concept linked to every facet of the economy and human life. Accordingly, the list of associated issues is long. For any purposeful analysis of issues in infrastructure development to lead to an action-oriented way forward, it is necessary to narrow down the definition of infrastructure and associated issues. The term infrastructure has been used since 1927 to refer collectively to the roads, bridges, rail lines and similar public works that are required for an industrial economy to function. Transportation, communication, sewage, water and electric systems are all a part of infrastructure. These systems tend to be high-cost investments. In general, infrastructure is location-specific and cannot be moved from place to place (www.unescap.org).

Transportation infrastructure cannot operate without transportation and transportation cannot run without transportation infrastructure. Different transportations have their own infrastructure to support each other. For air transportation, their infrastructure will be the airport. Port will be the infrastructure for water transportation while infrastructure for land transportation such as public bus will be the bus terminal or bus stop.

Transport infrastructure development in East and South-East Asia has played a key part in the phenomenal growth of world trade. The infrastructure backbone for international trade has been the container shipping network and increasingly the airfreight network. World container port traffic, which expanded by 9.2 per cent to 266 million TEUs in 2003, is dominated by Asian countries. They accounted for 46 per cent of container ship operations, 62 per cent of container port throughput, and 83 per cent of container ship building. Twelve major South and East Asian exporters together account for half of the world’s containerized exports (www.unescap.org).

Bus terminal or known as bus stationA is one of the most important transportation infrastructure whereA busesA stop to pick up and drop off passengers. It may be intended as aA terminal or stationA for a number of routes or as a transfer station where the routes continue. It is larger than bus stop where bus stop is usually built at the road side for the bus to stop for a while but not to wait for passengers.

Tel Aviv’s new central bus station was officially inaugurated recently, after 26 years of off-and-on construction, legal and financial disputes (Encyclopedia.com). A majority of the Dan and Egged Tel Aviv-area buses are now based at the new station; 5,000 buses pass through the station daily, carrying some 150,000 passengers. The station is the largest bus station in the world, encompassing 197,600 square meters indoors, and 34,400 square meters outdoors (Encyclopedia.com). The largest underground bus station in Europe isA Kamppi CenterA ofA Helsinki,A FinlandA completed in 2006. The terminal cost 100 million Euro to complete and took 3 years to design and build. Today, the bus terminal, which covers 25,000 square meters, is the busiest bus terminal in Finland. Every day, the terminal has around 700 bus departures, transporting some 170,000 passengers (www.webcitation.org).

Since bus station play a vital role in strengthening the volume of traffic as well as in providing better services to the passenger, the bus service undertakings, specially in the public sector, should come up and encourage the emergence of the bus station management as an independent discipline in the field of traffic management. (Kulshrestha, 1993, p.9)

Penang, as most of us may already know, is one of Malaysia’s most popular destinations for travelers coming from the local or the international communities (Talk Malaysia 2010). One of the main reasons for Penang to have so many travelers coming and going out annually is partly because there are a lot of interesting places to visit in Penang. Most of the interesting places in Penang are located at mainly around Georgetown and Seberang Perai (www.talkmalaysia.com).

Therefore, transport infrastructure especially bus terminal or station in Georgetown play an important role in order to pick up and drop off passengers from a destination to another destination. This is because Penang has traffic problem, therefore public transport are used.

Komtar Bus Terminal is the hub of bus services in George Town. All the bus routes of Penang radiates from this terminal. To be exact, Komtar Bus Terminal is not a “terminal” proper, but rather a bus station, because buses do not actually start from here, but rather, from the Weld Quay Bus Terminal. Nevertheless, most people will know it by that name. At the Komtar Bus Terminal, you can catch buses going to the north, central, south and west parts of Penang Island, as well as some buses that go to the mainland. Among the bus companies that use the terminal includes Rapid Penang, Milan, Transit Link and KGN-Hin. The terminal is located along Lebuh Tek Soon, although buses approach it via Jalan Ria and they emerge from the terminal into Jalan Ria once more (www.penang-traveltips.com).

As a bus stop user, not satisfied with bus terminal in Georgetown. Some of the same complaint had been made by locals and tourists too. This is because they have the difficulties in determine which bus to ride in order to reach their destination. Therefore, this study is to find out what are the factors which make the tourists satisfied and not satisfied with the bus terminals in Penang. This study also includes, to identify the present condition of transport infrastructure, the cleanliness in the bus terminals and the safety and security in the bus terminals. From these factors, this study is able to conclude what are their expectations towards bus stop in order to let the government make improvement.

1.2 Statement of Problem

Transport and traffic management have always been a bone of contention for Penang. Many feel that rapid economic development has not been met with an equal amount of attention given to proper traffic management and planning. There are about 1.4 million vehicles (motorcycles, cars and other vehicles) for a population of about 1.4 million people in Penang. This is about double the number of vehicles in 1999 (Sympologic, 2008).

For the above reason, public transportation had played a very important role to reduce the traffic in Penang. But without a good infrastructure, public transportation will not be able to run smoothly. There are 2 main transport infrastructures for bus in Georgetown which are Komtar Bus Terminal and Weld Quay Bus Terminal. But, locals and tourists are not satisfied with the bus terminals in Georgetown. This is because there are no proper route information and bus timetable. It is difficult especially for tourists to identify which bus to ride in order to reach their destination. Tourists always have to ask the bus driver one by one to ask for the destination. This had slow down the traffic also. Besides, from the observation, the bus terminals are not well-maintained in term of cleanliness and safety.

1.3 Goal & Objectives

The goal of this research is to study tourists’ satisfactions and expectations towards bus terminals in Penang.

In order to achieve the above goal, there are some objectives need to be done.

To examine tourists’ satisfactions towards bus terminals
To examine tourists’ expectations towards the bus terminals
To examine the present condition of bus terminals
To identify the cleanliness in the bus terminals
To identify the safety and security in the bus terminals
1.4 Hypothesis

From the objectives above, the below are the hypotheses which had concluded:

Locals and tourists are not satisfied with the bus terminals.
Locals and tourists have high expectations on the bus terminals in term of cleanliness and security.
There is no proper route information or sign board in the bus terminals.
The bus terminals are not clean.
The bus terminals are not secure.
The above hypotheses are made based on my own experiences and observation.
Significance of the Study

This research is able to let the government and private sector to make improvement on the bus terminals in order to let them become truly efficient. From the questionnaires which will be distribute and collected, they able to tell us the satisfaction level and expectation of locals and tourists towards the bus terminals. From their expectation, the improvement can be made. For example by putting up the route information and sign board, locals and tourists able to know which bus to ride to reach their destination. Besides, clean the bus terminals daily so that locals and tourists will feel comfortable and assign more security to secure the bus terminals. When the improvements have made, the locals and tourists will have the chance to use better bus terminals. All these will make the business of the bus increase too.

1.6 Scopes and Limitations of the Study

The scopes for my research are Penangites and tourists in Penang. Penangites and tourists who are the user of bus terminals are targeted. 80% Penangites and 20% tourists are chosen to carry out this research. In order to complete this research, distribution of questionnaires will be made to these 2 groups of people mentioned above. Besides, observation in the bus terminals will be done by my own selves too.

The bus terminals in Georgetown which would like to research on are Komtar Bus Terminal and Weld Quay Bus Terminal. These are the two popular bus terminals in Georgetown which crowded by people every day. This is because these are the two main stops which the bus will pick and drop passenger.

There are also limitations for this research. The first limitation is resources. There is very few information on books, journals or articles about transportation infrastructure. The next limitation will be the time. Only 5 months to complete this research. Last but not least, the limitation is the manpower. I am the only one who doing this research.

Chapter 2
LITERATURE REVIEW
2.1 Transport and Tourism

Page (2005) said that transport act as one of the important that contributed to the international development of tourism.

According to Page (2007), the mode of transport can be one of the main motivations for the tourists to travel. He also said that in the growth of domestic and international tourism, transport is the most critical element in the promotion. He continued said that transport links the tourist from the origin area with the destination area. Therefore it enables the holidaymaker, business traveler and other categories of traveler to purchase the products and experience what they have purchased. He added that transport may be an attraction in its own right. Tourists who travel by road may use public transport or private transport to experience a variety of destinations.

2.2 Transport and Tourism in Penang, Malaysia

A combination of East and West, Penang continues to grow in modernity but at the same time holding its traditions and old charm. Recently, because of the harmony of multiracial in Penang and the heritage buildings which are well preserved, these make the Georgetown being accorded a listing as a UNESCO World Cultural Heritage Site. Penang, long regarded as the food capital of Malaysia, it also attracts tourists with its beautiful beaches and delicious cuisines (www.tourismpenang.net.my).

Transportation in Penang is convenient. You can travel in or out of Penang by the well-connected of road, rail, sea and air. Not only the air and train service is good in Penang but the seaways also offer good transportation. Ferry and seaports are there to create convenient to the people in Penang and Buttterworth. Penang ferry is provided by the Penang Ferry Service that connects George Town, Penang and Butterworth. There are four terminals, one on Penang Island (Swettenham Pier) and three on the mainland. Next, railway act as one of the transportation in Penang, but they are not popular due to their low speed. Besides, international flights are available in Penang International Airport which situated in the Bayan Lepas area of Penang, Malaysia (www.asiarooms.com).

Goh (2010) said that traffic jams in Penang especially the major roads including Jalan Burma, Jalan Sultan Ahmad Shah, Jalan Jelutong and Jalan Mesjid Negeria re common although the population is small. Outside the city, jams are found even in Bayan Lepas and Telok Kimbar. He added that although the Jelutong Express Way had provided some relief to Jalan Jelutong and Jalan Mesjid Negeri, but the costs to Penangnites have yet to be calculated, although the highway is touted to be “free”. He suggested that Penang should follow the example of Crutiba. Crutiba is a city where the people rely on buses to avoid traffic jam. Recently, Rapid Penang buses are introduced for those who do not have car or have chosen not to use their cars.

2.2 Public Transportation

Zegeer (2002) said that good public transportation is an important to the quality of a community as good roads. According Ramanathan and Parikh (1999, cited in Ramanathan, 2001; Banister and Berechman, 2001; Ramanathan and Parikh, 1999; Eisner, 1991), transport is a vital element for the modern society now and key to sustained economic growth.

But, Ortuzar and Willumsen (2001) argued that the world of transport still face many problems of the past such as congestion, pollution, accidents, financial deficits and so on. They continued said that these problems will not get away until the traffic management improved.

They continue said that the transport problems have spread widely in both industrialized and developing countries. According to them, fuel shortages which are temporarily not a problem, but the increase in road traffic and transport demand has resulted in congestion, delays, accidents and environmental problems well beyond what has been considered acceptable so far. These problems have not been controlled to roads and car traffic alone. They added that economic growth seems to have generated levels of demand exceeding the capacity of most transport facilities. They continue argued that these problems are not likely to disappear in the near future. They suggested that it is necessary to ensure that a major effort in improving most forms of transport, in urban and inter-urban contexts.

With respect to the quality of prices and services, transport services have been traditionally been subject to tight economic regulation with respect to entering and exciting the market. In many countries, road and rail networks and airport and port systems are traditionally designed, built, and operated by the public sector itself, which is the ultimate form of regulation. This type of government intervention has resulted in excessive costs that are not matched by prices or quality, therefore creating an outcome that reflects the interests of the sector’s civil servants of contractors, unions, and other interests groups more than preferences of users and taxpayers (Estache and Rus, 2000).

According to UITP (2004), government and public transport share a same goal to make sure the public transport is accessible to all especially the traffic environments have to be well-designed and managed to let the people to reach and use public transport safely and with confidence. UITP suggested that government and the public transport community to work together to reduce not only the physical but also the psychological barriers such as cognitive, information, fear and discrimination to travel safely in cities.

UITP continues said that at any one time, an average of 25% of the population may have a degree of reduced mobility due to a physical or mental disability, impaired sight or hearing, or through having to carry heavy bags or travel with small children. UITP added, physical and sensory disabilities are often related to age and, as is well known, the proportion of the elderly population in western countries is growing and will continue to do so well into the 21st century. These are clear of the importance of improving accessibility to transport systems. According to UITP, benefits from improvements in transport accessibility are accrued not just to the disabled and ageing communities, but to all clients of the transport system.

2.3 Transport infrastructure

Traditionally, building extra capacity has been addressed due to the blockages in transport infrastructure. But the possibility is small for the further expansion of infrastructure in many urban areas where the demand for transport is highest. Furthermore, a number of reports have found that the construction of new roads and airports to relieve congestion is ineffective because it only serves to induce new traffic. On the other hand, a study undertaken by a Norwegian research organization, the SINTEF Group claims that infrastructure capacity increases are directly linked to decreases in polluting emissions from motor vehicles. Using a traffic micro-simulation, it showed, for example, that upgrading narrow, winding roads or adding a lane to a congested motorway can yield decreases of up to 38% in CO2 emissions, 67% in CO emissions and 75% in NOx emissions, without generating substantially more car trips (EurActiv.com, 2008).

According to Carcamo-Diaz and Goddard (2007, cited in IADB, 2000), Infrastructure, defined as the set of engineering structures, equipment and facilities with a long-term, useful life employed by households and the different productive sectors of the economy, is essential for economic growth (cited in Easterly and Serven, 2003) and integration. As pointed out by IADB (2002), there is a positive relationship across countries between income levels and the quality of infrastructure. According to Tanzi (2005), the implicit assumption about the direction of causation goes from infrastructure to growth, although this issue is still debated in the literature.

In many cases, the objective of transport infrastructure investment is to improve the accessibility of a given region by reducing travel time or increasing the potential to travel. Accessibility can be measured as the quantity of economic or social activities that can be reached using the transport labor, leading to increased competition and centralization. On the other hand, the impact for region concerned could be both positive and negative, depending on its initial level competitiveness (OECD, 2002).

According to ITF and OECD (2008), there are some features of surface transport infrastructure that make its provision distinct from many other areas of the economy and which will likely have to be accounted for when different models are being considered. They claimed that transport system does not exist for their own sake but rather to serve other economic and social activity, this is because transport is a ‘derived demand’. This means that the possible wider implications of capacity shortages in, and overall standard of, the transport system, must be taken into consideration in the design if any model for providing transport infrastructure.

2.4 Transport Infrastructure in Different Countries
2.4.1 Luxembourg

The pressure of congestion, excessive strain on transport infrastructure and environmental have led to a challenge due to a large and increasing number of commuters (OECD, 2008c). These pressures stem from both resident and cross-border commutes, which are broadly similar in number. High and increasing number of commutes among residents is reflected in Europe’s highest car ownership rate and one of the highest annual distances covered by automobile per capita. For cross-border commutes, 85% are made in passenger cars without use of public transport. These patterns lead to alarming levels of congestion on the main road transport corridors and there are now severe bottlenecks at the entrance to urban areas, notably in the city of Luxembourg. This results in wasted time, unsafe driving conditions, noise and high levels of emission and local air pollution (OECD, 2010).

2.4.2 France

According to Willis (2010), the transport infrastructure in France is one of the most modernized to be found anywhere in Europe and this makes international freight movements streamlined and effective. In the area of modern tramways, France is a world leader in railway technology. Rail transport is therefore always a best option for shipping companies and freight forwarders operating in France. The transport network is built as a web, with Paris at the center. There is a total of nearly 32,000 kilometers of track in France, most of which is operated by the French railway company, SNCF. Over the last twenty years, a set of high speed LGV (lignes a grande vitesse) have been constructed to connect most parts of France with Paris. There are same gauge rail links to adjacent countries of Belgium, Germany, Italy, Luxembourg and Sweden, as well as the Channel Tunnel link with the UK. The TGV, the French high speed train has broken world speed records is a sign of the way that France is a true global leader in rail transport. For freight transport, rail is a model in France.

2.4.3 Germany

According to Willis (2009), Germany has a transport infrastructure that is the envy of the world and this has helped enable the development of a highly effective freight services industry. The phrase ‘Germanic’ is often used as a byword for efficiency and with good reason, if the freight services industry in Germany is seen as a measure. He continued said that when consider that it is less than twenty years since the Berlin Wall came down and East Germany started its process of integration within Germany, the efficiency of the transport network throughout the country is all the more remarkable. There is a very efficient network of waterways, railways and motorways that make internal connections fast and straightforward and also connect Germany with other countries throughout the world.

2.4.4 Middle East

Timon Singh (2010) claimed that the Middle East and North Africa region has invested heavily in its transport infrastructure and for the likes of the UAE in particular over the past few years. He continued claimed that the money has gone into planes and trains in order to better improve between states, but to turn the region into both a business and tourist hub. Air traffic in the Middle East is the fastest growing in the world, and in order to cater for the increasing number of passengers at their various airports and thus improving their general transport infrastructure, the UAE has been implementing various aviation projects.

