Category: Free Essays

Decision making is a necessary process in every day business. It is a basic activity that needs to be done in order to achieve short-term and long-term goals. More often than not, success or failure of an organization to achieve goals is dependent on the decisions that organizations do for performance management purposes. Hence, it is imperative for any organization to implement various decision-making tools and techniques in order to come up with the best possible decision.

Effective decision making is critical to organizational survival; hence managers tend to seek ways to come up with the optimum decision. Intuition and serendipity are the bases for decision making in research and analysis. The manager’s previous experience may be a valid basis for decisions if this has been effective to achieve past goals. Likewise, the organization can also derive techniques from experiences of other organizations. The organization can adopt philosophical insights to apply to its own decision making needs.[1]Thus, these could also be the bases for decision making that the healthcare professionals and organizations need. In this paper, I present decision making tools and techniques that healthcare organization like EUPHA use. Moreover, alternative tools and techniques that could have been used will also be presented. At a final note, the most effective decision making technique will be recommended based on the special needs of the organization.

Decision making: Concepts and Definitions

Decision making in health policy involves process of consultation of all groups involves in health policy-related issues. The main groups that consist the decision making body include the government, medical professional’s association, hospitals, and health insurance companies. The decision making process for healthcare research and policy is directly influenced by the national government. This process is composed of the following characteristics: government leadership, multi group mechanisms and professional organizations.[2]

Creative approach to decision making capitalizes on its bases- intuition and serendipity. However, concrete analysis of information is necessary before considering the final decision especially for health research associations. Experimentation, research, and analysis are among the most effective and scientific means to choose among alternatives. Likewise, decision makers can evaluate alternative decisions through various decision making tools and techniques.[3]

In the next section, decision making tools and techniques are discussed one by one. The following techniques are used for the managerial needs of healthcare professionals. Each has its special uses, advantage and disadvantages based on the needs of the health organizations.

Considered Opinion and Devil’s Advocate. In this technique, the manager obtains considered opinion of experts and use “devil’s advocate” technique to bring forth arguments for and against alternative. The management team assesses several alternatives and develops arguments. Each alternative us tested through frank discussion among members of the department. Having considered different points of view, the decision maker then selects the course of action based on the resulting comparative assessment. The advantage of this technique is that alternatives are subjected to strict, internal, and organized criticism even before implementation. However, the devil’s advocate is not an actual decision making process; rather it only makes sure that each alternative was presented and evaluated thoroughly.[4]Another disadvantage of the technique is that it is vulnerable to personal bias and subjective judgment.

Factor Analysis Matrix. The alternative decisions are compared via a table or matrix. Under this method, the decision maker develops criteria under two categories: essential elements and desired elements. The factors named are designated with relative weights and the alternative with the highest weight is rated as the best option.[5]The advantage of this method is that it is an effective means to eliminate personal preferences and biases for a closer chances of coming up with impartial decision.[6]The disadvantage for this method, on the other hand, is that some factors may be overlooked and not be given weights that these factors deserve.

The Decision Tree. This is another decision making tool for healthcare managers that is used to trace possible actions that may occur from various decision points. The decision tree encourages the manager to trace possible events with respective notation of the probabilities associated with each. The decision tree includes the basic decision and the events rooting from this decision.[7]The advantage of this technique is that it forces managers to delineate reasoning, undertake disciplined speculation of consequences, see possible constraints, and weigh the situations.[8]This technique is particularly useful for managers who have intense personal investment on the decision to minimize emotional barriers and to come up with objective decision.[9]

On the other hand, the disadvantage of this technique is that it is imperative that the decision maker has all the valuable information necessary in constructing a decision tree. Misleading information can tremendously affect the accuracy of the decision about to be made.[10]Moreover, it cannot foresee external factors that may alter expected results and only one perspective, the decision maker’s perspective, is considered. Hence, the manager should not be short-sighted and should also see the picture in a wider perspective in order to anticipate the series of events from the basic decision in order to consider the most number of relevant possibilities. Likewise, this is also achievable if the decision maker has succinct information to support the consequences foreseen to occur.

Operations Research. Operations research is the application of scientific method to observe a problem, process or operation. It is a quantitative problem solving decision making tool with the use f mathematical models to management problems.[11]First among the steps of this technique is problem formulation wherein the problem is stated without predetermined judgment and notions. Second, mathematical model or conceptual model is constructed through equations and formulas representing critical factors of the problem under observation. Third is the manipulation of variables to develop and assess alternative situation in terms of predetermined criteria. There are various types of operations research.[12]

Simulation is the observation of the process with the use of a model or representation. In the process of developing the model, the manager seeks to gain additional information especially on the uncertainties of the situation. The manager focuses on these uncertainties and measure the degree of chance associated with each.[13]This technique compensated legal, ethical and economic constraints to manipulate reality in order to observe. Hence, models are logical but rather simplified representation of the relevant aspect of reality and ranges from simple physical models to complex mathematical equations. Healthcare professionals, for example may use physical models such as a model of a body organ.[14]

Gaming is the simulation of competitive situations in which situations are represented in a competitive manner to influence the manager’s decision. This decision making technique is used to derive human decision but can sometimes be computer-assisted. On the other hand, Game theory is one branch of mathematical analysis of conflict and strategy and is associated with the concepts of zero sum games and minimax strategy. However, this remains undeveloped because of complexities once the number of contestants and rules increased.

Another type of operations research is stochastic simulation, a model designed to include elements of randomness. Since the variables are uncertain, at least a sample of their values may be assigned through the development of statistical distribution pattern. Hence, the healthcare manager can simulate, for example, employee absenteeism, patient arrivals, and equipment failure.

The last type of operations research theory is waiting line and Queuing theory. Demand for healthcare products and services fluctuate. Hence, the manager must balance cost of waiting lines with that of the cost of preventing waiting lines through increased service. Waiting lines are common especially in hospitals where patients have to wait in lines for queues. Waiting line or Queuing theory is useful for analyzing situations in which units to be provided for services are relatively predictable. The three basic components of this theory include arrivals, servicing, and queue disciplines. Furthermore, arrivals are divided in three categories: predetermined, random and combination. Servicing is the focal point of analysis in terms of the number of units and time needed for each pattern of distribution. Lastly, queue discipline is the analysis of patterns of the waiting line including average minimum and maximum wait, number of lines and which units are often selected for service. The analysis of such information helps the manager to overcome negative aspects of waiting lines and to minimize the cost to the organization.[15]

The main advantage of operations research compared to other decision making technique is that it offers various methods of implementation. Each type may be selected based on the needs and resources available to the organization. Otherwise, all of the methods are implemented on scientific methods and objectivity is rest assured by quantitative methods of analysis. However, the main disadvantage is implementation of any operations research is the high costs, time and expertise necessary for the implementation.

Healthcare Professionals as the Decision makers

Healthcare professionals often face managerial roles in their organizations. With these two-fold roles, there might be conflicts on decision situations depending on how these situations are viewed. It is essential for the professional to learn how the perceived needs of the department must be balanced with the needs of the organization as a whole. While it is impossible to always get agreement with the organization as a whole, conflicts will be avoided through maintaining balance between the interests of the parties. After all, the departments’ interests are expected to be bounded by the goals of the total organization.[16]

Moreover, healthcare professionals and organizations face special challenges in terms of decision making. In their case, decision making becomes more complex than ever. Factors contributing to this increasing complexity include rapid growth of research knowledge, technological sophistication, and complex laws. These factors make decision-making in the healthcare sector more and more daunting.[17]

While others claim that research can help in decision making in the healthcare sector, in reality, it makes decision making a complex task. Hence, not only research expansion is needed. What is more necessary for this sector is to deepen health research policies.[18]For the meanwhile, this can be dealt with the use of decision making tools mentioned above.

Healthcare professionals and organizations may implement considered opinion and devil’s advocate. This can be used through professional sharing when different perspectives from experts are available. This also encourages collaboration and takes foundation on the expression that “two minds are better than one.” This can be used simultaneously with combined options technique in order to consider the possibility that the options may not be mutually exclusive. Two factors being considered may be implemented and come to one marginal and marginal value.[19]

Factor Analysis matrix may be used by healthcare professionals and organization when decision making is based on one perspective only. This can be seen as an argument within one’s self. Likewise, this can be combined with morphological box. This shows one aspect of the problem in relation to others. This box is technique that presents easy-to-evaluate form for analyzing problem and evaluates suggested solutions.[20]

However, among the decision making techniques, the most appropriate to use by the healthcare professionals and organizations is operations research. The sector needs scientific methods in coming up with significant decisions to healthcare management. Regardless on the type of operations research type, the organization can choose the type based on the needs of the situation. Simulation and waiting line and queue techniques may be the most useful among these types for the healthcare sector. However, high costs of this technique must be given attention.

Faulty decision making is usually made haphazardly. Hence, decision making should be made through intensified planning and implementation of a wide variety of decision making tools and techniques. In the end, the most effective decision making technique is: 1) the one that will assure objectivity and eliminate personal biases and predetermined judgment; 2) satisfy the needs of the decision maker; and 3) bring about the most appropriate decision. It is dependent on the actual organization and the decision making situation. Even after the decision has been made, evaluation and monitoring should also be considered.

Introduction

This assignment is about the tourism industry in France, includes its tourism historical context, migration, population structure, language hosts use within France and local hosts’ religion. Furthermore, it will mention about the development of tourism, transport and rural development. It will also talk about France’s seasonality and their employment. Besides, it will talk about how EU policy and politics that relevant with France’s development of tourism.

Metropolitan France is located in the Western Europe, extends from the Mediterranean Sea to the English Channel and the North Sea. It is nearby Belgium, Spain and Italy. France is at the southeast of United Kingdom and link with it by English Channel. Furthermore, France has few numbers of territories around the world, which included French Guiana that at Northern South America, nearby by the North Atlantic Ocean, between Brazil and Suriname. Guadeloupe and Martinique situated at Caribbean island. Reunion that is an island located in the India Ocean at southern Africa.

Tourism: the historical context

The earliest of tourism found in the France is in the 17th and 18th centuries, which called The Grand Tour, which undertook by mainly upper class European young men for education purposes, such as foreign languages, cultural and art of the destination, riding and dancing etc. At 18th century, the pattern started to change, people changed their purpose from Grand Tour to health tourism, spa holiday. In France, there were Aix-les-Bains and Vichy etc spa town provide specific facilities for health and leisure to its visitors, and they were mainly come from upper classes as low class people cannot afford at the beginning, but middle class visitors later.

Vichy is probably the best-known of French spas, although it now attracts fewer wealthy foreign clients than the era prior to the Second World War. (Boniface B and Cooper C, 2005, p. 205)

At the beginning of 19th century, people started to move from spa holiday to seaside resort for medical reasons as drinking sea water can fight various disease or disorders, but entertainment soon instead of the purpose of medical reasons. From the middle of the 19th century, there is trend of the increasing number of middle-class tourists travel to seaside resort by following upper class footstep, they are mainly families with children, which lead more and more of the French coasts to be developed for the tourism industry, the French Riviera and the north coast of France from Boulogne to Cherbourg. Alpine resorts start to attract tourists from the end of the 19th century during the period of the winter. Ski resort soon became popular, and France became one of the popular destinations for skiing holiday.

The French Apls have become Europe’s most popular winter sports destination, attracting domestic and foreign skiers alike. (Boniface B and Copper C, 2005, p.207)

Migration, population structure, language and religion

According to Migration Policy institute 2004, there are 140,033 people flows into France from other countries. 64.4% are from Africa, 8.7% are from Americans, 16.6% are from Asia, 9.8% are from Europe, 0.3% is from Oceania and 0.1% is from unknown. According to CIA world fact book 2009, the total population in metropolitan France is estimate 62,150,775 (July 2009), 18.6% of 0-14 years old (6,129,729 male and 5,838,925 female), 65% of 15-64 years old (20,963,124 male and 20,929,280 female), and 16.4 % of 65 years old and over (estimate 4,403,248 male and 6,155,767 female, 2009). The official language people use in France is French. However, few numbers of people still using regional dialects such as Provencal, Breton, Alsatian, Corsican, Catalan, Basque and Flemish, which declining rapidly recently. According to CIA world fact book, Roman Catholic is the mainly religions in France, which is 83%-88%, 2% are Protestant, 1% are Jewish, 5%-10% are Muslim and 4% are unaffiliated.

Agriculture, tourism and rural development

France is one of the countries with well developed rural tourism with 80% of rural areas in French territory (Sources, 2005) which bring the economy profit to the country and rural area.

In 2005, tourism consumption in France amounted to 108.11 billion euros, of which about 59 billion for the residents. The share of rural areas in terms of tourism consumption represents 19.3% or about 20 billion euros. (Source, 2005, author’s own translation)

The most popular rural tourism activities is camping and caravans in rural areas. Except French people always go to camping and caravans, foreign tourists from other countries like United Kingdom are also like to visit France for camping and caravan during the summer, especially is for educational purpose such as Scout.

The Federation du Scoutisme Francais lobbied the government for the recognition of their training and qualifications resulting in the 1998 act regulating camps and activities organised by recognised French Scouting Associations (ScouteBaseUK, 2007)

Rural tourism started develops at 1950 on France as the government noticed the potential value of it. In France, there are varieties of activities for rural tourism for instance, Gites, Logis de France, Chambres d’Hotes, Fermes-Auberges, food and drink as heritage, Crafts, ecomisees and loisirs Accueil, these examples are successful and inspired by public sector and mainly is supply accommodation, food and drink during people’s holiday by the traditional way. (Swarbroke J, 1999a, p.164-165)

Food and drink as heritage’s instance is alcoholic beverages, and Vineyards is famous area for alcoholic beverages, this activity is all about observation of grapes growing and being harvested, wine production, tasting and visiting wine cellars, even buy wines. (Sznajder M and Scrimgeour F et al, 2009, p249)

According to Rural tourism International, the most visited areas in France for rural tourism are located in the Mediterranean area, for instance Dordogne, Provence, Pyrenees, Massif Central and the Alps etc.

Seasonality and employment

France is the major destination that at the top of the rank on International Tourist Arrivals by according to UNWTO 2009, which had 79.3million tourist arrival, and the international tourism receipts is 55.6billion that rank at third.

Traffic volume in France link with school holiday tightly as families can take their children go holiday, like Christmas, New Year and summer holiday. In winter, French people will go for winter sport holiday with their families all the time, and their favourite destination is the mountain, and the transport they used for travel majority is car, therefore, it leads heavy traffic during these times. Furthermore, July to August traffic volume really busy as well as overseas tourists will visit France during summer.

Accounting to the Observatory of Tourism, 39.5% of French people travel on holidays at least once during the winter season. The favourite destination during this period of the year is mountain, with 21.7% of overnight stays. (Bison Fute, 2009)

Sources: Bison Fute, 2010

According to Eurostat, the employment rate in France is gradually increased from 59.6% (1997) to 64.9% (2008), and decrease to 64.2% (2009). The average working hours for full time jobs per week are 41.Besides, the unemployment rate in France from 9.1% (March 2009) increase to 10.1% (February 2010).

Different than other European countries, tour operators and all inclusive holiday is not popular in France as many of French people like to plan their domestic holiday on their own than travel abroad. Furthermore, they travel by car for mainly rather than flight, about 80% of French people travel by car. Therefore, there are not much jobs provide by tour operator for local people, only 5% of the total people working in the whole tourism industry. (Pompl W and Lavery P, 1993, p.214) However, other areas in the tourism industry like accommodation, attractions did provide lots of jobs opportunities for local people.

Transport and development; Spatial patterns of travel

Transport is always important for travel to and within the destination, and the development of the transport leads people can reach their destination easier and quicker. There are different modes for transport, include road, rail, air and sea. Tourists mainly use air transport for further destination, however, the growth of low-cost airlines lead more and more tourists use air transport as this is a lots quicker than the other method of transport in the recently years. France has both international and domestic airports, which is really accessible for inbound, outbound and domestic tourism. Road transport is the earliest transport in the world and still very popular for domestic travel and within Europe, this includes cars, buses, and caravans etc. However, buses are becoming out of date even it is the cheapest way to travel, and only for short distance as it is not comfortable than the other method of transport and slow. Car travel for domestic tourism in France is really huge as France has variety of resources for different types of holiday, even special interest holiday, includes skiing, beaches, food and drink, urban and rural etc holiday.

Transport by car dominates tourism in France, accounting for two-thirds of inbound tourists and almost 80 per cent of domestic holiday (Boniface B and Cooper C, 2005, p.198)

Rail transport is popular for domestic travel and within Europe. The development of high speed train increase the numbers of people travel by train as it is faster and comfortable than air transport. Domestic travel within the France by rail transport is also common as the network of high speed train did cover some of the main cities in France, which leads it easier to access.

These Run mainly on dedicated track at speeds of 270 kilometres per hour, linking Paris to Lyon, Lille, Mantes, Bordeaux and Nice. (Boniface B and Cooper C, 2005, p.187)

Sea is the other method of transport, however, it may not as popular as the other mode of transport as it took longer to reach the destination, and cost a lot more than the other, especially is cruise. However, there are more and more cruise holiday to France recently, mainly come from Britain.

