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Disneyland Resort Paris (formerly known as Euro Disney) is the fourth of the Walt Disney theme parks, built to follow the success of Disneyland in California, Walt Disney World in Florida, and Tokyo Disneyland in Japan. It is located in central France, making it accessible by a two-hour plane flight to more than 300 million people. Disneyland Paris is a holiday and recreation resort in Marne-la-Vallee, a new town in the eastern suburbs of Paris, France. The complex is located 32 kilometers (20 mi) from the centre of Paris and lies for the most part on the territory of the commune of Chessy, Seine-et-Marne. After Tokyo Disneyland opened to great success in 1983, the executives of the Walt Disney Company began plans for a European extension. The company considered many possible locations, but soon chose Marne-la-Vallee, a French town, as the site. Disney CEO Michael Eisner signed the first contract with the French government in 1985, and construction on Euro Disney began in 1988. The information center Espace Euro Disney opened in 1990, keeping the public informed about the ongoing work. The park opened in April 1992, and although 500,000 visitors were expected, only 50,000 came. For the first three years, the park reported large financial losses. Attendance was poor, employees reported high dissatisfaction and the French press grew more appalled at the presence of an America-centric park in their country. In 1994, the park was renamed “Disneyland Resort Paris” in order to dissociate it from the negative press surrounding “Euro Disney.” In 1995, Space Mountain was added to the park’s attractions, and the park turned it’s first-ever profit. The park is still dubiously profitable. Even with much of its debt written off, the company reports billion-dollar deficits: specifically, $2 billion in 2007. However, in 2008, the park was the most-visited attraction in Europe and reports more than 15 million visitors every year receiving more visitors than the Louvre and the Eiffel Tower combined (Christian Sylt, The Independent, 2008).

Why was Euro Disney performing poorly during its first year of operation? Recommend and propose strategies and suggestions to improve the situation?

Michael Eisner, CEO of the Walt Disney World Company, once said, “Fantasy is very hard work.” Eisner was referring to the intensive labor that goes on behind-the-scenes within the Disney Company to create the magic and fantasy which have become synonymous with the Disney brand. From the founder’s humble beginnings (Walter Elias Disney) creating animated cartoons in the 1920’s, to the multi- facetted corporation Disney has developed into, hard work has always been the key ingredient to the success of this entertainment empire. However, hard work does not always lead to success, especially when international expansion occurs. On April 12, 1992, Disney officially opened Euro Disney, a $4 billion USD, and 4,400 acre resort located in Marne- la-Vallee, France. Despite over 7 years of planning and countless hours of research, Euro Disney quickly developed in one of the most costly mistakes in company history. In the first 2 years of operation, Euro Disney lost close to $1.03 billion USD and was forecasted to lose approximately $1 million USD a day for the foreseeable future (Lyn Burgoyne, Euro Disneyland Venture, 2001). The main reason why Euro Disney performed poorly during its first year of operation was due to several factors such as European recession, Cultural differences and Marketing.

Just as Euro Disney opened, Europe was in the middle of an economic slump. Disney felt that they could overcome this issue however; High interest rates and the devaluation of several currencies against the Franc caused Europeans to have little spending power at that time. That results in a reduction in disposable income among the French population. Many of the other countries in Europe were experiencing a similar downward slope during the period.

Disney did not anticipate the huge differences between themselves as consumers and the Europeans especially the French. The entire resort was designed along the same guidelines as the original Disneyland (Rohese Taylor, Disneyland Paris Case Study, 2000). Much of the reasoning behind this strategic approach can be attributed to the success Disney had with the opening of Tokyo Disneyland. According to (Marty Sklar, Vice Chairman and Principle Creative Executive of Walt Disney Imagineering), “The Japanese told us from the beginning, ‘Don’t Japanese us.’ What that meant was, ‘we came here for Disney. We came here for America. Don’t give us Japan, we know Japan.” Disney determined that the Europeans would want the same as the Japanese an Americanized Disneyland. However, the general sentiment among the French was one of indignation at what some called ‘cultural imperialism’. Therefore, Euro Disney was not accepted among the European culture.

Euro Disney was marketed incorrectly to both the consumers and the media. The views of the French were not considered when marketing strategies were created. The resort was marketed in the American-style of “aˆ¦bigness and extravagance”. Instead, Euro Disney should have concentrated on the emotional aspect, marketing that guest would have a unique, extraordinary experience they would not forget (Lyn Burgoyne, Walt Disney Company’s Euro Disneyland Venture, 2001).

To improve the situation, there is a need for Disney to take control of the management decisions and analyzing issues and problems based on their own practice and not to use some team to analyze the problem and have it presented that is way outside the management. Thus, there is also the imperative need to understand and execute appropriate plan of actions that will bridge the gap of culture difference such as knowing what are the characteristics and attitudes of the European people in terms of the nature of business considering what will work on both sides and achieve good marketing strategies that would have connection to promotion and advertising process.

The fact that marketing issues was present, it may be proper for Disney to consider strategies that will cater to resolving such issues and probably focus on useful market tactics. The Euro Disney should implement marketing mix strategies which are the price, product, place and promotion. Promotional discounts for families on weekends will fit in to the European culture and planning more ways on how to make business better despite of business conflicts will cater to resolving those issues. Furthermore regarding the environment and location factors, Disney can choose such locations that have strong sales magnet, something that sales and profits are manageable and that possibly, Disney can opt for transfer of Euro-Disney location considering that all aspects of costs and expenses have to be minimal and does not overspend the resources and the need for a justifiable budget is important as high risks within the management and its process may be evident any time. Moreover, Disney can implement and apply flexible labor systems that will be adaptable to the situation, and is accepted by the French laborers and thus, the need also to cut down costs and manage risks and small changes properly to have balance of business.

Question 2

To what degree do you consider that these factors were a) foreseeable and b) controllable by either Euro Disney or the parent company, Disney?

The factors that played into the unsuccessful first year for Euro Disney could easily be foreseen by either euro Disney or the parent company. The same goes to the factor that Euro Disney and its parent company is controllable. It is evident that French has develop a sense of hostility towards the plans as it was stated in the case study, that they did not want American imperialism invading their country and culture. The worse thing is that Euro Disney worked in the arrogant nature of the American thinking. In this I mean, they expected the Europeans to act as Americans and thrive over this newly designed theme park, thus making things a lot worse. (John Graham, International Marketing, 2002) stated that Paris theater director Arianne Mnouchkin became famous for her description of Euro Disney as a “Cultural Chernobyl.” In the case study, it was also stated that in the fall of 1989, during a visit to Paris, French columnist pelted Michael Eisner with eggs. The joke going around that time was, “For Euro Disney to adapt properly to France, all seven of Snow White’s dwarfs should be named Grumpy.”

The French was disappointed during the early advertising because the advertisements focus more on the size and glitz rather than the types of rides and attractions (Phillip Cateora, 2002). Everyone knows advertisements play a major part that influences the society today and affects our everyday life. Nowadays it seems that the only way to avoid any form of advertising is to isolate oneself and live in a cave but not all advertising is negative and bad. It is found almost everywhere such as just by walking on the street, driving a car or watching TV. (Ference, 2004) reports “Every surface that could possibly have an ad slapped on it such as clothing, buses, taxis, myriad walls and billboards, even the snow you ski on now hawks something.”

Every advertiser or company must do more than just make a product, give it an attractive price and offer it to the consumer, communicate and promote it to their current and future customers, they have to advertise it. Therefore, the ability to foresee that the advertising was getting a negative response was obvious and this could have been somewhat controlled by Euro Disney or the parent company. Advertising bombards us everywhere but it is not without control and regulation by the government, businesses and citizens. This opens one of the major issues in advertising, “the question of law and ethics”. Advertising should be carefully controlled. Society needs to make sure that people are not taken in by misleading advertisements in which Euro Disney make a huge mistake emphasizing the glitz and size instead of different rides and attractions. This can be controllable if Euro Disney followed principles such as telling the truth, showing the truth in which the product should look exactly the same way as the consumers will purchase it. The general impression should as well be truthful because “Advertising is judged not by what it says, but what the consumers thinks it says” (Roman & Mass, 2003, p. 200-202).

Other important factors that managers could have foreseen included the approaching European recession, the Gulf War in 1991 and increased interest rates. External factors that affected business also included the devaluation of other currencies against the franc and competitions that drew the attention of European tourists. These competitions were the world’s fair in Seville and the 1992 Olympics, which was held in Barcelona (Phillip Cateora and John Graham, p. 615). It was apparent that the managers of Euro Disney and Disney separated themselves from their counterparts with many levels and departments. These include the government, banks and other parties that were involved. Some of the Disney managers admitted that they were arrogant and that their attitudes were forceful and controlling. It was as if all would agree to do it the way they suggested, then everything would be just fine and everyone would be happy (Phillip Cateora and John Graham, p. 614).

Question 3

Evaluate the cross-cultural marketing skills of Disney.

The origins of cross-cultural analysis in the 19th century world of colonialism was strongly grounded in the concept of cultural revolution, which claimed that all societies progress through an identical series of distinct evolutionary stages. Culture consists of language, ideas, beliefs, customs, taboos, codes, institutions, tools, techniques, and works of art, rituals, ceremonies and symbols. It has played a crucial role in human evolution, allowing human beings to adapt the environment to their own purposes rather than depend solely on natural selection to achieve adaptive success. Every human society has its own particular culture, or socio cultural system (Encyclopedia Britannica). Cross-cultural marketing is international marketing on a personal level. It means considering cultural differences when planning marketing campaigns and media, realizing the need for a balance between localization and globalization and most importantly, implementing strategies that respect differences while seeking to unify brand messages.

The problem with Euro Disney was that they did not utilize the cross-cultural marketing skills. Based on the case study, Disney executives were told that the French did not eat breakfast so that the meal was downsized but surprisingly the French do eat breakfast. 2,500 breakfasts were served in a restaurant that only held 350 people. They also discovered that the French did not just want croissants and coffee, they wanted bacon and eggs (Phillip Cateora and John Graham, p. 615). This showed that the cross-cultural skills were not employed such as the misinterpreted of data and wrong information retrieved during the environmental scanning of the elements of the European culture. The managers should have known that Europeans were more energetic and will certainly covered more of the Euro Disney theme park and rides than those in the western hemisphere. In contrast to Disney’s American parks where visitors typically stay at least three days, Euro Disney is at most a two day visit. The European vacations were not examined so the theme park did not see the profits and success as hoped. Americans take short breaks but they take them more often. However, Europeans take one month holiday.

The American managers were naA?ve that they thought the Europeans would change their one month tradition and adopt the Americans shorter yet more frequent time off but that did not happen. The French schedule remained the same as they would close the office and factory during the entire month of August. These factors should have been considered. Cross-cultural marketing would have been extremely useful but the parent company’s executives were being quite ethnocentric and it cost a great price (Phillip Cateora and John Graham, p. 615). Needless to say, their cross-cultural skills were unsatisfactory; in fact nonexistent is more appropriate to say. Had they had any skills of this sort, the beginning would have been a success and not such a failed start.

As we now understand, the Europeans have to be “attuned to the nuances of culture so that a new culture can be viewed objectively, evaluated, and appreciated. Just because a culture is different does not make it wrong. Euro Disney marketers should understand how their own American-style cultures influence their assumptions of another culture (John L. Graham, The Global Environment of Global Markets).

Question 4

Do you think the new theme park would have encountered the same problems if a location in Spain had been selected? Discuss

Spain, a country located in south-western Europe, bordering the North Atlantic Ocean and the Mediterranean Sea, between Portugal and France covers a total area of 505,957 sq km. Spain has 4,964 km of coastline. Besides five other places of sovereignty on and off the coast of Morocco, Spain consists of 17 administrative regions, 15 of which are on mainland Spain. Spain occupies four-fifths of the Iberian Peninsula and is a land of immense geographical diversity. It offers the tourist a great deal. Spain’s coastline has long since been a magnet for visitors but in recent years more and more people are spending holiday time, exploring beautiful and cultural Spain, away from the sea and sand. Spain has everything from lush, green forests and mountain ranges, through to endless arid plains and long, sandy beaches (Idealspain, 2010).

Since the 1960’s and the invention of the package holiday, Spain has always been a top tourist destination. There are few areas of Spain that have not seen the effect of tourism. Spain has adapted to cater for tourists and every area offers something different. Northern Spain offers a different type of holiday with lush green forests, un-spoilt nature reserves and clean rivers. This part of Spain has adapted to offer nature holidays and activity holidays, based on the rivers or within the nature reserves. Hotels tend to be more individual and have rural locations. Beach holidays have always been popular in Spain with the attraction of the wonderful climate, clean beaches and ample hotel facilities (Idealspain, 2010).