According to him, rail is another part of the region’s transport infrastructure that has gathered support in the Middle East from Dubai’s Metro System to plans for an expansive network connecting the GCC states. Qatar and Bahrain have one of the most ambitious projects, combining both rail and metro lines, which is set to transform the emirate into a major transport hub. The project, which is rumored to be costing over US$36.6 billion (QR133.5 billion) and estimated to take six years, is expected to be finished in phases over the next six years, with three major sections being the focus of the scheme – the metro network within Greater Doha, the over-ground railways covering the whole of Qatar and then, linking it to the rest of the GCC region and cargo trains.

2.4.5 London, United Kingdom

McDougall (2010) asked how do cities meet the needs of a growing population, promote diverse and healthy communities, improve the environment and tackle climate change. The answer is it’s a tall order and one that London is tackling head on with their aptly named “London Plan”. He said that the London Plan sets out to ensure that London’s transport is easy, safe and convenient and encourages cycling, walking and electric vehicles. The ambitious plan sets out the overall strategic direction for an integrated economic, environmental, transport and social framework for the development of London over the next 20-25 years.

He continues said that the London Plan identifies what are termed “Opportunity Areas” in and around London’s major reservoirs of brown-field land. These areas are characterized by their potential to accommodate new housing, commercial and other development linked to existing or potential improvements to public transport accessibility. It is important to make sure that they can be developed without undue additional pressure on London’s already-crowded public transport, or on the limited funds available for anything beyond committed transport improvements.

2.4.6 India

According to Pradhan (2010), transport is a key infrastructure in the present study, as causes energy consumption as well as economic growth in India. Therefore, he suggested that increasing transport facility along with energy consumption will lead to more economic growth in India. The achievement of higher economic growth through transport infrastructure and energy consumption could be due to its various direct and indirect benefits in the economy. But he claimed that the level of transport infrastructure is not so good, both in quantity and quality, in contrast to developed countries in the world. He suggested that if there is sufficient transport infrastructure in the economy, the result would be much better. He continued suggested that a suitable transport policy should be required urgently to boost economic growth and to maintain sustainable economic development in the country since transport infrastructure is a big deal to economic growth.

2.4.7 Malaysia

The greatest advantage to manufacturers in Malaysia has been the nation’s persistent drive to develop and upgrade its infrastructure. Over the years, these investments have paid off and serious bottlenecks have been avoided. Today, Malaysia can boast of having one of the well-developed infrastructures among the newly industrializing countries of Asia (www.mida.gov.my).

The latest development of Kuala Lumpur Sentral has become a futuristic self-contained city, providing the perfect live, work and play environment. A modern transportation hub integrating all major rail transport networks, including the Express Rail Link to the KLIA and Putrajaya, the government’s new administrative center. Besides, the Peninsular Malaysia’s network of well-maintained highways is a gain to industries. These highways link major growth centers to seaports and airports throughout the peninsula and provide an efficient means of transportation for goods. (www.mida.gov.my).

Malaysia’s central location in the Asia Pacific region makes her an ideal gateway to Asia. Air cargo facilities are well-developed in the five international airports – the Kuala Lumpur International Airport (KLIA), Penang International Airport and Langkawi International Airport in Peninsular Malaysia, Kota Kinabalu International Airport in Sabah, and Kuching International Airport in Sarawak. Malaysia’s biggest airport, the KLIA, surrounded by four main cities of Kuala Lumpur, Shah Alam, Seremban and Melaka has a capacity of handling 25 million passengers and up to 8 million tons of cargo per year. Cargo import and export procedures are fully automated at the KLIA to cut down delivery time (www.mida.gov.my).

Recently, Rapid Penang has introduced a state-of-the-art Intelligent Commuter Information System (ICIS), which provides real-time information on the arrival times of buses at terminals in Penang. The ICIS system, the first of its kind used by stage bus companies in the country, would enable some 75,000 commuters who use Rapid Penang buses daily to plan their journey more efficiently. It proved to be a success and has since been expanded for usage at the Komtar bus terminal, which sees the highest number of people boarding buses daily. A total of 200 buses operate from the Komtar bus terminal on a daily basis. The ICIS display system uses global positioning system (GPS) to map out the movement of all Rapid Penang buses and calculate the exact time of arrival of each bus at the Komtar bus terminal. The ICIS display system will later be extended to other strategic areas throughout the state including the possibility of having it installed in shopping complexes (newstraitstimes, 2010).

2.5 Bus Stop and Bus Terminal

There are bus stops all over the Penang and there are three main bus terminals for buses in Penang, Malaysia. They are Weld Quay Terminal, Komtar Bus Terminal and Sungai Nibong Terminal. According to Zegeer (2002), a well-designed transit routes a reachable stops are essential to usable system. He continues said that bus stops should be located at intervals that are convenient for passengers for safety purpose and should be comfortable places for people to wait.

UITP (2004 cited in Grenoble, 2004) argued that if the related infrastructure is inaccessible or inappropriately designed, much of the accessible vehicles will lost. Grenoble has carried out extensive research and development work to design tram and bus stops, starting some 20 years ago. The principle adopted by Grenoble was that the bus services should be made as accessible as the tram. According to Grenoble, the design standards found to be most effective for accessible bus stops were 14m(standard bus) and 20m(articulated bus) for overall length of bus boarding platform, 2.1m(minimum) and 2.6m(if a shelter is provided) for overall breadth of boarding platform, 3% for gradient of access ramp at end of platform, 21cm for height of boarding area, 60cm back from front edge of boarding area for safety line and 1.1m(minimum) and 1.3m(preferred) for clear space between front end of bus shelter and front edge of boarding area.

Zegeer (2002) said that besides the bus stop signing, a bus shelter with seating, trash receptacles, and bicycle parking are also desirable features. He suggested that bus stops should be highly visible locations where pedestrian can reach them easily by means of accessible travel routes. Therefore, a complete sidewalks system is essential to support a public transportation system. Convenient crossings are also important.

He continued suggested that proper placement of bus stops is key to user safety. For example, placing the bus stops on the near side of intersections or crosswalk may block pedestrians’ view of approaching traffic, and approaching drivers’ view of pedestrians. Approaching motorists may be unable to stop in time when a pedestrian steps from in front of a stopped bus into the traffic lanes at the intersection. Far-side bus stops generally encourage pedestrians to cross behind the bus. Reallocating the bus stop to the far side of the intersection can improve pedestrian safely since it climates the sight-distance restriction caused by the bus. Placing bus stops at the far aside of intersections can also improve motored vehicle operation.

Besides, he also suggested that the bus stops should be fully accessible to pedestrians in wheelchairs, should have paved connections to sidewalks where landscape buffers exist, and should not block pedestrian travel on the sidewalk. Adequate room should exist to operate wheelchair lift. Yet, it is also useful to install curb ramps at bus stops so that a passenger can board from the street if bus-lift deployment is blocked.

According to Iles (2005), problem may arise at bus stations which are used as intermediate stops for buses passing through the town or city when services are operated to schedule. Iles gave an example on when a full bus with a few passengers drop enter the station, they have the capacity to pick up same number of new passenger, but through services always delayed by having queue while other buses, some of which may be commencing their journeys at the station, load first. For this reason, in some countries, illegally in some cases, long-distance buses do not call at all bus stations on

Abstract: The contribution of tourism sector to the economic development is pretty significant in Malaysia. And budget hotels play important role in tourism industry. Budget hotel is defined as a small hotel that is financed by one individual or a small group of individuals, and it is mangers are the same time its owner. Generally the characteristics of those budget hotels are that the managers do not operate through a formalized management structure. At present budget hotels are relatively few in Malaysia. This study tries to find the reason why there are so few budget hotels in Malaysia. We find that the shortage of budget hotels in Malaysia is due to the reason that positive externalities of budget hotels have not been effectively internalized. Externalities of budget hotels means that the development of budget hotels will attract more tourists and those tourists will bring more value to other sectors. When a positive externality exists in a market, the private marginal benefit curve is less than the society’s marginal benefit curve. With positive externalities, the production and consumption are less than the optimal production to the society. Because the positive externalities of budget hotels have not been effectively internalized, the stimulation for budget hotel owners to supply more budget hotel services is not high enough. Through secondary research, we find that the hotel industry has important influence on the whole tourism industry and the externalities of hotel industry also have significant impacts on the tourism industry. This results means that there is possibility that the budget hotel or other hotels cooperates with firms from other industries and produce more value for customers and for themselves. Furthermore we discuss the needs and wants of budget hotel customers based on Maslow’s theory of human needs, which he named the Hierarchy of Needs. We classify the needs of budget hotel customers into three levels. The first level is safety, the second level is necessary facilities and the third level is the pursuit of happiness. Then we discuss how budget hotels should perform according to the three levels of needs. At last we discuss how a budget hotel is able to control its service quality so as to attract customers and establish customer loyalty. We argue that one characteristic of hotel industry is that the monitoring cost is very high and many behaviors of the servants cannot be easily observed. It indicates that stimulation may be much more important than penalty. Under such a situation, the sense of responsibility is of great importance in the hospitality industry. We argue that the sense of responsibility may arise from good communication between employees.

Keywords: Budget Hotel; Externality; Tourism Industry; Cooperation

Contents 2

1. Introduction 3

2. Objectives of this paper: 5

3. Literature Review 6

3.1 Price Theory 6

3.2 Determinants of tourism demand 8

3.3 Externalities of hospitality industry 9

4. Theoretical Framework 10

4.1 Classical Price Theory and Hotel Price 10

4.2 Externalities of Hotel Price and Cooperation between Industries 11

5. Research Methodology 13

1. Introduction

Tourism is important for the economic development of many countries including Malaysia. The contribution of this sector to the economic development of Malaysia was 37% of GDP in 1970, and increased to 43% in 1980, 47% in 1990 and 53% in 2007 (Abdullah et al. 2011). In addition, the growth rate of this sector has been pretty rapid. The average annual growth rate was 9% during the 1970s, close to 7% in the 1980’s, and 8.5% during the most recently. Figure 1.1 shows this trend with concrete data of arrivals and receipts of tourism industry in Malaysia. The significant importance and the rapid growth rate of tourism industry imply a much greater contribution of tourism to the economic growth of Malaysia. It is expected that the contribution of the services sector to GDP will increase up to 60% by 2020. The Malaysian government has recognized the importance of tourism industry and has placed the development of tourism industry at a very important place. At present, tourism has been designated as a priority sector in the Ninth Malaysia Plan.

Figure 1.1 the Arrivals and Receipts of Malaysian Tourism

The Malaysia government tries to promote the development of this industry. But how could we improve the development of tourism industry? The first attention may be focused on the development of hotels or hospitality industry. The reason is that accommodation fee takes a very important weight in the expenditure of tourists, which implies that the development of hotels will pose great influence of tourism industry. The second consideration is that hospitality industry is related with many other industries. Hospitality industry is a huge industry, including not only hotels but also transportation, restaurants and so on. Without any hesitation, the hospitality industry is related to every aspects of people’s daily life. The correlation between hotels and other tourism sectors indicates that the whole tourism may benefit more if the hospitality industry could cooperate well with other related sectors. Therefore we hold the opinion that to promote the development of hotels and to make innovation in strategies of hospitality industry is fairly important to promoting the development of tourism in Malaysia.

In this study, we focus on issues related to budget hotels, because budget hotels play important role in tourism industry and the budget hotel industry has not developed very well in Malaysia [1] . According to the existing research, small and mediate enterprises, including budget hotels, are very important in tourism industry and all the business industries. For example, Abdullah (2011) find that firms with less than fifteen employees account for around 79% of all Irish tourism businesses, which is a characteristic of the tourism sector in many other countries recently. Sheldon (1993) find that over 90% of tourist accommodation establishments are represented by small firms in the world. And a similar dominance is reflected within Malaysia where owner operators account for the majority of all hotels. Morrison (1996) argues that the tourism industry has been dominated by the small business traditionally and this is still the fact in 1990s. There are several reasons leading to the popularity of small hotels. The first reason is the low benchmark of entering into the budget hotel sector. It is not difficult to start up a small hotel business and the professional requirements related to this sector are relatively low in with regard to other industries (Lerner & Haber, 2001; Szivas, 2001). The second reason is that demand for small accommodation is high, which enables small hotel providers to offer a wide quality range of products, facilities and special services to the market. The third reason is the flexibility of budget hotels. Budget hotels are small and the small size allows an owner-manager to respond quickly to demand shift and market change. In addition, the costs of budget hotels are relatively low because of the advantage of using family labor (Getz & Carlsen, 2000; Lowe, 1988). Because budge hotels are very important in hospitality industry and hospitality industry is pretty significant for tourism industry, it is necessary for us to make clear the influence of budget hotel on tourism.

Before analyzing the influence of budget hotels on truism industry and discussing the management of budget hotels, we need to make clear the definitions of hotel and budget hotel. A hotel is an establishment providing accommodations and usually meals and other services for travelers [2] . Generally there are several categories classifying hotels. Most often we may divide hotels into two subgroups, including star hotels and budget hotels. According to the view of Kim and Mauborgne (1997), there are two market segments in the budget hotel industry and the star hotel industry. Star hotels are generally more expensive than budget hotels while providing more services. Most star hotels have some amenities under certain star rating system, which usually includes private bathroom, color TV, telephone, air conditioner, refrigerator, safety deposit box, daily maid service, 24 hours front desk. The lowest level of star hotels is the one-star hotels, which are the most basic hotels providing all the basic amenities for all star hotels. But the rooms of one star hotel are relatively small. Some one-star hotels even do not provide refrigerators and safety deposit boxes. Budget hotels cannot be classified into those standard star rating systems and they are characterized with low price while providing less facilities. Generally these hotels do not offer ancillary facilities on top of the standard basic accommodation facilities. Maybe they are not clean enough, safe enough and do not supply something that you consider as essential for your stay. But many of the budget hotels have their own characteristics which depend on the operation of its managers.

But the definition shown above is generally used in other countries than Malaysia. In Malaysia, budget hotels may provide better services than one-star hotels. For example, Malaysia Budget Hotel Dot Com (MBHDC), is an organization uniting some budge hotels, and it specializes in providing “high quality and lowest price budget hotels in Malaysia (3 Stars and below)” [3] . In the understanding of this organization, cheap hotels, youth hostels, low cost resorts, motels, guesthouses and rest houses are all in the category of budget hotels. Based on the definition of Morrison (1996) on a small tourism business, we may define a budget hotel as a small hotel that is financed by one individual or a small group of individuals, and it is mangers are the same time its owner. Generally the characteristics of those budget hotels are that the managers do not operate through a formalized management structure. It is not affiliated to an external agency on a continual basis for at least one management function. In addition, it is small in terms of physical facilities, service capacity, and number of employees.

The main purpose of this paper is to evaluate the influence of hotel industry on the whole tourism industry, and to explore the possibility of making innovations in budget hotel industry, which may improve the development of tourism industry of Malaysia. This study tries to find the reason why there are so few budget hotels in Malaysia. We interpret this phenomenon with theories of price and externalities. It is found that the reason for the lack of budget hotels is that the positive externalities of budget hotels have not been effectively internalized. Externalities of budget hotels means that the development of budget hotels will attract more tourists and those tourists will bring more value to other sectors. Because the positive externalities of budget hotels have not been effectively internalized, the stimulation for budget hotel owners to supply more budget hotel services is not high enough. Through secondary research, we find that the hotel industry has important influence on the whole tourism industry and the externalities of hotel industry also have significant impacts on the tourism industry. This results means that there is possibility that the budget hotel or other hotels cooperates with firms from other industries and produce more value for customers and for themselves. Furthermore we discuss the needs and wants of budget hotel customers based on the theory Maslow’s levels of human needs, which he named the Hierarchy of Needs. Then we discuss how budget hotels should perform according to the three levels of needs. At last we discuss how a budget hotel is able to control its service quality, attract customers and establish customer loyalty.

2. Objectives of this paper:

Defining budget hotel and compare different concepts.

Analyzing the influence of budget hotel price on tourism;

Understanding customer’s wants and needs in relation to budget hotel accommodation;

Investigating quality and methods to retain customer in budget hotels;

Analyzing principles establishing brand loyalty for budget hotels.

3. Literature Review
3.1 Price Theory

This study tries to find reasons why there are so few budget hotels in Malaysia. Because the supply of budget hotels is adjusted by price in a market economy, we need to use a proper price theory to explain this economic phenomenon. Therefore we need to select a best price theory that is able to help us to gain deep understanding about the shortage of budget hotels in Malaysia. Economists have for a long time been aware of the importance of price and try different ways explaining the mechanism of price formation. The existing economic thoughts on price are so rich and colorful that we often feel confused when evaluating different kinds of price theories. The evolution of price theory can be classified roughly as three classes, including Marx’s theory of value, economic price theory and accounting theories of pricing.