Cross-Channel ferries are the preferred transport mode for tourists from Britain. (Boniface B and Cooper C, 2005, p.199)

Relevant EU policy and politics

There is not any EU policy is particular for tourism, nevertheless, there are some EU policy for environment, transport, employment and development which link with tourism industry tightly. Under the employment policy, there is a harmonisation of qualifications to improve the quality of service within the tourism industry through European Social Fund (ESF) to support training course in tourism, these training are mainly for catering and hotels. Furthermore, rural development policy are support by the European Agricultural Guidance and Guarantee Fund (FEOGA) for helping farmers expand their income sources and improve their farm accommodation and infrastructure etc, which could help develop the rural tourism activity. Beside, the environment policy is to protect nature resources and habitats, and reduce the pollution, for instance noise, air and water etc. The policy is also aim to improve the environmental for better quality holiday for tourists. In addition, the transport policy is very important to tourism industry as they are inextricably linked. (Fitzpatrick Associates, 1993, p.56-80)

Conclusion

Overall, France is one of the earliest countries to develop tourism and is one of popular destination in the world nowadays as France had variety of natural resources for different tourism activities, thus, France’s domestic tourism is huge. French people travel by car mainly, so it causes high volume of traffic during the periods of school holiday as most of them go for domestic tourism. However, the huge domestic tourism leads the lack of people require all inclusive holiday and tour operator, hence tour operators in France cannot provide many job opportunities for French people. Rural tourism in France is well developed as well as France has plenty of rural areas for tourism and developed nearly 60 years, which appeal to both of French people and foreign tourists. The popular examples for rural tourism are camping and caravans. There are different modes of transport for getting to and getting around with France and cars is the most popular one. However, for long distance destination are mainly by flight. Beside, high speed train became more and more popular in France gradually as it is a lot comfortable and accessible. There is not any particular EU policy for tourism, but there are environment policy, rural development policy, employment policy and transport policy which linked with tourism closely.

At the moment, in Europe, the rural tourism is concerned with some problems such as: sustainable regional development, a balanced path regarding the economic development and environment protection, establishing rural policies which go beyond the agricultural dimension and integrate all the problems of rural areas. The agriculture is not limited only to ensuring the food for the population; it must contribute to the development of rural areas, and also, it represent an indispensable support for the rural tourism. There is a strong relationship between agriculture and environment: it does not exist rural environment without agriculture and agriculture cannot be done in a ruined environment. In Romania, rural tourism is an economic activity concerning the development of tourism in rural areas. We can appreciate that it exists a strong connection among tourism and other activities of local economy, especially the agriculture. In Romania rural tourism took place from a long time but occasionally. Until 1990, due to the restriction to accommodate foreign tourists in private houses, rural tourism was ignored. After 1990 the rural tourism revigorated many investment being directed toward the improvement of the houses. In the year 2002, in the accommodation structures from rural Romania 137 000 tourist spent their vacation, from which 20 000 foreign tourists. The motivations varied: the beauty of Romanian landscape, the return to nature, the knowledge of tradition, Romanian culture, practicing certain sports (hunting, fishing, mountain climbing). Rural tourism in Romania represent a mean to capitalize the rural environment with its agricultural, tourist, human and economc potential. For this reason Romania must regard the rural tourism in its policies toward sustainable rural development.

1. The Evolution of the rural tourism in Romania

Currently Europe is dealing with several problems, among which rural tourism has a great importance: providing a well regional development, guaranteeing a balance between economic development and environment` protection, creating some rural policies, which should contain all the problems related to the rural space. Though agriculture nowadays cannot be limited to providing people with food, it must contribute to the rural space development and to constitute the support of rural tourism. Rural tourism represents one of the best ways to combine tourism demands with environmental protection and sustainable development [1] .

Rural tourism is a new phenomenon and an old one at the same time. Rural tourism represents one of the first ways of tourism manifestation in Romania. It was applied since early times, along with traveling, horse or nautical tourism. During its historical evolution, tourism has had ups and downs, but it has never disappeared. By late 20th century, rural tourism has had a spontaneous and periodical character and has made itself noticed through some participation in a series of events in rural, traditional communities near abbies or churches. But today, we can see a new gusto of rural tourism. The motivations which make tourists choose certain boarding house are the following: the wish to return to nature, to a traditional way of living and habits, the lack of tense programs, the price conditions, the quality of the human element.

Compared to other types of tourism, considered to be the modern ones (business tourism and cultural tourism) rural tourism has had in the late `90s a new stage of development. In Romania, there isn’t just a high tourist potential, there’s also a great experience in the field, the first tourist villages were organized in 1967-1968. In 1974 foreign tourists’ accommodation in private housing and tourist villages was unavailable for international tourism [2] . After 1990 the interest in rural tourism revives. A series of associations and organizations were created which through their objectives were willing to contribute to tourism expansion in the rural areas: The Romanian Federation of Montane Development (1990), Romanian Agro tourism Agency (1995) and National Agency for Ecological and Cultural Tourism (1994).

2. The rural tourism and agro-tourism

Although it seems simple the notion of “rural tourism”, which is elaborated in the rural environment, the definition does not include the complexity of this activity with different developing forms and ways in different countries.

The term of “rural tourism” has various meanings that differ from one country to another.

In Germany the practice of rural tourism leaded to the conclusion that “a guest for a vacation brings more profit than any other activity during the year”.

In France, the tourism in the rural environment has old traditions which are achieved at a high level of organization, diversification, and promotion.

In Italy the rural tourism can be met under the form of “green vacations” and has as main component the agro-tourism.

In Denmark the tourist product is known under the name of “active vacation”, and the tourist services are offered in houses at farms and camping.

In Hungary it is used the term of “village tourism”, indicating that the only activities and services offered in villages are included in this type of tourism, and meaning: accommodation at low prices, involvement in agricultural activities or in other types of local activities.

In Slovenia the most important form of rural tourism is the tourism at farms of different families, where the guests live either with the farmer family, or in guest’s houses, but visit the farm for meals or to explore the farm’s yard.

In Holland the rural tourism means, especially, farm camping, where the majority of services that are offered are bounded by routes like: cycling, riding horses.

In Greece the rural tourism means accommodation in rooms that are furnished in traditional style, with traditional breakfast – most of the times being prepared with home made products.

In Romania the rural tourism has been practiced since ever, but spontaneous and accidentally, and supposed the accommodation at citizens from rural places. Until 1990, because of the interdiction of hosting foreign citizens in private houses, the rural tourism was practically ignored. After 1990, the tourist activity in the rural areas has known a new start, fact explained by the foundation of the organizations that are proposing the development of tourism in the rural environment. So, in 1995 appears The Romanian Agency for Agro-tourism, which has as main purpose the alignment of the Romanian agro-tourism to the international one. In 1994 appears ANTREC, nongovernmental organization, non-profit member of the European Federation of Rural Tourism, which now has 30 branches in the country and totalize over 2500 tourist and agro-tourist pensions, with 10500 accommodations places.

In most of the countries the complementary activities, meaning: restaurants, recreations facilities, the organization of cultural activities and entertainment in national places-are only at the beginning. From this point of view the rural tourism is a particular form of tourism, more complex, including primary services (accommodation, food, transportation) and auxiliary (entertainment) as well as economical activity, usually agricultural practiced by the hostess of the tourists ( productive activities, of processing the agricultural products in the farms and their commercialization to the tourists or through the commercial channels).

Rural tourism includes a variety of ways of accommodation, of activities, events, festivities, sports and entertainment, all of them taking place in a typical rural environment. Involving all these facts, a more exact definition of the term of “rural tourism” that can be used in a unitary way on the entire European continent, is confronted with many specific issues. “Rural tourism is a concept that includes all the tourist activities that take place in the rural environment”. Or, “the rural tourism is the tourist activity organized and leaded by the local populations and is based on a tied connection with the surrounding, natural and human environment.” This definition, considered more comprehensive shows off the rural tourism from the tourist activity that takes place in the littoral areas, in the urbane ones and in those destined for winter sports, places where constantly, tourists, as well as the nature of their activities, exclude any significant relations with the local population, which constitutes the surrounding human environment.

Lacking any other adequate definition of the rural tourism, accepted in the European Union territory and outside them, the term that is used is that of “green tourism”, symbolic color, in order to distinguish this form of tourism from the others, as: “white tourism”(winter sports), “blue tourism”(seaside holidays) and so called “the tourism of the lights”(the urban tourism).

Some authors consider the rural tourism and agro-tourism, different notions, and for others they have the same content.Both types of tourism have as displaying area the rural environment, and through the included activities generate the tourist circulation and supplementary incomes for those who perform tourist services. The two types of tourism are the result, on one hand, of the modern human behavior, anxious for holidays as original as possible, of returning to nature, and, on the other hand, constitute possible alternatives to re-launch of rural areas in the perspective of durable developing of rural areas. Both rural tourism as agro- tourism are based on the rural area, on the citizens and products specific to that area, which have to be adapted to the demands of the tourist market and without standardizing the offer, they have to arrange receiving structures at the level of the tourist demands, to valorize the Romanian cooking traditions.

Rural tourism has a bigger content, has permanent character and has a heterogeneous receiving structure (hotels, inns, motels, vacation villages), the other components of the tourist product (gastronomy, handcraft) are common to the agro tourism from the respective area. For agro-tourism, the tourist offer is composed by tourist and agro-tourist pensions that are individualized by the comfort category, the natural environment, the local gastronomy, the performer of rural tourist services (the farmer), who through psycho-social features, culture, education, personalizes the tourist product created for commercialization.

Agro-tourism is considered a more restricted concept, which includes different forms of tourism bounded by agricultural activities and/or by agricultural arrangements. This particular form of the rural tourism is organized by farmers, usually as a secondary activity, agriculture remaining the main occupation and source of income. The rural tourism regards all forms of tourism practiced in the rural area, meaning activities outside (riding horses, fishing, hunting, walks or riding a bike, health tourism), knowing tourism (churches, fortress, different historical relics), of discovering the natural environment (flora, fauna), knowing and understanding local cultures (folklore, popular traditions), gastronomic tourism etc.

In the specialty literature, Romanian and foreign, by using the notions of agro-tourism, is better expressed the content, meaning a complementary economical activity of the agriculture in a rural locality. It can be shown that, the agro-tourism has certain features which make it different from the traditional, classic tourism, such as:

The tourist consumption takes place in the rural environment, where essential are: the quality of the pension and receiving services at farmers, the knowing of the natural, human and cultural environment as well as the originality of the tourist products;

The tourist offer is authentic, different, organized and leaded by farmers;

It is an economical activity complementary to the agricultural exploitation and not an alternative or a substitution of this;

It offers to the population with low income the possibility to rest and to strengthen, of spending the free time in vacations or week-ends in the rural environment, with cultural-educational values and a specific hospitality;

It doesn’t requires big investments for decorations of tourist infrastructure and superstructure or for other specific things;

The big tourist agglomerations from the littoral or from watering or mountain stations are being avoid;

Is a tourism in which the specific of the offer is divert and of a big dissemination in space;

Is not compatible with the ordinary tourism.

From the facts presented above, it results that the agro-tourism, through its particularities, differs from the classic tourism being a component of the rural tourism and a possibility of developing the rural areas in tied connection with agriculture. The rural tourism and agro-tourism constitute a way of an integral valuation of the rural environment with its agricultural, tourist, human and technical-economical potential. For this reason Romania must join, in the future, the rural tourism, and especially, agro-tourism in the politics of durable local development.

3. The effects of rural tourism

The development of tourism in the rural area has the following effects:

Rural tourism cannot be considered to be a way of sustaining the development of rural society. For many years agriculture has been the primary element in the Romanian rural area. The variations that took place after the Fund Land Law no. 18/1991 conducted to the crumbling of the agricultural fields, the country average reaching 2,5 ha. Under such conditions, keeping a rural world with its best economic, social and cultural sides means reorientation to other economic activities. From this point of view, rural tourism and especially agro-tourism can constitute a fundamental support for avoiding fields` degradation and maintaining a certain socio-economical status.

Rural tourism can contribute to the preservation of the viability and the stability in the rural area. The depopulation phenomenon, which manifests itself through youth departures, the abandonment of the old houses can be stopped through tourist activities meant to transform this fragile environment into a dynamic one through some reforming strategies of the Romanian village. Rural tourism seems to be the right instrument to revive rural areas by keeping or even creating new jobs, having in view the diversity of jobs, a favorable financial level accomplished by farms together with elements such as: preserving nature, landscape, keeping tradition.

Rural tourism can become an alternative to agriculture. The development of tourism in the rural area can have two forms:

a) The tourism which replaces the unprofitable agricultural activity, so therefore all tourist resources in those areas must be exploited (it was the way mountain and seaside tourism was born and developed);

b) The tourism as complementary to agriculture (agro-tourism) which implies agriculture being the dominant area, and its tourist potential being exploited for the benefit of this activity.

Rural tourism represents a source of income for the farmers. Agro-tourism, as a form of rural tourism, is being organized by the farmers, usually as secondary activity, with agriculture remaining the primary concern and source of income. Through the diversification of agriculture-complementary tourist activities agriculture can become profitable and can generate new family jobs, taking into account the seasons.

Better use of local resources. Selling products obtained in the agricultural process can improve by using some shorter distribution channels or by selling them direct to tourists. In the last few years new ways of processing, promoting and selling agricultural products developed through classic or specific circuits.

Rural tourism often offers conditions for the development of infrastructure, which then contributes to the growth of some economic activities in rural areas. Growing opportunities for social contact between the residents (that usually have a solitary life in their communities) can be considered a benefit to the development of rural tourism.

Besides its economic side, rural tourism has a pronounced affective character – it is not an offer to consume; in developing and implementing it in our country we must start from tradition and surroundings, which should be looked upon as a irreplaceable capital, giving value and pleasure to spare time.

Rural tourism represents a multifactor activity, it is not only a visit to a farm or a local residence, it is not only rest, it is also the best source of health and stress-free therapy. Rural tourism is mainly focused on dynamic, nature loving people, and ecological tourism is focused on sport, hunting and fishing fans. This type of tourism offers freedom and independence to every individual. Seen from a different angle, rural tourism, in its pure form, can be looked upon as that type of tourism that has the following characteristics:

located in rural area;

functionally rural, meaning that it is built upon rural region characteristics: small factories, open spaces, contact with nature, cultural inheritance, traditional societies and practices;

rurally scaled, this meaning that buildings, settlements and fluxes have reduced sizes;

has a traditional character;

locally controlled and developed for long term welfare in the community;

varies according to the complexity of rural area.

4. Rural tourist structures in Romania

The tourist village is a rural, picturesque, well-constituted placement settled in a natural, unpolluted area, tradition retentive, with a rich historical past which goes beyond the politico-administrative, economical, social and cultural function, is temporary accomplish the function of receiving and hosting the tourists for spending a vacation on a undetermined period of time [3] . The tourist village has the role to put in evidence the specific of the localities, having as purpose the adaptation of some promoting strategies of the most frequent forms of tourism. This must be done, also taking into consideration the main geographical, economical, social characteristics, but also the main motivation and options of the categories of tourists, who attend the respective locality. The implementation of some specific strategies in the organization and function domain of the tourist village are absolutely necessary in any area. This, due to the reason, that every rural locality constitute an entity with personal particularities and specific activities, which has to be identify and value as efficient as possible, also from the tourism point of view.

In a developing strategy of an area, is imposed the knowing and the framing of the tourist villages by types, due to the particularities of every type of tourist village. It can be delimited [4] :

The ethnographic-folkloric tourist villages, which can be identify in the territorial perimeters, where exists a traditional way of dressing, architecture, furniture and interior design specific to the area, existing, also, popular music and choreography, which are imposing as essential features of the respective village.

The tourist villages of artistic and handicraft creation, where the tourists interest is especially for handicraft tourist creation and also from their desire of acquiring these creation directly from the source. Through an adequate strategy, in these areas, can be done the passing from a circulation tourist to a vacation one; in this way it can be offered the possibility for the tourists to be initialized by popular artists renowned in popular archaic technique and art (icons made on glass or wood, sculpture made in wood or stone, ceramic, popular confections and seams etc.).

The climacteric and landscape architecture tourist villages, whose predominant characteristics are the picturesque natural area and the geographical position, isolated from the agglomerate centers and the big arteries of circulation. Also for this types of villages can be adopted investing strategies, through which to be modernized the peasants houses, so to correspond to the tourists demands.

The tourist villages of hunting interested and forest fruits harvest, for the north areas or even in the mountainous regions. The local population can organize forms of hunting entertainment. In this case, the rural tourism strategies are spliced with the ecological ones, of keeping the flora and fauna from the area, next to the launch of culinary-gastronomical services made from hunt and forest fruits.

The viticulture and fruits growing tourist villages are placed in the areas that include basins and centers specialized in animals and fruits growing. The most intense tourist activities are in the harvesting time of the year, when the tourist can be involved in the effectively harvest festival, but also the offering of fruits, grapes and other goods prepared from them.

The pastoral villages are represented by those rural localities, where the main preoccupation of the villagers is the growing of the ovine and bovines, impressing the tourist with the menus based on dairy products. Can be organized, depending on the season, shepherd’s meals and specific and traditional feasts. It can be outlined strategies regarding the tourist and economical aspect (of developing the growing of animals in these areas) and socio-professional (of maintaining the profession of shepherd, which is very gainful in these areas). This argumentation is being made also for the reason that, lately, the textile industry request for animal fur has grow very much, the request being often satisfied with imported quantities of fur.

The tourist villages for sports practice represent the areas which has very good conditions, especially for the winter sports practice. The tourist’s categories, which can be more or less initialized, are anxious to practice them, helped by the instructors formed by the local population, in these villages existing special places from where you can rent the sport equipment. The developing strategies of this type of village must be correlated with the developing of the local infrastructure, especially of the communication ways.

The tourist villages and the accommodation areas specific to the religious forms of pilgrimage, are materialized by the position in those localities around the monasteries or even by the existence of accommodation places inside the locals of religious cult. In every area of the country exists monasteries and hermitages with historical-religious traditions. The strategies that can amplify this pilgrimage must be based on the encouragement of the investments for the recover of the monastic constructions and the tuning of agricultural lands to encourage the economical activities.

The rural tourism has, as results from the typology of the tourist villages, multiple motivations: returning to nature, knowing the tradition, the culture, taking care of your health, sports practice, the consumption of fresh fruits and aliments.

With all these, the rural tourism in Romania, at present, has a modest dimension.