If the location selected by Disney is in Spain, it would have been met with less criticism and is believed the cultural differences will play a huge role in its success. As I mentioned earlier, Spain is also one of the top tourist’s attraction countries in Europe. Disney would still have to learn the customs and the culture of Spain and incorporate them into the development, implementation and operation of a new theme park. The work habits of the Americans is totally different from Spain in which the Spain’s main concern is focus on life and family first whereas the Americans focus more on themselves and individuality, not the group. This suggests that if Disney theme park is in Spain at least the Spanish which gives top priorities to the families will often bring them to the theme park. (Tom Strong, Spanish Cultural Commentator) gives his view of the differences between Spain and the U.S.A. “In the U.S.A., a newborn baby gets a social security number. In Spain, the newborn gets added to the Libro de Familia. In Spain, it is not at all uncommon for children to stay at home until age 30 whereas in the U.S.A. they would be tagged with the word ‘loser’.

International marketing is all about culture and what we are able to do in marketing to a particular foreign product such as Disneyland to market its theme park is shaped by the cultural variables of the country as well as the great importance to understanding the Spanish culture. The geographical conditions of Spain provide sunshine all year round and milder winter temperatures. The advantages are that it may attract potential customers form the northern Africa and the Middle East because of its wonderful climate. In terms of its purchasing power, total population and it’s density it won’t lose to the French counterpart. The (Central Intelligence Agency World Factbook, 2010) stated that the Spain purchasing power for the year 2009 is $1.367 trillion and its French counterparts is $2.113 trillion and the GDP for Spain is $33,700 whereas the French is $32,800. As a member of the European Union, travel to the southern state already a tourist center in the Union, will yet provide more reason for the launch of Euro Disney. The entry ticket should cover the cost of the Spanish sunshine, sympathy and service, unlike the rest of Europe.

Question 5

If you were the business development manager, what would be the major consideration you would go through before selecting a location for the next Disneyworld? From your discussion select a location you think will be the next Disneyland site.

As a business development manager, I will have to take into consideration about some in depth knowledge and analysis about a country’s background before selecting the location for the next Disneyworld. There are many factors in the macro-environment that will affect the decisions of the managers of Disney. Tax changes, new laws, trade barriers, demographic change and government policy changes are all examples of macro change that will help Disneyworld to know more about the foreign market conditions and the external forces. To help analyze these factors I will categorize them using the PESTEL model.

Political factors may refer to the government policy such as the degree of intervention in the economy. What goods and services does a government want to provide? To what extent does it believe in subsidizing firms? What are its priorities in terms of business support? Political decisions can impact on many vital areas for business such as the education of the workforce, the health of the nation and the quality of the infrastructure of the economy such as the road and rail system (Aguilar, F.J., Scanning the business environment, 1967).

Economic factors include interest rates, taxation changes, economic growth, inflation and exchange rates. As we all know a shift in economic can have a major impact on a firm’s behavior. For instance higher interest rates may deter investment because it costs more to borrow a strong currency may make exporting more difficult because it may raise the price in terms of foreign currency inflation may provoke higher wage demands from employees (Aguilar, F.J., Scanning the business environment, 1967).

Social factors are changes in social trends which can impact on the demand for products and the availability and willingness of individuals to work. In the UK, for example, the population has been ageing. This has increased the costs for firms who are committed to pension payments for their employees because their staffs are living longer. The ageing population also has impact on demand for example; demand for sheltered accommodation and medicines have increased whereas demand for toys is falling (Aguilar, F.J., Scanning the business environment, 1967).

Environmental factors include the weather and climate change. Changes in temperature can impact on tourism industry such as Disneyland. With major climate changes occurring due to global warming and with greater environmental awareness this external factor is becoming a significant issue for firms to consider. The growing desire to protect the environment is having an impact on many industries such as the travel and transportation industries for example, more taxes being placed on air travel and the success of hybrid cars and the general move towards more environmentally friendly products and processes is affecting demand patterns and creating business opportunities (Aguilar, F.J., Scanning the business environment, 1967).

After the extensive analysis of these major external forces, I would think the next Disneyland site should be in Canada. I think it should be top in priority because Canada is rich in history, landscapes and its aboriginal cultures. Canada is a country with much diversity as it has mountains, national park and alpine forest. According to the Nation Brand Index (Anholt and GfK Roper research agencies, 2008) that measures the world’s perception of 50 nations by interviewing 20,000 adults from 20 countries, the friendliest nation in the world is Canada. Canada has hosted several high-profile international sporting events, including the 1976 Summer Olympics in Montreal, the 1988 Winter Olympics in Calgary, and the 2007 FIFA U-20 World Cup. Canada is the host nation for the 2010 Winter Olympics in Vancouver and Whistler, British Columbia (The Vancouver Organizing Committee for the 2010 Olympic and Paralympics Winter Games, 2009) which we can see is obvious that it is a place for major tourists attraction which can bring advantages for Disneyland.. This scientific approach to friendliness may seem a bit formal, but indeed, the Canadians are really quite hospitable, kind people and are truly worthy of honors. Many Europeans and Americans travel to this country as it is less expensive if compared to the rest of Europe. The Europeans are most likely to head there during august, the people from the United States usually head up during spring break, and many companies offer trips to Canada as incentives, bonuses and conferences. Visitors from central and South America also visited Canada.

There is an influx of expatriates moving to Canada as many want to go there to escape the Asian life and as well to pursue “The American Dream”. Having stated all of this, it is still very important to that the tunnel vision of ethnocentrism be avoided. Although there are advantages and reasons supporting why Disney can do well with its current operation style because they are neighboring countries, Canada’s culture, beliefs and morals still vary. Like other countries, Canada is not considered to be a country of “workaholics” as the United States is stereotyped to be. The family or group is still top priority versus the American’s view of individual accomplishment being the top goal. It is important to learn from the mistakes that were made when Euro Disney was started. Having offices and managers from the country will be detrimental. Incorporating Canada’s culture and examining the tourists’ activities, practices and trends will be crucial to the making or breaking of a Disney in Canada.

Conclusion

Euro Disney has greatly enhanced their product since the troubled beginnings in 1992. During this period, many key lessons were learned about the relationship between culture and product offering. These lessons learned became the basis for future development in the European market. Today, the Disneyland Paris Resort is marginally profitable and is experiencing high, yet stagnant, attendance rates. It would be presumptuous to label the resort a success, especially since its net total loss is still over $700 million. However, changes in the marketing and design of the resort have led to profitability and gradual acceptance among the European citizens. In order to increase profitability and attendance, three factors must be achieved: product marketing must be increased, the current marketing strategy must be enhanced and ethnocentric obstacles must be overcome. There exists long-term optimism for the future of Euro Disney due to the strong foundation it has developed over its 10 years of existence, the strong financial backing of the investors, and its plans for future development within the European culture. With proper strategic planning and a relentless pursuit to continue to learn and adapt to the European culture, Disneyland Paris will be a successful resort.

Bibliography

Aguilar, F.J. (1967), Scanning the business environment. New York: Macmillan.

Cateora, Phillip & Graham, John (2002), International Marketing: Eleventh Edition. New York: McGraw-Hill.

[Online] CIA – The World Fact book (2010). https://www.cia.gov/library/publications/the-world-factbook/geos/fr.html, Accessed on February 18, 2010.

[Online] CIA – The World Fact book (2010). https://www.cia.gov/library/publications/the-world-factbook/geos/sp.html, Accessed on February 19, 2010.

Della Cava, Marco (October 10, 1999), “Theme parks are staking bigger claims in Europe.”

Prada, Paulo & Orwall, Bruce (2002), “Mickey’s Bosses Learn From Past Mistakes in Opening

New Park in France.” Dow Jones Interactive Business.

Schneider, Mike (2001), “Theme Parks Adapt to Nations Cultures; Disney, Other Firms Look Outside North America for New Markets.” Dow Jones Interactive Business.

[Online] Idealguides Ltd Group of Companies (2010). http://www.idealspain.com/Pages/Information/GeographyHeading.htm, Accessed on February 20, 2010.

[Online] Sylt, Christian (2008), Magic results: Euro Disney plans new hotels. http://www.independent.co.uk/news/business/news/magic-results-euro-disney-plans-new-hotels-899529.html, Accessed on February 21, 2010.

[Online] La-Vallee, Marne and Chu, Jeff (2002), Happily Ever After? http://www.time.com/time/magazine/article/0,9171,901020325-218398,00.html, Accessed on February 21, 2010.

Introduction

The Algarve is the southernmost province of Portugal and has gained a reputation in recent years as a popular tourist destination. Visitors now flock to the region each year in order to sample the agreeable climate, landscape and culture. A plethora of modern amusement parks, leisure facilities and golf courses await the prospective tourist and offer an impressive array of activities to chose from.

The tourist industry has been growing steadily in the Algarve since the 1960s, and over 4,5 million arrivals were recorded at Faro international airport in 2003. Indeed, when one considers that in 1960 only 353,000 foreign tourists visited the province, one could easily refer to the recent developments as a veritable ‘tourist boom.’^[1] Such a surge in activity has naturally provided a great deal of economic benefit at a local and national level. As Boniface and Cooper have noted, tourism is now a fundamental component of the Portuguese economy and accounts for 8 per cent of GDP.^[2] However, the rapid expansion of tourist development on the coastal areas of the Algarve has raised serious concerns regarding the environmental impact of the industry. Many commentators are now questioning the sustainability of tourism and other commercial projects throughout the province. Indeed, as well as environmental considerations, the prospect of an increasingly competitive international tourist market also exacerbates anxiety. Thus, will it be possible to maintain the thriving tourist sector and sustain commercial development in the Algarve?

The Geography of the Algarve

The climate of the Algarve is highly conducive to the tourist and leisure industries. Temperatures range from a comfortable 15°C in January to a peak of 28°C in July. Average rainfall is only 1mm in July, whilst during the winter period it rises to 70mm.^[3] Tourist numbers peak during the summer months of June to August but the mildness of the winter months has permitted entrepreneurs with the opportunity to promote all year round tourism.

The province spans 160 km from the Atlantic Ocean in the west to the Spanish border in the east, and extends for 30 to 40 km inland from the southern coast.^[4] Over 300 km of coastline boasts some of the finest beaches in Europe. Wuerpel has divided the province into three distinct areas, these are the mountainous, hilly and lower heterogeneous zones.^[5] The mountainous region is sparsely populated and the stony soils in many areas are restrictive to agricultural practices. However, the higher rainfall and more agreeable bed rock of Serra de Monchique in the west provide excellent mountain pastures. The highest peak in the Algarve (Foia) is located in this range and at 902 metres has become something of a tourist attraction.

The hilly central region which forms a ‘crescent’ shape between the mountains and the coastline is named the ‘Barrocal’ by the local peoples. The fine terra-rosa soils of this zone support the orange, almond and fig orchards of the province, as well as the vineyards and olive crops. This area represents the true ‘garden of the Algarve’ and the small villages, which have maintained much of their traditional character, are to be found here.^[6] Tourist operators have begun to promote the cultural heritage of these settlements and encourage visits further inland.

The coastal vicinity forms Weurpel’s lower Heterogeneous zone, and it is this area which has experienced the most pressure from recent developments in the tourist and leisure industries. The geography of the coastline can be readily divided into two separate sections east and west of the town of Faro, which is the largest settlement in the province and serves as the administrative centre. Picturesque bays, grottoes, coves and outcrops are evident to the west, whilst to the east the coast is flatter with sandy offshore islets (ilhas) and mud flats. Ellingham, Fisher and Kenyon have highlighted that most tourist development seems to have taken place between Faro and the town of Albufeira. They speak of the ‘Mediterranean style suburbia’ and ‘endless villa complexes’ which now dominate this stretch of coastline.^[7]

The resident population of the Algarve is approximately 350,000. However, the influx of tourists, time-share owners, second home residents and seasonal workers, during the months of June to September, ensures a considerably larger summer population. Tourism is the major industry of the province and represents almost 70% of economic activity. The agricultural and fishing industries continue to play their role despite the recent tourist boom. Portugal is also one of the world’s leading exporters of cork and the cork oak trees of the Algarve are a lucrative source of this product.