In order to understand the evolution of price theory, we need to start thinking from the exchange behavior. The reason of choosing exchange behavior as the starting point is that exchange is the foundation of the market economy. Exchange behavior is the most common phenomenon in a market economy. In fact there is no price if there was no exchange. But why do we exchange with others? Intuitively, we can get more utilities through exchange. In the process of exchange we can get something useful from others, at the same time we must be able to provide something useful for others. Otherwise the deal cannot be done. The great classical economists like Adam Smith and Karl Marx had paid much attention to exchange behavior. In his famous book “An Inquiry into the Nature and Causes of the Wealth of Nations” Adam Smith (1776) wrote down the following words, which have been quoted by numerous economists.

Man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self-love in his favor, and show them that it is for their own advantage to do for him what he requires of them. Whoever offers to another a bargain of any kind, proposes to do this. Give me what I want, and you shall have this which you want, is the meaning of every such offer; and it is the manner that we obtain from one another the far greater part of those good offers which we stand in need of. It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love.

Smith saw the pretty positive aspect of the market economy of compelling people to cooperate with each other through exchange. Smith recognized that to propose an exchange is intending to show other people that your goods or service is useful to them. When you finished exchange, it means the other person recognizes that your goods or service is of value. Exchange can be considered as the fundamental factor of the market economy.

Karl Marx does provide a special way explaining value and price although Marxism is generally considered a way of engaging and transforming social reality (Tinker, 1999). Marx’s theory of value is based on the analysis of exchange behavior. Karl Marx started his analysis on capitalism from the definition of commodity which was obtained from his analysis of exchange behavior. According to Marx commodities are the fundamental units of capitalism and capitalism can be viewed as a form of economy based on the intense accumulation of such objects (Bourguignon, 2005). He also pointed out “A commodity is, in the first place, an object outside of us, a thing that by its properties satisfies human wants of some sort or another” (Karl Marx, 1887). After noting that commodity exchange, Marx turned his attention to the question: why we are able to exchange two different products? His answer is that there must be comparable thing between the two different products. Therefore people are able to decide the exchange ratio based on the amount of the “comparable thing” in the two different products. If this is true, then what is the comparable thing? Marx thought it is labor [4] . Although different products have different uses, they are all made through labor. The labor contained in a product is the value of this product. If one product cost more labor, then this product is more valuable. This is a perspective from cost. This analysis is reasonable at that time, but when the productivity becomes so advanced that a lot of different factors besides labor, such as technology and management skill, begin to make greater contribution to production, Marx’s theory of value is hardly able to interpret various complex economic phenomenon.

Then another class of price theory was developed and become more attractive. That is the price theory based on the concept of “utility”. The framework of utility-price theory became well established when Economics went into the 20th century with the development of mathematical analysis (Sandmo, 2010). A lot of economists moved their interest from cost perspective to equilibrium perspective when analyzing the price formation mechanism. In this framework the price of a commodity is decided by the equilibrium of demand and supply. Demand of a product reflects the utility of a certain product to some consumers, while supply reflects the cost of producing this product. If supply superiors demand, then price will go down. The result is a lower supply and more demand, which may lead to equilibrium between supply and demand. If demand superiors supply, then price will go up, which results in more supply and less demand. Equilibrium between supply and demand is also possibly to be realized (Mankiw, 2004). The price at the equilibrium is the equilibrium price. This price theory is widely accepted and applied to explain different kinds of price fluctuations.

The neoclassic equilibrium theory of price is mainly static, which is hard to explain some modern price formation process, for example financial asset pricing. As the development of productivity, mainly the development of financial techniques, some new price theory taking time and future into account is necessary. Therefore a new class of theory, the core of which is the calculation of present value, has been developed to meet this demand. The theory argues that the value of an asset is decided by the future cash flow that this asset is able to bring (Jones, 2006; Thomas and Ward, 2009). And this theory has been applied widely to the pricing of financial or other kinds of asset.

Because the entering benchmark of budget hotels is very low, the supply of budget hotel is mainly decided by demand. And this problem is not a dynamic pricing issue. Therefore, the neoclassical price theory is the best to be used to explain the shortage of budget hotels.

3.2 Determinants of tourism demand

Because the supply of budget hotel is mainly decided by demand, we need to know more about determinants of tourism demand and know how to forecast the demand. It has been widely recognized that accurate forecasts of tourism demand is pretty helpful for managerial decision making. Archer (1987) argues that in the tourism industry “the need to forecast accurately is especially acute because of the perishable nature of the product. Unfilled airline seats and unused hotel rooms cannot be stockpiled”. Some scholars, such as Edwards (1985), publish some predictions for certain countries. There are also some organizations in the tourism industry that publish confidential predictions on tourism demand. There are a lot of review articles on tourism demand up to now, including Crouch (1994),Witt and Witt (1995), Lim (1999), Li et al. (2005), and Li and Song (2008). According to the reviews, the methods applicable to analyzing the influence of the determinants of tourism demand are relatively limited. Multiple regression method is the main methodology in this analysis (Witt and Witt, 1995). Tourist visits may happen for several reasons, including holidays, business travel, visiting friends or something else.

The majority of existing studies of tourism demand analyze either total tourist trips or just holiday travel, with only a few concerning on business travel. In the empirical literature, tourism demand is generally measured by the number of tourist visits from an origin country to a foreign destination country (for example, Turner & Witt, 2001; Kulendran & Wong, 2005; Coshall, 2005; Rossello, 2001). An alternative measure is the tourist nights spent in the destination country. The third measurement is the expenditure of tourists in the destination country (such as Li, Song, & Witt, 2004, 2006; Li, Wong, Song, & Witt, 2006). But up to now there has not been a best method for tourism demand analysis (Li and Song, 2008). With regard to the researched countries, USA, UK, and France are the most popular researched countries while the research on Malaysia is very limited.

The quantitative literature on tourism demand can be divided into two classes, including non-causal time-series models and the causal econometric methods, the difference between which is whether the model identifies any causal relationship between the tourism demand and its influencing variables (Li and Song, 2008). The causal econometric methods are useful for the present study. In the review of Li and Song (2008), there are 121 empirical papers on tourism demand in total. Among those literature, 72 used the time-series techniques to model the demand for tourism, while the others employ econometric techniques analyzing the causal relationship between tourism demands and explaining factors.

3.3 Externalities of hospitality industry

One major hypothesis of this paper is that the shortage of budget hotels in Malaysia is due to the reason that the externalities of budget hotel have not been well internalized. An externality is “a cost or benefit that is not transmitted through prices or is incurred by a party who was not involved as either a buyer or seller of the goods or services causing the cost or benefit” (Bishop, 2012). We can understand externality as a consequence of an economic activity that is experienced by unrelated third parties. We can classify externalities into two categories including positive externalities and negative externalities. An example of the negative externality is pollution. A negative externality happens when an individual or firm does not need to pay the full cost of its production. If a good or service has a negative externality, it implies that the cost to society is larger than the cost paid by consumers. Because consumers make consumption decisions according to their own conditions, meaning they try to make their marginal cost equal to their marginal benefit, without considering the cost of the negative externality, negative externalities will cause market inefficiencies where too many goods or too much service are produced. A positive externality occurs under the situation that an individual/firm makes a decision without receiving the full benefit of production. The benefit to the individual/ firm is less than the total benefit to the society. Therefore when a positive externality exists in a market, the private marginal benefit curve is less than the society’s marginal benefit curve. With positive externalities, the production and consumption are less than the optimal production to the society (Mankiw, 2011).

There has been a lot of literature discussing the impacts of externalities on different industries or economic activities. For example, Katz and Shapiro (1985) provide an analysis on the influence of externalities on the competition in several important markets. They find that if there are externalities, then consumers’ expectations can influence the structure of the market equilibrium in their model. Azariadis and Drazen (1990) find that externalities can influence the accumulation of human capital. Henderson (1997) employs panel data for five capital goods industries and estimates dynamic externalities. He concludes that externalities pose significant influence on capital goods industries. Warziniack et al. (2009) develop a general equilibrium model measuring welfare effects of taxes for correcting environmental externalities and evaluate the impacts of externalities arising through exports. They find that externalities from exports are resulted in a number of sources. They argue that taxes on the sector imposing the environmental externality often presents more negative effects than positive effects. There are many other literature studying the influence of externalities on other aspects of an economy, such as Devereux et al. (2007), Acharya and Volpin (2010) and Foster (2012). But there have been few papers on the externalities of hospitality industry on the development of the whole tourism industry.

Most of the researches on externalities in tourism industry are related to city planning, location setting or taxes. For example, Chang et al. (2011) analyze the congestion externalities caused by tourism expansion and the wealth effect generated by the revenues from overseas tourism taxation. Schubert (2010) studies optimal taxation (subvention) when tourism is associated with multiple externalities. Chao et al. (2004) examine the welfare effect of tourism on the host economy. They identify three channels influencing domestic welfare by tourism, the most important one of which is the social externality accompanied with tourists. Calveras and Vera-Hernandez (2005) place great emphasis on the presence of quality externalities among hotel establishments when they explore the role played by the tour operator in quality investments. These existing researches are helpful for my analysis of the externality effect of hospitality effects on the whole tourism industry and the welfare of local residents in Malaysia.

4. Theoretical Framework
4.1 Classical Price Theory and Hotel Price

Pricing is an art. How to set the price of a good at the best level and achieve the most profits is a hard challenge for any manager in any business field including the hospitality industry. According to the classical price theory of Economics, price is related to two aspects of goods and services: supply and demand. Price has a positive relationship with the supply of goods and services. The reason is that profits would be thick if price if high. As a result of the thick profit, more and more firms will enter this industry and supply more goods and services. At the same time, price has a negative supply with demand of goods and services, because a high price means a high cost of consuming the goods or service for the consumers. The positive relationship between price and supply and the negative relationship between price and demand implies that an equilibrium market state will finally be realized. Market equilibrium means that supply and demand of goods and services are equal to each other. The price at the equilibrium state is named “equilibrium price”. When price is higher than the equilibrium price, it means that demand is larger than supply. At this time, firms will provide more goods or services and price will go down. Similarly, when price is lower than equilibrium price, supply is larger than demand. Then firms will supply less because of the low profits, as a result of which price will go up. This theory fits the normal goods market the best, while remains limited exploratory power for luxury goods market and some other markets. Since hotel is a normal goods instead of luxury goods, the classical price theory in Economics is useful in the studying the price of budget hotel.

In this paper one our main objectives is to analyze the influence of hotel pricing on the whole tourism industry. In order to answer this question we mainly analyze from the demand perspective, which means that hotel price influences the demand of hotels and the demand of tourism. The reason is that accommodation fee is the majority of tourism expenditure for most of the tourists. If hotel price is too high, fewer tourists will come and the demand for hotels becomes lower. And there is a second perspective that hotel price also influences the welfare of local residents. If the hotel price is set to be very low, then the profits of the hotel and the wage of local workers must be low, which implies that the welfare of local residents is low. As a result, there must be a best choice of price which is able to maximizing the welfare of local residents, and a best price that maximizes the profits of hotels.

Price

Quantity

Supply Curve

Demand Curve

Figure 4.1 Classical Price Theory

4.2 Externalities of Hotel Price and Cooperation between Industries

But there is a difference between the best price for local residents and the best price for hotels. The best price for hotels should be the one that is able to maximize the profits of hotels. This price is not necessarily the price maximizing the welfare of local residents. The price maximizing the welfare of local residents is the one that maximizing the gross income instead of profits of hotels.

The difference between hotel’s best price and local residents’ best price exists because of the externalities of hotels. An externality (or transaction spillover) is “a cost or benefit that is not transmitted through prices or is incurred by a party who was not involved as either a buyer or seller of the goods or services causing the cost or benefit”. The externalities of hotels can be understood as the influence of hotel price on other sectors or industries. For example, if the hotel price decreases, then more tourists will come to Malaysia for sightseeing because of the cost becomes lower. More tourists imply more demand for local restaurants, entertainment industries and some other sectors. Similarly, if hotel price increases, fewer tourists will choose to spend their holiday in Malaysia and the local restaurants and entertainment or other industries would benefit less from tourism.

Price

Quantity

Supply of Hotel

Demand of Hotel

Demand of Tourism

Figure 4.2 Externalities of Hotel Price

The logic of externality indicates that if the hotels and other sectors could cooperate well, the whole tourism industry would benefit more from the increase of tourists. Imagine that if the hotel price is set to be lower than the present level, which will attract more tourists and those more tourists may bring more spending on local goods and services. Those incurred spending may compensate the loss of hotel revenue. It means that the total benefits of local tourism increases although at the cost of hotel revenue decrease. A good cooperation between the hotel industry and other industries means that other industries are able to transmit part of the incurred revenue to hotel industry and share the increased revenue with hotel industry.

There are some examples illustrating this good cooperation in tourism industry. In some states of Malaysia, the scenic spots are free and tourists do not need to pay gate tickets. The loss of tickets income leads to higher income of ot

Introduction

The aim of this paper is to present my findings and acquired knowledge about the yield & revenue management through describing its business practices in the travel and tourism industry.

I have decided to produce this essay about yield & revenue management in the hospitality industry, because my placement in a five star business hotel in Budapest provided many insights on this particular area.

During my placement I realised how interesting and challenging the day-to-day job of a yield manager could be.

At first let me start with clearing the mist about the term itself. It is often argued whether yield management and revenue management are separate or identical terms. According to my experiences and my research there is no difference between revenue and yield management apart from different industries using different terms to define the same things.

Yield management in hotels should rather be called revenue management since revenue and not (airline) yield is to be maximized.

What is yield management then?

“A revenue maximization technique which aims to increase net yield through the predicted allocation of available room capacity to predetermined market segments at optimal price” (Donaghy et al., 1997)

Or in layman’s terms we can say, selling the right product to the right customer at the right time at a right price thereby maximizing the overall revenue.

History

The brief history of yield management dates back to the 1970s, when following the deregulation of US airlines a severe competition began where a new and more professional method was needed to increase revenue. Airline companies wanted to fill their planes as optimally as possible to defeat the perishable nature of its services. Because in case a plane departs with only the half of the seats occupied it cannot be filled on the way and it cannot be stocked for later sale. In similar highly competitive circumstances, yield management began to be used in the hotel industry around the middle of the 1980s. At this time the industry was being confronted with excess capacity, severe short-term liquidity problems, and increasing business failure rates. Major hotel chains such as Hyatt, Marriott, Quality Inn, and Radisson decided to solve these difficulties by adopting yield management.

Preconditions of Yield Management

In order to be able to yield a hotel the following preconditions should be met:

Fixed capacity: Hotels usually have a fix number of rooms and venues, although, in some special cases new wings can be built or internal re-constructing can be implemented. Generally it is very unlikely that the capacity will increase. It also involves the fact that the product needs to be perishable to be yielded. “A room on Monday does not equal with that room on Tuesday”

High fix costs: This factor is connected to the fixed capacity because the major characteristic of hotels is that they need huge capital to be built. Furthermore, building and planning new rooms costs a lot and takes a lot of time.

Low variable costs: Selling a room that was not occupied before comes with relatively low service costs.

Time-varied demand: To be able to yield it is necessary to have seasons to be able to distinguish between different rate periods easily.

Similarity of inventory units: The nature of the products needs to be somewhat similar to be able to use the same channels of communication and management.

Market segmentation: The market has to be segmented and clearly fenced to be able to target them with the yield management tools. Business or corporate clients who are usually time-sensitive are willing to pay higher rates whilst leisure travellers who tend to book longer in advance are rather price-sensitive.

Historical demand and booking patterns: To have reliable historical data is crucial to be able to build a picture of the ever changing trends, however, it should not be the sole source of predicting future demand.

Pricing knowledge: Knowledgeable yield managers are needed, not only to understand the nature of services but also to set prices in a professional manner

Overbooking policy: Many hotels still do not allow overbooking and by that they have to face losses in revenue maximization. If overbooking is carefully managed no serious guest complaints will arise.

Information systems: Without the proper systems no hotel can keep up with the current pace of rate changing, and the complex management of the distributional channels.

The Yield Management Control Dimensions

In hotels, yield management is concerned with the market sensitive pricing of fixed room capacity relative to a hotel’s specific market segments. Kimes (1997) states therefore that yield management in hotels consists of two functions: rooms’ inventory management and pricing. However, I experienced that there is rather three major ways how yield management can control the revenue outcome:

Duration control

Room /rate control

Capacity management

From the customers point of view these decision making factors are basically the;

Time

Price

Quality

Duration control could be used by those group travellers that are likely to negotiate on the time of their event and the length of stay of their groups. Whereas, a leisure traveller cannot be asked to come on a different date since they probably took that period off. The situation is however more complex, because leisure travellers for instance will likely to take those time frames where the most cost efficient promotions, packages, offers or discounts are. And by that their timing can be also managed. On the other hand, seasons and high bargaining power of customers can influence the level of duration control as well.