5. Sustainable development of rural tourism in Romania

In Romania rural tourism has registered an extensive, dissipated development, without an integrated approach, involving all categories of resources, and its target was in most cases the internal tourist rather than international tourist. This led to many small investments in the territory, the local tourist products being diversified, but independent, without a major impact on the tourism market. The inconsistency and the temporary, fragmented characteristics of this tourist products, in accordance with the small possibilities of agro-tourist boarding houses owners, concludes versus an unclear shape and dimension of rural tourist product in Romania. Rural tourism in Romania is still in its early stages, in this moment being necessary a strategy to re-launch the tourist product before the expansion and development stages. The development of rural tourism in Romania poses specific problems (negative aspects):

untaught modification in the built environment, by extending the accommodation space, without taking into account rural architecture or features;

changes in the social and cultural lives of the villages; kitsch entrance in the rural life as a result of interference with urban civilization can distort or modify the local traditions;

traffic congestion in rural areas especially in the most visited destinations;

changes in rural traditions and customs as the villagers adopt the urban lifestyle;

the insufficient diversification of services and the lack of complementary services, significantly reduce the number of tourists;

artistic programs (festivities, ceremonies, performing traditional works, folk festivals) are just being offered occasionally and only in case of larger tourist groups. These specific hospitality manifestation should instead be used as segmentation tools, aimed at targeting, for example, foreign tourists;

merchandising local souvenirs is underdeveloped activity; it is more likely that, a traditional ceramic feature or an in-house made blouse with traditional models on it, to be found in major commercial centers in the cities than on the village they were produced in;

The main advantages that rural tourism can deliver to the rural communities in Romania are:

an increase in the local revenues, both at the level of community and at the level of rural families;

modernization of local infrastructure as the result of the intensification in tourist circulation;

expanding rural revenues by direct selling of the agri-products to the visitors, selling of a crafted handy-made articles;

maintaining some economic activities in remote rural areas, preserving the traditional manifestation and religious festivities, these mobilizing the local inhabitants to conserve them. A virtuous circle is therefore built.

contributes to the education and training of local villagers, expanding the knowledge horizons of the rural population, facilitate the cultural exchanges among city and village, stimulates the overall regional growth.

Synthesizing the above-presented issues, we can identify positive and negative aspects of rural tourism in Romania [5] (table no. 3).

Table no. 3

Rural Tourism in Romania
Positive effects

Social and economic effects

Cultural influences

Influence on natural and built environment

– source of complementary revenues, leads to new jobs creation;

– encourage collective actions at community level;

– stabilization of population in areas affected by depopulation;

– multiple effects in other fields of activities

– preserve the local culture;

– ensure a local pride feeling, self appreciation and identity with traditions;

– preserve the historical sites and other objectives important for the local community;

– utilization of abandoned properties;

Negative effects

– local price inflation;

– possible population growth as a result of economic development;

– labor market changes structure;

– local real estate market is affected;

– demand is seasonally

– local culture might be lost in contact with the more “powerful” urban culture;

– a distortion of local habits and folklore, by trying to present them before an auditorium

– habitat could get affected;

– water pollution, garbage accumulation, gas emissions, etc.

– a possible crisis of the living space, more rooms being offered to the tourists

The development of rural tourism must be done in accordance with the new rural realities and taking into account the technological revolution. Globalization of economy brings transformations that the rural tourism must be aware and it must look for the new opportunities offered [6] . Rural life is changing, the transformations take place at a faster rate, competition is growing, thou more opportunities exists but they are harder to capitalize. The rural environment can no longer be the millstone of a national economy, the villagers must operate that mentality shift allowing them to ensure a sustainable development for their area. The “new economy”, the concept used today to express technological advance, the open economies, market liberalization, brings a few changes also at the rural perspective level (table no. 4).

Table no. 4

Old rural realities

Internal markets are important;

The ability to exploit natural resource is important for the local and national economy and this determines the local specialization: arable field, mineral resources

Rural areas are somehow specialized, but many are similar at the level of characteristics and economic functions performed

The inhabitants of rural areas have little formal education and less opportunities to find a job than the urban inhabitants

Urban labor market can easily absorb the unqualified workforce surplus from rural areas

Transportation costs are high, access to the rural areas is difficult even for internal residents

Capital markets are segmented, rural areas obtain resources internally

Communications are expensive and relatively slow, limiting the coordination

Rural areas compete one another internally

New rural realities

External markets are important;

The ability to exploit natural resources is not very important for the global economy, the skills, knowledge and information are the main factors determining the success of the area

Rural areas are specialized, few rural areas are similar at the level of characteristics and economic functions performed

The inhabitants of rural areas have little formal education and less opportunities to find a job than the urban inhabitants

Urban labor market can not absorb the unqualified workforce surplus from rural areas

Transportation costs are low, access to the rural areas is facilitated even at international level

Global capital markets are integrated, rural areas must attract resource from international markets

Communications are fast and cheap, facilitating coordination

Rural areas compete one another internally and at the international level with other rural areas from developed on developing countries

The changes presented above have a major impact on rural communities in Romania. The implementation of high scale rural tourist projects imply that the inhabitants will poses specific knowledge of project management, marketing, finance, even thou a certain gap will remain among rural inhabitants and urban citizens. The rural communities must do everything in their power to reduce t

It is very important that in today’s competitive environment, (both in terms of business and employability) one has a clear understanding and sufficient knowledge of the sector or industry in which they would be operating.

This report will be looking at, and analysing the Hotel industry in the United Kingdom, examining industry’s micro and macro environment. Its purpose is to examine the industry with intention to gather market intelligence that would support prospective managerial development, career aspirations and prepare them for sufficiently informed participation at interviews. Findings from the report should therefore, enhance their business knowledge and employability prospects in the industry.

The report will focus on the last five years which have in fact seen the industry at its best and at its worst in just a few years. A number of different data sources would be utilised such as industry reports, news paper articles and various websites related to the industry.

INDUSTRY ANALYSIS
Industry overview

The hotel industry and tourism in general is one of the world’s main growth industries worth trillions of ponds globally. According to a key note report (2009) the hotel industry in the United Kingdome grew by 29.1% in four years to 2008, reaching a staggering ?15.87 billion. This growth was attributed to a number of factors, such as the high disposable income available to people, introduction of low cost airlines and the rapid expansion of budget hotel sector.

With hotels that opened up to a wide range of customers combined with cheap flights and high disposable income people could have more than one holiday a year. This in turn benefited the hotel industry as a whole from both foreign and domestic tourists.

This vibrant growth, however, has seen a change in its fortunes in the last two years, due to a number of factors but mainly the economical downturn. In 2008 global economy took a turn for the worst and the problem deepened in 2009, leading to recession in most developed economies and UK was no exception. This had an immediate impact on holiday purchasing with research suggesting that a significant proportion of adults thinking of saving money by having a domestic holiday in 2009, while 25% of them were worried they could not afford a holiday at all (KeyNote 10). This has led to many hotels adapting to the situation by reducing prices or offering lucrative promotional deals to meet the market expectations and improve sales.

The hotel industry could be divided into two sectors, corporate and consumer both providing services to meet their particular clients needs. The first one includes accommodations paid by businesses, for business travel purposes and the latter is paid by consumers for non-business reasons.

A grading scale based on a star system is used to classify the quality and range of service provided by the company. The grading is comprised of 1-5 stars, where one star represents simple accommodation with no thrills attached and five stars represent exceptional quality of service with some degree of luxury. In some situations Silver or Gold may be added to Hotels that exceed the requirements under the star system.

It is estimated that 1 one in every 10 people in the UK is employed in the Hospitality industry, in other words over 1.96 million (2007) people working in around 300,000 establishments across the country. Overall employment in this industry grew by 5% in 2007 but the Hotel sector had the lowest growth with only 2.7% adding another 6,500 jobs to the existing 238,500 jobs that existed in the previous year (Table 1.2).

Major cities accounts for the highest concentration of hotels in the UK and are thought to attract the highest level of tourism activity with London leading the way.

Market size & trends

During the economic boom of the late 90’s and early part of this decade the Hotel Industry has expanded rapidly benefiting from a number of factors mainly related to economic growth an improved technology. The increasing globalisation of a lot of companies necessitated more corporate travel and accommodation. Being the financial centre of Europe and to some extent the world, London benefited a great deal from this rich consumer source. A lot of hotel groups responded to this by investing on their brands, positioning their portfolios to more upscale four/five star properties. In addition, the budget hotel sector was developed to suit a wider range of consumers as well as businesses. All was made even easier for consumers by the development of the internet. This allowed easy comparison in terms of price and guest facilities on offer, as well as a more convenient way to book them. Internet is now thriving with 34,104,175 or 57.2% of population having access to it in the UK spending an average of ten hours a month online (www.theanswerbank).

In spite of the healthy growth experienced in the last two decades and the excitement of the coming Olympic Games London 2012, the industry has in 2009 suffered a setback. This was due to the recession that affected almost every developed or developing economy in the world. In the first quarter of 2009, the UK saw a fall in visits by one million, although statistics show that spending remained relatively the same as the corresponding time of the preceding year (table1.1). This could be accredited to the weaker pound which slummed at record lows both against the Euro and American Dollar at 75.86p to the Euro and $ 1.375 (bbc.co.uk).

In 2008 there were 31.9 million visits in the UK producing on average ?512 of spending each, generating over ?16.3 billion of revenue for the economy. This however is considerably smaller than the spending generated by the internal visits of UK residents which marked ?21.1 billion for the same period, though slightly down from the previous year. The total spending generated by both UK and Overseas visits for 2008 was just above ?37.4 billion, 0.4% higher than 2007 (table 1.1). Hotel industry takes just above 42% of this wealth, in other words ?15.87 billion.

During the peak of recession there was a significant increase on short-term holidays taken domestically. Though, as the economy comes out of recession domestic holidays are predicted to fall by 7.7% with a similar decline on value between 2009 and 2013. Holidays abroad on the other hand are forecasted to increase by over 16% between those years. (KeyNote)

According to government data turnover in the hotel market gradually increased on average by 6.6% between 2004 and 2008. Key Note forecasted a 6.8% (appendix 4) decrease in total revenue for the following year but expects an upward trend from 2010, peaking in 2013 to 4.8% or 16.99 billion in total. Room occupancy which is a key indicator to measure the amount of business carried out by hotels was at 76% in 2007 according to VisitBritain but decreased in the following two years to 68% in 2009.

Economic trends

In the last five years the UK economy has seen some of its best and worst days. After the healthy growth that the economy had enjoyed in the early part of the decade came the downturn that succeeded in the second half of it. As a result of the global credit squeeze, 2007-09 proved to be a bumpy ride for the economy, enforcing banks to take a tougher line on lending. This caused a sharp fall in consumer spending, with unpleasant consequences for most industries. In 2005 research showed that productivity growth had slumped and business investment was at a record low, consequently the British economy was growing at a rate slower than the average growth for other developed economies, falling well short of chancellor’s budget prediction.

Table 1.4 shows the GDP performance in the last five years to 2008. It is evident that GDP plunged in 2008 to only 0.7 and performing at its worse in the 3rd quarter of 2008 when the economy fell into a recession registering a -6% drop (nationalstatistics.co.uk). GDP started to recover late in the 4th quarter of 2009 when it was just under stagnation point and first signs of getting out of recession appearing in the first quarter of 2010. According to national statistics growth in the first quarter of this year register a 0.2% increase. The same source suggests that during the same quarter distribution, hotels and restaurants fell by 0.7% compared with an increase of 1.9 per cent in the previous quarter. Appendix 1 shows how this recession compares to the previous two in the 80’s and 90’s. It appears that last recession was the hardest of the three but seems to be the shortest of the three.

High energy prices in the world markets (highest being $136.24 a barrel, 2008, appendix 2), forced inflation rates rise to record heights in September 2008 to 5.2% well above the Bank of England’s target of 2%. This increase forced the Bank to raise interest rates three times since summer 2006 with highest being in July 07 at 5.75% (BBC, 29/11/07). Although, this spike in inflation became less of e concern for the Governor as recession was deemed the major threat to the economy. This then led the Bank England to repeatedly lower interest rates reaching its lowest point at 0.5% in March 09 and hoping for the inflation to melt away. In fact that is exactly what happened with inflation rates falling to 1.1% in September 2009, the lowest since 2004. (thisismoney.co.uk)

Increase in fuel prices is bound to raise travel costs for millions of people. High fuel prices, rise in interest rates and inflation followed with the credit squeeze effects are also leaving people with less disposable income. This is having a negative effect on consumer spending as it is getting difficult for consumers to keep up with credit payments (credit cards/mortgages/loans). Therefore, loss in consumer confidence may result in less spending on holidays consequently impacting on industry profitability.

Competition

According to National Statistics there are 10,195 hotels in the country and the majority of those establishments generate less than ?1 million annual turnover (appendix 5). This has not stopped competition in the industry intensifying in recent years, narrowing the gap between budget and midmarket hotels. However, it’s still the large chains/midmarket hotels that win the marketing battle by spending large sums on brand building. This has become a very important feature and most hotels are now seeking to develop stronger identity that would target both consumer and corporate sectors more effectively.

Among others, Premier in was one of the largest spenders on media advertising in 2009, spending over ?5.5 millions on promotional activities followed by Travel Lodge who spent just under ?3 million. In addition to this the large chains have focused on seasonal offers and lowering their prices. For example, in autumn 2009 Travel Lodge lunched room sales for the next spring, offering rooms for as low as ?12 a night.

Also these midmarket establishments have more flexibility to offer packages or meals to attract a larger, more price conscious market. Low budget hotels on the other hand have responded to this by providing more facilities and services than before as well as including more offers on their websites.

Table 1.8 shows some of the major players in the United Kingdome and their relative annual turnover. InterContinental Hotels Group PLC seems to lead the way with close to ?2 billion annual turnover from which ?302 million were pre-tax profit. The company has a number of brands under its umbrella such as Crowne Plaza, Hotel Indigo, Holiday Inn, Express by Holiday Inn, Staybridge Suites and Candlewood Suites operating in around 100 countries offering 630,000 rooms.

Second in this list follows, Millennium & Copthorne Hotels PLC with an annual turnover of ?703 million and pre-tax profits of ?103 millions. The company fosters four different brands including Millennium and Grand millennium Hotels, Capthorn Hotels and Kingsgate Hotels. Recently it has recently expanded with seven new hotels in China and Middle East.

Accor UK Business & Leisure Hotels Ltd is owned by Accor a French based group which has 15 different brands under its umbrella varying from luxury to economy accommodation. The UK based subsidiary generates an annual turnover of ?198 million of which ?37.5 million pre-tax profit.

Travelodge which is owned by Dubai International Capital is the next in line generating an annual turnover of ?287 million and a pre-tax profit of ?16.5 million. The company is rapidly expanding both in UK and main land Europe, with 29 hotels planed to be built in UK in 2009 and 100 in Spain by 2020.

De Vere Hotels & Leisure Ltd operates two hotel chains generating a total annual turnover of ?248 million by combining a 100 bedroom hotels and fitness clubs. The company is owned by Alternative Hotel Group which is aiming to rebrand the De Vere portfolio under Deluxe, Heritage and Venue options, differentiating the accommodation offer.

Tourism

There was a slight drop in the number of overseas residents visiting Britain for business reasons in 2007/8 as a lot of companies tightened their budgets on travel expenditure. This has resulted in low room and bedspace occupancy levels which dropped to a 4 year low (426.2 million bed nights) with serious consequences for the hotel market. The following year was a very difficult year for tourism, experiencing a significant drop in visit numbers. 2010 is also expected to be somewhat difficult for the industry, with substantial improvement expected to start only in 2011.

However, according to a keynote report on travel and tourism, research suggests that 1/3 adults in the Britain has taken at least one holiday in the last 12 months and 1/5 of them having taken three or more for the same period. Still, the economic downturn forced a lot of suppliers, including the package tour operators, to react by reducing their capacity and cutting the number of holidays on offer.

UK continues to be an attractive place in the international holiday market and this is very important for the long term prospects of the hotel industry. The coming decade which has been described by many commentators as the “golden decade of sport” because of the many different international events due to take place in UK (table 1.7) is exiting times for the industry. Overseas spectator numbers to these events will provide a necessary boost for the hotel market. Records based on previous similar events staged by other countries in recent years show that hotel profitability increased as a direct result.

BigHospitality referring to VisitEngland research suggests that tourism industry in the United Kingdome could be worth a staggering ?147 billion by 2020 with the potential of creating over 225,000 new jobs in the industry. This would be a 52% increase from the current estimated value of ?97 billion.

Though smaller than the domestic spending in hotel sector, the international tourism is a significant contributor to total revenue. Only London, which earns over ?8bn from overseas visitors, depends more on the overseas visitor than on the home market.

Employment and Demographics

According to BBC unemployment in UK continued with its downward trend until August 2007, falling by 5000 in the second quarter of 07 to 1.65 million where it maintained one of the lowest unemployment rates in Europe at 5.5% but slightly higher than that of USA. ONS figures also showed that average earnings rose by 3.7% during the same quarter, beating expectations of a 3.6% rise. However, theses prosperous years were soon over and low unemployment was history.

According to the national statistics, employment has seen a dramatic fall in the last three years reaching its lowest point since 1996 when it hit 72.1% or 28.82 million in February 2010 (appendix 3). In the last quarter to February there was a decrease in both part-time and full time employment totalling 89.000.

The number of people working only part-time because they could not find full time employment increased during the same quarter to reach 1.05 million, the highest figure since 1992. The overall unemployment rate recorded 8.0%, in other words 2.5 million, higher than any time since September 1996.

The inactivity rate in the first quarter of 2010 was at 21.5%, the highest since 2004. This added another 110,000 to the total figure, reaching a record high of 8.16 million people considered inactive in UK. Though, this could be as a result of a relatively large number of young people choosing to go into education after finishing their secondary school rather than go straight to the labour market.