The History of Tourism in the Algarve

The Algarve’s rise to become the ‘tourist Mecca of Portugal’^[8] has been relatively recent. Wuerpel has noted that the province was always a ‘fundamentally quiet and remote region’^[9] situated on the periphery of continental Europe. Ancient Roman ruins may be observed throughout the region, and the ancient fortified city of Silves is testimony to the influence of Moorish civilisation. The restoration of the town of Sagres, which was developed by Henry the Navigator in the 15^th century as an important naval centre, now serves as a tourist attraction. However, as Kaplan has highlighted ‘the Algarve is not rich in historical monuments.’^[10] This is partly due to the deleterious earthquake of 1755 which destroyed many of the ancient sites of antiquity. Wuerpel has commended the province for its unique character by noting that ‘the region has remained singularly distinctive, more Mediterranean than Atlantic, more African than European.’^[11]

Visits to the Algarve, before the coming of the railway in the late 19^th century, were mainly restricted to the health spas of the upland region, such as Caldas de Monchique which dates from the 17^th century. Communications between Lisbon and the Algarve were poor and consisted of crude mule trails. In 1889 a railroad arrived in Faro and a gradual east/west expansion of the line continued into the 20^th century.

The 1898 edition of Baedeker’s guide book of Spain and Portugal only speaks of the small towns of Faro and Loue, which were by then accessible by train. However, by the 1908 edition the author is more revealing when he states that ‘most travellers will scarcely find it worthwhile to visit South Portugal’ and adds, ‘the towns contain nothing of much interest while the places on the coast resemble large fishing villages.’^[12] Indeed, prior to the second world war Portugal was an unfashionable resort and tourism remained a peripheral industry. In the 1930s only 36,000 tourists were visiting the country on an annual basis compared to over 5 million who visited the more well-known resorts of Italy.^[13]

As Andrew Holden has explained, ‘since the 1950s there has been a rapid increase in the demand in western societies for people to travel internationally and visit a variety of different destinations.’^[14] The post-war economic boom and subsequent rise in disposable income levels now permits more and more people with the opportunity to travel. Since the 1960s Portugal has benefited economically from the influx of tourists and the coming of mass tourism. Improved communication links, such as the international airport near Faro which was opened in 1965, have boosted the performance of the tourist and leisure sectors considerably. Tourist numbers have exhibited an almost continuous upward trend since the 1950s, save for a slight downturn in the 1970s after the April Revolution.

Sustainable Development

The notion of ‘sustainable development’ has been promoted by agencies at a local, national and international level since the 1980s. An increased awareness of the finite nature of natural resources within the modern global economy has dramatically altered the decision making process. Holden has noted that the concept of conservation can be traced back to the mid-nineteenth century but that the principles of ‘sustainable development’ have evolved rapidly in recent years. The publication of the Brundtland Report in 1987 and the promotion of the United Nation’s Agenda 21 programme by governments throughout the world have assisted in the solidification of the concept. However, Holden is quick to emphasise that ‘sustainable development is not concerned with the preservation of the physical environment but with its development on sustainable principles.’^[15] In essence, sustainable development seeks to obtain a state of equilibrium between economical, political, cultural, social and environmental interests within a particular area. Developers should be allowed to promote new projects provided the local population benefits and environmental regulations are observed. The Brundtland report acknowledged that such development is necessary in order to alleviate poverty and reduce migration from disadvantaged regions. However, many commentators have criticised the concept of sustainability due to its ambiguity. Some feel that the principle of agencies, who often hold opposing interests, functioning in a state of equilibrium is idealistic and not practical.

Sustainable Development in the Algarve

The Portuguese have been determined not to overdevelop their tourist regions and emulate mistakes made by their Spanish neighbours in regions such as the Costa del Sol. Traditionally the industry has attempted to orientate itself towards the upper end of the market and avoid the deleterious effects of mass tourism.

Prior to the April Revolution the government promoted tourist development in the Algarve and generous state subsidies were provided for the province. Strict design restrictions were placed on building projects as the authorities attempted to maintain the distinctive Moorish characteristics of the region. However, since the 1970s commentators such as Kaplan have been critical of ‘uncontrolled development’ and how too many developments ‘bear the marks of speculation and indifference to the shape, the feel, the colour of the land.’^[16] De La Cal has also drawn attention to the ‘resulting hodge-podge of uncontrolled building’ which exists on the coastline west of Faro and may threaten to scare off many potential visitors who dislike crowded beaches and urban environments.^[17] Indeed, by the 1980s many felt that the Algarve was in danger of becoming a victim of its own success and that the environmental impact of the new industry would have to be controlled.

The Portuguese government had identified 75 sites which were to be designated as protected areas as early as 1973. The Algarve hosted 8 of these sites and a culture of conservation has since been cultivated in the province. Nature reserves such as the Parque Natural do Sudouste and zones of restricted development have now been established in order to maintain the unique environment. The Plano Nacional de Turismo (1986-89) sought to develop the tourist industry in the Algarve but identified that the natural environment and traditions of the province should be maintained. The government has attempted to realise these objectives through rural tourist programmes, like in north-eastern Algarve, which has suffered from severe depopulation since the 1950s. Tourists are now encouraged to visit the villages of the interior and sample the unique culture. Controlled eco-tourism to the east of Faro and on the western Atlantic coast is intended to generate new sources of income whilst protecting wildlife and fauna. Critics of the National Plan include Lewis and Williams, who believe that economic considerations shall always take precedence in a disadvantaged region such as the Algarve, and that increased environmental and cultural degradation is inevitable.^[18] Kaplan insists that the environment is merely a secondary consideration and that ‘money is arbiter’ but concedes that the beaches of the Algarve are extremely clean.^[19]

The World Travel and Tourism Council (WTTC) have recently assessed the impact of tourism on the economy in the Algarve. They have concluded that the Algarve has the potential to be ‘one of Europe’s most sought after tourism destinations’ and that the province’s unique environment, heritage and culture remain largely ‘untapped.’^[21] The organisation has provided a range of recommendations in order to ensure sustainable development in the region.

The council suggest that leisure park facilities, such as the Aqualine theme park near Altura, should be encouraged and promoted in order to attract clientele on a year round basis. They have discovered that such facilities are popular with visitors from Portugal and neighbouring Spain. Such a localised customer base would naturally contribute greatly to the sustainability of the Algarve’s economy. However, the council concedes that Spanish tourists tend to stay for a short period and thus, spend less than northern European and American visitors.

The development of ‘golf tourism’ in the region also provides the possibility of employment out with the summer peak. The agreeable climate and excellent golfing facilities of the Algarve have the potential to attract visitors during autumn and winter. The organisation has also identified the threat posed by new low-budget resorts in eastern Europe. They insist that market and product diversification is now imperative in order to maintain a thriving economy. By targeting senior travellers in northern Europe and by promoting top quality retirement accommodation in the province, the council believes that the Algarve can reduce its dependency on large scale tourist operators. This is also consistent with the Portuguese orientation towards the more exclusive end of the market. However, the council are concerned that building restrictions on the coast may be hindering development in the region and the sustainability of the tourist industry. They highlight that there is a shortage of high quality accommodation and that it is now over 7 years since the last five star hotel development.^[21]

Lewis and Williams have noted the over dependency of the Algarve on visitors from the United Kingdom and how they accounted for 35% of tourists by the late 1980s.^[22]

The WTTC have also warned against this trend towards a dependency on the British, Dutch and German markets and recommends promotion in other potential markets. Williams and Shaw have identified that North American tourists tend to spend more during visits and it is hoped that many will be attracted to the new golfing facilities.

Studies of Alpine ski resorts in France have shown that the tourist industry is more sustainable within a region if local investment and participation in the industry is permitted and encouraged. Local people tend to be more respective of the environment and conduct business in a sustainable fashion. The recent international investment in the Algarve may have been beneficial in the short term but an over dependency on foreign investment may have negative consequences. Multi-national corporations may relocate as hastily as they locate in a locality due to international market fluctuations and erratic trends in the tourist industry. Kaplan noted that ‘foreigners are investing in the land, in commerce, in tourism, in the future of Portugal at record breaking levels.’^[23] However, the recent promotion of more inland cultural tourist pursuits such as wine tasting and craft fairs is encouraging.

Conclusion

The Algarve represents a typical tourist resort experiencing a range of conflicting interests.

There are those who value the aesthetic elements of the province, such as Ellingham, Fisher and Kenyon, who complain that the ‘development and crowds overwhelm the charms that made the Algarve popular in the first place.’^[24] There are also conservationists like Gordon Sillence, of the European Network for Sustainable Tourism Development, who warns of the depletion of the local ecosystem, forest and habitat of the Iberian lynx. Through impact assessment Sillence and many others are anxious about the continued level of development in the province and believe that the public authorities should do more to protect the environment.

Local people and the many Portuguese who arrive in the Algarve during the summer months to work in the service sector may feel that tourism is an essential and positive factor. The WTTC also espouse this view and feel that more should be done to encourage sustainable economic development in the region. They believe that environmental protection may in fact be hindering economic sustainability. The European Union has looked favourably upon the expansion of the Portuguese tourist industry since the nation’s ascension to the Union in 1985. EU funds greatly assisted the development of infrastructure throughout the south of Portugal and galvanised the tourist sector. However, commentators have warned that since the ascension of the new eastern member states, EU funding for the Algarve will decline considerably.

Clearly the Algarve is now at a crossroads in its quest for sustainable development. The WTTC have recommended that the government prepare a comprehensive plan in order to further develop the economy of the region. The organisation has also noted that the Algarve boasts some of the most beautiful and undamaged coastline in all of Europe, unlike its Spanish neighbours. Such a positive environmental factor, as well as the agreeable climate, will surely be of paramount importance as the Algarve attempts to target new tourist markets and diversify its economy in the years to come.

Bibliography

ANDERSON, B. ANDERSON, E. Algarve – Landmark Visitor’s Guide, Landmark, 2001, Pages: 9-10, 103

BONIFACE, B. COOPER, C. Worldwide Destinations: The Geography of Travel and Tourism, Elsevier Butterworth, Heinemann, 2005, Pages: 228-230

DE LA CUL, M. Portugal, Collins, 1988, Pages: 327-340

ELLINGHAM, M. FISHER, J, KENYON, G The Rough Guide to Portugal, Penguin, 2002, Pages: iv-x, 509-572

HOLDEN, A. Environment and Tourism, Routledge, 2000, Pages: 161-182

KAPLAN, M. The Portuguese: Land and Its People, Penguin, 1988, Pages: 23-24, 178-179

MABBERLEY, D J. PLACITO, P J. Algarve Plants and Landscape: Passing Tradition and Ecological Change, Oxford University Press, 1993, Pages: 219-243

MAGONE, J M. The Developing Place of Portugal in the European Union, Transaction Publishers, 2004, Pages: 85-100

WILLIAMS, A M. SHAW, G. Tourism and Economic Development: Western European Experiences, John Wiley and Sons Ltd, 1991, Pages: 107-129

WORLD TRAVEL AND TOURISM COUNCIL. The Algarve: The Impact of Travel and Tourism on Jobs and the Economy, World Travel and Tourism Council, 2003, Pages: 1-31

WUERPEL, C. The Algarve: Province of Portugal, David and Charles Inc, 1974, Pages: 15-43, 162-169

Chapter 2Literature Review

There are many researchers who have examined on how tourism affects the local people in a destination. They have worked on how to assess the negative and positive impacts of tourism on society. This literature review will be based on the research of the socio-cultural impact of tourism on the local people in Mauritius. The impacts that tourism brings to the local people will be assessed by the use of a questionnaire. This literature review will be completed by searching for journal articles, relevant studies which have been previously done on the topic.

Overview of Tourism

Tourism is an active and deal process which include direct and alternative relationship between people and originator of tourism products. The interaction between people is the is often the necessary feature which characterizes a tourism experience. These experiences can lead to both positive and negative impacts and this should be controlled in order to maximize the positive impacts and minimize and negative impacts (Sheldon & Abenoja). Positive and negative feature of tourism can be moved to the tourists and the hosts population as a tourism product can only be consumed in a destination.

One of the most influential socially based plan refined to examine the impact of tourism has on local people and the environment in which the local people live is dependent on the work of Doxey (1975), who was able to demonstrate the feeling that local people show as tourism extend and start to use greater area of a local economy over time. (Doxey) also argued that there are basically four levels to be considered when assessing local feelings towards the tourism industry. These are as follows:

Euphoria: This is where tourist come to a destination where they are received with little control and planning in a destination

Apathy: Tourists are accepted by the local people in a destination, commercialization takes place and there is a relationship between groups.