Room/ Rate control is especially important by OTAs, online travel agencies, because according to Mourier (2010) just over 27% of the hotels worldwide have reported that most of their incomes are from OTAs or through online channels. The optimal management of finding the balance between the amounts of rooms sold through OTAs or through the hotels own website and sales team is alone a very challenging exercise. Due to the limits of this essay this time I won’t go into details about pricing strategies.

Capacity management should allocate the available inventory of the various room categories to the potential segments in a way that their demands, cancellations, no-shows are taken into consideration.

Finally, as I experienced the guests usually are in a high bargaining position and therefore they simply let the management decide whether to accept their request or reject it. Therefore, the most common type of control dimension is usually the Room/Rate control.

Measures of Yield Management’s Success

If we would like to get a real picture whether the yielding efforts are fruitful it is important to not only measure the occupancy, the average daily rate (ADR) and the volume, but to calculate the revenue per available room as well. Furthermore, all of these data should be viewed together. If we take for example a high occupancy it is not necessarily positive if it is reached with a very low rate.

Revpar can be calculated as follows:

REVPAR = AVERAGE RATE x OCCUPANCY

REVPAR allows us to measure the success of balancing occupancy and ADR resulting in maximized revenue.

Orkin (1988) defined revenue realized as ‘actual sales receipts’ and potential revenue as ‘the income secured if 100% of available room are sold at full rack rates.’ This indicates the following formula for calculating yield efficiency:

Note: The nearer the percentage to 100 the better the yield.

Limitations of Yield Management

First of all, education or the lack of it results in waste of time with the management heads and the GM if they have deeply rooted perceptions, such as, the more volume, occupancy, ADR the better.

Secondly, if it is over used, for instance, cancelling the booking made by travel agents during high occupancy periods in order to save travel agents commission. This will, however, result in loss to future business.

Thirdly, if the necessary IT infrastructure, or its further development and the reliable performance data is missing than really effective yield management is nearly impossible.

Finally, very often even major hotel chains employ only one yield manager per hotel, which given the complexity and the importance of this job makes hotels very vulnerable. For example, if the yield manager decides to leave or gets seriously sick than for an invaluable time (one or even two month) nobody will be able to effectively monitor the third party rates, set new rate codes for corporate clients and nobody will be there to act if there is a tax change and the whole rate structure needs to be modified.

Yield Management Supporting Tools

Yield management solutions are often a result of the following approaches:

EMRR (Expected Marginal Room Revenue)

Expert systems

Booking curves

Operations research models

Neural networks (in experimental phase only)

Here I would like to go into more detail in the Expert systems I worked with, such as, the Travelclick and the IDeaS. Both are ecommerce and revenue management solution provider companies. To be able to work with them a usually very high annual fee should be paid, and it is very difficult to measure whether how much did they contribute to the revenue of the hotel. Both system collects first the data of the hotel and provides in case of Travelclick market data of other competitors as well. Of course, the rates there are not always true or the rates of the same distributional channel, and this can mean a huge difference in rates. Some of the most important report that Travelclick provides:

Hotelligence : Benchmark of hotel’s historic GDS performance against the competitive set.

FuturePace: Allows seeing the hotel’s estimated future market share against the competitive set.

RateView: Gives an overview on the hotel’s and its competitors’ rate within the GDS and Internet channels.

SearchView: Provides the ranking of the hotel and its competitors on search engines and third-party sites, and monitor consumer review sites.

On the other hand, IDeaS tries to provide a Rate Optimization Services which is collecting all the necessary data of the hotel and gives the best rates for the given segments. However, it is more likely that entirely no company would set its rates just according to an algorithm, but as an advisor it is indeed very useful for yield managers. A great advantage is if the hotel has a developed hotel management system, like Opera, Hostware etc. because the necessary data can then be easily extracted for the reports.

Future of Yield Management

In the forthcoming years, the process for booking hotels will continue to change. The booking window will continue to shrink as today’s consumers not only require more flexibility with their vacation time, but they also tend to wait longer in hopes of finding the best deal. As well, new developments in technology are making it easier for the everyday consumer to book their hotel room, anytime and basically anywhere. With the appearance of the new smart-phones, a new dimension of mobile booking applications is going to be introduced, as well as more and more social media sites expected to add booking widgets that will enable customers to reserve room nights from websites like Facebook, or Iwiw. In fact, Priceline’s research shows that 58% of customers with mobile devices were within 20 miles of their hotel when they made the booking and 35% were within just a mile. Additionally, new booking engines will continue to emerge, as will online travel communities with booking capabilities, online tour operators, and even trip building websites that use algorithms. A very important aspect of the new era for the travel industry is that hoteliers aren’t just dealing with making their property seen among more channels but they are also dealing with more well-informed customers who know what they want, where to look for it and more importantly where to compare rates to get the best deals.

Mourier (2010) says that due to this rapidly changing environment, yield management really becomes less about trying to beat the competitor and more about a personal relationship with consumers.

Conclusion

To sum it up, I strongly believe that yield and revenue management makes a huge difference in today’s hotel management and it is great that it started to shift from the pure operation side to a sophisticated way of optimizing revenue. It might seem discriminating to customers but the way they feel about it is highly dependable on the communication channels they receive it, and since today it is so widely spread without any major concerns I do not think that it will cause problems. Especially, because the economy balances itself with occasional downturns when the bargaining power of customers increase tremendously especially in view of the tourism industry.

Introduction

At the present time, globalisation which just means linking together the localities separated by distance is not an issue in terms of communication, moreover it brings together the world as one (Scheuerman, 2010). The positives of globalisation do not limit itself to just bringing the world together in terms of communication, tourism and hospitality industry has also greatly benefited by this.

India is considered one of the fastest growing countries in the world and becoming an attraction for the foreign tourist. India hosted 6.58 million foreign tourist in the year 2012, which was an increase by 4.3% compared to last year. The foreign exchange earnings were a staggering $17.74 billion which was an increase of 7.15 compared to last year (India Tourism Statistics, 2012). The Indian government un It will not be wrong to assume that India has been successful in catering the basic requirements which a tourist looks for before planning their trip to a foreign country. These statistics make India one of the top tourist destinations. The basic requirements being variety of serviced accommodation to choose from, adequate infrastructure, communication system, museum, art galleries, restaurants, cafes, craft places, gardens, historic places and sports amenities. The tourism ministry of India was quick to recognise the tourism market in India and has taken necessary steps to promote it. The Foreign Tourist Arrivals in India during the eighties and nineties lacked consistency but since then it has seen steady growth. The early 2000 can be considered the best years for tourism industry as they saw double digit growth (India Tourism Statistics, 2012).

This paper specifically focuses on the 5 star luxury hotels section of the hospitality industry of India. It is very important for the individuals involved in the operations of the hotel to know about the factors which might affect the competition. In the competitive setting, Brand Equity is believed to be the most important value generating asset to the organisation and its customers. Customers can benefit through Brand Equity as it would help them get a better understanding of the services provided by the brand which would eventually increase confidence and help them in making the buying decision. The organisation can benefit in terms of increasing profits, attracting new customers and retaining the loyal customers, having a competitive advantage over rivals (Aaker, 1991).

Therefore, the study is carried out to better understand the brand equity of high end luxury hotels in India and the link between brand equity and the post purchase evaluation by the customers. This will provide a better understanding of brand equity of the hotel which is just a small element of brand asset. The post purchase evaluation by the customers for the brand equity in hospitality industry will be directed by analysing the already existing written texts. The suggestions given by the guests who have already visited the hotel are used to analyse as their feedback and opinion would shed light on the major issues faced in terms of brand equity during their stay.

Hence, the conclusion of this paper would provide an insight of the different brand equity elements, their features and the influence these elements can have on the day to day working of the hotel by the top management, the marketing team, operations team and everybody responsible for implementing the strategy. A successful brand strategy would give the hotel a competitive advantage over its existing market rivals.

Problem Statement

A brand can be called an important resource for value addition to the organisation as it is used in the marketing strategy and positioning of the company in the market (Ghauri and Cateora, 2010). Brand equity is a combination of elements namely brand loyalty, brand awareness, brand association, perceived quality denoting the improved value of the brand as a whole. In case of hospitality industry, the focus is mainly on how the consumer perceives the hotel brand, this further improves chances of making more profit.

The literature on brand equity have largely focused on the product aspect and not much study has been contributed to the service industry. Thus, literature on brand equity for service industry like hotels is very limited. This has attracted my attention and inspired me to study brand equity primarily focusing on the hospitality industry.

As stated above, India has been successful in improving its tourism and hospitality sector over the years. This has resulted in stiff competition amongst the hotel operators. To increase the rate of growth, the government helps and extends its support in almost all domains of the tourism industry. As an example, the government’s initiative to improve the Indian tourism industry in overseas market is the brochure support. The overseas offices help promote organisations who intend to promote special tours (Ministry of tourism, 2014). There are marketing development assistance schemes to promote Indian tourism abroad which is administered by the ministry of tourism, government of India to help hoteliers, travel agents, tour operators etc. The competition in the hospitality industry is intense in parts like Andhra Pradesh, Tamil Nadu, Uttar Pradesh, Karnataka and Maharashtra which experienced maximum domestic tourist in the year 2012. The foreign tourist preferred Delhi, Mumbai (Maharashtra), Chennai (Tamil Nadu), Bangalore (Karnataka) and Kolkata (West Bengal) as their top 5 destinations in India (India Tourism Statistics, 2012).

Furthermore, the intense in business competitions especially for five stars luxury hotels are higher than other hotel with fewer stars rating. Normally, the higher stars rating hotel such as five stars luxury hotel comes with the higher price of the offering. However, the competition is not only based on the price and promotion concern but also the uniqueness of the hotel brand. In addition, the emerging of new comer hotels in Bangkok area can also be the supporting evidence, for example Starwood’ St. Regis, W hotel, Four Points by Sheraton (Starwood, 2010).

As a result, brand equity can play an important role in increasing the overall profit of the hotel and the people responsible for operating the day to day functioning of the hotel need to realize this. The elements of brand equity needs to be studied in terms of the hospitality industry, this would help understand the role of brand equity in hospitality industry. This paper primarily focuses on the five star luxury segment of the hotels in India. This paper is based on the comments and feedback of the guests who have visited the chosen hotels which are then linked with the elements of brand equity.

Purpose of Study

The main motive of this study is to understand brand equity and elements in terms of the hospitality industry in India considering the post purchase evaluation of the customers who have visited the hotel. The research also aims to find the link between the elements of brand equity and the comments and feedback of these customers after their purchase. Moreover, the objective of this study is to find the practical effects of brand equity. By the end of this research, I intend to suggest some articulated hypothesis of brand equity in hospitality industry for future studies.

Research Questions

The research question has been framed on the basis of the background of the topic chosen and the problem statement to accomplish the objective of this research:

What are the features of brand equity of high-end (5 Stars) luxury hotels in India?
Which elements of brand equity do most of the customers perceive for evaluation?
Thesis Outline

The first chapter gives a brief about the research topic on evaluation of post purchase behaviour on brand equity for hospitality industry in India. This is further explained by designing the problem statement and research topic to specify the path of the study with the focus only on five star luxury hotels in India.

Chapter two includes the literature review. This is done by investigating the literature available in physical format and those available on the internet. The literature review explains branding and the various aspects of brand equity to give a basic understanding about brand equity. This will be followed by brand equity in hospitality (service) industry, buying decision of customers, electronic word of mouth and evaluation of customers after using the hotel (post-purchase).Along with this literature, a framework has been designed to give a better understanding of the research which includes the idea of brand equity.

Chapter three begins by explaining in the research methodology, how the topic was chosen. This is followed by a discussion on the methodologies used in the research design. Qualitative and quantitative approach were used for this study. Qualitative approach was done by carrying out content analysis using a specific set of measurements. Quantitative approach was used to present the findings and the results. The process of collecting data, the use of secondary data like the feedback of hotels from customers, text and other articles on brand equity are discussed in this section. This section continuous with further explaining the limitations of this study and the sampling design in context of the total volume considered and the time period observed for the data collection. This is commenced by highlighting the validity and the reliability of the study.

The fourth chapter presents the findings from the collected data from the website tripadvisor.com for feedback from the guests who have visited the hotels. The main aim for this exercise is to analyse and interpret this data and then divide them in terms of the different components of brand equity or the set of measurements. The results are explained by using the quantitative approach by denoting them in terms of percentage of each component and sub component of brand equity.

The fifth chapter analyses the findings and discusses the results and a comparison is made with the earlier studies on brand equity and hospitality industry. This section is concluded by analysing each brand equity category and proposing the hypothesis on brand equity for hotel.

The sixth chapter concludes the research by explaining the results obtained from findings and analysis in the previous chapter. This section also answers the research questions for the study.

The seventh and the final chapter recommends on the real-world effects of the results obtained from this research. This paper is concluded by proposing a path for the future study centred on the hypotheses.

The town of Bournemouth was established only 200 years ago by “a man named Tregonwell” in 1810 (Lambert, 2003). He was attracted by the natural beauty of the area and thus the first house with cottages was built (Lambert, 2003). In the UK the demand of trips to the seaside increased among the rich and middle classes by the end of the 18th century (Lambert, 2003). Hence, in 1836 the son of the first settlor “Sir George Tapps-Gervis decides to create a seaside resort at Bournemouth” (Lambert, 2003). Consequently, in 1837-38 the first villas available for hire as well as the “Bath Hotel” were constructed in order to accommodate Bournemouth first visitors. In the year of 1840 Bournemouth was accessible for the first time by the “stagecoach from Christchurch to London” (Lambert, 2003). Additionally, in the 1840s Bournemouth gains recognition as a health resort due to its fresh air, “moderate climate” and sea bathing (Walker, 2007). Bournemouth population grow to 695 by the year of 1851, the same year when “the Church of St Peters [was] consecrated” (Lambert, 2003). In 1861 the town?s first pier was built and the first paddle steamer started operating as a holiday exercise (Walker, 2007). Bournemouth became even more accessible by the year 1870 due to expansion of the railway network to the town. Therefore, Bournemouth received visitors mainly “from London, the west country, the midlands and the north” (Walker, 2007). As a result the population of Bournemouth increased to 16,859 by the year of 1881 (Lambert, 2003). More and more facilities were built, such as the theatre Royal in 1882 and the Boscombe Pier in 1889 (Lambert, 2003). In 1893 Britain?s first municipal orchestra was launched which gave concerts for the public in the Winter Gardens and on Bournemouth Pier (Walker, 2007). The population increased rapidly from 37,000 in 1891 to 59,000 in 1901 (Lambert, 2003). In the same time one and two week family vacations to seaside destinations became increasingly popular and Bournemouth expanded “from Victorian times onwards” due to the built of several large hotels, “former detached villas became upmarket boarding houses and later hotels” and “artisan housing became B&Bs” (Walker, 2007). Later in 1922 the Russell-Cotes Art Gallery and Museum was opened, followed by the Pavilion in 1929 (Lambert, 2003). Due to the Second World War an airport was built by Bournemouth 1941 and the first charter holiday flight took off for Palma in Majorca with 36 passengers in October 1958 (Bournemouth Airport, 2010). A new trend towards holidays abroad developed in the 1970s due to the introduction of affordable flights which led to fewer and shorter trips by visitors (Walker, 2007). As a result of that Bournemouth attracted mainly niche markets, such as “bowls, bridge, dancing, golf, etc.” themed holidays (Walker, 2007). In order to attract new markets a vast number of English language schools were established in the 1950?s and in 1984 Bournemouth International Centre opened for conferences and exhibitions (Walker, 2007). By the 1990s Bournemouth visitor trends have changed significant as a result of an increased number of licenses for “nightclubs and bars in central Bournemouth” which attracted each weekend “thousands of young people [aˆ¦] for the ?club culture?” (Walker, 2007). Corollary, Bournemouth became a “no go area” for previous visitors (Walker, 2007). Therefore, in 1998 the Streetwise Safety Centre opened (Lambert, 2003). Nevertheless, Bournemouth population grow to 164,000 by 2003. In the same year the Castlepoint Shopping Centre opened (Lambert, 2003) and in 2006 Bournemouth annual tourism award was inducted (Walker, 2007). However, in 2008 the construction of Europe?s first artificial surf reef began and it was opened in 2009 in order to transform the image of Bournemouth completely (Walker, 2007).