Population in the United Kingdome has continuously increased in recent years reaching 61.4 million in 2008, an increase this of over 9% in just five years (KeyNote). This was due to the high influx of migrants from the newly joined EU member states from Eastern Europe. This trend of population growth is forecasted to continue to the end of the century. Britain’s population is predicted to reach 71 million within 25 years, 78 million within 50 years and 85 million by 2081 (The Guardian, 28/11/07). This 39.6% growth (from 59,834,300 in 2004) represents an opportunity for steady market growth in UK in the next 78 years. The hotel industry is likely to benefit substantially from this if the lifestyle people have grown to enjoy in the last 20 years continue to be the norm.

SWOT
Strength

UK is seen as a major tourist destination and has in place a good promotional and support system for tourists such as VisitBritain.

The UK market incorporates a number of internationally well-known hotel brands and chains.

Short term leisure breaks have risen due to high disposable income over the last decade.

The development of the budget hotel sector opened the hotel market to a wider range of clients.

The Internet has facilitated easier choice and booking of facilities.

Weaknesses

The industry’s performance is highly dependable on the performance of the wider economy.

The market seems to be over supplied in term of room numbers and this seems to keep room occupancy levels rather low at 60% average.

Budget and upscale hotels seems to be putting the midmarket establishments under pressure.

Continuing investment is necessary to maintain properties at a high standard.

Opportunities

A number of international sports event planned to be staged in UK between now and 2019

Western Balkans expected to join the European Union soon which would allow for more tourists from that region visit Britain.

Forecasted growth of inbound visits till 2014

Steady population growth well into the century which would boost demand for travel and tourism and consequently Hotel facilities.

Threats

Some EU economies suffering from high deficits may be forced to freeze or lower wages all together in their public sectors. This could impact the numbers of overseas visits to UK which would adversely affect the turn over and consequently profits in the hotel industry

It may get harder to raise expansion capital due to falling property values.

High unemployment rates in UK could mean that people may not be able to afford holidays.

CONCLUSION/RECOMMENDATION

The success of the industry is dependable on a lot of external factors and this was most clearly evident during the last economic downturn. However, in today’s world globalisation plays an important role both in leisure and commerce. Therefore, hotel industry which is now well established will be a sector that would commend high demand for its services in the future. History shows that hotel industry has bounced back in the past after suffering similar setbacks. This will certainly be the case this time round with the first signs of recovery already in sight. At glance it appears that the industry has learned from previous downturns responding to it by adjusting prices and offers to look more attractive.

Seeing that the largest share of revenue comes from internal visits and many EU economies risking Bankruptcy, it would be wise to try and encourage more British people spend their vacations in the UK. In the meantime the coming decade with its sports events to be held here presents a great opportunity for the industry. Therefore, companies should take advantage of this by planning ahead so they would have sufficient bed/room space to meet the demand. Although trading at the moment is rather low in comparison to pre-recession time and raising capital for further development has become harder. It is worth remembering that hotel projects take a relatively long time to materialise and now may be the time to start thinking for the future.

As the economy recovers the hoteliers should also seek to build occupancy back, perhaps through further competitive pricing and promotional deals with the aim to reinstate RevPar growth.

APPENDICIES AND TABLES

Table 1.1. Overseas residents’ visits to the UK and the expenditure in the UK (Million, ?million and ?) 2004-09

2004
2005
2006
2007
2008
2008 Q1aˆ
2009 Q1aˆ
Number of overseas visitors (million)

27.8

30

32.7

32.8

31.9

7.2

6.2

Expenditure (?m)

13.047

14.248

16.002

15.960

16.323

3.129

3.128

Average expenditure per visit (?)

469

475

489

487

512

435

505

UK residents Expenditure (?m)

21,238

21,107

Q1- first qarter

aˆ – Seasonally adjusted

Note: expenditure figures refer to total spending by visitors not solely accommodation/hotel costs

Source. International Passenger survey (MQ6, Quarter 1 2009) National Statistics

Table 1.2: EMPLOYMENT IN THE UK HOSPITALITY INDUSTRY 2004-2007

2004*

2005*

2006

2007

Contract food service providers

179,600

178,300

182,600

181,600

Hotels

247,100

238,400

238,500

245,000

Pubs, bars and nightclubs

368,400

333,900

297,700

319,600

Restaurants

518,700

514,700

499,700

526,700

Hospitality services

402,100

379,900

390,300

417,400

TOTAL WORKFORCE

1,917,300

1,843,000

1,866,300

1,960,700

Source: Labour Force Survey www.caterersearch.com

Table 1.3: UK resident population estimates 2004-08

2004

2005

2006

2007

2008

Population (000)

59,846

60,238

60,587

60,975

61,412

% change year on year

–

0.7

0.6

0.6

0.7

Source: Monthly Digest of Statistics, August 2009, statistics.gov.uk

Table1.4: UK GDP at Current and Annual Chain-Link Prices (?m), 2004-08

2004

2005

2006

2007

2008

Current Prices

1,202,956

1,254,058

1,325,795

1,398,882

1,446,113

% change

–

4.2

5.7

5.5

3.4

Annual Chain-Link

1,227,387

1,254,058

1,289,833

1,322,842

1,332,652

% change

–

2.2

2.9

2.6

0.7

Source: Economic and Labour review, August 09, statistics.gov.uk

Table 1.5. UK rate of inflation (%) 2004-2008

2004

2005

2006

2007

2008

Inflation (%)

3.0

2.8

3.2

4.3

4.0

Change year on year

–

-0.2

0.4

1.1

-0.3

Source: Monthly Digest of Statistics August 2009, National Statistics website

Table 1.6: Proportion of nights spent and expenditure on hotels, motels or guest houses and other accommodation in the UK by UK and Overseas residents (%) 2007 & 2008

Nights (%)

Expenditure (%)

2007

2008

2007

2008

UK Residents

Hotel, motel or guest house

23

23

46

48

Other accommodation

77

77

54

52

Overseas residents

Hotel, motel or guest house

23

22

50

50

Other accommodation

77

78

50

50

Source: UK Tourism survey 2007 and 2008, VisitBritain/International Passenger survey 2007 and 2008, National Statistics.

Table 1.7: Golden decade of sports

Event
Sport
Year
Location

Ryder Cup

Golf

2010

Wales

Olympic Games

Various

2012

London

Commonwealth Games

Various

2014

Glasgow

Rugby World Cup

Rugby

2015

England

World Cup???

Football

2018

UK

Cricket World Cup

Cricket

2019

England

Table 1.8: Major Players in UK Hotel Industry

Company
Revenue per year (?m)

Accor UK Business & Leisure Hotels Ltd

198.3

De Vere Hotels & Leisure Ltd

248.2

Guoman Hotels Ltd

220.4

Hilton International Hotels (UK) Ltd

58.10

InterContinental Hotels Group PLC

1,850.00

Macdonald Hotels Ltd

135.4

Marriott Hotels Ltd

149.5

Millennium & Copthorne Hotels PLC

702.9

Premier Inn Hotels Ltd

159.5

Travelodge Hotels Ltd

287

Source: KeyNote

Appendix 1: The Economy in three recessions (bbc.co.uk)

Appendix 2: Oil price rise 2000-07 (bbc.co.uk)

Appendix 3: Employment (statistics.gov.uk)

Appendix 4: UK Hotel Market Forecast.

Appendix 5: Number of establishments

The Anne Frank Organisation (2006) states that in 2004, 936,000 visitors visited the house that used to be Anne Frank’s, a Jewish girl who among other Jews were murdered in the time of Hitler’s fascism. Among this timeframe, Auschwitz, a concentration camp based in Poland which became a symbol of genocide, annually receives 750,000 visitors (Yuill, 2003) coming close to the annual 900,000 visitors to Dachau (Lippard, 1999).

All these sites and many more which are similar, are what are called sites for “dark” tourism (Lennon and Foley, 2000), also known as Thanatourism (Seaton, 1996 – cited in Ryan et al, 2005) and ‘Black Spots’ (Rojek, 1997). This form of tourism is what Seaton (1999) defines as sites and attractions that are associated with deaths, acts of violence, scenes of death and crimes against humanity.

With the popularity of this form of tourism growing within the ‘horror tourism’ market (Tunbridge and Ashworth, 1996), the ethical issues surrounding it will need to be questioned. With the consumers and providers taking part in this growth of dark tourism, both their potentially contrasting ethical views towards dark tourism may be different. Whereas a providers’ means of preserving history is to charge people to maintain its upkeep, the consumers may see it as money making scheme in the expense of the deceased lives of the site. Whereas the providers’ means of letting people know its history is through interpretation of vulgar images, may seem unethically distasteful for consumers. Therefore, using Stone (2006)’s ‘shades’ of darkness spectrum as a tool for measuring different levels of dark tourism sites, these two main issues will be critically examined in depth, and in both the consumers’ and providers’ point of views to further understand the ethical dilemma of dark tourism.

Dark tourism has often raised ethical debates about the ways in which leisure and pleasure are mixed with tragedy (Kempa and Strange, 2003), as many people think some sites for dark tourism is too sensitive to present it for the world to see. However, although this may be the case, it actually varies depending on the ‘shade’ the site is supplying. This has been supported by Stone (2006) in which he believes that not all dark tourism sites and its supplies have the same degree of darkness and ethics. Stone (2006) believes that each site and what it supplies has its own degree of darkness, and depending on its criteria; it can be placed on what he refers as a ‘darkest-lightest’ spectrum.

On one side of the spectrum is what he termed ‘lightest’ side of dark tourism. Sites belonging to this side of the spectrum tend to be fully commercial providers such as the London Dungeon, which Stone (2006) also term ‘Dark Fun Factories’, as its main aim may be more financial than educational. Stone (2006) further explains that although sites belonging to this side of the scale will be associated with death and suffering, it is not OF death and suffering. Therefore, sites at this lightest side will most likely be purposeful and entertainment based, with a lower degree of ethics surrounding it.

However, on the other end of the spectrum are the ‘darkest’ side of the spectrum, in which its criteria’s are completely the opposite of those on the ‘lighter’ side. Stone (2006) explains that sites on the darkest side will be sites of death and suffering and its orientation will be to educate. Examples of these darker sites are which Wight (2005) class as ‘primary’ sites, such as holocaust camps to sites of celebrity deaths, as sites on this side of the scale will be seen as authentic and non-purposeful, leading to a higher degree of ethical issues surrounding the sites at this side of the scale.

One of these ethical issues is the notion of whether consumers should be charged to enter a site of death and with so much history. In novices’ and consumers’ eyes, it could be seen as unethical as they may see it as a means for providers to make profits in the expense of the deceased lives and history. Although this may be the case on sites within the lighter shade of the spectrum as it may be purely commercial, it is not always the case within the darker sites. Sites from the darker shade such as Auschwitz, the Gallipoli Anzac (Slade, 2003) and Robben Island prison (Shackley, 2001) are normally sites which are old and need continuous up keeping and staff. With this continuous maintenance, sites will need money to be able to continue to run its site and its historical contents. However, this also leads to the issue of how much. If a site charges just enough to afford the upkeep, then it may seem fair and ethical to do so. For example, according to Shackley (2001), the prison in Robben Island which Dann (1998) elaborates as a ‘Dungeon of Death’ attraction, employs local people as tour guides, and their average weekly wage is ?10, which is the same amount as the entrance fees. However, if the entrance fees were to double, it will then be seen as profit making, thus, unethical as it is money making in expense of the past.

By charging its consumers, it may also be a means of controlling how many consumers enter the site, as mass consumption of the site may lead to deliberate sanctification and loss of original identity of the site. Strange and Kempa (2003) agrees with this and further states that the commodification of history for mass consumption frequently leads to the trivialization of the site, and in turn causes deliberate sanctification of its history, as well as the loss of original purpose of why the site was built.

An example of this happening is shown in the site of Machu Picchu. Johnston (2006) explains how ever since Machu Picchu was named a World Heritage Site in 1983, over 500,000 visitors started visiting the site every year, and to prevent deliberate sanctification, an entrance fee of $20 was put up. This in turn not only did not limit the number of foreign consumers from visiting, but also pushed the local people out of its own heritage site as they could not afford the entrance fees. Johnston (2006) continues to explain that this has contributed to the mass replacement of indigenous people with tourists around the site, causing sanctification and trivialisation of the site, as the original culture of Machu Picchu was gone.

Despite all the motives that the providers have for charging its consumers, its clearly shown that it needs to be managed efficiently in order for it to work.

Consumers who are consuming the product as experience and integration (Ryan et al, 2005) may agree with the notion of charging as it may feel like they are giving back to the deceased lives and the history of the site. Lippard (1999) explains this as ‘guilt – tripping’ in which consumers of this typologies may feel guilty of what happened in the past and may want to contribute towards the history in order to feed their conscience. Consumers consuming as experience and integration (Ryan et al, 2005) may be more sentimental than consumers that are consuming as play (Ryan et al, 2005), as the typology of play consumers will come from a Psychocentric (Novelli et al, 2005) background in which they may visit frequently to lighter shades of dark tourism sites but rarely to sites of a darker shade. Elaborating from this, it could be possible that consumers consuming as play may not be used to the dark history of the sites and may be shocked of its contents and backgrounds surrounding the darker sites, thus, may welcome the sanctification of the sites but not the notion of charging. Frequent happenings of this emotion tend to happen in what Ryan et al (2005) called Grey tourism supply, in which Ryan et al (2005) explains this theory as consumers with low, or no interest and knowledge in death and tragedy visits an intended dark tourism site. In this situation, a consumer may not be aware of the dark historical contents of the site as they would not have previous knowledge due to its lack of interest, but upon arriving to the intended site and knowing its gore details, they may instantly be repulsed and shocked.

However, this is rare as Seaton (1999) believes that dark tourism is consumer demand rather than attraction demand, explaining that if it was not from the high interests and demand from the audience, there will not be the dark sector of tourism.

To some extent, Seaton (1999) may be correct and that the main reason for the existence of dark tourism could be from the high demands for dark tourism. However, for this to happen, the presentation of the sites may also be blamed for the high popularity of dark tourism. This is because Walter et al (1995) explains that even when consumers are interested in death and tragedies, for tragedies to be given a real meaning, it needs to have a context by explanation, and sometimes through the personal stories of those people who has been caught up in it. This has been previously mentioned using an example from one of the darker sites of Robben Island. Shackley (2001) states that the prison site in Robben Island located in South Africa, employs ex prisoners that used to be held there. These ex prisoners are now acting as tour guides for its consumers, repeatedly telling each group of consumers their own personal experience of when they were held in the cells. Shackley (2001) continues to explain that the emotional welfare of the guides had not been considered and many of the guides felt obliged to continue with its employment due to lack of employment elsewhere. Although Walter et al (1995) did explain that consumers are interested in personal story telling, but ethically, should stories as sensitive as this be told repeatedly and personally from the own mouths of the ex prisoners? This may not only be ethically wrong, but also morally wrong. Blom (2000) agrees with this and states that interpretation as personal as this should be interpreted though technology such as information points within the sites. However, despite this, providers within the darker sites may not see it in the same way. Providers could argue that employees such as ex prisoners are getting paid and that they decide to be employed in this job role voluntarily. Providers could also argue that story telling from the mouths of people who have been caught up within the history of the sites are more reliable and feasible than technology. This may be because stories that will be told from someone who has actually experienced and been there, may infact reduce the exaggeration of the contents of the history and stories, as well as being less biased than if technology was to tell it. By interpreting using technology, there could be a high chance that the information recorded into the technology is from someone with no relations to the site, thus, gives consumers wrong information. Also, this method of tour guides for interpretation may actually further benefit both the providers and consumers, as if the consumers had to ask a question about the site and its history, it can be answered immediately by the tour guides, delaying the time in which the consumers may form its own answers and judgements about the site.

The views of the darker site providers in employing tour guides may also be the same for the views for providers of the lighter shade of dark tourism, as it may be required and expected by consumers to have someone to guide through the lighter sites, e.g. the fun factories (Stone, 2006). However, an implication that can arise from this is that within the lighter shade of dark tourism, the tour guides may exaggerate the actual history and stories behind the site in order to manipulate the consumers’ attention and encourage repeat business.

Manipulation of consumers’ attention can also be done by the movement of original objects. For lighter shades of tourism sites to do this may be accepted, as previously mentioned before; Stone (2006) explains that sites of a lighter shade tend to promote any materials in order to attract business, thus, attracting profits. However, if a site of a darker shade decides to do this, the circumstances will change and it will become unethically wrong. For example, Wight (2005) states that in Auschwitz, the famous signage that read ‘Work will set you free’ was moved from its original position to a location near the end of the tour to create a high point for consumers to reach a controversial conclusion to the experience. This can be a form of manipulation as Carnegie (2006) states that some sites do intentionally move objects in order to interpret the displays to contain central, recognisable, emotional and generic truths to the local audiences. This raises an ethical dilemma, as although providers may see nothing wrong with this as controversial conclusion may leave its consumers feeling the pain and tragedies of the past, but the ethics of this makes it unfair and unauthentic for its consumers. The main purpose in why consumers visit places of dark tourism in the first place is because they may want to experience the real truth behind the sites first hand, and thus travelled to the site to get this experience. However, when providers moves objects around to help stimulate consumers’ minds, it is made unreal as it is not how the history says it was, but how the providers want it to be. By moving objects, bits of history gets moved as well, and as time moves on and nobody moves it back to its original place, the origin and bits of history of it are forgotten, hence the deliberate sanctification of some sites and the movement of sites within the shade spectrum.

The phenomenon of dark tourism is a difficult and delicate field to understand, but one aspect of it that is most understood is that it is increasingly growing in popularity, with thousands of consumers flocking worldwide to see these sites of tragedy. However, the ethics of visiting sensitive sites such as these are also growing, as questions such as whether to show or not to show, and whether to charge or not to charge are often questioned in both the providers and consumers point of views.

To show these sites of tragedies may cause exploitation of local people as well as deliberate sanctification of the sites and its history, but to not to show, our history may be denied to us.