Annoyance: As the tourism industry is being saturated, local people tend to have uncertainty about a location of tourism. Tourism planners increase infrastructure instead of controlling the growth of tourism.

Antagonism: Local people start to become irritated and this is presented to tourists and tourism and planning is restorative.

The number of impacts from tourism is physically wide and it often has the authority on areas beyond those usually linked with tourism (Kreag 2001). It is difficult to measure the exact type and magnitudes of impacts of tourism as they cannot be viewed in a separate way because the effect brought by tourism alone and the effect which has been accomplished by other agents of change such as modernization, development, and the influence of media (Archer & Cooper, 1994; Lickorish & Jenkin, 1997; Mathieson & Wall, 1982).

Socio-Cultural Impacts of Tourism

According to (Oppermann & Chon, 1997), they argued that the socio cultural impacts should be available in towns and it should be designed in such a way in order to achieve the ideals of sustainable development. The socio-cultural impacts of tourism occur when there is the interaction between the “host”, or local people, and “guests”, or tourists (Smith 1995). However, Glasson, Gofrey and Goodey (1995) argued that the socio-cultural impacts are the “people impacts” of tourism and it concentrates on the day to day changes and quality of life of residents in a destination. It has been stated by (Opperman and Chon 1997) that tourist and the host interactions does not have effect on the hosts and the society of the host, but also it has an effect on the tourists and the tourists’ societies.

Socio-cultural impacts have both positive and negative forms and it is the hosts and the guests who are affected (Cooper et al., 1998; Oppermann & Chon, 1997). Moreover, (Pi-Sunyer, 1973), stated that socially and culturally, tourism has often been victim of social tensions. It can be noted that the principal impacts affected by the tourists and host relationship are the demonstration effect, that is when the behaviour of the hosts community is developed in such a way to imitate the tourists (Boissevain, 1979; Tsartas, 1992). During their stay in a destination tourists interact with the local residents and this interation brings an outcome such as modifications in the quality of life of the host’s community, value system, labour division, family relationships, attitudes, behavioural patterns, ceremonies and creative expressions (Fox 1977; Cohen 1984; Pizam and Milman 1984).

The encounters of tourists and the hosts occur when tourists are buying goods and services from any host individual where there are at the same place and at the same time and where they can exchange ideas and information (de Kadt 1979). Another type of encounter which occur in tourism is where there is a failure in promoting mutual understanding among different nations and stereotypes prevail (Nettekoven 1979; Krippendorf 1987; O’Grady 1990). In addition, socio-cultural impacts of tourism also include change in the language that is used in a destination (White 1974; Brougham and Butler 1977; Jeffs and Tavis 1989; Wallace 1997); growth in the consumption of alcoholics, crime, prostitution and gambling (Young 1973; Graburn 1983; O’Grady 1990). According to Brunt and Courtney (1999) argued that socio cultural impacts of when there is the interaction of tourists-host could be utilized to host residents and was affected by their role and their relationship within the tourism industry.

Communities Perspective of Tourism

Considering the attitude of local people the large range of the positive and negative impacts of tourism on the community at large and individual can be analysed (Fredline, 2004). (Ratz 2002), said that the lives of the host’s community are changed by two major factors which are namely the tourists-host relationship and the development of the tourism industry itself. Local people and foreign companies are encouraged to invest in different types of tourist enterprises (Larsen 1998) and this is looked in such a strategy to motivate economic activities to take place which will make the state become richer. In a host community, not every people perceive the impacts of tourism in the same manner. Researches says that the level of satisfaction of residents in a destination and their attitudes in relation to tourism are conditional on their perception of the impact of tourism.

Socio-Cultural sustainability

Cultural sustainability is the maintenance of local values, the way that people live in their environment and identity (Heikkinen et al. 2007). According to (Besculides, Lee, & McCornick, 2002; Simpson, 2008) the cultural and social as aspect of sustainability may be supported by tourism development by granting a change of declining traditional industries appealing infrastructure development promoting pride referring to culture and community, fostering cultural acceptance amongst visitors, keeping cultural heritage, fostering cross institutional acceptance and bring into existence educational favorable circumstances. However, (Liu 2003; Stronza, 2007), argued that tourism can bring up new lifestyles, belief, and values to hosts, and come through changes in the living form of the communities.

Positive socio-cultural impact of tourism

Tourism brings into contribution of an improvement of the social infrastructure in a destination. Cultural development can be considered as a positive impact of tourism. Various situations exist where tourism is the active force behind the preservation and awareness of local culture and traditions. (United Nations, 1996; Jamaica Sustainable Development Network, 2001; Tourism Product Development Company 2005; du Cros; 2001)

Negative socio-cultural impacts of tourism

For some islands, there are negative social impact that are created due to tourism. An increase in the price leads to a fall in the standard of living of the local community. Fishermen are deprived from their occupation. Sometimes locals are prevented to get access to public beaches as most hotels give priority to tourists to enjoy the beaches and therefore locals are left with only part of the beaches. Moreover, there are capacity issues where the beaches are overcrowded which leads to traffic congestion and noise pollution, reverse acculturation and high crime rates also occur (United Nations, 1996; PA Consulting Group, 2007).

Physical influences causing social stress

The physical power that increasing tourism has on a destination can cause social stress because this encounter the local community. Cultural degeneration such as damage to cultural heritage may take place from vandalism, littering, pilferage and illegal removal of cultural heritage items or by changing the historical landscape that surrounds it. Resource use conflicts will arise because there is a competition between the host community and the tourists for making use of prime resources such as water and energy which are limited in supply. Conflicts will arise when there will be the construction of hotels in coastal areas.

Culture Clashes

As tourism is the movement of people to different places geographically and places of social relation between tourists and the hosts, culture clashes may come forward because of differences in their cultures, ethnic and religious groups, values, lifestyles, languages and levels of prosperity. There will be economic inequality between local people and the tourists as they spend more than they often spend in an economy.

Behaviour of tourists causing irritation

Tourists usually fail to respect local people and their moral values due to carelessness in a destination. They may not respect the locals traditions by taking pictures where they are not allowed to do so and they may also be not well dressed in religious places like temples, mosques, and church.

Crime

Jud (1975) stated that amount of criminal movement facing foreign tourists grows as the number of illegal chances increase. He also said that the more tourists arrival in a destination will result in more chances for crime to take place. However, Lin and Loeb (1977) argued that there might not be a certain connection between tourists and criminal activities. Moreover, Bernasco and Luykx (2003) stated that there are three factors which pull crimes against property and these are attractiveness, opportunity and accessibility. As a result if communities do not protect themselves and imperfectly put in order by external agencies, some individuals will precise their personal temperament and devotion towards criminal behaviour. Moreover, Shaw and Mc Kay (1992) stated that a weak organizational form within a community may produce an environment more favorable for criminals against people and vice versa.

Job level friction

There has been a lack of professional training and low-paid tourism jobs such as waiter, cleaner gardening are offered to local people whereas the higher-paying jobs are like managerial jobs are offered to foreigners.

Change of local identity and values

Conventional tourism can bring impact change or loss of recognition and values and leads to influences as stated below:

Commercialization of local culture

Tourism can turn local culture into product and this is when religious traditions, local customs and festivals are diminished to adjust to tourist expectations and this has been called as reconstructed ethnicity.

Standardisation

A destination aim is to satisfy and it risk standardization, accommodation, food and drinks, etc must meet the want of the tourists in a destination

Adaptation to tourist demands

In destination tourists have the desire to buy souvenirs, arts, crafts, cultural manifestations. Craftsmen in many tourists’ destinations have changed their products by designing new types to make them match the new customer’s tastes.

Increase of Prostitution and sex tourism

According to the WTO (World Tourism Organisation) experts (1994) sex tourism has its principal intention that effect of a commercial sexual relationship. Sex tourism is absolutely tangible encounter in which the partner is not anymore an animated object. Many men go to Asia to choose Asian girls because no communication is possible. Sex workers can be migrant women in a destination from neighbouring countries. Moreover, sex tourism has impacted to an increase in AIDS in India. It has been discovered that upper grade hotels have their supply for sex tourism to take place. Sex tourism is also linked to drug peddlers who search for long vacation tourists at cheap destinations.

The economic impacts of tourism

According to (Loomis and Walsh 1997) businesses and public organizations are progressively showing interest in the economic impacts of tourism at national, state and local levels as the tourism industry contributes to the nation’s balance of payment (BOP) and this provide a great supply of income (Tatoglu, Erdal, Ozgur, & Azakli, 2000). The World Traven and Tourism Council (2012) reported that tourism can be beneficial to an economy in terms of increasing the Gross Domestic Product (GDP). Moreover, (Andereck Valentine, Knopf and Vogt 2005) reported that tourism industries can have a positive effect on the economy of a community by effecting diversity, and tax revenue. Furthermore tourism is taken into consideration as a determinant that provides a higher living standard and which effect to attract investors to do investments and tourists to spend which as a result creates greater benefits than costs (Brida, Osti & Faccioli, 2011).

The benefits that tourism bring in an economy

According to (Rithie, 2000; Carolson & Millan, 2002; Getz, 2005) said that the events in a destination tend to improve the infrastructure and development capacity. (Westerbeek et al. 2005, p. 133) reported that when infrastructure is well articulated consisting of physical venues, accommodation and facilities such as transport can lead a an even to success and reducing costs, ameliorating the convenience of spectator, as well as the athlete and long term benefits for the local community when the event ends.

Multiplier effect

Tourism as a supply of income is difficult to measure, this is because it creates multiplier effect (Clarke et al, 2009; Brida et al, 2010; Rastegar, 2010). Multiplier effect is the abundance of money which is generated due to tourist spending in an economy it increases as it passes through different areas of the economy (Dritsakis, 2008; Boopen, 2006. Tourism does not only leads to employment opportunities but also motivates growth in the primary and secondary sectors of the industry.

Primary tourism sectors namely, lodging, dining, transportation, amusements and retail trade are influenced directly and most of the other sectors are have impacts of the secondary effects.

Direct effect in the economy

These are production changes which are linked with the actual effects of changes in tourism expenditures. An increase in the number of tourists staying in a hotel would lead to an increase in profits due to sales in the hotel sector. Direct effects of tourists spending also include hotel payments for wages and salaries, taxes, and supplies and services.

Indirect effect in the economy

This is the re spending of the hotel industry’s revenues in other behind industries. For example industries which supplies products and services to hotels. Modification in sales, jobs, and income in the linen supply industry shows another area of indirect effects after all connecting hotels to various degrees to multiple other economic sectors in the region.

Induced effect in the economy

Induced effect is the household income earned directly or indirectly by tourism spending. For example employees from the hotel and employees from the linen supply are supported directly and indirectly by tourism, they spend their money in the local region expenses of housing, food, transportation and spending of added wage, salary, or owners income are considered as induced effect.

Indirect effects of tourism on GDP (Gross Domestic Product)

Tourism is a big constituent of the services economy, representing 30% of international trade in services. Taking into account of the revenue, the T20 countries generate nearly 70% of global tourist activity. In addition, the contribution that tourism can make to the growth of the economy is found in its indirect impacts, which in the T20 countries showing over 45% of tourism’s total contributions to the GDP. These indirect impact which are linked both to goods and services bought by the tourism sector and to investment and public spending multiplied by tourism are an important factor of economic growth.

The exchange rate effect of tourism

Tourism is a major foreign currency earner as it supplies the market with foreign currency and this market would not exist if tourism would not be so large. This diminishes the cost of foreign currency below what it would otherwise be.

Creation of employment

According to (Bridenhann and Wickens, 2004), tourism is an industries among many other industries which has the highest power to contribute towards job creation and economic development, especially in rural areas.

Environmental impact of tourism

Negative environmental impacts takes place when the level of visitors in a country exceeds the carrying capacity of an environment or use greater space that is required for an environment. When it is uncontrolled, it brings threats to many natural areas around the world.

The environment quality, natural and man-made is of great importance to tourism. However, the relationship with the environment is intricate. The environmental impact is related with the construction of the general infrastructure in a destination such as roads and airports, and of the facilities of tourism, such as resorts, hotels, restaurants, shops, golf courses. As the negative impacts of tourism can destroy the environment in the long-term, and these impacts should be minimized. Further literature of the negative environmental impact of tourism is as follows:

Land Degradation

The important resources of land are fertile soil, forests, wetlands and wildlife. Due to an increase in the construction of tourism facilities there has been pressure on these resources. Direct impact can be caused by providing tourists with the facilities needed such as accommodation and other infrastructure needed on the environment. Moreover, when there is deforestation, forest often suffers from this disaster.