Thurot

To describe the evolution of a tourism destination such as Bournemouth theoretical models can be used. The first theoretical model used was established in 1973 by Thurot. He defined three phases which destinations have to pass through in order to develop (Pearce, 1989). In the first phase the destination is discovered by wealthy travellers and thus the first “international class hotel” settles in the destination (Pearce, 1989:22). In the second phase of Thurot?s destination development model “upper middle class hotels” develop (Pearce, 1989:22). Thus the number of tourist arrivals increases. In the third phase the destination losses its unique features and identity to new emerging destinations and therefore the number of middle class and mass tourists raised (Pearce, 1989). Nevertheless, Thurot?s model does not take in consideration a time frame. However, the development phases described are closely linked to the development and improvements in transport and therefore in affordable access to and from a destination (Pearce, 1989).

Bournemouth entered Thurots first phase in 1810 when it was discovered by Tregonwell (Lambert, 2003). In 1837-38 the first villas available for hire as well as the “Bath Hotel” were constructed in order to accommodate Bournemouth first visitors (Lambert, 2003). During that time only rich people had the time and finance available to travel. However, later Bournemouth developed into the second phase of Thurot?s model mainly due to the fact that Bournemouth got connected to the railway network in 1870 and therefore become easier to access for a lower price the visitors number Bournemouth received increased (Lambert, 2003). Additionally, one and two week family vacations to seaside destinations became increasingly popular in that time. Therefore the type of visitors changed. Bournemouth expanded “from Victorian times onwards” due to the built of several large hotels and “former detached villas became upmarket boarding houses and later hotels” (Walker, 2007). By the 1950?s Bournemouth entered the third phase of Thurot?s model due to the development of affordable flights to Mediterranean destinations which resulted in a decrease of demand for seaside towns in the UK (Leksakundilok, 2006). Therefore Bournemouth lost its original values of sea, sand and sun to the newer destinations. However due to the development of language schools, the Bournemouth International Centre and amenities Bournemouth managed to attract a large number of tourists which were mainly middle class and mass tourists.

Miossec

The second theoretical model used in this essay was published in 1976 by Miossec and is called the “Tourism development model”. Miossec?s (1976) model describes “the structural evolution of tourist regions through time and space” (Higham et al, 1996:76). Additionally, it identifies the changes of the “provision of facilities and the behaviour and attitudes not only of tourists and the host population, but also local decision-makers” within a destination (Higham et al, 1996:76). Miossec (1976) segmented its model in four “phases of development” (Higham et al, 1996:76). In the first phase the region is widely unknown to travellers, isolated, there are no or only few tourism facilities in the destination and the attitude of the local population towards tourism is diverse (Higham et al, 1996:76). However, in the second phase occurs an increase of tourism facilities and amenities within the region which leads to “the development of a complex hierarchical system of resorts and transport routes” (Higham et al, 1996:76). Additionally, the attitude of the host population towards tourism changes “to the point where it is fully accepted” (Higham et al, 1996:76). This could result in the development of planning controls by the local authority (Higham et al, 1996:76). In the third and fourth phase of Miossec?s (1976) model the awareness of the region and its attractions increases among travellers. Hence, the competition between single destinations within one region increases. Therefore, single destinations could “begin to specialise in specific activities and attractions” in order to gain competitive advantage (Higham et al, 1996:76). Corollary, the “character of the region” will change which could have a deterring effect on tourists (Higham et al, 1996:76). However, Miossec?s (1976) model does not explain the reason for the development of a region into the next phase.

Bournemouth was in the first phase of Miossec?s (1976) model until 1836 when the son of the first settlor “Sir George Tapps-Gervis decides to create a seaside resort at Bournemouth” (Lambert, 2003) which can be seen as the start of the second Phase. Before that time the region where Bournemouth is situated now was mainly heathland (Lambert, 2003). During the second phase the first tourism facilities were constructed such as villas available for hire and the Bath Hotel (Lambert, 2003). Additionally, in the year 1840 Bournemouth was accessible for the first time by the “stagecoach from Christchurch to London” (Lambert, 2003). The development “of transport as a means of increasing links between resorts and between resorts and tourism generating regions” (Prideaux (2), 1999:55) plays an important role in the development process of a region (Prideaux (2), 1999:55). Therefore in 1870 Bournemouth became linked to the railway network (Lambert, 2003). However, Bournemouth entered the third phase when tourist became more aware of the region and thus Bournemouth. By the “1870s and 1880s villages near Bournemouth grew rapidly” such as Boscombe, Springbourne and Westbourne (Lambert, 2003). Corollary, these single destinations within Bournemouth region developed their own tourism facilities and attractions. An example therefore is Boscombe which opened its Chine Hotel in 1874, St. Clements Church in 1873 and the pier in 1887 (Lambert, 2003). However, due to the development of cheap flights for instant to Mediterranean destinations Bournemouth and its region lost attractiveness and thus visitor numbers declined (Leksakundilok, 2006).

Butler

The third theoretical model used in this essay was created by Butler in 1980 and is called the “Tourist Area Life Cycle” (Page and Connell, 2006:31). Butler noticed that seaside destinations experiences 6 different phases of development over time based on visitor numbers (Page and Connell, 2006:31). A seaside destination will start off in the “Exploration” phase where the destination is first discovered by tourists and the visitor number starts to increase. Due to the growing number of visitors the destination will go over to the “Involvement”, than “Development” and after to the “Consolidation” phase until it reaches “Stagnation” (Page and Connell, 2006:31). These phases a part of a life cycle of a destination which can than go over into a “Rejuvenation” or “Decline” phase. In each stage significant changes can be observed in terms of the types of visitors, local involvement, impacts, supply and many more. Furthermore, the length of a stage various from destination to destination and is also dependent on the acceptations of the local population. Additionally, the S-shaped curve described in Butler (1980) Tourist Area Life Cycle model varies in shapes for different destinations due to a difference in competition, types of amenities, policies, accessibility, stimulation and many more. There is also the possibility of an interruption of the model caused by events such as financial crises, wars, epidemics and others.

Bournemouth Exploration phase started in 1810 with the discovery of the area by Tregonwell who built the first house with cottages there (Lambert, 2003). At this point Bournemouth was virtually unknown to travellers. However, in 1836 the son of the first settlor “Sir George Tapps-Gervis decides to create a seaside resort at Bournemouth” (Lambert, 2003). Consequently, in 1837-38 the first villas available for hire as well as the “Bath Hotel” were constructed in order to accommodate Bournemouth first visitors. During that time only the upper class was able to go on a holiday due to a lack in accessibility, time and disposable income, “facilities and local knowledge” (Destination Recovery Services, 2007). The main reason to travel during this period was for health reasons. Seaside destinations were considered as health resort due to its fresh air, “moderate climate” and sea bathing opportunity (Walker, 2007). Thus in the 1840s Bournemouth gains recognition as a health resort (Walker, 2007) and is considered to be in the “Involvement” stage. However, in 1870 Bournemouth got linked to the rail network and allowed therefore easier access for visitors especially “from London, the west country, the midlands and the north” (Walker, 2007). “The coming of the railway enabled people to travel further, faster and at a relatively affordable price.” (Page and Connell, 2006:30). Consequently, the type of visitors to the destination changed from rich and ill travellers to seaside family holiday makers. This stage can be considered as “Development”. Additionally, in this phase more and more facilities were built, such as the theatre Royal in 1882 and the Boscombe Pier in 1889 in order to offer a positive visitor experience (Lambert, 2003). The “Consolidation” phase in Bournemouth was characterised by mainly by the development of new visitor markets due to the change in trend of holidays aboard. Thus in the 1950?s Bournemouth?s first English language schools appeared in order to attract foreign students which was possible due to easy and affordable access through Bournemouth International Airport (Doyle, 2006). Consequently, the types of tourists in Bournemouth change from family holiday makers into low spend and mass tourists (Doyle, 2006). The visitor numbers in Bournemouth continued to decrease as well as the length of stay, thus Bournemouth was declining. The main reason therefore was the growing competition of Mediterranean destinations (Leksakundilok, 2006). In the 1970?s Bournemouth entered a phase of “Stagnation”. In order to overcome this issue the Bournemouth International Centre opened in 1984 for conferences and exhibitions (Walker, 2007). Additionally, Bournemouth started to attract young people to the town especially at the weekends due to an increase in licenses for nightclubs, bars and restaurants (Walker, 2007). Corollary, Bournemouth became a “no go area” for previous visitors (Walker, 2007). However, Bournemouth managed to rejuvenate in recent years due to large investments and the creation of all year long leisure amenities, such as the Bournemouth International Conference Bureau which was launched in 2003, indoor attractions for instant the Oceanarium and the Imax cinema and annual events (Bournemouth Borough Council, 2004). Additionally, Bournemouth invested in its seafront appearance, accommodations and transport sector. The result of that was an increase in visitor numbers from 300,000 in 1996 to 500,000 in 2000, tourism awards and the transformation into a metropolitan town (Bournemouth Borough Council, 2004).

Gormsen

The final theoretical model used in this essay was developed by Gormsen (1981) and is called “The spatio-temporal development of international seaside tourism”. This model concentrates on “the importance of local participation and local control” (Hotelmule, 2010). Moreover, Gormsen (1981) looked at the development process of tourism in seaside destinations in Europe (Pearce, 1989). Therefore, he concluded that the development of the accommodation sector “is an initiative of external developers in the early stages” (Leksakundilok, 2006:54). However, later the development process is replaced “by extensive participation by regional (local) and other social groups” (Leksakundilok, 2006:54). The model starts off with the tourism development on both sides of the English Channel. However due to the development of cheaper and faster transport and advances in technology tourism spreads out to the second periphery which represents the coastline of southern Europe, the third periphery which shows the development of tourism at the north African coastline, the Balearics and Canary Islands, and the fourth periphery symbolises destinations in west Africa, the Caribbean, the Pacific and in the Indian Ocean, South East Asia and South America.

Between the 1800?s and 1870?s the participation in tourism development of the local population in Bournemouth increased which is noticeable through the accommodations and facilities built to cater for travellers, for instance in 1837-38 the first villas available for hire as well as the “Bath Hotel” were constructed (Lambert, 2003) and in 1861 the town?s first pier was built and the first paddle steamer started operating as a holiday exercise (Walker, 2007). During this period only the Upper class could afford to travel. However, that changed with the development of a railway link to Bournemouth in 1870 (Lambert, 2003) which allowed an easier access and thus more people were able to travel. The development of the railway network was responsible for a change in attitudes toward travelling which corollary “changed the class structure of the English seaside holiday” (Page and Connell, 2006:30). Over time the number of tourism accommodation, facilities and activities increased due to a growth in local involvement in the tourism development process. By the 1900?s one and two week family vacations to seaside destinations became increasingly popular and Bournemouth expanded (Walker, 2007). With the development of cheaper transport and accommodation the type of tourist Bournemouth received changed from only upper class to middle class. However by the 1990s Bournemouth visitor trends have changed significant again as a result of an increased number of licenses for “nightclubs and bars in central Bournemouth” which attracted mainly the lower classes (Walker, 2007).

Conclusion

In summary, this essay showed how Bournemouth developed from a virtually unknown heathland region on the south coast of England to an award-winning seaside destination which receives hundred thousands of visitors each year. The main factors which enable the development of seaside destinations such as Bournemouth were identified as “improved access, via rail travel, improvements in social access to leisure time and the recognition of new investment opportunities in creating these coastal resorts” (Agarwal and Shaw, 2007:3). Furthermore, Bournemouth development was compared with four theoretical models of destination development. The first model used was described by Thurot (1973). It emphasises on three stages of development a destination has to pass through. The second model developed by Miossec in 1977 “describes a destination’s evolution based on spatial characteristics, transport, tourist behaviour and attitudes of decision-makers, and the community” (Dredge, 1999:778). The next model used was created by Butler in 1980 and is called the Tourist Area Life Cycle. Butler (1980) “illustrates the various stages a destination travels through, depending on the number of tourists it attracts over time” (Ryan and Cooper, 2004). The final model used was developed by Gormsen in 1981. This model concentrates on “the importance of local participation and local control” (Hotelmule, 2010).

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According to Tourism Philippines, Boracay is famous for its long white sandy beaches, and is also a popular outlet for water sports activities such as scuba diving, snorkeling, sailing etc. Other than the sandy beaches, Boracay is well known for the nightlife and party scene. There are numerous bars and clubs along the whole stretch of beach, mostly located at station 2 of Boracay. Spas are also readily at most places; you can even find freelance masseurs “patrolling” the beaches! (Tourism Philippines, 2008, Retrieved From: http://tourism-philippines.com/boracay-travel-guide/)

According to corporate.mozcom.com, “The best part of the island is its 4 km. White Beach, also called long beach by the locals. It is situated at the west coast between the villages of Angol and Balabag, and some experienced travellers claim it to be the finest beach of all Asia. The water is shallow here and its sand brighter and finer than most beaches in the archipelago. There are about 350 beach resorts with 2000 rooms to suit virtually everyone’s taste. There is accommodation of all types and price categories. Restaurants range form the native fastfood stalls to establishments that would satisfy even a gourmet. You can find beer joints as well as discos with amazing light and sound equipment.” (corporate.mozcom.com, n.d, Retrieved From: http://corporate.mozcom.com/dot/r6/borfacts.html)

Nestor P. Burgos Jr. of the Philippine Daily Inquirer states that, “DISCERNING travelers and tourists prefer destinations off the beaten track. But many of them still end up in the world-famous beach of Boracay Island in Aklan.” This is because of its white beach and fine white sand and crystal clear waters, according to Edwin Trompeta, regional director for Western Visayas of the Department of Tourism. “The beach and waters combined with the island’s nightlife make Boracay irresistible,” he says.

Despite controversies on land ownership and unregulated development, Boracay has drawn more tourists every year because of its famous white beach, consistently included in the lists of the best beaches in the world.

Furthermore, the global economic slump has failed to dampen tourist arrivals with new foreign markets and local tourists making up for the slack in visitors from countries hit hard by the world recession.

As a matter of fact, tourist arrivals on the island have been on the upswing for a decade. They are up from 554,181 tourists in 2006, 596,707 in 2007, 634,263 in 2008 and 649,559 last year. For the first five months of this year, tourist arrivals have grown by 12 percent, according to data from the tourism office of Malay town in Aklan.

Boracay’s peak season usually begins in October and lasts until May the following year

From January to May 2010, tourist arrivals reached 378,694, higher than the 337,664 tourists who visited the island in the same period last year and the 320,994 tourists who came in 2008.

The highest number was recorded in May with tourist arrivals reaching 101,349, higher than the 92,813 tourists in the same month in 2009 and 83,731 in 2008.

More than 600,000 local and foreign tourists visited the white sand beaches and various parts of Boracay during the period, more than 40 percent higher than the 2009 figure of around 470,000.

DOT 6 said they have recorded more than 230,000 foreign tourists in the island as of early October.

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This is good news amid the various travel advisories issued by several countries against visiting in the Philippines, the DOT 6 said.

The United States, Australia and United Kingdom had earlier issued advisories as precautions in traveling to the country in the wake of reported terror threats.

The tourism of Boracay is continuing to grow in fact, The News Today states that, “Boracay’s revenue, mainly due to tourism, has reached P 12.17 billion as of the third quarter, higher compared to last year’s figures.

Income from tourism in Boracay from January to May reached P6,961,683.28.” (Burgos, 2010, Retrieved From: http://newsinfo.inquirer.net/inquirerheadlines/regions/view/20100814-286677/Boracay-tourism-still-up-amid-woes)

Tourist Attractions and Activities in Boracay

According to travelnet.com, Boracay is famous for the following:

Beaches / White Beach

Boracay boasts of a sugary white sand beach and azure blue waters. The best part of the island is the four-kilometer White Beach known to be the “finest beach in the world.” The surrounding water is shallow and the sand is finer and brighter than most beaches in the archipelago. White Beach is so, soooo fine, it feels like treading on miles of baby powder!

Aquasports

The island paradise of Boracay is a perfect place for watersports. Here, you can partake in a smorgasbord of exhilirating aqua action – from swimming and snorkeling to scuba diving, windsurfing, sailboating, kayaking, boardsailing, and boating.

Nature Tripping / Eco-Adventure

World-renowned Boracay is an adventure island ideal for island hopping, hiking, trekking, caving, mountain climbing, biking, and horseback riding. Trekking and mountain biking can bring even the intrepid to the island’s quaint interior villages and to the edges’ scenic rocky cliffs, discovering along the way many hidden coves with isolated beaches far from the

tourist crowd.

Boardsailing at Bulabog Beach

On the eastern side of Boracay Island is Bulabog Beach. It is a boardsailor’s mecca that draws enthusiasts from all over the world, especially during the peak season from November to March. In January, it is the site of an International Funboard Cup.

Paraw Regatta

Sailboating and kayaking are popular sporting activities, with Boracay playing host to the annual Paraw Regatta, an international sailboat race that makes use of the native outrigger.