By understanding the ethicalities of dark tourism, it will help in preserving its history and sites, so that it can then be better managed and better preserved and presented for the future. This in turn reduces the risk of exploitation of the sites and the way different typologies of consumers think. However, ethical issues do not stop at the grounds of the consumers and its providers, the sensitivity of the tour guides are also needed to be explored. As discussed previously, tour guides such as ex prisoners are sometimes obliged to relive their experience repeatedly in order for consumers to know the history. Although this may be one of the effective methods of telling history, it is important to consider the welfare of these tour guides, as the repetitive telling of their own experience may in turn contribute to further unethical dilemmas.

Therefore, maybe to finally conclude on the ethics of dark tourism, it may be possible to state that ethical issues will always continue to exist around dark tourism, as long dark tourism itself exists too. However, the importance of the consideration of the ethicalities of dark tourism cannot be understated, and both consumers and providers may want to work together, if in the future, we still would like to know about our history through the form of tourism instead through textbooks and education.

The purpose of this essay is to let the reader know that there are some factors that affect environment around and far away from the location of an event, and also assess any challenge that may happened when dealing with this environment problem in the event management industry. The scope of this essay is limited and not focusing on one certain event only, but only talk about some kind of events generally without discuss those events deeply. The analysis is conducted by getting the example of some events and analyzes why those kinds of events may help or even damage the environment. While on assessing the challenge, this essay finds the challenge and comment the value of them. The most important and significant findings is when the effects of an event to the environment may caused pollution by direct and indirect ways. However there is finding about the good side of an event to its environment. And some challenge for this issue is about how to solve, educate, and maintain the process in order to get this environment issue fulfilled.

Introduction

First of all we must know the definition of event itself. Based on Allen, O’Toole, Harris& Mcdonnell (2005) state that event is certain ceremony, act, presentation or tribute that are intentionally designed, programmed and created to held certain occasions or else get any benefit in cultural, social, and the goal of business. We can see the different types of events such as sport events, festivals, carnivals, parades, market, trade shows, until just a meeting( Arcodia, 2009). And based on the size we can see from just local communities with local people as audiences to mega-events in which the audience is from around the world (Allen, O’Toole, Harris& Mcdonnell, 2005.

In this essay I explore the answer for issues that will be discussed. The scope of this essay is about issues in the effect that an event can be caused, either in social, economic, and also environment. Not only the affects it selves but also this essay cover the topics in assessing the challenges that may occurs to environment management industry. I focus on identifying environments factors that effecting events by offering analysis to it. Also in this essay I set the limit about the kind of events into just festival, cultural events, and social events, so the prospects of the person who reads are limited and as a result this met their expectation since that this essay only talked about something in wide scope ,not in detail.

When we talk about environment effects of an event, we cannot be far from pollution. Pollution is the biggest issue ever that every government must face in order to protect their environment. Based on curry and Moutinho (1992) that said “the relationship between tourism and environment is a symbiotic relationship in sense that conservational area, wild life, and preservation of sites and monuments of historical interest often a response to tourism demand but have the effect of stimulating and maintaining the flow of visitors to that region,” government cares about the environment because they can get profit from tourism sector. So that in defining any effects in this essay, I divide the effects into two parts. The first is the negative effect of an event to the environment, and the next one is the positive effect of an event to the environment. Then based on those negative effects I will divide it into two parts as well. The direct negative effect of an event to environment and also the indirect negative effect of an event are that parts. After that there are some challenges about environment caused by effect of events in event management industry.

432 words

Body

Firstly we will talk about the negative effects of an event to the environment. Just like I stated in the introduction, this negative effects are divided into two categories, the direct negative effects and indirect negative effects as well. The meaning of negative is already known, it can be something bad, terrible, not proper and many more, but the meaning of direct negatives effect in this essay is about any bad effects that may occurred as the straight result of an event to its environment that come from the waste and material procession of the event itself. Then I will identify some certain events that give direct negative effect to the environment and analyze why that events may cause those damage. The first event is Taiwan lantern festival which held every year when about thousands of Taiwanese light balloon of lantern that made from oil-soaked in folded paper and then put it in high pole. This caused the debris from that lantern to litter the environment and one day this set a fire near Taiwan International Airport, thus create huge amount of cloud and later on many flight is cancelled temporarily. Those smokes may contain carcinogenic chemicals and also benzene that are harmful for people’s health and also becomes pollutant that may damage environment (Adam, 2008). Similar with lantern festival is Floating Lantern Festival in Chiang may where the usage of old style natural material made from banana trunk with the leaves stick in the trunk is replaced by Styrofoam that resulting in the river banks, ponds, and parks being littered and obstructed. This lead to broken environment since the cleaning up progress may consume more time. (Jonal, 2009). The next event is Diwali festival that held in India that consist with bursting crackers. This event may pollute air since the crackers may release toxic gases. The third example is about Bourgas festival in Bulgaria. In that festival, people build seven stages and then makes tent in sea garden park which resulting everlasting and significant effects to its animals and plants. The result is becoming worse every year. This damage to environment mainly caused by that construction, mass amount of people with tents, and the poor of storage bin with poor restroom facilities as well (Illiev, 2009). The last example of direct effect to environment is the Ganesh Festival in Western India. In this festival, big doll is created using plaster of paris and noxious metals which are destructive substance and then coated with paints that may contains cadmium, mercury, and carbon. All of this doll is put into water that resulting in the decrease of oxygen level in the water which later on may lead to dangerous health for human who eat any fish that contaminated in that water. This festival is clearly polluted the water with the ecosystem within it (Nita, 2007). However, pollution is not restricted only to material pollution but, “Poorly designed hotels and other tourist facility buildings, and inadequate or inappropriate landscaping, create visual pollution in an area”, ( Kaur &Batra, 1996)

Now we go to the indirect negative effect of an event to its environment. The meaning of this indirect effect is any consequence from the performance of an event that resulting in the damage of environment by people activity that they did in order to be able to participate in that event. People do everything they could to participate in any certain festivals, sport events, and more events or they just become spectators in that event. By doing that thing, realized or not they have been participating in the destruction of environment. People don’t realize when they littering in the area where the events was held. It is still okay if government or official clean up the mess, but the problem occurred when the mess is not quickly being cleaned as it may pollute the environment. They even don’t realize that when they go to an event, they use vehicle such as cars, planes, and even ships which all of them is participate in polluting any land, water, and air. The bigger a festival is, the more people will come all around the world. For instance is Glastonbury Festival of Contemporary Performing Arts which is the biggest music festival in the world. Many arts performed there such as music, arts, cabaret, and dance (Wikimedia Foundation, Inc, 2009). Being the biggest in the world, we can imagine how many people from different contingents in this world travel only to England where the event took place. Most people must be use planes, ships, and even cars. In Vietnam, many different countries in Europe, U.S., and Asia are participating Hue cultural festival that have tourism, buy and sell and investment fair that participated by qualified local and foreign business (Viet Nga Tourism, 2008). With so many foreign countries participate in, we can assume that more different region of people will come to Vietnam. The other events that contain many different countries are when 15 countries attend Asian-African Children Art and Culture Festival in Jakarta, Indonesia. Even the committee expected up to 25 countries will bring their delegation to attend arts performance, games, and storytelling (Zhao, 2009). Of course it is not as big as Glastonbury festival that may attended by million people or more, but this events still makes people around the world go by plane that participated in air pollution that damage the environment. At this moment I will analyze why cars, planes, and ships that all of them are used by people to attend any events is damaging the environment. Pollution from car is the most pollution that people committed. Any emission from car is give bad effect to the driver and people around that car. Climate change is the responsibility of car as well since the engines create greenhouse gas accumulation. The change in climate may produce extreme weather that lead to failure in production of plant fields (Environmed Research, Inc., 2009). Global climate change also worsen by plane that some people belief that it produce more main greenhouse gas than cars each time since it produce carbon dioxide more in average. Annual global warming as big as Africa Island was also produced by planes (Kirby,2000). And finally is the ship pollution that worsens the environment condition. It makes noise that bother natural world, its ballast tank destroy algae and animals while sometimes it produce illegal waste to the sea. Its sulphur oxide makes acid rain that later on damage crops and when its’ inhaled by people lead to heart attack. Moreover Cruise ship that people tend use to held some events like festival, concert abroad it or just as a transportation facility to attend any event in different island. Cruise ship produce solid sewage ,oily bilge, and of course air pollutants (Wikimedia Foundation, Inc., 2009).

When we talk about positive effect of an event to its environment, we talk about any good thing that may help and prevent the environment from damage. The first example is about Tzu Chi bazaar of food held in Medan, Indonesia. This bazaar’s profit will be allocated to the development of any ruin building caused by earthquake in Padang. Moreover in this bazaar that sold vegetarian food, and environment friendly tools, people must bring their own recycle bag because in this bazaar forbid any plastic bag that might damage the environment (Redaksi Web, 2009). Other positive event is Plant for the Planet: Billion Tree Campaign which backed by Kenyan environmentalist, Prince of Monaco, and ICRAF. This campaign rehabilitates million hectares of land by planting billion of trees that will bring back soil and water resources, ecosystem of forest that later on reduce global warming by hold the carbon dioxide level in the air (West,2009). Based on The Nature Conservancy (2009), Nature conservancy campaign to help protect coral reefs also can be a positive effect for environment. That campaign is just similar with thousand island conservancy event in Indonesia that start everything about Hawksbill Turtle from hatching, rearing, tagging, and releasing that can be joined by general people (Pulau seribu.net, 2008).

Then if we want to assess the challenge that provided to this environment issue in event management industry, we must know the challenge itself. The main challenge of course is how to prevent and reduce the pollution that occurs from the celebration of events. Many ways can be done to prevent the pollution, such when held Taiwan Lantern festival, people can use virtual lampoon instead of real fire. People can follow the rule not to littering and leave no trace campaign that they must clean up any mess that occurs because of them. Make substitution for event properties such as doll made from natural friendly material can help protect the environment as well. In order to reduce the car pollution is by buying fuel-efficient cars, use bio-fuel gasoline, and do not drive a car in often time (Environmental Defense Fund, 2009). To reduce plane pollution is by not flying into near distance of destination; go to event close to home and use teleconference technology in spite of use flight for business (Kirby, 2000). And finally in order to reduce and protect the water pollution, any ships are supposed to have good management in recycling or hold the waste, and they must use bio-fuel to reduce air pollution. Urban green tourism can help to reduce the pollution with more natural friendly program. ” By extension , green could also be read as sustainable or healthy and UGT is then about ecological, cultural, and economic sustenance for the good health of people and their environment”(Gibson, Dodds, Joppe &Jamieson, 1992). The second challenge to this industry is whose responsibility for the environmental damage this is. This is not only individual attendee, not only government, but it is the responsibility of all parts that make this event happened. So company, government, individual participant and sponsors are sides that have liability to the environment around the event. Education from government and the event committee is needed to make people realize that if they damage the environment, they will suffer from consequences as well. This education must decrease resistance to care about environment and otherwise they must become enthusiasm with this problem. Next challenge is the speed of action after any suggestion or campaign to reduce pollution caused by an event to be done by people. Whether the speed is slow or fast, it depends on the self-awareness of each person. Accuracy is also important that the campaign can target people with the effective and efficient way, so they tend to protect the environment. The last challenge is about the term where this campaign or education about caring to the environment is being executed. This can be short term where people are tend to keep the education only when this thing is booming, by follow the main stream, or in a long term where people are full of aware in protecting the environment for good.

1821 words

Conclusion

There are some effects on environment that affected by some particular event. This effect can be measured as negative and positive effect. The negative effects are occurred when the event with its instruments and participants create pollution directly as a trace to an event existence and more over people who attend in certain successful event will give pollution to air, land, and water, by driving, use flight and cruising with ship just to see the entertainment becomes indirect negative effect to environment . The positive effects can be completed if there are environmental friendly festivals, bazaars, and campaign about safety to environment and event to protect ecosystem as well. In this case people should increase the frequency of positive events, and try to reduce activities that may harm the environment. And for assessment of challenges in environment that provide to event management industry is about challenge that we face in this industry. The challenge is about preventing and repair environment from pollution by substituting instruments of events and reduce the usage of any vehicles. Green tourism is one of solution that can reduce the pollution. Then people who have responsibility in the effects of environment become some issue that must be discussed further. Next challenge is about education that must be educated to all people who will attend certain event and then they realize how environment is important for their live. Accuracy and speed are the challenge that objective and measure people’s sequence in realize about this big issue. And finally the term of this campaign to reduce challenge is determine the successful of this movement, the longer of the term is the best object so that environment during the show of an event can be secured.

287 words

You are to critically analysis the current strategy of Ryanair which comprises the following tasks.

Undertake an environmental analysis of the European airline industry with implications for the budget sector and Ryanair in particular.

Analyse how Ryanair has been successful in the European budget airline industry.

From the above analysis, critically assess the sustainability of Ryanair’s strategy.

Executive Summary

In this recession period to sustain a business and make it different and unique id definitely a big task and to make it growing need to implement different Strategies. Strategy is the direction and purview of a business organization in long run to achieve an advantage over other rivals by adapting with available resources and build competency. today we are discussing the Environment Analysis, strength and weaknesses and its strategy to sustainability of Ryanair a low cost Airline.

This assignment will analyse the business environment of the airline industry in Europe, then it considers the competitive strategy and sustainability of Ryanair.

Introduction

Ryanair start its business by Mr. Cathal and her wife with the financial help of their father Tony Ryan with the total capital of ?1 in 1985. The company Head office is in Dublin, Ireland. Initially Ryanair provide flights between Ireland and UK by using secondary airport due to national airlines monopoly. In 1990 Ryanair loss was IR?20 Million and at the end of 1990 the new management team under the supervision of Michael O’Leary adapted the model of Southwest USA base airline introduced the low budget cost concept in Europe and became market cost leader with no frills carrier. Gulf War 1 broke out in 1991 and airline traffic all over the world distorted. Although the down turn in overall airline traffic, Ryanair made a profit of ? 0.3 million for the year and carry 651,000 passengers with a total work force of 477 people. In 1997 Ryanair first time ranked in Dublin Stock exchange and London stock exchange and in 2002 on NASDAQ. Ryanair added number of aircraft and number of European destinations in 1999. And in 2000 Ryanair introduced Europe largest travel website, www.ryanair.com within three months, the site was record 50,000 bookings per week. In 2005 May 26th Ryanair Holdings, PLC celebrated its 20th birthday. At the celebration party Ryanair CEO Michael O’Leary said that “Ryanair will be overtake British Airways by carrying 3.5 million passengers a month in 2005”

In June 2009 Ryanair is offering 1200 scheduled short haul flights per day along with 145 locations throughout Europe and Morocco with an operating fleet of 196 aircraft flying approximately 845 routes.

Environment Analysis

The external business environment of Ryanair means the other European airlines and other influencing factors which affect the decision making, making of business strategy and the performance of Ryanair. There are number of external environmental factors which affect the Ryanair like PEST (Political, Economic, social and technological factors) Strategic management in any airline industry plays very important role to make them successful airline. The strategy of Ryanair is depends on the vision and mission its vision and mission which is based on the environment factors which are internal and external factors. These environmental factors normally called environmental analysis. In Strategic planning techniques environmental analysis plays very important role to evaluate or scan that business environment is suitable for business or not. In Ryanair these strategic policies clarify its resource strengths and deficiency, its market opportunities, the outside threats to its future success and its competitive status relative to rivals.

Environmental analysis in airline industry helps them to develop and change their strategy to meet the upcoming external changes and its help the company to lead. D. Stoffels 1994).

Concept of Environmental Analysis

Environmental analysis means the environmental scanning or appraisal (L M Prasad).

There are two types of for Strength, Weaknesses, opportunities and threats. In Ryanair Strength and weaknesses are internal factors whereas opportunities and threats are external factors. Ryanair environment is analysis based on following structure.

Figure No 1: Ryanair Environment Analysis
External Analysis

The external analysis is based on the opportunities and threats.

Threats

Volcano crises

9/11 terrorist attacks

War in Iraq

Oil prices

Economic downturns

Government Regulation

The airline industry in Europe has always been under pressure from domestic and European Union. At the end of 1980 E.U deregulate the airline industry and an array of liberalisation measures followed that were to be applied throughout its territories. In 1997 E.U any airline can operate its business from anywhere within Europe.

Competition

At the start of 21st century competition in airline industry exploded and this competition will continue to grow up new entrants to take this advantage. Due to price competition and economic downturn and financial crises there is no entrants who want to enter in the market.

Porter’s Five Forces Analysis of the low cost Airline

According to Porter 1985 “Five force analysis is a means of identifying the forces which affect the level of competition in an industry”. Porter’s five forces model is based on the opportunities and threats of Ryanair from the external environment. Here porter analysis is applied on Ryanair external business environment. Porter five forces analysis are as under.

Porter Five Forces Analysis
Bargaining Power of Suppliers

Boeing is the main supplier of Ryanair Airline

Regional airports are mostly dependant on one airline

Bargaining Power of Customers

Customers are price conscious

Lack of loyalty

Switching airline is comparatively easy without any cost

Threat from New Entrants

High capital investment

Some barriers to entry

Threat from Substitutes

Lack of brand loyalty for customers

No extra cost for customer to switching

Other methods of transport like Euro train, cars, Ferries and Euro lines

Competitive Rivalry

The low cost airline industry is highly competitive

PESTEL Analysis

PESTLE analysis is the most appropriate model to discuss the Political, Economic, Social, Technological factors, Environmental factors and legal factors.

Political Factors

Political factors means government regulations like taxation policies, environmental law, employment law, trade restriction by government and political instability.

Change of Government taxation policies

An international organization like Ryanair may effect by regulate the Government and taxation policies and some time these policies are in favourable and sometime in opposibe favour.

Political changes in countries where Ryanair have routes

Like in United Kingdom election are coming and may be new party change their business policies.