Air and noise pollution

Pollution is something harmful that begins into the environment and these harmful materials are called pollutants. It can be natural such as volcanic ash. Pollution can be also produced by human activity for example trash or runoff produced by factories. Pollutants damage the quality of air, water and land.

There are various things that are useful to people create pollution. Cars eject pollutants from their exhaust pipes. Burning coal to produce electricity pollutes the air. Industries and homes spread garbage and sewage that can pollute the land and water.

Impacts on Biodiversity

Tourism can cause loss of biodiversity in various ways for example by competing the wildlife for habitat and natural resources. Negative impact on biodiversity can be caused by trampling, stress in animals, import of invading species, destruction of habitats, marine habitat deterioration.

Strain on water resources

Water is one of the important resource that is needed to survive and for a business to continue to operate water is need in the everyday operation of the business. Hotels use water in swimming pools, golf courses and also water is used by the tourists for personal use. Therefore there is a tendency for shortage of water and generating a greater volume of wastewater.

Energy Utilisation

Hotels use huge volume of water. Tourists staying in a hotel use on average 1/3 more water per day than a local inhabitant. The consumption of energy per m2 per year by one star hotel is 157kwh (380 KWh in a four star hotel) (EEA, 2003). However, the infrastructure is not suitable as it has been designed to cope with peak periods.

The role of the UNWTO, (United Nations World Tourism Organisation) towards the environment

In order to prevent the unfavorable impacts of climate change, the IPCC reports 2007 need 25-40% emission reduction sphere for the Annex 1 Parties (industrialized countries) by 2020, compared to the basis year 1995.

Defining tourism industry is not a sample matter, it is very complex industry made up of number of different businesses. The common thing these businesses share that they provide products and services to tourists. The most accepted definition is provided by the World Tourism Organisation. According to WTO, “tourism comprises the activities of persons travelling to end staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes”.

Tourism has become one of the major economic activities in the 21st century. The development in aviation industry has made tourism industry very competitive. As airlines industry expands and the world economy experienced substantial growth in tourism industry. After World War II only wealthy people were able to enjoy travelling and tourism but late 20th century and early 21st century it became affordable to masses. The economic significance of tourism industry is quite evident in 21st century. According to WTTC Press Releases (2010) “World Tourism Industry contributes over 10% of the world GDP and growing every year. This industry can benefit an economy in number of ways e.g. by providing employment, increase in government taxes and creates more diversified economy.

Four industries are dominated in 21st century, financial, telecommunications, Information technology and tourism. The desire of travel is a human need and people keep travelling for number of reasons. The travelling activities will never stop therefore tourism activities will increase in the future more and more, especially with the development of transportations system and modern technology. In past few decades tourism industry growth was tremendous and numbers of tourists in the UK have risen every year since World War II, apart from 1992 gulf war, September 11 2001 terrorist attacks on New York and July 7, 2005 London bombing. The growth in tourism industry has been the result of number of factors, e.g. Economic factor (longer paid holiday, affluence), Social factors (education and advertisement create desire to travel) and finally Development in tourism industry have made easy for tourist to travel new holiday destinations and attractions, cheaper holiday packages, faster and reliable transport.

What is Terrorism?

Terrorism has been defined as the intentional use of force or threat to use violence against civilian, business and government, in order to achieve their aims. During past three decades over 25000 terrorists’ incidents has happened around the world, which have resulted over 100000 causalities or injuries. The basic objectives of terrorists have remained unchanged over the years but development in technology has allowed terrorists to use more sophisticated and devastating tactics to create fear in people’s mind. The biggest increase in terrorism activities in past decade has raised many questions about the economic impacts on many countries around the world.

In addition to the technological and natural hazards, people also face threats of terrorism posed by terrorists groups. Terrorist can be foreigner or domestic and their threats to people and nation from isolated acts of terrorism. The terrorists groups used different methods of attacks to create fear in people, like assassinations, kidnappings, car bombs, airline hijacking, building explosions, computer base attacks (cyber attacks), mailing of dangerous materials, use of biological, chemical and nuclear weapons. The main targets of terrorists are civilian, government departments, holiday destinations, international airports, historic and largest cities and businesses.

According to Enders W. and Todd S. (2002), “terrorism is the premeditated use or threat of use of force by individuals or groups to obtain social or political objective through the intimidation of large audience, beyond that of the immediate victim”. By using fear against civilian, terrorists create fear in general public through intimidation and hope to weaken the government’s legitimacy by strengthening their own importance. Beside civilian death and destruction, terrorism can have very serious impacts on economy and tourism in the worse and immediately affected industry by terrorism.

UK Tourism Sector and Economy as a Whole:

The tourism industry in one of the biggest and fastest growing industries in the United Kingdom, and an important economic sector for UK economy. It is the UK fifth largest industry which provide directly employment over 1.4 million people in UK. In last year domestic and international tourists spend over 90 billion in UK economy. According to Deloitte report 2007 tourism industry contributed direct and indirect in UK economy were worth 8.2% of GDP and also provided 2.65 millions jobs to workforce. The UK tourism industry employs more people than engineering and manufacturing industries, but both industries receive significant polices attention from Government. Growth in tourism sector could have significant impacts on UK workforce. In UK the combination of culture, history, world famous attractions and natural beauty is an attractive option for local and international tourists. There are number of upcoming opportunities like London Olympics 2012, Rugby League World Cup 2013, Glasgow Commonwealth Games 2014 and Rugby Union World Cup 2015 for the UK tourism that should be exploited and on the other side depreciation of sterling means increase in spending power of international tourists, which also make UK more attractive destination to visit. It also encourage local tourist to spend holidays in UK because foreign destinations become more expensive than UK’s. Recent reports shows that number of UK tourists going abroad has fallen significantly in past few years and they are planning holiday domestically. This is confirmed by BCC (2009) report, local business in Essex notes that, “there are definite signs that exchange rates are giving the UK tourism industry a boost with less people travelling abroad and more international tourists come UK”.

The future growth of UK tourism is predicted by BBC. According to BBC (2010) report; in 2018 domestic and overseas visitors will put ?115 billions a year in UK economy. The direct contribution in the UK economy will be ?52 billion in term of GDP which represent 4% of UK economy. Tourism also provides 1.36 million jobs in 2009 to UK workforce which is 10% of total work force. UK is the world’s sixth largest international tourism destination in term of number of tourists. After September 11, 2001 and July 7, 2005 incidents tourism industry was badly affected. According to the LCCI (2005) report, it has been estimated that the fall in tourism could cost UK tourism industry over ?300 millions. Liberal Democrat MP Sarah Teather and Brent East told GMT (2005), that the impact of London terrorist bombing on tourism industry is 60 percent worse than it was initially feared. They said that the terrorism cost UK tourism industry over ?500 million.

Why Terrorism target Tourism Industry:

The words tourism and terrorism exist at either end of a continuum of quality of life. The word tourism means living happily, enjoyment, and relaxation, while terrorism means feeling of death, destruction, fears and panics every where. According to Beirman D. (2003), “tourists are primary concerned with travelling to the destination satisfying their desires with minimum complications, threats to their safety and wellbeing “, while on the other hand Gilham (2001) said, “physical threat or serious disturbances to one’s plans are suffer to reduce the prospects of a tourist destination or tourist firm”. In past decade terrorism has very severe impacts on the travel and tourism industry than any other industry. The main reason of this may be because the basic objectives of the terrorist groups are to spread fear, as a result the basic safety and security of people threatened. According to Maslow A. (1943) the hierarchy of needs, he said that human nature never satisfied, when they have met their basic needs for safety and security. When they are able to satisfy their basic needs, then they attempt to satisfy their self actualisation needs such as better life, travel and tourism. According to Essner J. (2003), the psychological impacts are enough to have severe impacts on tourism. The fear of terrorism is irrational, because in terrorist attack chances of being killed are very little and security environment has demonstrated its negative impacts on tourism in many top destinations around the world.

In this competitive age, the business environment is changing dramatically. Terrorism is the biggest threat to tourism industry because travel is susceptible to the incidents of terrorism. When people travel they always avoid hazards, so for tourists safety is the major concern. During the past decade especially after September 11 2001, there are number of events which have had significant negative impacts on UK tourism. The correlation between terrorism and tourism is undeniable in the era due to industry strength and tourist places are the ideal target for terrorist to create large amount of economic and social disruption in the country. In UK terrorism can be seen in substantial part, as a result of this backlash to the tourism industry. There are number of definitions of terrorism, in the world of Alexander, Yonah, (1979) “terrorism is a threat or use of enforcement and inclemency to achieve a political goal by means of intimidation fear, and coercion”. In the present world context, the European Union (2001) define the terrorism relevant to international business in the following words. “Terrorist offences are certain criminal offences set out in a list comprised largely of serious offences against persons and property which, given their nature or context, may seriously damage a country or an international organisation where committed with the aim of: seriously intimidating a population; or unduly compelling a Government or international organisation to perform or abstain from performing any act; or seriously destabilizing or destroying the fundamental political, constitutional, economic or social structures of a country or an international organization”.

September 11 Terrorist Attacks and Tourism Industry:

Terrorism has deep history science the cold war but this issue become most salient after terrorist attacks in September 11 2001. This incident affected the UK and international tourism industry in various ways. On one hand the world tourism industry was affected financially, the other hand it suffers due to legal and security issues. The international tourism industry between countries was most seriously affected due to security and safety concerns and legal issue. Especially UK, US and other developed countries were compulsion to protect their territory and people at any cost. Tourism industry in UK and USA found themselves floundering financially in the months after the terrorist attack on world Trade Centre, while rest of the world tourism industry also lost millions of dollars. According to U.S department of state (2002) report more than 3000 people of different nationalities were killed in the terrorist attacks only in the United States in September 11, 2001. The attacks were the conspicuous example of terrorism on global level. According to the overview of European commission (2001) this was the one of the major event in the past decades which diversifies the viewpoint and outlook of people around the world. Terrorism affects both the long term and short term perspectives of the all economic sectors around the world. Czinkota (2002) cited that terrorism influenced long term karma of entire industries, for example tourism, retailing and manufacturing industries.

According to U.S Department of state (2001), “terrorist select businesses (e.g. tourism places) for attack compare to other targets”. The most kind of attack is bomb blast, although armed attacks and kidnapping are also some kinds of terrorist attacks. According to Council of Foreign Relations (2002) reported “the majority of victims in terrorist attack are civilians”. The relatively large number of tourists may not prepare to face these kinds of terrorist attacks. However the scenario has changed as it was at the time of terrorist attack in 9/11. Kunreuther, Michel and Porter (2003) said that during the days of terrorist attacks in 9/11 a common feeling came into mind of people that it could be me. But with the passage of time, this may give way to may be it will not ‘me’ next time. This kind of behaviour is more common now a day in south Asia. But it is a common thinking that it is extremely easy for terrorist that to attack any where in the world. Even in low cost and low tech attacks, terrorists achieve to disrupt the tourism industry.

After the September 11 terrorist attacks many international tourist destinations have badly affected legally because countries have introduced new laws for foreigner tourists e.g. strict visas requirements, security check and criminal record check etc. UK government also introduced strict immigration law for every one who wishes to come UK for visit, in the effort to prevent further terrorist attacks. The new terrorist laws restricted the tourists for freely travel across the UK borders and require by security department to keep proper track of their activities. The anti terrorist laws have made very complicated for tourism industry to conduct its business activities freely across the UK borders; as a result many people and firms engaged with tourism have financially struggled. Another major issue that affect the UK tourism industry is security and UK government have to invest huge amount of money to improve both internal and external security. The security is most important because terrorist target hot tourists spots and transportation network to achieve their targets.

There is not a vast existing literature which shows the relationship between terrorism and tourism management theories, and the lack of presence of research literature is absolutely visible on the relationship between terrorism and tourism management, which elaborates constructive techniques for tourism industry in the presence of phenomena of terrorism. Terrorism has capacity to create atmosphere of fear and can be intimidate industry in number of ways. This threat of terrorism attacks poses a continuous atmosphere of risk for the tourism around the world. This risk itself creates extension for treatment of risk in management theories. The majority of management literature theories adopt term ‘uncertainty’ as a factor of unpredictable environment which may influence the tourism industry in certain ways. The environment effected by terrorism also has a factor of unpredictability in it. This study is another attempt to research and investigates impacts of terrorism on the tourism industry in UK and we will also discuss different approaches for reducing and handling the terrorism threats.