Diving

Dive sites surround the island and are learning venues to both novice and professional divers, guided by competent instructors of the many dive shops that operate in the area. For trueblue scuba diving enthusiasts, Yapak in Boracay is a great deep dive.

Recreational Sports

Laid-back Boracay is the perfect venue for golf, tennis, bowling, even beach volleyball. Top-of-class amenities for these activities are available in the island. For golf bugs, Fairways and Bluewater Resort Golf and Countryclub has an 18-hole championship course.

Partyhopping

The code in Boracay is strictly informal. Walking barefoot than shod is the rule rather than the exception. Swinging discos have the beach for a floor, giving dance a new twist. From dusk to dawn, the island turns into one big party place where everyone is welcome to join in.

Mambo Number 5

For the adventure-driven, “Mambo Number 5” is a little bit of boating and wind surfing, a little bit of scuba diving, a little bit of trekking, a little bit of mountain biking, and a little bit of golf.

Shopping

Bargain shopping is a joy of a diversion while in Boracay. Souvenir pieces provide endless possibilities, from trinkets and native accessories made of shells and semi-precious stones to exotic or contemporary beach wear and fashion artworks.

Dining

The taste of the 6th Region, to which Boracay belongs, is quite simple. Charbroiled chicken is common fare. Another favorite dish is raw fish marinated in spicy vinegar. Dining is no problem in Boracay, with most resorts having their own restaurants that serve both Filipino and international cuisines. Small snack bars line the island.

Relaxation

Diversions are not a problem in Boracay, with leisure activities calendared throughout the year and amenities offered by some 350 tourist establishments. The island is ideal for beachbumming, relaxing, and simply lazing around. At the end of the day, unwind with a relaxing massage. The island never runs out skilled masseurs offering massage services by the beach. For a more luxurious treat, visit the new Mandala Spa.

Boracay Boardsailing

The picture-perfect tropical island of Boracay offers flat-water speed sailing, wave jumping, and longboard cruising. White Beach, shielded from the amihan, or northeast monsoon, is for beginners. Bulabog Beach, on the other side of the island, has ideal conditions for speed, slalom, and high-wind shortboard sailing. It is also the site of the annual Boracay International Funboard Cup. Tabon Strait has superb high-performance sailing, but there is a real risk of being swept away, so this site is for skilled sailors only.

Tibiao Whitewater River

Rising near the peak of Mt. Madja-as, the Tibiao River descends almost 2000m on its short but tumultuous journey to the sea. The lower section of the river, known as the “Chicken Run”, is grade 3; the more difficult upper section reaches grade 4. The Tibiao has all the classic features of a tropical whitewater river, with rich vegetation hemming the banks, views of rice terraces, spectacular falls and clear water. The river is close to Boracay and easily accessible.

Natural Formations
Beaches / White Beach

Boracay boasts of a sugary white sand beach and azure blue waters. The best part of the island is the four-kilometer White Beach known to be the “finest beach in the world.” The surrounding water is shallow and the sand is finer and brighter than most beaches in the archipelago. White Beach is so, soooo fine, it feels like treading on miles of baby powder!

Festivals
Ati-Atihan (second weekend of January)

January is the time to hang loose in Kalibo, the “Land of the Atis” and the gateway to Boracay. For all of three days, it celebrates the Ati-Atihan Festival – where frenzied streetdancing is performed by costumed and black-sooted “tribes” as they wend through the main streets from dawn until the witching hours. Ati-Atihan commemorates the 13th-century land deal between ten migrating Bornean chieftains and the aboriginal Ati King Marikudo. It also honors the town patron, the infant Santo Nino. To the accompaniment of hundreds of lyres and drums, merrymakers throw all inhibitions to the wind as they join the tribes in a mad jig punctuated by rhythmic shouts of: “Hala bira! Puera pasma! Hala bira! Viva Santo Nino!” (Loosely translated: “Let go! Don’t get sick! Let go! Hail the Holy Child!”)

Paraw Regatta

Yearly, Boracay Island plays host to the Paraw Regatta, an international sailboat race that

makes use of the native outrigger.

International Funboard Cup

A music and dance festivity depicting the history, folklore, and traditions of the Lobocanons. Bolibong Kingking is a term applied to the drums and gongs and their rhythm used to accompany the supplication dance ritual in front of the Image of Our Lady of Guadalupe, the 2nd Patron of Loboc.

Pana-ad sa Loboc (Holy Thursday & Good Friday)

Bulabog Beach, situated on the eastern side of Boracay Island, is a boardsailor’s mecca that draws enthusiasts from all over the world. Every January, it is the site of an International Funboard Cup.

Marketing Boracay

A study was undertaken for the International Finance Corp. (IFC) by a team of Filipino and German consultants to improve and develop Boracay to make it a world-class tourist destination. According to this study, the plan is achievable and through this, the island of Boracay can compete with other world-renowned beaches like those in Phuket, Thailand and Bali, Indonesia.

“The plan is to redesign the marketing strategy to make the island more visible and accessible to tourists from around the world,” declared IFC Country Manager Vipul Bhagat. Boracay is presented as a haven of good investment opportunities, paying attention to strategic tourism marketing and promotion so as to invite and persuade more tourists into visiting the island.

http://www.mb.com.ph/node/61659

The study emphasizes the major changes which are intended to be done and implemented to develop, sustain and make Boracay a major destination for big-ticket tourism. These changes include the “transfer of solid waste management facility from Boracay to Caticlan; the construction of low-cost mainland housing to ease migration and congestion in Boracay; improved transport facility between Boracay and Caticlan; development of Caticlan’s airport and marina; a Caticlan-based full service hospital to respond to emergencies, and; an agro-industrial center in Caticlan with ice and cold storage facilities and a public market.” Issues like migration, zoning, lack of health facilities and medical personnel, visual and noise pollution, solid waste and water management, energy supply and intra- and inter-island transport are also addressed. In addition, the building of educational facilities offering tourism-related services, environmental management and eco-tourism in Caticlan was also recommended to raise the awareness of the locals to continue preserving, sustaining and developing the island that is considered as one of the Philippines’ most treasured and precious natural resources. .

To start with the marketing and strategic management development, the IFC conducted a web marketing seminar for local officials and businessmen to improve and hone their skills and utilize the use the Internet to market Boracay and improve and build-up its image. A separate forum for potential investors was also held in Manila.

The service provided by One World Hotel is called ONE Service. Hotel guess can simply push the special ONE Service button through guess room telephone to request for any service. The services include housekeeping, maintenance, concierge service and food & beverage. Before arrival, the hotel’s concierge team connects guests to a dedicated Web Site that provides insider information about Malaysia, for example where locals eat, where guests can pick up local products and suggested activities. Guests can also send personal emails to the Concierge team to help tailor an itinerary ahead of the visit. Full access transportation is available through the Concierge, which includes transportation to and from the Kuala Lumpur International Airport. The hotel also provides free shuttle service to interesting places in Kuala Lumpur, which includes the nearest Light Rail Transit (LRT) station in Kelana Jaya, Sunway Lagoon Theme Park, KL Sentral Station and Petronas Twin Towels. Other services include babysitting/childcare service, limousine and taxi service, laundry and valet service and foreign currency exchange.

There are multiple facilities available in One World Hotel. For wellness and recreation, it has fully equipped fitness centre with professional coach and complete with sauna and steam rooms for both male and female, outdoor swimming pool, spa and massage, 2 floodlight hard tennis court and 2 artificial grass tennis court. For conferences, theme parties, business meetings and weddings, One World hotel has a business centre, more than 5000 square meters of meeting space, pillar-less Imperial Ballroom which covers 3100 square meters which is partition-able into three separate ballrooms and can accommodate up to 2000 people for banquets and 3500 persons theatre-style, an extensive foyer for pre-function facility complements the Imperial Ballroom which also has its dedicated entrance from the lobby level of the hotel, 15 versatile function rooms suitable for groups of 20 to 350 people for meetings, private dinners and weddings, 3 individual holdings rooms for dignitaries and a secretariat room are also available. Other facilities include up to 1000 basement parking lots for the convenience of hotel guests, non-smoking rooms and wheel-chair accessible rooms,

Besides services and facilities, there are three innovative restaurants in One World Hotel., such as Cinnamon Coffee House, a restaurant of vibrant taste, sight and sound, embodying local and international cuisine experiences in a single venue, Zuan Yuan Chinese Restaurant specializes in authentic Cantonese cuisine and Kura Japanese Restaurant reflects the genius of Japanese cuisine with an exquisite mix of rare treasured delicacies. There are also a few entertainment venue in One World, The Sphere Lounge is the perfect place for business or social gatherings with its sleek, modern design, yet cosy atmosphere, Poolbar and Grill is best for the hotel guess who like to soak in the sun enjoy exciting thirst quenching beverage, snacks, light meals or wellness cuisine, Long Bar is a place for nights of fun and entertainment in a trendy atmosphere and Havana Club is a special place for cigar lovers.

The nearby attractions of One World Hotel include 1 Utama Shopping Centre, Sunway Lagoon Theme Park, Petronas Twin Towers, National Science Centre, Lake Gardens, Kuala Lumpur Bird Park, Bukit Utama Golf Club, National Monument, Orchid farm, Batu Caves, Central Market, Chinatown, Suria KLCC and Genting Theme Park.

INDUSTRY ANALYSIS
Current Situation and Trend

Hotel business particularly has been badly affected by the global economic crisis in year 2008. This is because during the economic downturn, most corporate companies will introduce cost saving measure, especially ban on travel and stop on meetings, conferences and training sessions which mostly take place in hotel. Furthermore, leisure business is also affected as families do not want to spend extra on holidays due to jobs insecurity.

The economic downturn caused serious effect on choice of hotel, those budget hotels will win in the competition with luxury hotels during tough economic times. Corporate will make fewer, shorter and cheaper business trips, business travelers will care less on luxury instead they are concentrate on whether the hotel deliver the basics, such as good Wi-Fi access, an efficient check-in and a quiet room, rather than lavish facilities such as superior class restaurants, gym or spa.

It is a time of real opportunity for budget hotels to expand on market share. However budget hotels still need to compete on more than price, this is because despite the downturn, travelers still expect to have a good service. In other world, offering a highly customized services that generate a positive impact on guests makes them return and establishing a solid long-lasting ties.

Performance Review

One World Hotel has prevailed and successfully established its name within the increasingly competitive hotel market. However, like most of the hotel, One World Hotel was hit by the global economic downturn. Its revenue declined by 15 percent from RM 64 million posted in 2008. (Business Times, 2010) Despite the economic downturn, One World is facing competition from nearby 5-star hotels such as Armada Hotel, Saujana Hotel, Eastin Hotel and budget hotel such as Tune Hotel.

Due to time consuming, our team assessed the existing service performance of One World Hotel based on consumers’ independent hotel reviews and comments shared by a few travel sites such as TripAdvisor and Agoda. In order to have a more accurate and actual data, the hotel is highly recommended to conduct a market analysis survey to evaluate what is the reason behind the business decline. From the assessment, they can find out the percentage of which category suffer more losses due to economic downturn, whether it is business traveler or leisure traveler and their preference and trend.

In this proposal, our team assumes that due to economic downturn, the losses of business traveler are equal to the losses of leisure traveler.

Key Issues (SWOT Analysis)

In order to fully recover from economic downturn and thrive in the coming years, One World Hotel must assess its overall strengths and weaknesses as it moves forward through the new millennium. The following SWOT Analysis shows some of the strengths and weaknesses of One World Hotel and also some opportunities and threats that await the hotel.

Strength

One World Hotel is a well established hotel with great architecture and facilities. The room is very comfortable and spacious; the hotel is well kept and clean. One World is in a great shopping location adjoining a huge and great shopping mall with everything you need, One Utama. One World also has seven innovative restaurants to cater the customers’ need.

Weaknesses

From the customer review, the front desk service is rather poor and the check-in process is quite slow, customer service staffs may need some training. One World also lack of after sale service. One World has a high room rate with an average room rate of RM310 which may become a problem when price is a concern. One World is not convenient if hotel guest need to go anywhere in Kuala Lumpur because the hotel is not in the city centre, an hour is needed to get to the KL Central and there is no light rail transit (LRT) within walking distance. Although the hotel provides free shuttle service, the endless traffic is also a problem.

Threat

Global economic crisis in year 2008 was a major blow to the hotel industry, a similar situation may occur again and could result in another downturn. Competition from other luxury and budget hotels also poses a threat to One World

Opportunity

One World Hotel should turn the impact of last two years into opportunity. One World should find a new market strategy instead of competing in the red ocean. An economic downturn may be an opportune time if One World provides value those customers expect and where possible, exceeds their expectation. New products and services can be developed by One World.

IMPLEMENTING BLUE OCEAN STRATEGY
Reconstruct Market Boundaries

As sales declined by 15%from $64 million posted in 2008, a mix of desk research, qualitative and quantitative research is strongly recommended in order to understand the underlying trends. Problem happens whenever ideal state is differs from actual state. Typically, a proper plan research answers most of the questions and leads to conclusion, recommendations and decision that solve the problem and identify the market opportunity. One World Hotel management should allocate resources for this survey prior to reveal actions. However, our team members would like to diagnose this scenario base on some customer post purchase evaluation shared in website. No doubt, it is subject to data distortion and difficulty to interpret due to small number of sample size, but it is a practical approach to provide at least some information when resources are limited.

Given that there are more than 50 hotels (range from budget to 5 stars) serving business and leisure traveler in this area, a value curve of Petaling Jaya Hotel Industry in year 2008 is drawn in order to understand the current state of play and develop a strategy canvas. Customer- perceives performances in most of the service attribute are counted and measured scaled relative to competitors. For instance, price, convenience, facility and hygieneThis showed us the competitiveness across entire market. The objective for both luxury hotel and budget hotel are charted in the value curve. In this case, luxury hotel is interpreted as an upscale hotel and costs more than the average accommodation RM180 per night. Those below RM180 are categorized as budget hotel.

Figure 1: Value curve of Petaling Jaya Hotel Industry in year 2008.

From Figure 1, luxury hotels offers a list of “Stars” quality services including lavishly decorated room and modern facilities which provide extraordinary experiences that exceed customer expectations. This hospitality industry is not solely selling rooms or beds but customers’ satisfaction, the overall services provided by those luxury hotels in Petaling Jaya are barely meeting customers’ expectation despite of it is a key factor for these hotel to success.

Figure 2: One of the comments shared in internet. Source: http://www.tripadvisor.ca,25th September 2010

On the other hand, budget hotels score lower in quality services offerings. Their beds are less comfortable but located in city center areas which are a few minutes’ walk from bus stop, bus station or MRT station. Their target market is more constrain in “price” and they have less expectation for hotel. For them, hotel is only “a place to sleep”. Obviously luxury hotel and budget hotel are targeting at two different market segments.

Figure 3: Value curve of luxury hotel in Petaling Jaya indicating the One World hotel relative performance across hotel’s industry competition factors.

What is the strategic group from the perspective of One World Hotel? We identify 3 luxury hotels located in Petaling Jaya area namely Eastin Hotel, Hotel Armada Petaling Jaya and The Saujana Kuala Lumpur hotel. Obviously, One World Hotel which is widely accepted as luxury hotel is offering typically product attributes as compare to their competitors hence difficult to stand apart from the market place. Drawing a strategy canvas is not an easy job; however the management should reconstruct the competitiveness position in order to outcompete from other luxury hotels. But, the question is “How?”

Visualizing Strategy

To win the future, One World required a switch from existing approach of competing with their rivals like Eastin, Armada and Saujana Hotel. Instead of looking at current strategic position in this market position and caught up by operation detail, we shift our attention on the big picture. Like most of the business environment, One World is exposed to heterogeneous market. Looking at the location and business activities around the area and analyses the need why customer tend to stay around that area, we prioritized the target market for One World to be business trip customer. Due to the heavy traffic at its’ surrounding, it is unlikely that customer will choose this area for vacation. It is not convenient to go in and out of this area frequently and One World chooses not to challenge with this factor. Same goes for Bed and Room size and since they had invested on the hotel recently, changes are minimized to avoid modification cost. The exclusive characteristic here is well-off for shopping and surrounded by variety of food. Temptation for the business trip’s customer to stay within and opt for shopping or eating after work is high and these can be good reasons why customer chooses this area for their business trip. Other services like free shuttle and concierge shall be maintained.

From our survey and after a lengthy discussion over the competitive factors, we have discovered attributes which should to be raised, reduced, eliminated and created.

Figure 4: A side to side comparison on One World product attribute before and after implement Blue Ocean Strategy.