Political instability

Political stability plays very important role in an international company like Ryanair. Now a day in United Kingdom if government will be labour party then the policies will be in favour of the business community.

Terrorist attacks on airline business

Starting of 21st century the mode of terrorism is totally changed and now terrorist attacks through aeroplanes and target airline industry. Considering the events of 9/11 in USA, Manchester Airport chemical attack in UK it’s totally change the strategy of industry.

Local government office may object to noise and new runway projects

Currently Ryanair is facing Legal issues and disputes with Government.

Economical Factors

These factors are purchasing power of consumer and Ryanair, capital cost, economic growth, inflation rate, bank interest rate and currency exchange rate.

Economic condition may affect positive or negative in the airline industry according to the country economic situation. If consumer’s standard of living will be high automatically they will use airline for holidays and other purpose.

Fuel prices are rising day by day

In these days fuel prices are going up and up and it may affect the consumer purchasing power.

Social Factors

In Social circumstances Ryanair will affect by peoples attitude towards luxury class, population growth and health matters.

Ryanair do not offer luxury class so business trips are frequently possible to reduce company cost.

Rapidly increase in travelling life style

Lack of consumer loyalty

Ryanair low budget airline means to attract more consumers around the globe.

Technological

Every business organize one unique system to operate its business

Ryanair main supplier is Boeing and Boeing have less carbon emission and les noise pollution

Good relationship with customers by maintaining online service

Online sales/service

Environmental Factors

Environmental factors plays very important role in external environmental of airline industry. The important factors are as under.

Natural disasters

In Iceland Volcano ash disturb the whole Europe flights and airline and still writing these word almost 70,000 flights are cancelled. It will affect the airline industry around the globe.

Health problems

During flight some people feel really bad depression and its can decrease the profitability of the airline industry.

Legal Factors

Immigration law

Immigration law is very major barrier in legal factors. There are some restrictions on the peoples to travel to other some certain countries.

Aviation safety rules

Every country has its own aviation and safety rules which affect the airline of other country.

Swot Analysis of Ryanair

SWOT analysis shows the organization existing strategy and position. SWOT analysis based on strength, weakness, opportunity and threats in any organization. In Ryanair this tool is used to analyse the internal strengths and weaknesses and external opportunities and threats. The current scenario of Ryanair on the basis of SWOT analysis is as under.

Strengths

Brand Name: Ryanair spent 15 years in the LCC market to develop its brand name

Low airport charges will automatically reduce the cost of fare.

All Boeing aircraft: Uniform fleet save training cost and technical cost

High service performance: low baggage loss, in time, high rate of flight completion it gave the good image of the Ryanair performance

High Aircraft Utilization

Point to point service

Small Headquarters: Ryanair try to reduce its administration cost due to small offices

Weaknesses

Bad press image

Restricted expansion possibility due to budget cost

Lack of skill staff

Opportunities

New routes and new destination

Provide best and updated customer services may affect the number of customers

Threats

Threats from competitors like BMI, Easy jet, Air Asia, Atlantic and fly be.

Economic downturn may affect disposable income.

European Union may put some type of restriction if Ryanair do not accept the rules and policies.

Mostly hotels are four stars due to low cost package is risky

Change the choice of consumer

Change the status of economy may change the situation of business policies.

Question No 2. Ryanair European low cost airline
Competitive Strategy of Ryanair

Competitive strategy is key factor for the success of Ryanair. Ryanair followed different types of strategy which kept itself one step up from its competitor. Ryanair aim was establish itself Europe’s low fares leading airline through improvements and expanding day by day of its low fares services. The Ryanair strategy was simple to focus on low fares and catch more and more passenger traffic.

At the end of 20th century the European aviation industry changes its cost strategy and focused on low budget model and now whole industry became low cost airlines. Ryanair based on low fares airlines and growing rapidly due to its environment friendly policies. Ryanair strategy is to provide their customers latest aircraft and advance technologies facility in their aircraft that reduce fuel burn and emissions of CO2 as much as possible.

Figure No 2: Ryanair Business Model

Ryanair plan to invest 17bn Euro on expansion programme of fleet replacement and now all Ryanair old Boeing 737-200 aircraft have replaced with the new Boeing 737-800. Here are the key elements of Ryanair Strategy who make itself European leading low cost airline.

Low fares: Low fares are the main focus of Ryanair strategy. Ryanair sets its fares on the basis of demand of that flight.

Frequent point to point Flights on short haul Routes

Commitment to Safety and quality maintenance

Ancillary services

Choice of route

Low operating costs

Maximizing the use of the internet

Question No 3.
Sustainability of Ryanair

Ryanair business model is adapted from the Southwest airline of USA. Ryanair focused on the secondary airports because majority of the national airlines concentrated on hub airports. At hubs airport acquired a scarcity value and were typically allocated to incumbent airlines in order of seniority at the airport by a scheduling committee presided over by the home country national airline. First time Ryanair used London-Luton route to promote its strategy in 1986 because slots were not available due to rush at Heathrow airport. Ryanair played a vital role to use these secondary airports and make itself a successful low cost airline. On secondary airports the deregulated market brought the opportunity to progress business with the new market entrants rather than remain underutilised. due unused airports substantial reductions was given to new airlines which they used form the expansion of passenger numbers by low cost would be financially worth it.

The Ryanair product

At the starting of Ryanair airline business in Europe its strategy was very simple to reduce its cost and sustain itself in the long term in airline industry was to use secondary airport. All major airports was under monopolistic condition of national airlines so Ryanair target secondary airports and its affect on Ryanair the low congestion charges, low landing charges and low rate of missing bags per passenger. Due to this situation Ryanair fully focused on its customer services.

The Ryanair airport product

The strategy of Ryanair was using secondary airports affect very positive result on consumer. Ryanair offers point to point flights and secondary airports become the hub airports. In secondary airports the consumption of time, cost reduce like less walking time within terminals, less waiting time for baggage retrieve and very cheap car parking.

The Ryanair cost base

Ryanair becomes the cost leader with very small labour force and fully focused on costs and productivity.

Ryanair Europe No 1 in customer service

In February 2010 Ryanair ranked No 1 around the Europe airlines. Only Ryanair is guarantee about the low cost and best customer services. These figures are published in customer service statistics in very month.

CUSTOMER SERVICE STATS FEB
2009
2010
On-time flights

87%

83%

Complaints per 1,000 pax

1.39

0.86

Baggage complaints per 1,000 pax

0.35

0.23

Complaints answered within 7 days

99%

99%

External factors

Ryanair is world fastest growing airline company

According to Ryanair statistics in 2006 42.5 millions peoples travel in Ryanair airline and in 2007 it was 51 million and in 2008 the passengers was 59 millions.

Ryanair Passenger Growth in Millions in 2006, 2007

Pax Chart

Conclusion

The above report examines the environmental analysis of European airline industry and discussed the strategy and sustainability of Ryanair in that environment. Ryanair is using very simple and good strategy according to economic condition at this time which is simple product, strict cost control over airports like aircraft suppliers and distribution costs. Ryanair focused on secondary airports that reduce its operating cost.

BIBLIOGRAPHY

L M Prasad, Business Policy: Strategic Management, New Delhi: Sultan Chand & Sons, Educational Publishers, 2005

An Analysis of European low-cost airlines and their networks accessed on April 10, 2010. From www.sciencedirect.com

Nigel Evants and David Campbell, Strategic Management for Travel and Tourism, 2003, Pages375-378

www.ryanair.com

R. Casadesus-Masanell, Joan Enric Ricart, From Strategy to Business Models and on to tactics

Long Range Planning (2010)

Jay b. Barney & William S. Hesterly Strategic Management and Competitive Advantage(concepts and cases) 3rd Edition, Pearson

Sustainable tourism is the environmental, economic, and socio-cultural aspects of tourism development that generates the revenue, employment. The research shows that an integrated approach to tourism planning and management is also now required to achieve sustainable tourism(Jamieson, Walter and Alix Noble, “A Manual for Sustainable Tourism Destination MAnagement” CUC-UEM Project, AIT, 2000). Sustainable tourism defined as “tourism which leads to management of all resources in such a way that economic, social and aesthetic needs can be fulfilled while maintaining cultural integrity, essential ecological processes, biological diversity and life support systems.” Some of the most important principles of sustainable tourism development include: Tourism should be deal with the help of community and the the community should maintain the control of tourism development. Tourism should support to its community with their quality employment and the connection between the local business and tourism should be established. Education and training programmes to improve and manage heritage and natural resources should be established.

Tourism is one of the world’s biggest industries. For developing countries, it is also one of the biggest incomes generators. Early literature in tourism development emphasized the role of tourism in economic development, particularly for developing countries (Erbes, 1973). However, the negative social, cultural impacts of tourism has increased in the past two decades , calling for more aware of planning and management of tourism development(WTO, 1996; Mathieson & Wall,1982, Wahab, 1997). The benefit of tourism in the country’s economy is a major incentive for developing countries due to three pro-tourism arguments. First, the evolution of the request for international travel is scheduled to continue at astonishing rate because of the economic stability and travel preferences of people in the developed regions such as Europe, Asia and North America. Secondly, income elasticity of demand for the tourism means that, as the family income for the developed world increased, the disposable income would be directed to travel. Thirdly, developing countries need the foreign exchange earnings to support its economic development initiatives, in order to meet the needs of their local residents. By pro-tourism arguments, many developing countries are choosing, or being encouraged to develop tourism over some of the more traditional industry alternatives such as agriculture and manufacturing (Mill & Morrison, 1999). The major problems with agriculture are that overly dependent upon a few specific crops or products. In the competitive world market, where externalities and price are uncontrollable and unpredictable, countries dependent on agriculture have an unreliable and inconsistent source of revenue. Under these circumstances, the tourism industry can play the role in diversifying economy and the supplement the income has brought in through the agriculture. For example, after introducing tourism into the Caribbean island economies, the $9 billion tourism sector brought in six times the revenue of all traditional agricultural exports (Simon, 1995).

Other developing countries have set up manufacturing as an economic development policy option. In order to manufacture, a country need to have easily accessible source of raw materials for production. The country which has rich in natural resources is more successful in manufacturing. Many developing countries has shortage of skilled labour which is one of the necessary inputs for manufacturing. even when these problems are non-existent export oriented industries still face full international competition in selling their products (Mill & Morrison, 1999). Tourism also need land , skilled labour, capital resources to access . Yet, tourism, in the way that the product is produced and delivered, may be a

more viable alternative for developing countries. Most developing have the basic raw materials resources for tourism industry. Using the country’s heritage, architecture , the natural and cultural resources makes a destination unique and marketable to visitors.

Accessing tourism is a good choice for the development of economics and requires more than simply understand the projected growth. Tourism requires many other reasons to make a suitable fit for developing countries. Unlike agriculture and manufacturing industries, tourism produces an invisible export. Tourism also allows countries to manipulate exchange rates to influence visitor expenditures. For instance, the destination can lower the exchange rates in order to attract more number of visitors. Tourism affect directly or indirectly to other sectors of economy more than other industry.

The strategies to maximize the economic benefits from tourism for developing countries are to bring in more money from visitors and organize tourism to minimize leakage of money and jobs. The statement looks simple but it actually complex due to some reasons. Government and private sector play in establishing policy and encouraging development in developing countries. National policies on tourism in developing countries are usually the domain of the state, whereas in more developed countries, private entrepreneurs often dominate policy formation and enactment (Liu, 1998). In most developing countries, owing to the small size of the private sector and the shortage of funds, the government necessarily takes on the role of entrepreneur (Shurland, 1998). This is usually in response to proposed private foreign investment. Governments in the developing world generally have the responsibility of formulating and enforcing tourism policy, and for many, sustainable tourism goals are central to their tourism plan. This should include, as already stated, increasing the economic impact of tourism to the local economy by reducing the leakage of foreign exchange earnings.

As previously mentioned, one of the ways to increase the tourism development is to bring in tourist who spend money in the developing country. As the mass tourism markets is criticized for the negative environmental and social impacts they cause, there is growing attention to those with higher household income expecting that they will spend more money during their visit. Although this sounds logical, the strategy has its critics (Mill & Morrison, 1999). Although it is not clear, visitors with high incomes may spend more but they may also require substantial investment in infrastructure and facilities with high import content.

The critical climatic conditions and the disappearance of endangered species in the worlds ecosystems is the concern of all, and affect our everyday lives, businesses and industries. The tourism industry is not spared, having adversely and greatly contributed to the destruction of micro-ecosystems and biodiversities over decades through Mass Tourism. Nonetheless, governments, tourism-planners and international organisations are now investing into alternative forms of tourism in order to counter the still ongoing damages of Mass Tourism. The goal is to consume differently and to sensitise tourists about sustainable practices, not only during their holidays, but to implement it in their very thinking and everyday life. This paper combines the material of four different papers, based on Alternative Tourism and Ecotourism respectively. They describe the principles of each and the features required for its successful fulfillment.

Introduction

Lifestyles and consumer behaviour have been known to evolve and adapt to changes in global needs and the availability of resources in the world all throughout history. As such, it is not surprising that the increase in awareness, concerning the precarious environmental, social and economic situation of today’s world, is leading to new trends and behaviour in the way people live and consume. Likewise, the tourism industry has been undergoing a similar transformation since at least the past two decades with the advent of ‘Alternative Tourism.’

This form of tourism has been introduced since the early nineties and has began to grow in magnitude as from the 1980s. It is considered as a sustainable alternative to counter the adverse effects and low-level authentic experiences provided by the so-called ‘Mass Tourism.’ The latter has boomed dramatically with the technological advance of transport facilities (air, sea and land) and the open-sky agreements between countries worldwide, amongst various other factors.

Inspite of the huge, fast economic gains of Mass Tourism, it has been found to be severely disastrous on the environment and the socio-cultural aspects of host countries and communities, respectively. In contrast, Alternative Tourism has responded in retaliation into the ‘clean’ or ‘sustainable’ form of tourism, which takes into account, the impacts of tourism on nature, society (for both the host community and travelers), culture and economy. Here, locals are also directly involved in the making of the tourism product and are often the financial beneficiaries.

The umbrella of Alternative tourism covers a vast range of tourist activities such as rural, adventure, cultural and historical, heritage, sports (such as hiking, mountaineering, caving, diving, and so on), ecotourism and any other forms of tourism that is not Mass Tourism, as long as it does not impact adversely on the host country.

Ecotourism has emerged since the 1960’s and is popular amongst nature and culture lovers. It fits perfectly the concept of Alternative tourism and is considered as the fastest-growing form of sustainable tourism, according to the UNWTO (2003). Hetzer (1965) described the characteristics of ecotourism as: minimizing environmental impacts, respecting host cultures, maximizing benefits to local people and maximizing tourist satisfaction.

Literature Review

Alternative Tourism is a process which promotes a just form of travel between members of different communities. It seeks to achieve mutual understanding, solidarity and equality amongst participants. (Holden, 1984, p.15: cited in Smith & Eadington, 1992. P.18)

McIntyre (1993, p.11) defines Sustainable Tourism as a model form of economic development that is designed to improve the quality of life of the host community, and provide a high quality of experience for the visitor. Moreover, to maintain the quality of the environment on which both the host community and the visitor depend. He also states that it seeks decision-making among all segments of the society, including local populations, so that tourism and other resource users can coexist.

Firstly, Alternative Tourism does not damage the environment, is ecologically sound, and avoids the negative impacts of many large-scale tourism developments undertaken in areas which have not previously been developed. Secondly, it is thought to consist of smaller scale developments, or attractions for tourists which are set in villages or communities and organised by them. These are seen as having fewer negative effects – social or cultural – and a better chance of being acceptable to the local people than mass tourism. Thirdly, there is the question of who benefits. Certain kinds of tourism are called alternative because they are not exploitative of the local people, because the benefits flow to local residents, or in general to poorer communities.

Also known as Soft Tourism, Sustainable tourism denotes a mutual understanding between the local population and their guests, which does not endanger the cultural identity of the host region and which endeavours to take care of the environment as best as possible. Soft tourists give priority to using infrastructures destined for the local population, use the same accommodation and transport facilities as the natives and do not accept substantial tourist facilities harmful to the environment (Smith & Eadington, 1992). Further, as they want to get more information before and during their holiday, it may actively try to encourage a respect for the cultural realities encountered by the tourists through education and organized “encounters” (de Kadt, 1990).

Alternative Tourism, also brings about constraints. For a variety of reasons, alternative tourism in developing countries has been much more limited and less successful than Mass Tourism. The alternative projects in the Third World are frequently handicapped by the cost of international travel in the first place and poor local connections within destinations in the second. Language barrier, differences in culture and standards of living between hosts and guests tend to hinder communication and understanding (Smith & Eadington, 1992).

Some of the implications of alternative tourism need to be examined more closely. These include the reduction in numbers of tourists, the change in type of tourist, the education of all parties involved, and the impacts resulting from a new set of activities. Reducing numbers of tourists has two aspects, reducing numbers in areas where numbers are currently too great, and limiting potential visitors to levels compatible with capacity parameters. It is extremely difficult to reduce numbers in a free market situation without prejudicing the viability of the industry. Revenues can be expected to decline (unless massive market replacement occurs at the same time), which can result in loss of employment and reduction in local standard of living (Butler, 1990).

Also, soft tourists may not only represent a not large enough market, but may also not be a repeat market. While mass tourists are for the most part sedentary and spend their money in a limited number of locations, much of the expenditure of the alternative tourists may be pre-spent on packages or spent in small amounts in a wide variety of locations (Butler, 1990).

Furthermore, educating people is an alternative that is hard for Butler (1990) to reject, but it is a mammoth and long term project. He states that most people would probably accept the wisdom of the concept of sustainable development and developing “suitable” and low-impacting forms of tourism, but short-term reality dictates that the window of opportunity is often limited and time-scales of most entrepreneurs are short. Those of a tourist spending a week on a beach are even shorter. It is not realistic, even if naively optimistic, to expect a tourist wishing to lie on a beach in the Caribbean to be too interested in the impact he or she may have on the social fabric of the island visited, especially when they may not wish to associate with local residents or move out of the hotel complex.