Context and relevance of the Study:

The topic, impacts of terrorism on tourism industry has been widely explored, this study is based on past decade to find out the impacts of terrorism on UK tourism industry and suggest the appropriate framework that helps tourism industry to minimise the impacts of terrorism. Given this significance, the aim of this research is an attempt to find the impacts of terrorism on UK tourism industry in the present context for the period after September 11 2001.

Research Aim:

The aim of this research is to analyse and explore the effects of terrorism on tourism industry in the United Kingdom after September 11 2001. The second part of my research is to critically analyse and recommend the most appropriate framework for tourism industry to deal with the terrorist threats or scrutinize the different ways to avoid and minimise the impact of terrorism on tourism industry.

Research Objectives:

The research objectives will include the elements, which have relation to both terrorism and tourism. The objectives of this research will show the correlation between terrorism and tourism and the tourism industry is highly impacted by terrorism activities. This research has the following individual objectives:

To critically analyse the general impact of terrorism on United Kingdom tourism industry.

To recommend the most appropriate framework that helps the tourism industry to minimize the impact of terrorism.

Hypothesis:

The hypothesis of this study is as follows;

Tourism industry is likely, to be negatively impacted by terrorism events.

Research Questions:

The above research objectives can be broken down into following leading questions;

What are the effects of terrorism on UK tourism industry?

What measures and framework exist to minimize the impacts or consequences of terrorism on UK tourism Industry?

After having answered all above questions, conclusion and recommendations will be formulated to minimize the impacts for tourism industry. The conclusion and recommendations are put in the context of relevant political, economic and legal manners.

Scope and Limitations of the research:

This is an academic research that would shed some light on the matter of terrorism and tourism which have been discussed in different prospective in past. The significance of this study is found out the impacts after September 11 2001 and July 7 2005 terrorist attacks on UK tourism industry. Terrorism and tourism relationship is an ongoing issue and it relevance may change in different period because of the change of political structure of the countries. This study is relevant to the people involve in tourism and related industry and of much interest to get insight of the tourism industry.

The finding of this study will be limited from the following aspects. The study includes the impacts on UK tourism industry only. Hence, its findings may not be applicable to other countries tourism industries because of the frequencies and number of terrorist attacks. Another limitation is use of secondary data, this data is an important component of my research but there are some limitations that the secondary data may have and the problems that could arise if these limitations are ignored. The verification of existing data is difficult. Secondary data can be general and vague and sometimes it may cause difficulties in decision making. It is possible that data could be out dated and the sample used to generate the secondary data maybe small. The secondary data may not be accurate and sources of data need must always be checked. The sample used to collect data may be very small or very big, which means it may not show the true picture of the population. The secondary data sometimes does not help to design methods of formulating research question or answering that question. The data publisher company may not be reputable. While keeping in mind those limitations of secondary data, I will use data for my research from reputable academic websites and published literature.

Research Structure and Design:

This research consists of six chapters. It begins with chapter 1, which reveals the need, aim and objectives for this research to be attained. Chapter 2 of my research will discuss the methodology, which enables me to fulfil the requirements of this research. Chapter 3 is an extensive and deep interpretation of literature review about terrorism and tourism. This chapter also looks at the other literature on the tourism and terrorism topic, and also discusses the difference between previous researches and this research. Chapter 4 of this research will explore the impacts of terrorism on UK tourism industry. Chapter 5 of this research is about managing the effects of terrorism and discuss the framework to minimise the impacts of terrorism. Finally chapter 6 of this research is the conclusion and recommendation chapter which will answer all the key questions, aim and objectives of this research seek.

Abbreviation and terminology:

Uncertainty: specifically mean the unpredictable environment; it is unpredictable when next terrorist attack will occur.

Risk: mean threat; internal and external threat in tourism industry which may affect the productivity of organisation.

Toronto is one of the most multicultural cities in the world. There are over 140 languages and dialects are spoken here, and just over 30 per cent of Toronto residents speak a language other than English or French at home. The top non-official home languages were: Chinese, Tamil, Italian, Spanish, and Portuguese.

“Visible minority” is defined by Statistics Canada as “persons, other than Aboriginal peoples, who are non-Caucasian in race or non-white in colour”

Background

Immigration to Canada can extends back thousands of years. The Inuit are believed to have arrived entirely separately from other indigenous peoples around 1200. Indigenous peoples contributed the culture and economy of the early European colonies and played an important role in fostering a unique Canadian cultural identity.

Immigration since the 1970s has overpoweringly of visible minorities from the developing world, since restrictions on non-white immigration was altogether removed, starting when Lester B. Pearson was prime minister with the revised Immigration Act, 1967. Currently, most immigrants come from South Asia and China and this trend is expected to continue.

Prior to 1885, restrictions on immigration were imposed mostly in response to large waves of immigration rather than planned policy decisions. The first Chinese Head Tax legislation passed in 1885, which was in response to a growing number of Chinese working on the Canadian Pacific Railway. Subsequent increases in the head tax in 1900 and 1903 limited Chinese entrants to Canada. In 1923 the government passed the Chinese Immigration Act which excluded Chinese from entering Canada altogether between 1923 and 1947.

Statistics (please refer to chapter 2 of the text)

In 2001, 250,640 people immigrated to Canada. Based on the Canada 2001 Census total population of 30,007,094 people, immigration represented 0.834% population growth that year. On a compounded basis, that immigration rate represents 8.7% population growth over 10 years, or 23.1% over 25 years (or 6.9 million people). Since 2001, immigration has ranged between 221,352 and 262,236 immigrants per annum.[8] According to Canada’s Immigration Program (October 2004) Canada has the highest per capita immigration rate in the world,[9] although statistics in the CIA World Factbook show that a number of city states and small island nations, as well as some larger countries in regions with refugee movements, have higher per capita rates.[10]

The three main official reasons given for the high level of immigration are:

A. The social component – Canada facilitates family reunification.

B. The humanitarian component – Relating to refugees.

C. The economic component – Attracting immigrants who will contribute economically and fill labour market needs (See related article, Economic impact of immigration to Canada).

There are three main immigration categories:
Economic immigrants

Citizenship and Immigration Canada uses several sub-categories of economic immigrants. The high-profile Skilled worker principal applicants group comprised 19.8% of all immigration in 2005.Canada has also created a VIP Business Immigration Program which allows immigrants with sufficient business experience or management experience to receive the Permanent Residency in a shorter period than other types of immigrations. The Province of Quebec has program called the Immigrant Investor Program [8]

Family class

Under a government program, both citizens and permanent residents can sponsor family members to immigrate to Canada.

Refugees

Immigration of refugees and those in need of protection.

Illegal immigration in Canada

There is no credible information available on illegal immigration in Canada. Estimates range between 35,000 and 120,000 illegal immigrants in Canada.

Issues involved

These cities are experiencing increased services demands that accompany strong population growth, causing concern about the capability of infrastructure in those cities to handle the influx. For example, a Toronto Star article published on 14 July 2006 authored by Daniel Stoffman noted that 43% of immigrants move to the Greater Toronto Area and said “unless Canada cuts immigrant numbers, our major cities will not be able to maintain their social and physical infrastructures”.[11] Opinions on how to address funding shortfalls vary, with others not citing immigration reduction as a solution. A public consultation by Mayor David Miller of Toronto, for example, emphasizes a better distribution of responsibilities among the three levels of government, and new funding models to address the concern.[12] Most of the provinces that do not have one of those destination cities have implemented strategies to try to boost their share of immigration.

Obviously, the fee made it costly, and therefore harder, for Chinese immigrants to come to Canada. But it also had the side effect of separating families – some could only afford to send one family member to Canada, who would save money to fetch the rest. But, when the Chinese Exclusion Act was implemented in 1923, families were then separated for extended periods of time, as long as 20 years in some cases. Chinese-Canadians were offended by the act, and observed July 1 as “Humiliation Day,” closing shops and boycotting Dominion Day celebrations. It made many Chinese-Canadians feel like second-class citizens. Obviously, the fee made it costly, and therefore harder, for Chinese immigrants to come to Canada. But it also had the side effect of separating families – some could only afford to send one family member to Canada, who would save money to fetch the rest. But, when the Chinese Exclusion Act was implemented in 1923, families were then separated for extended periods of time, as long as 20 years in some cases. Chinese-Canadians were offended by the act, and observed July 1 as “Humiliation Day,” closing shops and boycotting Dominion Day celebrations. It made many Chinese-Canadians feel like second-class citizens.

Due to lots of immaginat, heavy duty to services of health, education (like ESL for English as a Second Language), jobs, welfare, lot of money of welfare in refugees, city plan and facilities and crimes grown. Another way, the imagines help on economic development, like new house demend, small business grown, minopoty build up their community and poperty (land) grown and businese groet. Toronto start to delopment more north.

About two-thirds of the Chinese immigrants who came to B.C. during the last five years did not possess adequate English language ability at the time of landing. A majority of them spoke Cantonese and Mandarin as their mother tongue. As a result of the high concentration of Chinese immigrants in the family and independent worker classes, education qualifications of recent Chinese immigrants were somewhat polarized. Of those Chinese immigrants aged 20 or older who came to B.C.

during the last five yeas, 42 per cent had a secondary or lower education while 35 per cent had a bachelor degree or higher education.

A lot of Chinese immigrants from Hong Kong and China student prefer to stay in Canada and refugees. The reggges increase the health, social benift , and creim.

Key people involved in the public awareness?? of the issue or the resolving?? of the problem associated with the issue.

For discriminating against Chinese immigrants in past periods, an official government apology and compensations were announced on 22 June 2006.

Jane and Finch is a neighbourhood located in the former city of North York. It is a multi-cultural neighbourhood.

The Jane-Finch community has one of the largest concentrations of criminal gangs of any area in Canada. It also has “one of the highest proportions of youth, sole-supported families, refugees and immigrants, low-income earners and public housing tenants of any community in Toronto” (p.5, A Report of the Jane-Finch Street Involved Youth Issues Coalition, December 2002).

As well, there is a substantial and equally diverse population living in middle class detached, semi-detached, townhouses and high-rise tower blocks.

The area was alternatively named University Heights in January 2009 to get rid of its notorious tag.

Traditional methods used for resolving issues – if any

James Bissett, a former head of the Canadian Immigration Service, has suggested that the lack of any credible refugee screening process, combined with a high likelihood of ignoring any deportation orders, has resulted in tens of thousands of outstanding warrants for the arrest of rejected refugee claimants, with little attempt at enforcement.[16] Unlike in the U.S., refugees claimants in Canada do not have to attempt re-entry to learn the status of their claim. A 2008 report by the Auditor General Sheila Fraser stated that Canada has lost track of as many as 41,000 illegal immigrants.[17][18]

In the 1980s, there was a growing movement in Canada demanding payment and a government apology to make up for the injustices of the Chinese head tax. The Chinese Canadian National Council (CCNC) has been seeking redress for those affected by the head tax since 1984, asking for financial compensation and a formal apology from the government.

In December 2000, three Chinese-Canadians — backed by the CCNC — launched a class-action suit against the government. It was unsuccessful, primarily on the grounds that the Charter of Rights and Freedoms — introduced in 1982 — can’t be applied retroactively.

The decision was appealed. But the appeal was dismissed in Ontario Court of Appeal in 2002 and the Supreme Court of Canada in 2003. Ultimately, the courts felt the claim was a political issue, not a legal one.

And in 2003, the CCNC launched a new redress website and a Canadians for Redress Campaign.

In November 2005, the federal government, then led by Paul Martin and his Liberals, signed a $2.5-million deal to set up educational projects to commemorate those who paid the tax. The deal was struck with the National Congress of Chinese Canadians and 14 other Chinese-Canadian groups signed a deal with the federal government. But, the cabinet decided not to offer an apology because it could open the government to legal action. The agreement angered other Chinese-Canadian groups, including the Chinese Canadian National Council, who complained they had not been consulted.

In January 2006, then industry minister David Emerson said, after talking to lawyers, a full apology was in order. Then prime minister Paul Martin issued a personal apology on a Chinese-language radio program.

On April 4, 2006, newly elected Prime Minister Stephen Harper promised he would formally apologize for the head tax.

On June 22, 2006, Harper made a formal apology in Parliament. About 100 people, including some who paid the head tax and their families, boarded a train in Vancouver a week earlier to travel to Ottawa and hear the apology, in a journey dubbed the “Redress Express.” The public gallery in the House of Commons was filled with hundreds of people.

Harper apologized on behalf of the people and government of Canada for the head tax and the exclusion of Chinese-Canadians.