For this market segment on consumer needs and wants, consumer commonly aim for comfortable and convenient. They will not have ample of time to do their personal activities like shopping during their business trip. Therefore, it will be helpful if information on shopping center or food is simple, clear and easily accessible. To provide the additional convenience, One World can increase their services as information provider through internet. Kiosk and on-line station must be widely available at strategic area such as the lobby and main alleys within the hotel. For those customers who are not vice verse or dislike this gadget may approach the help desk, whereby the customer service may provides clear and detailed instruction.

Eliminate
Raise

Gym, Spa, sauna, massage and steam rooms

Help Desk service

Tennis court

Quick Information-Kiosk & Internet

Reduce
Create

Room rate

Personality

Number of Restaurant

Food variety

Affordable room rate

Butler service

Figure 5: Eliminate-Reduce-Raise-Create Grid for One World

One World should also prepare special butler upon request for this service at small fees to bring their customer around. This group of service staff needs to always keep up to date with the latest information for all the retail outlets as it is part of unique task to carry out. Customer satisfaction in this area of service should be their performance measure.

By targeting to raise the attribute of convenience of shopping and customized service, existing facilities on restaurant shall be reduced. With this reduction, it will provide benefit of space for kitchen, cashier and storage which will facilitate cost reduction. Maintaining only one restaurant in One World, this restaurant shall be equipped with special service where dine in customer are able to order food from external restaurants. The idea is to enable the customer to have variety of food and experincing it on the same table. Customers can order their food through special menus including Japanese, Indian, Korean, Mexican and more food from the restaurant nearby and delivery service will be provided right to the table. This service shall be planned in a way that only hotel guests are entitled for the same price of the food as if they buy it from the original restaurants. With this, food provided from One World itself is less but the hotel guests will access to more selection. Profit from food can be gained from the alliance restaurants, plus saving gained from reducing the maintenance of restaurants and the additional space.

On top of this, to achieve Blue Ocean marketing strategy, One World shall eliminate facilities like gym, spa, sauna, massage center, steam rooms and tennis court as to build One World into more focus hotel. All the eliminations as well as reduction in the maintenance of facilities to be carried out at One World will obviously cause the current status of 5 stars drop. However, this shall not be the limiting factor for us to pursue their new opportunity of Blue Ocean. One World shall disregard the common stars standard to customize their service so as to provide their customer on the benefit that they are looking for. In other word, One World is look up for a different standard of 5 stars hotel with only 3 stars price!

Area of focus which One World must raise is the training and minimal investment in database system. This is required as a tool for staffs to provide ‘personalized’ services. Every customer is precious and they shall return with ‘known identity’. For instant, customer’s name, preferences on food, interests on shop and more can be captured in the hotel database. All these information may help the customer service to prepare for appropriate information when the returned guests placed their booking before arrival. Through this way, it can help the staff to provide ‘personalized’ service. In addition, the service troop must be well fitted with appropriate social skill in providing their customized services.

To extend their market, One World can tailor their price to affordable rate if customer required staying for longer period. For stay which is longer than 7 days for example, this can serve as special package or discount. By doing this, their frequency in customizing work for different customer can be reduced and at the same time secure the business. This attribute of adapting special package price may help to open up market for loyal customers especially for the expatriates.

All the changes as describe above must be communicated to all levels of staff and ensure that all are aligned with the same goal. System such as incentive or reward system and suitable performance measure must be in place for operation and management. On top of this, continuous training and motivation are equally important to raise these attributes and sustainability at the highest service standard.

Reach Beyond Existing Demand

One World previous niche marketing strategies that focuses on price exclusivity had created a very small target market. In times of recession, this group of people has become smaller. Moreover, some of them might reduce some unnecessary expenses. Besides maintaining current market, One World has to reach beyond existing demand. In doing so, the new One World has to understand the needs and reach out to the three tiers of Noncustomers.

The first tier of noncustomers, are hotel patrons that are usually in search for packages with value for their money. These people are ready and prepared to migrate whenever there are better offers. They will stay in One World if there is value for their money and are more than willing to switch to nearby hotels such as Eastin Hotel if Eastin Hotel has more to offer.

The second tier of noncustomers is people who will usually use hotel service but chose not to visit One World. They may be environment travelers who like to be close to nature. Hence, this group of people will select hotels that are close to nature. Until and when One World has something that fit their criteria that is close to nature, One World could not reach out to these groups.

The third tier of noncustomers, are those who never think of One World market offerings. They are the house tenants especially the expatriates in Malaysia. The expatriates are in search of a warm and homey place to stay. One World definitely has something that can be tailored to suit their needs.

Hence, we searched for some common ground and found some key commonalities across the three tiers of noncustomers and existing customers. They are price, convenience, facility, food, leisure, room size, hygiene, shopping facility and other services such as receptionist, after sales service and personalized service.

One World can reach out to the expatriate market, the third tier of noncustomers. Often, these expatriates come alone and were given a huge budget as housing allowances. They may be seeking for a place with a good and convenience location as they are not familiar with the place. As their appointment may only be as long as a year or two, they are not too particular in searching for some real house.

This offers opportunities to One World. One World can offer the same product as a landlord or land lady can offers. A place called home. Adequate room size with good hygiene and perfect quality bed is exactly what these expatriate are looking for. Instead of renting a big condominium for a single person, and having to clean the house themselves, these expatriate can opt to have it all under the roof of One World. These expatriate can have the same satisfaction from renting a house when staying in One World.

Third

Tier

Expatriate

Tenants

Second

Tier

First

Tier

Oneworld

Market

Figure 6: The Three Tiers of Noncustomers

Moreover, One World strategic location that connects to the shopping centre and food outlets offers convenience to the expatriates. With One World connections to the various outlets in One Utama shopping centre, the expatriates can spend their leisure time utilizing the sports facilities and gym in the shopping complex.

By entering to tenancy contracts with the expatriates, One World can be sure of their room occupancy and this guarantees some fixed income for the hotel. One World can allocate some rooms with various types for this long term occupancy. One World sales team can approach the multinational company to sell the concept ‘everything you need in one place’.

Get The Sequence Right.

One World hotel will provide upmost customer focus service – makes customer feels like home at an affordable price. The concept of feeling at home at hotel at an attractive price will compel customers to choose One World hotel as their first choice. One World hotel should strive on customer productivity, simplicity and convenience to attract mass customer. One World hotel new concept focused on the “personalized” service of customer. Every customer visited One World hotel will have the anticipation of returning with a “known identity”. Customer’s name and contact is common information which hotel may store. One World hotel shall go one more step further by storing not only customer name but also customer request such as need to have iron and ironing board on each trip, additional pillow, special design of pillow, or even the need to have a room with window facing east for Feng Shui purpose. All the previous information will be utilized during the next visit whereby the hotel can have preunderstanding on customer and prepare the required service.

One World hotel can strive to be different from other hotel by simply changing the way customer is usually treated. Providing good customer service is a norm in hotel industry but One World Hotel can provide service and care like family.

For example, it is a general practice that when a customer does not check in after 6pm and do not left an instruction that he or she will be checking late and provide credit card information to secure the room, the room reservation will be cancelled automatically. One World hotel can provide a service whereby all room reservation will be treated in such a way if a customer do not check in after 6pm, the hotel staff will contact the customer to obtain information regarding the customer arrival in order to ensure the customer will have a room upon arrival.

The kiosk or on-line station to facilitate customer’s shopping shall be user friendly whereby customer can learn to use in less than 5 minutes. This will encourage customer to utilize the technology to enable them to have a comfortable stay in the hotel.

One World hotel shall aim for strategic price lower than luxury hotel and comparable with budget hotel. By eliminating facilities mostly unused by mass customers, One World can maintain a low cost operation. By reducing facilities example gym and tennis court, One World can provide an economical price to customer and maintain a low cost to run its business. Investment in training of service troup (intangible) shall be much lower than upgrading or maintaining facilities which are not the main focus of customer. One World hotel can make offer to companies by providing room reserved specifically for their company with a lower price on the condition the company has to pay for the room for entire year. This will benefit the company if the company frequently send employee to stay in the area for business trip. Thereby, the hotel will not be fully dependable on seasonal customers. One World hotel can utilize the ‘slice share’ concept by offering their function hall, conference room or ballroom up for company reservation. One World hotel can offer to provide discount for customers who successfully recommend their friends or family to stay at One World hotel. This will enable One World hotel to achieve strategic pricing.

Adoption hurdle on execution of the new concept of treating customer like family members and providing “personalized” service while eliminating facilities such as gym and tennis court is the risk of having customer which required the facilities such as gym and tennis court. Thereby, One World will provide gym facilities by providing transportation for customer to nearest gym and sports recreation. Since the percentage of customer which required such facilities is less, thereby this will reduce the cost of purchasing gym equipments and the maintenance fees. One World hotel new goal is to aim for value innovation rather than facilities innovation. Another adoption hurdle is One World hotel need to convey their company mission to their employees as the new concept mainly focus on customer service which is dependable on employees effort. Thereby, One World hotel need to have a comprehensive training on friendly and effective customer service. One World can incorporate classroom training and apprenticeship program.

Instead of using facilities to attract customers, One World hotel shall focus on providing friendly and efficient customer service. This can be achieved by performing an assessment on the manpower in order to utilize their resources including hotel staff whereby they can reduce their direct labour cost.

Overcome Key Organizational Hurdle
3.5.1 Break through the Cognitive Hurdle

To convince the managers that there is a need for strategic shift in the hotel, they need to be really exposed to the problems faced by the hotel guests. So far, most of the comments and complaints are received either through front desk suggestion boxes, or online travel forums such as TripAdvisor where guests may post comments about their recent stay. However, there are significant numbers of guests whom may be very unhappy about their stay, but never gave any feedback to the hotel management. They just never come back. A check on the travel forums reveals that many guests are happy with the facilities provided by the hotel (except for the wireless internet), but have mixed feedback when it comes to the hotel’s customer service.

To bring out the real issues faced by guests and make sure the managers see them, a “Mystery Guests” program could be carried out. 20 participants would be secretly selected and invited to stay at the hotel for a given amount time. All expenses would be paid by the hotel. These Mystery Guests would be given instructions to evaluate the service provided by the staffs, making complaints to certain quarters, demanding for certain services to be provided etc. At the end of the program, a face-to-face meeting between the top management, department managers and the 20 Mystery Guests would be called. The Mystery Guests would then spell out their evaluations on the services received by them. Instead of going through the Communications Manager, we expose all the department managers to the comments and complaints from the guests. Through this, we would be able to convince the managers that a strategic and organization-wide change is imminent.

3.5.2 Jump the Resource Hurdle

To overcome the resource hurdle, we need to identify where are the hot spots and cold spots, and perform horse trading for the resources. In One World hotel, one possible hot spot is the staffs’ hospitality training. Guests are responding that the staffs’ services are good on one occasion, and horrible on another. These inconsistencies have caused much annoyance to regular guests who could not expect what will be the service level in their next visit. With more focus on the consistency of high level of service, guests can expect great service from every staff, every time. This activity does not necessarily involve high resource input, as much of the training structures are already in place. What need to be done are some adjustments in the training program to ensure the consistencies in the staffs’ service level. Front office’s staffs are also crucial in ensuring guests have a great experience the moment they enter the main entrance. Many guests made comments on the front office’s service, with mixed reviews on their performance.

Cold spots can be identified in the maintenance of some of the hotel’s facilities such as gym and tennis courts, and the operations of the hotel’s various kitchens. The resources invested in these activities are meant to provide more facilities to the guests, but these can be met through other methods such as the partnerships with One Utama’s restaurant and gym operators as explained above. By removing and reducing these activities, many resources can be redistributed to other critical areas of the hotel, such as ensuring perfect maintenance in the rooms for better sleep quality of the guests.

3.5.3 Jump the Motivational Hurdle

To overcome the motivational hurdle, we need to identify the kingpins of the hotel and manage them in a fishbowl. The kingpins of the hotel may be the department managers, who are each in charge of all the other employees under their respective departments such as Marketing, Front Office, Housekeeping, Food & Beverage, etc. These managers are essential in executing the blue ocean strategy, which requires them to be carefully managed by the top executives.

The respective department managers should be managed in a fishbowl, in which each manager’s performance could be transparently seen and gauged by others. A weekly meeting consisting of the top management and all department managers would be held to engage these kingpins. Their performance would be transparently appraised where performers would be rewarded while laggards being taken proper actions.

3.5.4 Knock Over the Political Hurdle

To overcome the political challenges inherent in implementing strategic change in an organization, the top management needs to identify who might be the angels and devils within the hotel.

Firstly, the General Manager needs to secure a consigliere in the top management whom will be having the duty of surveying the grounds, understanding staffs’ emotion and identify those who would oppose the new strategy. The consigliere needs to be one highly respected by all the staffs and could help the General Manager navigate the treacherous water of implementing new strategies. He or she will also help identify who the devils and angels may be within the organization.

Angels in the hotel could be the Marketing and Finance departments, as th

1.0 Introduction

1.1Definition of Tourism industry

Tourism refers to the movement of people from different social and cultural background travelling out of their usual environment staying in a different place for business, personal, or professional reasons. These people are commonly referred to as tourist. Their actions in the country they visit affects the local economic market as they carry out their activities, as most of which may require them to spend money thus increasing the expenditure in the local markets which in turns boosts the GDP of the respective country (Media.unwto.org, 2014b). Therefore the tourism industry is formed to cater to the needs and demands of locals and tourists in terms of products and services and is defined as such in this report.

1.2 What does the tourism industry mean to Singapore?

As Singapore lacks natural resources, the tourism industry serves as an integral factor that acts as a crucial pillar for the economy of Singapore. It contributes an estimated 4% to the gross domestic product of Singapore and also provides jobs to about 160,000 people. The tourism industry serves to reaffirm Singapore’s position as a global cosmopolitan city that is dynamic, able to cater to the locals’ and tourists’ demands for leisure, entertainment, giving consumers enhanced quality and diversity in terms of leisure creating a wider range of options creating a vibrant living environment that Singaporeans can proudly call home (Stb.gov.sg, 2014).

2.0 Economic Impact Analysis

Four types of Economic Impacts that Tourism have on the economy

1-Direct contributions

Tourism’s direct contributions are results of revenue earned from tourists’ expenditure by businesses like hotels, restaurants, retail outlets, transportation services, cultural / sports and recreational services.

2-Indirect contributions

Some of the indirect contributions derive from investment spending from the businesses of the travel and tourism, Government expenditure in the form of investment to improve or enhance the industries.

3-Induced contributions

The direct and indirect employees involved in this sector then in turn contributes to the consumption by spending their wages on food and beverages, recreational activities, clothes, housing and household goods.

4-Total contributions

Therefore the total contributions from the direct, indirect and induced contributions will in turn affect the GDP and the employment rate as they affect various factors of the GDP equation which also affects the production rate thus increasing the GDP and employment rate in a situation when there is an increase in revenue and demand from tourist and with certis paribus assumed.

2.1 Contributions to Singapore’s GDP

The latest press release by UNWTO World Tourism Barometer, shows that expenditure receipts international visitors spent on food and beverages, services, entertainment, accommodations and much more totaled up to an estimated SGD$ 1,455 billion during 2013. And that the growth rate of receipts experienced a 5% increase from 1035 million during 2012 to 1087 million during 2013(Media.unwto.org, 2014a).

According to an economic report by Singapore’s Travel and Tourism Economic Impact report 2014, in 2013 travel and tourism’s direct contribution to Singapore’s GDP was SGD$ 19.1 billion (5.3% of total GDP) Singapore’s GDP. Its GDP contributions in 2014 is expected to experience a 5.8% increase, and also to experience a 3.4% increase per annum, as of 2014-2024, to SGDS$ 28.3 billion as of totaling a 5.3% of the total GDP in 2024 (World Travel and Tourism Council, 2014).

The abovementioned news and report serves as macroeconomic examples that shows how tourism is able to increase consumption of goods through expenditure internationally and in a country. It also shows that tourism’s contributions to a nation’s GDP shows positive signs of growth thereby explaining why Singapore’s government is showing increased interest in the economic impacts that tourism presents on national and local levels.

2.2 Supports Job and Induces Investments

The tourism industry serves to support employment indirectly by providing 295,620 job positions which makes up 8.7% of the total employment in Singapore. Currently, there is a SGD$ 16.2 billion worth of investment in the tourism industry which contributes to 19.7% of total investment which also expects to experience a 5.5% increase this 2014 (Singapore Business Review, 2014b).

Therefore if the tourism industry booms and experiences an increase in demand for goods and services, relevant services and manufacturing companies that indirectly contributes to the tourism industry may experience shortage of manpower as a result also creating increased job opportunities for the people in Singapore. Purchases from suppliers may also experience an increase as more products are needed to cater to the demands of the people. Also due to increased numbers and demands from tourists, the government of Singapore would therefore have increased reasons to further invest in the travel and tourism industry which will eventually contribute to the GDP equation.