However, Alternative Tourism help cleaning physical surroundings, protecting environments and often the distinctive cultural patterns of local communities. It can be a significant factor in conserving the environment. Moreover, it also helps to conserve an area’s cultural heritage. Archaeological and historical places, distinctive architectural styles, local dance, music, drama, ceremonies, arts and crafts, dress, customs and value systems all comprise the culture of an area (McIntyre, 1993).

He emphasises on the fact that Alternative Tourism raises awareness concerning the impacts of tourism on the natural, cultural, and human environments. It ensures a fair distribution of benefits and costs. It incorporates planning and zoning which ensure tourism development appropriate to the carrying capacity of the ecosystem. It monitors, assesses and manages the impacts of tourism, develops reliable methods of environmental accountability, and counters any negative effect. Furthermore, nature tourism encourages productive use of lands which are marginal for agriculture, enabling large tracts to remain covered in natural vegetation. Cultural tourism enhances local community esteem and provides the opportunity for greater understanding and communication among peoples of diverse backgrounds. Environmentally sustainable tourism demonstrates the importance of natural and cultural resources to a community’s economic and social well being and can help to preserve them.

As opposed to Mass Tourism development, which is predominated by multinationals and tends to be unplanned and uncontrolled, taking up the most scenic regions and altering them beyond repair, Alternative Tourism requires extensive initial planning with greater reliance on local labour, and local sources of capital in line with locally promulgated regulations. Tourism assumes a complementary industrial role emphasizing the importance to continuing traditional lifestyle patterns. Existing resources (e.g., buildings) are used and renovated when necessary rather than relying on new construction.

Features of Alternative Tourism

Also known as Sustainable Tourism, Alternative Tourism adheres to the triple bottom-line of sustainability, that is to develop and progress without depleting environmental, socio-cultural and economic resources for future generations. In other words, these resources must be used, preserved and managed in such a way as to move forward, while keeping in mind the Native American proverb: ‘we do not inherit the world from our ancestors, we are borrowing it from our children.’

Tourism can be environmentally feasible, as opposed to the pre-conceived idea exhibited by Mass Tourism during the past decades. It is not all about deforestation, land and water pollution or chains of gigantic resorts all over the place. ‘Sea, Sun and Sand’ Tourism, a major form of Mass Tourism, has caused its own death by saturating the most popular and splendid coastal spots with hotel resorts, hence permanently disfiguring these locations physically, depleting and polluting its resources and attributes respectively. This has led to an increase in awareness amongst host communities and potential tourists alike, and hence emerged forms of tourism that aimed at enjoying a destination while minimizing alterations to nature and monitoring the impacts of visits at the same time.

First of all, environmentally sustainable tourism businesses would take into account the characteristics of a location at the Planning Stage of a project. This is usually part of the EIA (Environmental Impact Assessment). The fauna and flora would be meticulously studied and limited changes (or none at all) would be permitted, so that micro-ecosystems would be able to survive and cohabit along with the implementation of the project. This way, endangered species (both plants and animals) would still retain their habitat and the environment would be altered in the smallest possible way. Furthermore, the project should not be physically alienating to its surroundings, that is, it should be able to blend in and not be an eyesore. For instance, a state of the art hotel in a remote, under-developed village would be totally inappropriate, even if it respected environmental norms.

In the same breath, operating sustainable tourism commerce implies minimizing damages done to the environment through energy and waste management. As far as possible, sustainable forms of energy must be used, and energy-consumption must remain reasonable. Waste water management is a must, and recycling must be practised as far as possible, for ethical disposal of both solid and liquid waste.

However, not all businesses are able to afford the above measures, especially, since the number of green-tourists is usually quite limited. This is where the concept of ‘Carrying Capacity’ comes into effect. The physical carrying capacity of a destination or site, is the maximum number of visitors that it can contain at a particular time. In order to avoid permanent environmental changes and abuse, the number of visitors and the duration of their stay must be under strict control. This is also known as the limits of acceptable change and does not require much financial investment to be accomplished.

In addition, Mass Tourism brought along westernisation, the alienation of ethnic and local cultures and commodification throughout the years. Their consequences can be seen today, especially amongst the younger generations in destinations that have suffered Mass Tourism for several generations. The youth have often copied the beliefs and lifestyles so as to resemble those of foreigners, deeming western culture to be superior, and thus resulting in the loss of local cultural heritage and long-standing ancestral traditions. This is due to the fact that cultural exchange between tourists and locals has not been equitable, even though it is usually not in the intention of visitors to have such an impact on local beliefs and traditions. In order to counter this, tourists need to be educated on how to interact, behave and limit the exposure of their cultural identity, with respect to that of the host community.

Accordingly, commodification, which is the act of viewing local cultural, historical or religious identity merely as a tourism product, is yet another drawback of mass tourism. Places of worship or of sacred religious importance were being assaulted with camera flashes by hordes of tourists, who were not even aware of the appropriate dress codes and behaviour to be adopted on such sites. Thanks to sustainable tourism and the responsibility of tour operators towards the education of tourists, rules and guidelines have since then been forwarded so as to minimize the impact of loss of cultural identity. Indeed, it is now the tourist that adapts to the culture of locals during visits to sites of religious and cultural importance, thus resulting in a more authentic cultural exchange and experience.

Thirdly, the most immediate aspect of Alternative Tourism in a destination is the economic gains to the local community. Despite the fact that large-scale tourism generates astronomical amounts to tourism-related businesses and organisations, the majority of locals do not benefit from these profits first-handedly. In some cases, such as in franchise businesses, most of the profit goes back to the source-organisation, with local employees being paid with low salaries and slim chance of career advancement.

On a different level, the concept sustainability implies that one should make reasonable use of its available resources, in such a way as to progress, while benefiting to its environment and stakeholders. This largely goes against conventional tourism, whereby most of the resources required to make the tourism product happen comes from elsewhere, whether in terms of raw materials, expertise and partially labour. It is therefore natural that economic rewards go abroad as well.

On the other side, Alternative Tourism encourages entrepreneurship in all forms, from hospitality, entertainment and craftsmanship of locals. They are often offered trainings, participate in empowerment programmes and sometimes even subsided by the state to put their projects into motion.

Nevertheless, financial gains, which is not comparable to that of Mass Tourism goes directly to those local entrepreneurs and the money is usually spent within the country, hence improving income distribution, increasing standard of living and indirectly contributing to the national GDP.

The Emergence of Ecotourism

Being one of the most popular segments of Alternative Tourism, Ecotourism is reaching a peak and gaining educational, sustainable and economic importance within the tourism industry, being one of its fastest growing sectors (UNWTO, 2003), grossing over $335 billion a year. In today’s world, it plays a crucial role in the conservation of nature, in educating tourists about sustainable environmental practices and in benefiting local people.

Ecotourism products consist of attractions, tours and accommodation, where each component is marketed and sold separately, but may be combined into packages as well. It is a form of tourism that targets a wide range of tourists, who are willing to experience a get-away holiday from the stress and monotony of everyday life. Its influence lies in the fact that unlike other forms of tourism, it is diverse enough to attract tourists of different age groups, budgets, interests and occupations.

However, ecotourism poses a threat to its own existence and operations. Since the tourism product is settled within the type of ecosystem or environment that it promotes, there needs to be careful planning and management. Else, its activities may harm, deplete or alter the fragile and pristine biodiversities that it relies on for sustenance. Limits of acceptable change regarding social, cultural and environmental must be closely monitored in order to minimize impacts.

Ecotourism projects are usually of small-scale and low-impacting; waste output is minimized and recycled as far as possible, so as to cause the minimum intrusion and alterations to the surrounding ecosystem. Biodegradable products are favoured over chemical detergents or products toxic or unhealthy for the environment. Clean and renewable energy forms, such as solar or photovoltaic panels, are popular energy sources in the most sophisticated eco-lodges as well as the use of fossil fuels are avoided. Further, infrastructures are designed to be harmonious with the environment in which it is situated.

The actors involved in creating the ecotourism product include businesses, scientists, government agencies, non-governmental organisations and local or native communities. The active participation of guests or tourists, is essential for the product to be complete. It is interesting how this tends to foster collaboration and better understanding between the different contributors to ecotourism, hence encouraging local entrepreneurship and strengthening local identity.

Emphasis must be stressed upon the preparation and education of ecotourists, before, during and after their holiday trip. This implies that guides and tour operators play a major role in consolidating the ecotourism product. They are responsible to instruct tourists about acceptable behaviour during their stay or trips, sensitize them to be environmentally-friendly and raise their awareness towards the need for sustainability, not only during their holidays, but also in their thinking and everyday lives.

Furthermore, their duties include instructing guests about the modes and limits of communication with respect to surrounding local or native culture. Ecotourism has the goal of improving and contributing to the well-being of these people, without altering their beliefs, culture or traditions, but promoting them while empowering their identity and pride.

Additionally, ecotourism projects often help natives and local communities to rehabilitate endangered species or animals and plants alike, reinstate their natural habitat and raise-awareness about them. Ecotourists are educated about the importance and relevance of such projects, if not encouraged to actively participate themselves.

The profit accumulated through ecotourism is usually re-injected into ecological projects and also to upheave the standard of living of locals and their everyday situation. In the case of culturally sensible communities, such as natives, this is expended differently, in terms of medication and the protection, as well as conservation of their lands and culture.

Conclusion and Discussion

Alternative Tourism and Ecotourism have both been operating in a moderately successful manner in Mauritius during the past decade and is continuously gaining in popularity, both among locals and tourists alike. Indigenous plants and species are being rehabilitated and their habitat sustained, although there have been some negligence on the part of some stakeholders. The Blue Bay Marine park had been flourishing in the beginning years, but the project is now undergoing a decline due to illegal fishing and the carrying capacity of human interactions exceeded through visits, snorkelling and deep-sea diving. It is however not too late to reverse the situation and additional efforts need to be input from all stakeholders.

On the bright side, small surrounding islands such as l’Ile Plate and l’Ile aux Aigrettes have known successful rehabilitation of their micro-biodiversities and human intervention is being closely monitored by environmental organisations.

Fortunately, Mauritius has the resources and potential to further promote Ecotourism and other forms of Alternative Tourism, such as hiking, outdoor tourism and mountaineering. Additional resources must be made available to qualified people and organisations to implement and diversify the Alternative Tourism projects possible on the island. Emphasis should be put on consistency and regular evaluation, to cater for weaknesses.

The objectives of sustainability however do not limit themselves to tourism and the whole Mauritian community must be sensitised for better environmental-friendly attitudes, which requires advocacy, education and a change of behaviour, which is a long-term and never-ending process, to protect, save and respect what remains of our nature and resources.

1. Introduction

Jetstar Asia Airways is a low-cost budget airline operating in the South East Asian region. Its mother company – Australia’s Qantas Airways – found it in 2003. Unlike Jetstar in Australia, Jetstar Asia is majority Singapore in which a Singapore investment company, Temasek Holdings Limited holds 19 per cent of shares, two Singaporean businesspersons possess 32 percent, and the remaining 49 per cent of shares belongs to Qantas Group. The company is known as an airline to offer low fares, all day and every day to South East Asia customers. It has received several valuable awards, such as “Best Brand Experience for Low Cost Carrier” (2006), “Best Low Cost Airline, Southeast Asia and Asia” (2006, 2008), “Top 10 Airlines by Passenger Carriage” (2006, 2007), “Best Asian Low-Cost Carrier” (2006, 2007). The first Jetstar Asia Airways’ flight took off for Hong Kong on December 13, 2004. Jetstar Asia and Valuair Airways Limited were merged on July 22, 2005 (Jetstar, nd).

With a fleet of seven A320 aircrafts, Jetstar Asia now offers up to 126 weekly flights from Singapore to 17 destinations in ten Asian countries. It is planning to increase capacity by more three A320 aircrafts by early next year and add destinations in India and China.

This marketing study aims to provide the Jetstar Asia Airways’ current marketing environment. It will use primary data and secondary data and analyse SWOT and PESTEL to make clearly internal and external marketing environment. Primary data is survey of 50 people who are concerning budget airline. Secondary data is used from books, journals and websites. The report also discuss about the current market plan of Jetstar Asia Airways. From the audit process, recommendations will come out for improving Jetstar Asia Airways’ marketing performance in existing competitive aviation environment.

2. Background

Today, global aviation industry has been divided into three major categories (Lelieur, 2003). The first category consists of large network carriers, such as United Airlines, American Airlines, and Delta in the United States; Air France, British Airway, Lufthansa in Europe. The second one is the middle size carriers such as KLM and SAS in Europe. The final category is the low cost carriers, such as Jet Blue, Westjet in North America; Virgin Blue and Australian Airlines in Australia; Ryanair, EasyJet, and Air Berlin in Europe; Air Asia, Oasis Hong Kong Airline, Jetsatr Asia Airway, and Tiger Airway in Asia Pacific.

According to Weiss (2008, p.84), “Low-cost carriers, also known as a no frills or discount airlines, offers low fares in exchange for eliminating many traditional passengers services. These airlines have a lower cost structures than competitors. They often operate a single passenger class and fleet, reducing training and servicing costs”.

In recent years, the low-cost carriers (LLCs) phenomenon has become more popular in aviation industry. The low cost airline business has experienced surprising growth in term of passengers carried and aircraft ordered. LLCs are likely to keep their price down thoroughly online booking as well as providing the minimum level of onboard services. They can be seen as a new big success in the world airline industry. According to OAG’s Quarterly Airline Traffic Statistics (2007), low cost international flights have increased 20% year by year. Asia Pacific witnessed a dramatic growth in low cost sector, with an increase from 3,900 flights and 600,000 seats in 2001 to 61,000 flights and 9.2 million seats in 2007 (Abacus, 2008). The Asia Pacific low cost market now has accounted for 12% of all flights and all seats. Many Asian countries such as Singapore, Malaysia, India has opened up LCCs to attractive a large number of passengers. As an affirmation about Jetstar Airways’ prospect, Geoff Dixon, CEO of Qantas Airways Ltd said: “We’re very confident about the timing of the launch of this airline. I don’t know where other airlines will end up but I can assure you Jetstar Asia will be around in four years’ time and will be profitable, so Temasek and our other investors can be confident.” (2004).

Jetstar Asia has announced its revenue increases 20% for the year ended 31 March 2008 (Jetstar, nd). These proves that low fares has become attract more travellers. The expectation of Jetstar Asia Airways about “the world’s largest potential aviation market” is coming true.

3. External analysis
3.1. The micro-environment
3.1.1 Description of the market
(i) The world aviation market

According to the International Air Transport Association (IATA), the world’s airlines are expected to lose US$2.5 billion in 2009.

Industry revenues are expected to decline to US$501 billion. This a fall of US$35 billion from the US$536 billion in revenues forecasted for 2008. This drop in revenues is caused by the economic crisis and the outbreak of the H1N1 epidemic. These aspects affect to the psychology of the travelers.

Yields will decline by 3.0 percent (5.3 percent when adjusted for exchange rates and inflation). Passenger traffic is expected to decline by 3 percent following growth of 2 percent in 2008. This is the first decline in passenger traffic since the 2.7 percent drop in 2001.

Industry profits, US$ billion
2006
2007
2008F
2009F
2006
2007
2008F
2009F

Operating profits
Net profits
Global

15.0

19.7

1.1

3.9

-0.1

12.9

-5.0

-2.5

excluding restructuring costs

3.6

12.9

-5.0

-2.5

Regions

North America

7.3

9.3

-0.3

3.6

-2.6

5.3

-3.9

0.3

excluding restructuring costs

1.0

5.3

-3.9

0.3

Europe

5.2

6.4

1.5

0.7

1.8

5.4

-0.1

-1.0

Asia-Pacific

1.8

3.5

-0.1

-0.6

0.9

2.1

-0.5

-1.1

Middle East

0.0

0.0

-0.1

0.0

-0.1

-0.1

-0.1

-0.2

Latin America

0.5

0.4

0.1

0.1

0.1

0.1

-0.1

-0.2

Africa

0.1

0.1

0.0

0.0

-0.2

0.1

-0.3

-0.3

Source: ICAO data to 2007. IATA 2008-09 forecasts. Excludes “fresh-start” items.

Asia-Pacific is the region most decreased in the aviation yield with the drop is forecast about US$1.1 billion

As this report demonstrates, the annual average growth rates of aviation in Asia-Pacific drop dramatically form 7.5% in 2006 to -2.5% in 2009 (forecast). All these information are uncomforted to the airline firm in the Asia-Pacific area. It is probably because the aviation market shrank in the future.

Annual average growth rates, %
2006
2007
2008F
2009F
2006
2007
2008F
2009F

Traffic volume (tkp)
Capacity (atk)
Global

5.3

5.3

0.9

-3.6

4.1

5.0

2.0

-2.5

Regions

North America

2.7

3.5

-1.3

-4.8

0.5

3.2

-0.1

-5.7

Europe

4.9

2.1

1.1

-3.6

3.9

3.5

1.7

-2.5

Asia-Pacific

7.5

7.8

0.6

-2.5

6.7

6.9

2.3

-0.5

Middle East

11.8

16.4

7.6

1.2

12.6

14.5

7.4

4.9

Latin America

-3.4

9.9

1.5

-4.1

1.6

6.9

3.4

-0.2

Africa

7.0

4.5

-1.9

-3.6

1.8

5.8

-3.4

-2.5

Source: ICAO data to 2007. IATA 2008-09 forecasts. Domestic and international traffic. Includes passenger and cargo by weight.