“We feel compelled to right this historic wrong for the simple reason it is the decent thing to do … a characteristic to be found at the core of the Canadian soul,” he said.

Harper also offered symbolic payments to compensate head-tax payers, or their spouses, and funding towards community projects. Susan Eng, of the Ontario Coalition of Head Tax Payers and Families, called it a historic day.

In October 2006, Harper said payments of $20,000 would start in the fall and the money would go to about 400 survivors or their widows. “Addressing it directly and honestly has been an issue we felt strongly about for some time,” Harper said.

Questions to be answered/Critical Analysis

Does the literature support the hypothesis and conclusion described in your previous assignment?

What other questions did you find from reviewing the literature?

Any ethical?? issues connected with research done in the

literature?

The “top-down” model is a management strategy where scientific investigation leads the process of identifying and designating specific areas (Kelsey et al., 1995 in MPA connections, 2004). This model is an approach to planning that usually involves a centralized government imposing regulations or laws on resource users (MPA connections, 2004). This model can be very controversial and give rise to opposition as it fails to adequately take into consideration and represent the concerns of stakeholders in the MPA designation process which can result in a community with little understanding of, or support for an MPA site proposal or its management plan (Brody, 1998). This top-down management strategy tends to produce ‘paper-parks’ in which natural resources continue to be degraded due to ineffective enforcement measures and little compliance with rules and regulations (Brody, 1998). This seems to be evident with regards to Buccoo Reef, where decisions about the BRMP are largely made by government officials or management authorities without considering the contributions of many stakeholders. The local community especially those indigenous to the Buccoo Village region, feels disrespected by the lack of communication, and feels that their opinions should be taken into consideration. This lack of communication and support of community involvement, had led to a community that is somewhat disenfranchised, rebellious and uninterested in contributing to protection of the resource.

The “bottom-up” management strategy employs the emphasis on acknowledging local values and perspectives as well as adapting designations to prior use patterns (Fiske 1992 in MPA connections, 2004). This model is a planning approach that usually combines scientific knowledge with traditional knowledge of the users in order to understand and accommodate how they rely on the resource (Graham et al., 1992). Protected areas, either terrestrial or marine, are diverse in their specifications and goals, but share a crucial common ingredient: the role of the public (Springer, 2006). It has thus been realized that biodiversity conversation initiatives cannot be thought in isolation of social issues (Mishra et al., 2009) and biodiversity conservation schemes that do not take local people into account not only raise ethical issues, but also run the risk of being self-defeating (Few, 2000) since ignoring the role of local communities will only exacerbate the problems associated with natural resources (Camarago at al., 2009). It is important to note however, that social systems are made of complex components, some of which are inevitably oppositional (Springer, 2006). Nevertheless, these variable roles played by diverse groups of people can contribute to the success of the designated protected area, or in some cases, fracture the entire scenario (Springer, 2006).

Over the past two decades, it has become widely recognized that the management of protected areas should include the cooperation and support of local communities (Wells & Brandon, 1992). There has been a growing realization that the conventional ‘Gun and Guard’ method of conservation is no more effective in dealing with the socio-ecological complexity and political dimensions of biodiversity conservation (Mishra at al., 2009). Dealing with such a multidimensional issue, requires integrated approaches that recognize the interconnectedness of social and ecological systems and attempt to link science, policy and societal goals through interdisciplinary methods of problem solving and multi-stakeholder involvement (Mishra et al., 2009). Failure to adopt an interdisciplinary approach to protected area management and manage protected areas as human ecosystems can compromise the biophysical values for which protection was sought (Stevens, 1986 in Lane, 2001). This realization has encouraged the development of ‘community-based conservation’ (Mehta & Kellert, 1998 cited in Bajracharya et al., 2005), which emphasizes the role of communities in decision making (Adams & Hulme, 2001).

Community Involvement

Community-based conservation approaches to decision-making in the management of protected areas are increasingly being implemented (Bajracharya et al., 2005) and many projects have now been initiated in various countries, most notably in Africa, where implementation of such community-based conservation practices have contributed to decreases in poaching and improved conservation (Wainwright & Wehrmeyer, 1998 cited in Bajracharya et al., 2005). Designation of protected areas can sometimes result in a variety of negative consequences for rural or local communities by means of restriction of access to traditionally used resources, disruption of local cultures and economies by tourists, resulting in social and cultural disruption and possibly enforced poverty (Mishra 1982 in Bajracharya et al., 2006). These issues have heightened concerns and have led to the growing recognition that for protected areas to be effective, local people need to be closely involved in their management (Wells & Brandon, 1992). Several research papers have emphasized that failure to recognize the relationship between nature and people can precipitate local social disruption among other negative impacts (Lane, 2001). The approach of community-based protected area management attempts to influence the thinking and attitudes with the hope that this will eventually lead to changes in behavior, although in some communities, such changes do not always occur (Infield & Namara, 2001 in Bajracharya et al, 2005).

Achieving community-based conservation is very complex. It is very difficult to stipulate a single value or goal onto an entire community of varying stakeholders as that can be restrictive and ultimately ineffective because it does not represent the community as a whole (Springer, 2006). The extent of variation depends on many factors, such as, the size and character of the community in question, the social cohesion of that particular community and the underlying motivation in making unified decisions (Mascia 2004 cited in Springer, 2006). There is no single, definitive framework that can direct diverse communities toward full agreement of any particular issue, thus encouraging communities to come to a decision that represents a broad spectrum of motivations will facilitate the formation and acceptance of alternative and perhaps even more creative solutions (Chrislip, 1994 in Springer, 2006). It is extremely necessary to understand the social dynamics of protected areas as it can have important implications for the implementation of management decisions.

The central idea of community-based management or ‘co-management’ as it is sometimes interchangeably referred, is the idea that if park managers can establish a cooperative relationship with local residents and park users, in which the responsibility is shared, then the task of the professional manager and the nature and importance of local management problems can be significantly changed (Lane, 2001). Establishing a cooperative relationship however depends on how the issue is addressed to stakeholders. Management must determine how best it can interact with the local community to achieve reciprocally acceptable goals (Springer, 2006). As suggested by Springer (2006), the best way to guarantee the accomplishment of these goals is through familiarity of the complex social connections within the community of interest (Springer, 2006). In order to gain an understanding of the intricate social dimensions of any community, it requires a close analysis of that particular community which will call for significant consultation and collaboration with various community members (Chrislip 1994, cited in Springer, 2006). This collaboration between conservation planners and stakeholders is crucial to integrating protected areas into the local socioeconomic fabric of the community, thus overcoming local opposition and behaviors that would otherwise undermine conservation goals while developing effective partnerships between local stakeholders and conservation planners (Lane, 2001). These co-management or community-based arrangements have the potential to provide economic benefits for local peoples (Smyth, 1992 cited in Lane 2001), however the extent of the economic benefit is determined by the nature of the relationship between the community and managers and the willingness of the managers to consider local economic issues (Lane, 2001).

To achieve effective collaboration, approaches are required that effectively engage the local community in management and decision making, and that enable their livelihood needs to be adequately met (Bajracharya et al., 2006). This concept of linking conservation with community development has resulted in a major shift in conservation management, based on the assumption that if local communities derive some benefits from conservation, they will in turn be more likely to contribute to the conservation of biodiversity (Wells & Brandon, 1992). This linkage of conservation ideals with the societal realm of protected areas addresses biological, cultural, economic and political concerns while empowering communities through effective collaboration and integration in conservation efforts (Granek and Brown, 2005).

Before gaining local stakeholder and institutional participation, it is imperative that stakeholder education be a prerequisite to the planning and participation process. Educational programs should be implemented that acknowledge stakeholder concerns and educate stakeholders about the benefits and limitations of implementing a protected area. Granek and Brown (2005) showed in their studies on the Comoros Islands that educating about the natural history to local resource users resulted in greater understanding and appreciation of protecting local resources (Lundquist & Granek, 2005). Education however, should not be limited to only stakeholders, but rather include scientists and managers to be educated on issues that will increase their understanding of the socioeconomic processes that will habitually affect implementation (Lundquist & Granek, 2005). These processes include information on resource industries, political systems, legal frameworks for protection, social systems and consideration of potential socioeconomic impacts of protected area designation.

Education, though fundamental is not the only area in which focus needs to be placed. Of extreme importance as well is the need for the goal of the protected area to be clearly defined. Explicit goals and objectives that are defined early in the design process is important for improving communication and standardizing expectations of stakeholder groups (Lundquist & Granek, 2005) thus allowing stakeholders to be fully aware of the expected outcomes and methods for measuring success consequently encouraging more willing support.

Management examples

Marine protected areas have met limited success in many developing countries and some researchers attribute part of these shortcomings to inadequate attention to the social context of conserving marine resources (Cinner, 2007). Marine protected areas are important in protecting the marine environment, but are also have substantial socio-cultural impacts (Badalamenti et al., 2000). In many MPAs, the success of the protective initiatives often tends to be proportional to the degree of involvement of the local community (West & Brechin, 1991 cited in Badalamenti et al., 2000). Considering the fact that effective execution of community involvement programs is quite multifaceted, one may be curious as to how many programs have actually been implemented and what factors contributed to its success or demise.

Granek and Brown (2005) conducted a 3 year study that analyzed the co-management practices implemented in Moheli Marine Park, Comoros Islands. Their assessments proved that even though the co-management approach had some inevitable weaknesses, the strengths significantly benefited the park. Granek and Brown (2005) showed that co-management that integrated education, use of indigenous local knowledge, capacity building and community commitment provided partial mitigation where there was a lack of resources, weak governmental enforcement and inadequate scientific data. Through this integration, the local empowerment that resulted contributed to the development of a conservation ethic that provided potential for long-term success through local interest (Granek & Brown, 2005). Co-management in the Moheli Marine Park also proved to empower community leaders and therefore evaded traditional hierarchical political structure (Granek & Brown, 2005). Involving the community proved to be of significance because this particular park lacked adequate scientific data, therefore requiring traditional knowledge as a substitute for limited ecological data. This in turn sparked local interest in being active in tracking the park’s success.

Unfortunately however, with these strengths also exists shortcomings of this co-management approach, for example, parks such as these that are based on limited scientific data and rely on traditional knowledge may hinder effectiveness. A lack of baseline data limits the ability of future research to quantitatively measure success (Granek & Brown, 2005). There is also the problem of inadequate government resources that can affect the park success and although there is community involvement in monitoring and policing the park, lack of adequate government enforcement continues to affect its success. Other shortcomings include larger scale political and economic issues such as overpopulation, or lack of available funding which can undermine conservation efforts. However, all in all, the co-management of Moheli Marine Park has been successful thus far and the park has seen a notable increase in ecotourism with an average of 200 visitors per year, and even though the designation and implementation of this park were limited by available science, technical and financial resources and federal personnel, it has been compensated by the strength and interest of the local community (Granek & Brown, 2005).

Successful community-based management has also been observed in the case of Puerto Morelos reef, Mexico. In this MPA, the establishment and maintenance had five stages (a) community leaders who would participate in the project were identified (b) consensus on the need to protect the reef through discussion among stakeholders, NGOs and scientists were generated (c) involvement of government agencies in establishing the status of the MPA (d) take-over of decision-making by centralized government agencies and; (e) continues problem-solving process between the government and stakeholders (Rodriguez-Martinez, 2008). As previously mentioned, education plays an important role and in Puerto Morelos, public education was a main factor in gaining community support for the creation and management of the MPA. General education programs began in the early 1990s with participation of NGOs and scientists and expanded to schools with local teacher researchers, tourist operators and MPA personnel in 2003 (Rodriguez-Martinez, 2008). Permanent educational programs began in 2004 which were designed to teach tourist guides about the values, functions, uses and fragility of coral reefs in order to heighten their interest in coral reef conservation and to provide them with better tools for work (Rodriguez-Martinez, 2008). Visual aids and public awareness materials such as websites, booklets and fliers were also used to educated students and the wider public. The efforts put into community education highly contributed to an increase in the willingness to accept the MPA designation and also allowed all community sectors to be open to participation during and after the creation phase. The ultimate result is that Puerto Morelos reef has a very cohesive management strategy that gives the community a sense of ownership of the process and readiness to comply, resulting in an increase in the development of social capital.