2.3 Increase in Tax revenues

The Singapore government imposes a ‘sin’ tax on alcohol and tobacco goods on all business. These taxes are paid by firms when importing such goods. Tourists that consume such products while in Singapore increases the demand for such goods which makes businesses increase their imports to meet the demand, allowing the government to collect more ‘sin’ taxes increasing tax revenues of the government. Given the recent news of a 25% increase in liquor taxes, the potential revenue that can be earned when tourist or locals consume such products provides substantial reasons for the Singapore government to be interested in investing in tourism sectors in an attempt to attract more tourists, increasing the demand and consumption for liquor to generate more tax revenues (Straitstimes.com, 2014d).

2.4 Attractions and events

Major events like the Singapore F1 Grand Prix serves to turbo charge economies by attracting tourists from all over the world to Singapore. A 12.6% increase in advance bookings of flights show how such events contribute directly to the tourism industry, not to mention the increase consumption of other services and products like restaurants, hotel accommodations and other necessities (AsiaOne, 2014). Tourist attractions like gardens by the bay, marine life park, river safari and national art gallery also serve to provide a wider range of activities for tourists to engage in thus increasing the population of tourists affecting the demand of goods and services and further generating revenues for local businesses(Singapore Business Review, 2014a). Coupled with the Casinos in Marina Bay Sands and resort world makes Singapore attractive to tourists.

3.0 Demand Analysis

3.1 Changi Airport plans for Terminal 4

Changi Airport is planning to build a fourth terminal that costs $985 million that is expected to be completed in 2017. The new terminal is expected to allow Changi Airport to cater to 16 million travelers annually (Straitstimes.com, 2014a). A new multi-story car park will also allow it to provide about 1500 parking lots. Coupled with the fact that Changi airport won Skytrax’s title for being the best airport, the planned terminal 4 would be able to increase the overall service quality making it a preferred airport resulting in increased demand as preferences is one of the main factors that result in a change of demand (Straitstimes.com, 2014b). The increased population of tourists also causes the demand for goods and services to experience an increase as it corresponds to the population factor regarding change in demand.

3.2 Gastronomic Tourism

Gastronomic tourism is an emerging type of tourism that is being developed and packaged into a new tourism trend. This is due to the fact that 1/3 of a tourists’ expenditure is spent on food and beverages which is a necessity. Gastronomic tourists make experiential trips to countries to visit producers of food, food fairs and gastronomic festivals some of which may even try to learn how to cook the local dishes (World Tourism Organisation 2014, 2014).

When Singapore organizes food fairs or events like the Food & Hotel Asia 2014 and Wine & Spirits Asia at Singapore Expo which ended on 11^th April 2014, the demand of such gastronomic tourists to travel to Singapore would experience a significant increase. The events was host to a record of 64,826 international trade attendees from more than a hundred countries and regions which was also a 5.8% increase from 2012 (Foodnhotelasia.com, 2014). Thus showing how events like these are able to affect the numbers and type of tourists increasing the demand of goods and services.

3.3 Medical Tourism

Latest reports from RNCOS, predicts Singapore’s medical tourism to experience a compound annual growth of 30% within the forecasted period of 2013 to 2017. Singapore is emerging to become a leader in the medical tourism market as it prides itself on its highly skilled healthcare professionals and world class medical infrastructure. The expected growth of medical tourism is also attributed to the fact that Singapore has state of art medical facilities and costs that are affordable in relation to quality(Digitaljournal.com, 2014). Being a preferred location for medical procedures increases the numbers of such tourists. Singapore is increasingly able to attract growing numbers of patients from lesser developed countries like Mongolia and Cambodia along with the current majority of medical tourists from developed or developing countries like Indonesia and Malaysia and the occasional patients from China and India (Mfa.gov.sg, 2014). Patients of such medical tourism also serves to increase the consumption of other services and goods as depending on the respective medical procedures, their stay may take days, weeks or even months.

4.0 Environmental Analysis

4.1 Safety and security

Singapore recently ranked 2^nd out of 99 in a law study. It also ranks top ten in terms of its civil justice systems (WJP Rule of Law Index, 2014). The republic has praised by the World Justice Project for having low crime rates, political violence and high confidence in its law enforcers. This gives tourists a sense of safety and security when they are in Singapore which will further increase the popularity and preference of Singapore as a tourist location giving rise in the numbers of tourist who will contribute to increase consumption of goods and services in the country.

4.2 Clean and Green City

Singapore is globally renowned to be a clean and green metropolitan city that is known to be of low pollution levels. Also attractions like Gardens by the Bay strives to attract more people to choose Singapore as a tourist location by attempting to create a city surrounded by gardens capturing the essence of a tropical garden city Singapore in an attempts to attract and increase the numbers of eco-tourists(Gardens by the Bay, 2014).

5.0 Conclusion

The positive contributions and economic impacts of tourism supports and maintain many jobs and is also expected to create more jobs and further contribute to the country’s GDP in future, therefore Singapore’s government should implement policies and take a more proactive approach to boost the tourism industry. Actions should be taken to spruce up bridges like the Cavanagh Bridge which is part of Singapore River’s historical structures (Zaccheus, 2014). They should also continue their efforts to organize events like the F1 Grand Prix, constantly improving the facilities of the Changi airport while making plans to capture and become a first class cruise tourism market by ensuring swift completion of the Marina Bay Cruise Centre as that market is expected to see a growth of up to 3.8 million passenger by the year 2020 (Kaur, 2014). Lastly further efforts and investments to improve medical facilities in Health City Novena should also be taken in order to attract more medical tourists and also benefit the locals (Straitstimes.com, 2014c). Once these recommendations are implemented, Singapore should be able to attract more tourist and experience the positive economic impacts that the tourism industry can offer.

People travel for business, for pleasure, or for a combination of two. The vast Majority of these people travel to a specific destination which represents the building blocks tourism. Once individuals have the time, the money and motivation to travel and have decided where to go, they need some means to get there. Once at the destination, these tourists as they are now called require some place to stay, some place to eat, drink and something to do. Such as, sightseeing, tennis, golf, skiing etc. (Mill, 2009)

People take vacation because they feel that, by doing so they will satisfy various needs and wants. In order for this to be achieved, tourists/customers must experience a phenomenal quality of service; communities must be prepared and ready to embrace this business. Once the country on a whole is developed and attractive, the people in the communities are educated and aware, the visitors’ experience will be an unforgettable one. They will definitely not hesitate to return.

The above mentioned is what this project entails. The importance of Quality Service in the Hospitality industry, community based tourism, its implication on the country and the Factors that attracts tourists to the Caribbean.

What is Quality Service?

Regardless of the industry, if you have customers, you’re in the customer-service business. With increasing access to information and alternative products, your customer is choosing where to do business based on the level of service they receive. (disneyinstitute.com)

The Walt Disney Company has never lost sight of its founder’s edict: “Give the public everything you can give them.” (disneyinstitute.com)

Tourism has been one of the world’s fastest growing industries, and there are large societies entirely dependent upon the visitor of their sustenance.

Tourism is the world’s largest industry. It sustained 120 million jobs in 1995, accounting for 7% of the global workforce. (The Hutchinson Encyclopedia)

The importance of customer service to the success of a business is difficult to underestimate. Providing quality customer service is about more than just getting the customer what he/she needs; it is about creating a relationship with your customer so that they keep coming back. (Cornett(ehowcontributor))

In order to maintain a high level of Quality Service to valued Customers, there are certain criteria that one should develop.

Knowing Customers

Being Proactive

Being Reactive

Personal Touch

Staying In Touch

Benefits

Feedback

Prompt Service (Cornett(ehowcontributor))

Definitions of quality services have included;

Satisfying or delighting the customer or exceeding expectations.

Product of service features that satisfy stated or implied needs,

Conformance to clearly special requirements

Fitness for use, whereby the product meets customers needs and is free of deficiencies.

(Chelladurai and Chang 2000) (al, 2011, p. 4)

Delivering quality service will be one of the major challenges facing hospitality managers in the opening years of the next millennium. It will be an essential condition for success in the emerging, keenly competitive, global hospitality markets. Service encounters are the building blocks of quality hospitality service. How can hospitality businesses manage them more effectively? A suggestion of a two step process was made in the evaluation chain: (William Lazer)

First, Hospitality managers should identify each encounter in the chain that they wish to take apart, and then single out those that are of operational or strategic significance – in effect focusing in on the few encounters that really make a difference to guest experience and thus to the bottom line. (William Lazer)

Second, apply what is called the 6 S’s to improve critical encounters through effective redesign. These are; (William Lazer)

Specification

Specification means clearly detailing about what, when, where and how, of service encounters. (William Lazer)

Staff

Which Staff Members are involved in providing the service? What skills do they need? What training has been provided? How committed are they to service goals? (William Lazer)

Space

Where will the service encounter occur? Is the space appropriately designed to facilitate the service encounter? Is the decor attractive to guests and supportive of activities that have to be carried out? (William Lazer)

Systems

Are the necessary systems support the encounter in place? Is the information necessary to respond effectively to guest to guests’ needs readily available? Is the appropriate technology being fully used? (William Lazer)

Support

Are the service providers given the facilities and financial and human support needed to do the job? Is the technology appropriate? (William Lazer)

Style

How should the service encounter be conducted, given the enterprise culture? Is the management style and marketing, and marketing orientation, appropriate for the tasks? Is the right emphasis being placed on service quality? (William Lazer)

Zeroing on hospitality service quality in this manner will help hospitality businesses meet the service challenges of the millennium, enhance their market positions, and reap the associated profit rewards. (William Lazer)

Service Delivery in the Hospitality Industry and Service Delivery in other Businesses

Service industries are playing an increasing important role in the economy of the developing and emerging nations. In today’s world of global competition, rendering quality service is a key for success, and many experts are of the view that the most powerful competitive trend currently shaping business and marketing strategies service quality .(LeBlanc, Nha Nguyen,1997) (www.academic.com/mmsmlcw)

Community Based Tourism

A community is a collection of individuals, families and groups with diverse attitudes, goals and aspirations. This diversity must be recognized in planning and conducting the public awareness program. It is important to identify the audience for a particular communication and tailor the message to its needs. A critical factor to be considered in explaining the benefits of tourism is relevance. One must analyze the interests, aspirations, backgrounds and lifestyles of the audience one is addressing. (Mill, 2009, p. 268)

Community based tourism is tourism in which local residents (often rural, poor and economically marginalized) invite tourist to visit their communities with the provision of overnight accommodation. (Goodwin, 2009)

Community based tourism enables the tourist to discover local habitats and wildlife, and celebrate and respects traditional cultures, rituals and wisdom. The community will be aware of commercial and social value placed on their natural and cultural heritage through tourism, and will foster community based conservation of these resources. (Goodwin, 2009)

The residents earn income as land managers, entrepreneurs, service and produce providers, and employees. At least part of the tourist income is set aside for projects which provide benefits to the community as a whole. (Goodwin, 2009)

Benefits of Community Based Tourism

Tourism offers many values to the community and nearly everyone gains from some of them, either directly or indirectly. While the public awareness program should help citizens recognize these benefits, not all can be explained to all audiences. It is necessary to select and stress those particular audience experiences and to explain it at a level they can understand. (Mill, 2009, p. 268)

In selecting benefits to be promoted, it is necessary to consider not only their relevance, but, their importance. Given limited resources, it is necessary to concentrate on educating the public about those which it will feel to be most desired. Some benefits, such as economic growth, would be counted as important by most communities. The ranking of others, such as diversifying the economic base, would be more situational. (Mill, 2009, p. 268)

Community Based Tourism development benefits are:

Economic

Sustainable and independent source of funds for the community development

Educational

Promotes the acquisition of new job skills

Social

Raises the quality of life

Health

Promotes good hygiene

Increase and diversification of food production for tourists will improve villagers nutritional status (Community Based Tourism Ecotourism and the Public Private Partnership)

Cultural

Encourages respect for different cultures

Environmental

Promotes environmental responsibility

Impacts of Community Based Tourism
Positive Impacts

Communities are developing local tourism in innovative ways, making sure to include various individuals and groups, small business owners, entrepreneurs, local associations and government officials. The development of this industry is a growing phenomenon as communities respond to the opportunities. (al, 2011)

Environmental

Environmental management at tourism sites such as garbage collection by the villagers

Increase environmental awareness of local people (Community Based Tourism Ecotourism and the Public Private Partnership)

Economical

Supplementary income from tourism for local communities (Community Based Tourism Ecotourism and the Public Private Partnership)

Social

Create social bonding thus, leading their society more united and resistant to drug and crime

Improve learning process in tourism management

Local people gain knowledge of tourist impact, impact mitigation planning

(Community Based Tourism Ecotourism and the Public Private Partnership)

Negative Impacts

The Influence of travel and tourism on a community is significant. tourists bring revenue. However, the ways in which this revenue is attracted and the numbers of people who reap benefits vary greatly. At one extreme, large scale, all-inclusive resorts owned and operated by corporations may have little or no economic influence on a community. People from the community may be offered only low-skilled minimum wage jobs. (al, 2011)

Environmental

Crowding situations (Community Based Tourism Ecotourism and the Public Private Partnership)

Economical

Land and resort development by outsiders, High business competition

Selling orchards, rubber plantation outside. (Community Based Tourism Ecotourism and the Public Private Partnership)

The fact that MOTS has placed such strong emphasis on consultation in developing this Master Plan shows that the need to involve community is now recognized at the highest levels in Jamaica. What is required is to ensure that all parts of the industry understand that, without local support, the industry’s growth will be unsustainable. To achieve this, the community involvement should be institutionalized in the process of developing tourism plans and products and in the management of the tourism product. (p. 191)

Factors Attracting Tourist to the Caribbean

The Caribbean region, is made up of 40 million people on 27 islands located in the Atlantic Ocean between South America and Mexico, is a popular tourist destination for those looking for a tropical, peaceful lifestyle in the sun and sand. Since the islands were colonized by Europeans in the 17th and 18th century, the multiethnic flavor and relaxing island lifestyle have captivated Europeans and North Americans, who come back again and again. (Manthei)

The Caribbean Region attracts tourists seeking an exotic romantic or family oriented getaway, or a sunny break from the harsh cold winters of their countries. Offering year – round sunny, warm weather with cool breezes, tropical beaches, cultural carnivals, peace and tranquility, and exotic food: it’s the perfect vacation location, especially for Europeans, Canadians and Americans. (Tourism and Tourism Business in the Caribbean)

The Caribbean is a geopolitical construct that includes the following principal countries:

Antigua and Barbuda, Bahamas, Barbados, Belize, Cuba, Dominica, Grenada, Dominican Republic, Haiti, Jamaica, St. Kitts and Nevis, St. Lucia, St Vincent and the Grenadines, Trinidad and Tobago, Anguilla, British Virgin Islands, Cayman Islands, Montserrat, Turks and Caicos, Guadeloupe, Guiana, Martini, Puerto Rico and few more. (Tourism and Tourism Business in the Caribbean)

According to the Caribbean Tourism Organization (CTO), the Caribbean Basin is the most tourist dependent region in the world. The region’s tourism dollars exceed gross exports by about a third of total receipts, and about a million workers are employed in the tourism industry. Many factors influence tourism in the Caribbean Basin. (Manthei)

Although not largely written about, Caribbean culture has arguably been preserved more by the authentic voices of intuitive scholars, artists, farmers, merchants and traders.

The Caribbean lifestyle is undoubtedly a product of its topical setting. The music, architecture, attitudes, and customers have all, in some way been shaped by the physical landscape and climate. (Culture of the Caribbean)

Cruise Tourism, which has generally grown faster than land-based tourism over the past decade, is expected to continue to grow as the Caribbean is the most popular destination in the world for cruises. (Culture of the Caribbean)

For diving, snorkeling and swimming, the Caribbean offers crystal-clear, pleasantly warm waters throughout the region. Cruise ship tourists might want to forgo time on the island to explore the treasure under the sea, such as barrier reefs, coral formations and creatures of all colours, shapes and sizes. For those in the mood for more relaxation, you will find no shortages of warm, friendly beaches for sunbathing and relaxing. (Manthei)

The Caribbean Islands have historically been popular with tourists from America, Canada, and Europe. During the global economic recession, tourism growth slowed but remained strong. Factors contributing to this are:

Ease of Access

Caribbean is the quickest getaway for most people living in the Northern Hemisphere.

Cost

There are many options of getting to the Caribbean consequently reaching the region is equally affordable especially when compared to other destinations.

Accommodations

The Caribbean has variety of accommodations from high-end luxury resorts to bed and breakfast and everything in between.

Many of the islands nation governments invest heavily in attracting tourists to their beaches, resorts and attractions, more so than some invest in the infrastructure of their countries. Extensively large all- inclusive hotels are built by foreign investors and the governments welcome new carriers opening new routes of travel to their islands.

References