(ii) Jestar Asia Airways market

Jetstar Asia Airways operates as a low-cost airliner in South-East Asia. In a recent report, the Centre for Asia Pacific Aviation (CAPA) predicts that low-aˆZcost carrier will see increased demand in terms of both traffic-growth aˆZand earnings this year, compared to traditional airlines.aˆZ

“Stormy conditions in 2008 have already helped the low-cost segment gain a aˆZlarger share of global aviation,” according to the CAPA report. “Now predicted aˆZtougher economic conditions and lower fuel prices will give the sector a major aˆZadvantage in 2009.” (Sharjah, 2009)

According to Adel Ali, Chief Executive Officer of Air Arabia, the low cost model is uniquely attractive in these challenging economic times.

According to Chief executive officer of Jetstar Asia Airways, Chong Phit Lian, the low-cost carrier is currently filling about 70 per cent of seats, compared with about 60 per cent last year. In the dark time of the economic crisis, this is the good sign for the low cost budget airline like Jetstar Asia.

3.1.2 Competitors analysis

Operating in the low cost airline market in the tendency of almost of airline firm extend the low cost field brings to Jetstar Asia many competitors. Examine in the aspect of low cost airline field and operation area, Jetstar Asia has three main competitors: Tiger Airway, Lion Air, and AirAsia.

Tiger Airway (Singapore):

Fleet size: 10

Destinations: 27

Parent company: Tiger Aviation

Company slogan: Get The Real Deal

Headquarters: Singapore

Tiger Airways is a low-cost airline based in Singapore, with its primary hub at Singapore Changi Airport. This is the main competitor of Jetstar. While Jetstar Asia was not very successful in the market, Tiger Airways with its strong business model had managed to make an impact in the highly competitive low-cost market. Tiger Airways mostly served secondary cities. This helped it challenge the markets, which are ignored by the major carriers. In addition, Tiger Airways followed a strict no-frills model to offer the lowest fares possible to its passengers

Strengths
Weaknesses

– Low cost operations

– Good position in customers’ mind

– Internet booking and e-payment

– Focuses on secondary city

– Intelligent strategic

– Fast development

– High reputation (win many awards for the low cost airline)

– Service resource is limited by lower costs

– Heavy reliance on outsourcing

– New entrants to provide the price-sensitive service

– Customer complaint

– Lack of destination

– Small fleet

Lion air

Fleet size: 42

Destinations: 40

Company slogan: We make people fly

Headquarters: Jakarta, Indonesia

Lion Air is Indonesia’s largest private carrier and Asia’s first hybrid carrier, which offers both economy – and business – class seating, based in Jakarta, Indonesia.

Strengths
Weaknesses

– Low cost operations

– Diversity of destination

– Huge of fleet size

– Maintain free meal despite the low cost.

– Service resource is limited by lower costs

– Heavy reliance on outsourcing

– New entrants to provide the price-sensitive service

– Do not have e-payment.

AirAsia

Fleet size: 75

Destinations: 66

Company slogan: Now Everyone Can Fly

Headquarters: Kuala Lumpur.

AirAsia is a low-cost airline based in Kuala Lumpur, Malaysia. It operates scheduled domestic and international flights and is Asia’s largest low fare, no frills airline.

Strengths
Weaknesses

– Low cost operations

– Fewer management level, effective, focused and aggressive management

– Simple proven business model that consistently delivers that lowest fares

– Penetrate and stimulate to potential markets

– Multi-skilled staffs means efficient and incentive workforce

– Huge fleet size provide many destination

– Have 3 secondary hubs

– Internet booking and e-payment

– Service resource is limited by lower costs

– Government interference and regulation on airport deals and passenger compensation

– Brand is vital for market position only fixed with asia

– Heavy reliance on outsourcing

– New entrants to provide the price-sensitive service

Generally compare between Jetstar Asia and three main competitors we can recognize that Tiger Airway is the direct competitor and now is leading the low cost carrier in the South East Asia aviation market. However, recently, Tiger Airway has to face with some problems form the customers (Mathaba, 2009, Singsuply, 2009) because of their bad service. With the supply from the parent company, Qantas Airline, this is the time for Jetstar to challenge Tiger Airway.

3.2. The macro-environment:
PEST analysis

PEST analysis is a common tool for analysing an organisation’s macro-environment to identify those factors that might increase the potential for crisis. (Elliott, Swartz and Herbane, 2002). These include political, economic, social and technological factors and the analysis examines the impact of each of them on the business.

3.2.1 Political environment

Singapore now is as a political stability nation. It has become the prosperous nation with a widespread network of trading links. So far, Singapore political stability has leaded to a high rate of economic growth. As one of Asia’ most stable economics, many Singapore companies have developed well. Singapore economic has been developing services industries such as wealth management and tourism, aviation industry. Singaporean airline industry plays a key role in Singaporean economy. It now includes mainstream Singapore Airlines and two low cost airlines – Tiger Airways and Jetstar Asia Airways. However, September 11th terrorist attack event in United States caused significant falling in travelling. Besides, the political instability in South East Asia region, such as Thailand, Indonesia, and Malaysia influenced negatively on aviation industry in Asia areas.

3.2.2 Economic environment

“The economic environment consists of factors that affect consumer purchasing power and spending patterns”.(Kotler and Armstrong, 2009, p103). These following analyses will show how economic factors have an effect on aviation industry.

In recent years, global economic crisis has pushed the trade-service dependent countries into worst recession. The world travel market has also been affected in this crisis. According to International Air Transport Association, due to economic recession, the global passenger traffic will decrease by 3% in 2009 and not growing above 4% until 2011 (IATA, 2008). Another major factor effects strongly on airline market, especially budget airlines, that is the increase in fuel price. From 2004, the oil price surge was a result of three main factors: increased demand, a small global excess of production capability, and the fear of supply disruption. The fuel cost increase caused of 36% rising of airline operating costs in 2008. The deadly combination of falling demand and high oil prices made a plunge of aviation industry’s profitability, approximately losses of US$10.4 billion in 2008. At the same year, Asia Pacific airline industry incurred losses US$ 300 million (IATA, 2009).

3.2.3 Social environment

Trends in social factors are significant component of the PEST analysis for airline industry. Firstly, some factors such as advanced medical provisions and low ratio at birth have allowed people to live longer. The average age of the population has been increasing steadily. Thus, the products that airlines offer concerning to older and disabled passengers who need help at airports. Besides, traditional family structure has been changing in today modern society. The increase of divorce rate as well as number of single-parent family has become contemporary trend that travel industry has to do to accommodate. They can be promotional and product planning policies, which offer to those who are singles or one-parent family. Furthermore, the changes in the job market have impacts for airline marketing policies. Due to work pressures, executives often have to make a day-return trip instead of two days. This has become more important for short-haul markets.

3.2.4 Technological environment

As an advanced technology, Internet now plays an important role in airlines industry. All airlines have websites that allow customers to book air ticket online. In making reservation, customers can also select their seat. Utilization of internet in aviation industry brings benefits for both airlines and passengers based on cost saving.

With PEST analysis as above, marketing environment of Jetstar Asia Airways has just evaluated to consider how the company operates in the today’s changing environment.

4. Internal analysis
4.1. Segmentation – Target – Positioning
4.1.1 Market segmentation

Jetstar has based on various variables to consider:

Geographic segmentation: Jetstar offers flight to various destinations, such as Bangkok, Ho Chi Minh City, Hong Kong, Kuala Lumpur, Manila, Phnom Penh, Siem Reap, Singapore, Taipei, and Yangon. (Jetstar, 2009)

Demographic segmentation: Jestar focuses on low-income customers, who want to travel to other countries for purpose visiting, business or studying. This segment is majority of the regularly travel by air and Jetstar can get a profitability significant through a pricing strategy efficiently to retain loyal passengers and attract new customers.

Behavioral segmentation: Jetstar applies many promotion prices on special occasions to attract customers and Jestar calculates the number of passenger in seasons. Especially, in summer occasions, Christmas and Happy New Year holidays, passengers have a lot of free time so that many people go travelling or come back their home.

Psychographic Segmentation: Passengers are willing spend much time to care about low-price and safety airline where they will go. Besides standard ticket price, Jetstar gives a lot of options ticket so that customers can be a flexible choice to reduce price, for examples: food, insurance, baggage, etc.

4.1.2 Targets

Among many competitions, Jetstar knows that they need to get a flexible strategy to achieve success and have a service closely with the highest customer satisfactions. Jetstar has many various target markets such as low fares, expand destinations, and increase flight frequencies, minimize operation costs, focused on customer services, optimize revenue and develop new revenue streams. Furthermore, Jetstar has a marketing strategy well through mass media and telecommunication systems such as internet, television, newspaper, etc. Besides, Jetstar invests in brand name to become a strong brand.

4.1.3 Position

Jetstar is a low-price carrier in the world. Jetstar has become a favorite brand with low fare, low operation cost, high safety, servicing well and friendly in loyal customer in the world. However, to retain customer’s mind, Jetstar has to face many completions carriers such as Lion air, AsiaAir, Tiger airways, etc through a flexible and lowest-price strategy.

4.2 Marketing plan
4.2.1 Product

The product is the most important aspect of the marketing mix. The product strategies made by Jetstar Asia Airways are mainly aimed to reduce costs so that the company can provide low fares to customers, because in the downturn the number of people who prefer low-cost carriers is increasing.

Firstly, Jetstar Asia only launches routes whose flying distance are within five hours from Singapore, such as Hong Kong, Taipei, Bangkok, etc (Jetstar, nd). Because flying close, aircraft can return to base in one day. It can help to save many costs, including expenses of aircraft staying at foreign airports and expenditures spending on accommodation for crew, etc.

Secondly, the fleet of Jetstar Asia is consisted of only Airbus A320 aircraft (Jetstar, nd). The reason is that a single model aircraft can make training, maintenance and repair costs greatly reduce. Personnel, including pilots, mechanics and cabin crew can be deployed optionally without re-training, thus the company eliminates the deployment center and in-flight configuration can be exactly same.

Finally, since Jetstar Asia is a low-cost carrier, no free food and beverages are provided. Passengers may purchase food and beverages on board from the cabin crew. Jetstar Asia cancels free meal service in order to reduce the costs on expensive catering equipment and save the time on cleaning the aircraft. In this way, aircraft need less time to stay at airports; it reduces landing fees and even the company is able to add one more flight because of the time saved.

4.2.2 Promotion

Once the product has been made and the price set, it is important that potential customers be told about the product. Promotion can also be used for reassuring the consumer that the product is of good quality and persuading them to purchase the product (Kotler and Armstrong, 2009).

In order to make customers convenient to obtain detail information about Jetstar Asia Airways, including price of tickets, schedule of flights, new services and routes, etc; the company uses its website to broadcast all the kinds of latest information. In recent month, it can be found that Jetstar Asia shows a new advertisement on television. It describes a travel story of a girl. In the advertisement, the girl took trips to lots of resorts such as Bangkok, Bali, etc and all these resorts are the place where Jetstar Asia’s flights can access. Although advertising on television cost the company millions of dollars, Jetstar Asia still confirms they can get benefits from the advertisement because it really attracts the public deeply. Jetstar Asia believes that it will encourage people to choose Jetstar Asia’s flights for travelling.

Moreover, the company also provides tickets, which are in promotion to customers. For example, Jetstar Asia launched 44,444 free seats promotion on flights between Singapore and 11 of its destinations in its 4th birthday celebration (asiatraveltips, 2008).

4.2.3 Pricing

It is very important that the reasonable price is charged for a product. The major of low-cost carriers is providing low price tickets to attract more customers. Jetstar Asia sets a low price to increase sales and market share. The company consistently strives to offer the most competitive ticket price to customers. For example, the passengers who take Jetstar Asia’s flights can expect to pay as low as a quarter of the current price for return tickets and sometimes it even suggests free of charge flights to certain destinations. The company also operates at budget terminals and secondary airports in order to cut costs as much as possible. Pricing strategies help Jetstar Asia become one of the biggest low-cost carriers in Asia.

4.2.4 Place

Place decides where the product is to be sold. Compared with mainstream airlines, it is not necessary for low-cost carriers to have more channels to sell their seat; because more channels means it will cost more money. So almost all of flights are booked directly at Jetstar Asia’s website, while only a few come from the travel agencies. This online marketing model helps to reduce operating costs. Jetstar Asia does not set up ticket centers and related equipments, so there are no printed tickets for customers. It can cut expenditures on printing and distribution of paper tickets.

4.2.5 Expansion strategies

Besides the four P’s strategies, Jetstar Asia also puts emphasize on the expansion strategies. Jetstar Asia Airways is planning to boost its fleet and operation as well as the company strives to expand into new routes.

In the coming 12 months, Jetstar Asia Airways has a plan to grow its existing capacity from Singapore by 46% by adding three more Airbus A320 aircraft (Govindasamy, 2009). The new planes will be used for new routes or expansion. Besides extending the fleet, Jetstart Asia has announced new services between Singapore – Phuket, and additional Singapore – Manila flights. The company will have scheduled flights to fly directly into mainland China with the launch of Haikou, from where travellers can easily access the resort town of Sanya. It is the first mainland China destination of Jetstar Asia (etravelblackboard, 2009). Extending the service to mainland China were part of the carrier’s next strategic stage to build its low fare services across Southeast Asia under the Jetstar brand. This plan has also benefited from cutting unprofitable routes in South-east Asia, where competition is increasing with AirAsia and Tiger Airways.

Recently, Jetstar has announced that it will double daily A320 Singapore-Phuket services to Thailand’s holiday resort center from 15th December. Beginning form 25th October, the existing daily Singapore-Manila will also increase by an additional three weekly services to a total 10 weekly return flights.

On June 7, 2009, Jetstar Asia Airways launched a daily direct service to Penang in northern Malaysia, marking its 17th destination from Singapore and the fourth Malaysian city. With the new route, Jetstar’s weekly flights between Singapore and Malaysia would increase to 88. Jetstar also operates to Kuala Lumpur three times daily, Kuching in Sarawak state daily and Kota Kinabalu in Sabah state four times weekly from Singapore. From October 1, 2009, Jetstar services on the Singapore-Penang route would be expanded to twice a day, or 14 times, weekly services (BusinessWeek 2009). Jetstar Asia also plans to launch new route to India. With those recently activities, Jetstar has noticeably expended its market share in the low cost segment. Jetstar Asia says that after the growth of its aircraft capacity, the company will definitely launch more routes and ensure more travellers who will benefit from low fares of Jetstar Asia Airways (Businessweek, 2009).

5. SWOT analysis

“A SWOT analysis is an in-depth examination of key factors that are internal (strengths and weaknesses) and external (opportunities and threats) to a business” (Pinson, 2008, p.33). SWOT analysis helps a business to concentrate on those areas that present the greatest opportunities and those competencies in which it is strongest. That business look into ways to diminish its weaknesses, develop strategies to defeat threats. The following analysis focuses on Jetstar Asia’s SWOT.

SWOT ANALYSIS OF JETSTAR ASIA AIRWAYS
Internal
Strengths
Weaknesses

– Flexible ticket price structure

– Growth in market share

– One type of aircraft

– Performance

– Narrow flight-destinations.

– Limited fleet.

External
Opportunities
Threats

– Strengthen competitive capability.

– Increase in short-haul travelling.

– Growth in Singapore tourism

– Increase of fuel price

– Unpredictable disaster factors

– Swine flu spread.

5.1 Strengths

– Flexible ticket price structure: Jetstar Asia Airways has applied flexible ticket price structure that allows customers can choose any kind of ticket, depending on customers’ demand. Customers can purchase which ticket with or without luggage. By this application, Jetstar Asia Airways desires to meet customers’ diversified demands.

– Growth in market share: The Company is going to launch its first service into China on December 16, 2009 (BusinessWeek, 2009). After that, it will offer new destination in India. Moreover, with three additional A320 aircrafts, it will expand its current capacity by 46 per cent by launching twice daily services on the Singapore-Phuket route.

– One type of aircraft: Thanks to exploiting one type of aircraft – Airbus A320- Jetstar Asia Airways can save cost of fuel consumption, cost of maintaining other aircrafts and reduce cost of staff training, leading to lower operation cost. As a result, Jetstar Asia Airways can make up competitive advantage to lure more customers by offering low- ticket price.

– Performance: One of the most important factors affecting customers’ choice in airline industry is on-time performance. Understand this; Jetstar has used the computerised Aircraft Communication Addressing and Reporting System (ACARS) to assure the accuracy of departure time and arrival time. In 2008 and 2009, Jetstar’s on-time performance always achieved from 92% to 98% (Jetstar, nd).

5.2 Weaknesses

– Narrow flight destinations: So far, Jetstar Asia Airways has just exploited its aeronautic routes to 17 destinations across 10 countries in Asia Pacific (Jetstar, nd). Meanwhile, Tiger Airways has operating with 27 destinations, and Air Asia has 66 destinations. This can be seen weaknesses of Jetstar Asia in aviation competition to attain customers.

– Limited fleet: Due to the limited fleet of seven A320 aircrafts, Jetstar Asia Airways has some difficulties in expanding its market share to new destinations.

5.3 Opportunities

Jetstar Asia Airways has focused on not only individual passengers but also business travellers. It has set up several kinds of privilege services for business travellers to increase number of passengers year by year. From only 50 firms in 2004, now Jetstar has 400 corporations travelling with it (Baoying, 2009). More and more businesses, even multinational companies, are likely to choose low cost airlines to save their business cost that create potential low cost market for Jetstar Asia Airways. Besides, trend of short-haul travelling is increasing in number of Asian tourists; instead of long-haul holidays, because it enables Asian people travel more regularly in year. Focusing on these subjects, Jetstar Asia will catch more opportunities to expand its market share. In addition to this, in Singapore, two integrated resorts – the Marina Bay Sands and Resorts World Sentosa – will be opened in 2010. At that time, number of travellers visit Singapore will increase dramatically. There will be about 15 million visitors coming to Singapore (integratedresort, nd). Such general trends as mentioned above will bring prospect for Singapore airline industry, including budget airlines and mainstream airlines.

5.4 Threats