Pollnac et al., (2001) examined the factors that influence the success of community-based marine protected areas in the Visayas, Philippines. The Phillipines is an extreme example where governmental policy, international aid, universities and NGOs have resulted in the establishment of over 400 MPAs (Pollnac et al., 2001). However, only about 20-25 percent of these MPAs in the Phillipines are successful, raising concern that this high failure rate may result in the rejection of the community-based approach. This study was conducted on 45 community-based marine protected areas in the Phillipines to conclude what factors led to the small success rate and whether or not these factors can be used to better the situation of the other 75 percent of MPA designation. At the conclusion of their study, it was indicated that six main factors appeared to be the most important in the overall success of the community-based MPAs on their sample.

Population size was the first observed factor, where the population sizes of the successful MPAs was noted to be relatively small (Pollnac et al., 2001). It was observed that for initial cooperation, a perceived crisis was needed before the project was started, for example reduced fish populations. There was also the need for successful alternative income projects considering the community may not be able to use the resource after protection was designated. A relatively high level of community participation in the decision making process that was high on the democracy scale with, continuing advice from the implementing organization along with inputs from the municipal government were also noted. Though these factors were deemed the most important, it is important to note that they are not the only contributors and even though they worked in these areas the factors may differ in other areas.

Hind et al. (2008) conducted studies in Apo Island, Phillipines in attempt to show the benefits of community involvement (bottom-up approach). This study analyzed the effects of the transition of Apo Island from being rated one of the best community-involved MPAs to changing into a top-down, solely governmental organized MPA. Observations showed that the MPA went from being fully supported by the community to complete community disenchantment. This change in management strategy by governmental take over resulted in the exclusion of the community and stakeholder input, resulting is lack of interest and compliance to regulations.

Considering the complex heterogeneity of the existing community within the Buccoo Reef and Bon Accord region, sole community management may be very difficult to achieve as there will be a plethora of opinions and personal preferences to appease. Considering the aforementioned examples of successful community management of MPAs where the communities involved are somewhat fluid and more dependent on the resource and thus focused on the goal of conservation rather than that of personal gain as the community of Buccoo Reef, leads to another obstacle in achieving effective community management. This therefore lends to the suggestion of a combination of both “top-down” and “bottom-up” strategies to ensure effective management. Recognition is growing for such a combined management strategy as being ideal, as it is an approach that is government-driven but also heavily involves stakeholders (MPA connections). This therefore can lead to an increase in the social capital of the region as involvement in the decision making process can heighten interest in conservation and protection of the MPA.

In the Caribbean there are said to be greater than 285 MPAs (Burke and Maidens, 2004). The management success of these parks highly varies, with some just being ‘paper parks’, and others being successfully managed (see figure 8). In order to obtain this information, Burke and Maidens (2004) analyzed effectiveness of MPAs based on four major criteria: the presence of management activity and to what extent enforcement is executed, the presence of a management plan and the presence of resources. The results obtained showed that as much as 49% of MPAs in the Caribbean region are deemed as being inadequate with only 5% being considered good. Some studies suggest that MPAs are frequently unsuccessful as a reef conservation strategy especially in developing countries, where socio-economic factors such as poverty can drive resource exploitation and the capacity for enforcement is often lacking (McClanahan 1999, in Cinner, 2007).

Tourism and Carrying Capacity

Tourism is the fastest growing sector of the global economy, and in most countries, coastal tourism is the largest sector of this industry (Tourism and Recreation). In many countries, especially developing small island states, tourism contributes a significant and growing portion of GDP and is often the major course of foreign exchange (Tourism and Recreation). In 1998, direct and indirect GDP from travel and tourism in the Caribbean was over US$28 billion, accounting for approximately 25% of the region’s total GDP (WTTC 1999 in Tourism and Recreation). In the Caribbean, tourism is largely coastal or marine in nature and has been built upon the traditional aesthetic appeal of beaches, a marine environment suitable for a range of recreational activities, and warm weather conditions all year round (Tourism and Recreation). Considering the lure of the natural environment, the tourism industry within the Caribbean benefits largely from ‘pristine’ surroundings, and thus, uncontrolled expansion and mismanagement can harm the very resources on which it is based (WTTC et al., 1997 in Tourism and Recreation). Tourism growth rates vary greatly among Caribbean states, with U.S. Virgin Islands and Puerto Rico being 15-19% between 1990 and 1994, while that of Grenada, Aruba, Trinidad and Tobago and the Caymans reported as being 33-37% growth, and that of Belize , St. Lucia and Guadeloupe amounting to as much as 50-65% growth for the same time period (Tourism and Recreation).

Marine protected areas are established for the primary purpose of conservation or preservation (Agardy et al., 2003), but their multiple use designation often incorporates a recreation and tourism component (Sorice et al., 2007). Undoubtedly, these use values benefit local and regional economies while also raising awareness and support of coral reef conservation, but unfortunately however, tourism and recreation participation can pose various threats to the marine resources, especially to fragile ecosystems such as coral reefs (Sorice et al., 2007). This illustrates the well-known concept of tourism as a double-edged sword and the tenuous balance between positive and negative impacts (Diedrich, 2007). In the past 20 years, there have been larger increases in visitation to marine protected areas in many parts of the world (Inglis et al., 1999).With this increase, is an associated increase in rates of participation in marine related activities such as snorkeling, scuba diving and reef walking (David and Tisdell, 1995) and thus, MPAs are increasingly challenged to maintain or increase tourism benefits while striving to protect the resource (Sorice at al., 2007).

Tourism has been thought of as a low-impact coral reef use, relative to extractive practices such as harvesting corals and fish for commercial purpose (Talge, 1993 in Zakai and Chadwick-Furman, 2002), however recent evidence has demonstrated that reefs may become degraded as a result of poor planned or intensive tourist use (Jameson et al., in Zakai and Chadwick-Furman, 2002). A number of studies have demonstrated that recreation and tourism activities such as scuba diving and snorkeling are threats to coral reefs because touching, standing, or trampling on reefs can cause serious damage such as coral breakage, abrasion and mortality (Hawkins et al., 1999 in Needham, 2010). Studies conducted on reef flats in Egypt have proven that heavily trampled reef flat areas showed a linear increase of coral damage with increased trampling intensities resulting in reduced coral cover, higher amounts of coral damage, less old dead coral, less obligate corallivorous fishes and more herbivores (Leujak, Ormond, 2007). Considering these findings, it might become necessary to restrict the number of visitors to a site, which raises the question: How much use is too much?

In order to attempt to answer such a question, one must consider looking at the notion of ‘carrying capacity’. Carrying capacity in tourism is a term used often to measure the level of tourism or tourism development an area can accommodate without adverse effects on the resident community, the natural environment, or the quality of visitor experience (UNEP AND WTO, 1992 in Tourism and Recreation). The basic concept of carrying capacity, the need for a limit of threshold in the tourist activity is present in one way or other in the concerns and priorities of local policy makers for sustainable tourism development (Kostopoulou and Kyritsis, 2006). However, to the extent that tourism related pressures on the natural environment create problems on the functioning of protected areas, management agencies need to determine what the various thresholds should be (Kostopoulou and Kyritsis, 2006).

When considering thresholds, research has proposed two distinct carrying capacity concepts. Firstly there is the notion of, “ecological or biological carrying capacity,” defined by Martin and Uysal (1990) as the maximum number of tourists that can be accommodated without causing excessive environmental degradation; and by Hawkins and Roberts (1997) as the amount of use below which an ecosystem can tolerate the amount of disturbance or stress, but above which degradation ensues (Leujak and Ormond, 2008). Secondly, there is the concept of “social carrying capacity,” which is defined as the level of use before a decline in users’ recreation experience ensues (O’Reilly et al., 1986).

Social carrying capacity has been proposed as a management tool for use in coastal tourism, with a decline in attractiveness of a beach location, as detected by a decline in visitor numbers being taken as an indicator of unsustainable resource use (O’Reilly, 1986). Any tourist destination where the environment is important can lose its attractiveness through either deterioration of the environment most likely due to crowding. Several studies have been undertaken to investigate visitor perceptions, mostly in terrestrial settings, with only a few in marine environments (Leujak and Ormond, 2007). However these studies have confirmed crowding as one of the major factors contributing to visitor dissatisfaction (Hoover et al., 1985 in Leujak and Ormond, 2007), with perceptions of crowding depending on different factors such as visitor characteristics and the location where encounters take place (O’ Reilly et al., 1986). Studies have shown that crowding norms appear strongly dependant on expectations, with visitors with greater experience of nature being more sensitive to visitor density (Manning 1985 in Leujak and Ormond, 2007). Intensified recreational use has been shown to reduce recreational enjoyment as negative impacts such as litter, or damage to plants, trees or corals tend to reduce aesthetic appeal and overall experience, although individuals with a lower degree of environmental concern appear to be more accepting of such impacts (Priskin, 2003 in Leujak and Ormond, 2007). Visitor behavior also has an influence on a location’s carrying capacity, as visitors may either simply not be aware of the impact they are having, they may be unable to change their behavior as a result of inexperience (for example inexperienced snorkelers or weak swimmers may be in need of instant rest while being out on a reef), or they may be unaware if existing regulations (Leujak and Ormond, 2007). As such it is important to take visitor perception, awareness and satisfaction into account when accessing any tourist destination, or in this case, a protected area as it can provide essential information for sustainable management (Daily 2000, in Uyarra et al., 2009).

Leujak and Ormond (2007) used this notion of social carrying capacity and administered questionnaires at various park locations in Egypt which addressed activity preference, coral reef knowledge and park regulation awareness. Visitor perception of reef quality and crowding were also taken into consideration. Based on their findings, it was estimated that to achieve a greater than 50% of visitors being satisfied about reef health, average coral cover would need to be around 25 to 30%, whereas a decrease of coral cover to 20% would leave only 40% of visitors satisfied and a reduction to 10% would leave only 25% satisfied (Leujak and Ormond, 2007). Results from this study showed that experienced recreationalists were more susceptible to overcrowding, preferring fewer people, whereas the less experienced showed preference to larger crowds. Various literatures have stated that determining the carrying capacity of a reef system is highly specific and still somewhat not fully understood. However, despite the difficulty of accurately assessing the carrying capacity of coral reefs for recreational use, the concept of carrying capacity remains an important and useful tool for coral reef management (Davis and Tisdell, 1995). Management must develop a concept that establishes the best allowable rate of visitation for the specific park in question as there is no one way to determine this since each site will have varying factors acting on it. It is important to assess these factors in order to allow for sustainable tourism within any protected area. The management plan of BRMP has indicated the need to establish some sort of ‘cap’ on visitation to the reef in order to achieve sustainable usage however no methods to achieving this goal have been mentioned. Sustainable tourism development not only has the potential for longer-term economic benefits for a community, but also can serve to limit environmental degradation (Tourism and Recreation).

Environmental analysis is a very important part of decision making. Managers need to take this aspect of taking decisions very seriously. It has been proved time and time again that decisions that are made from gut feelings or instincts may not work how the manager envisioned it to work out. It is always better for analysis to be done and different scenarios to be worked out to see how a decision can work out. This reduces the risk associated with taking decisions. This process of analyzing the environment is a dynamic process not a static process. The environment in which an organization works in is divided into internal and external environment its respective factors. The following article talks about the tools and techniques which are used in analyzing the factors of the business environment.

Introduction:

Strategic management is also called institutional management. It is the art and science of the creation of strategies and plans, the implementation and evaluation of these strategies and plans which helps an organization to achieve its long-term objectives. In this process the organization’s mission, vision and objectives are discussed and developed. After these objectives are developed, the policies, plans, with respect to projects and programs, are designed, and then resources are allocated or budgeted to implement them and achieve the objectives. (wikipedia n.d.)

Strategic management consists of a set of activities that come under setting goals and over the process of putting together tactics to achieve these goals and objectives. How strategic management is carried out depends on the organizational structure of the company. The Board of Directors, the management team as well as other stake holders of the company can be involved in these activities that fall under strategic management.

Strategy can be defined as “unified, comprehensive and integrated plan that maps the strategic advantages of the organization to the challenges of the environment. It is designed to ensure that the core objectives of the enterprise are achieved through the proper execution by the organization.” (Jauch and Glueck 1988)

Formulating a strategy for achieving an objective or a set of objectives is a combines three main processes which are:

aˆ? By analyzing the situation, evaluating themselves and comparing themselves with their competitors i.e. internal and external as well as micro-environmental and macro-environmental.

aˆ? After this assessment, the objectives are determined. These objectives should be created with respect to a time-line; where some are short-term and others are long-term objectives. This involves creating a vision statement, a mission statement, setting corporate level, strategic business unit level and tactical level objectives.

aˆ? These objectives should be studied along with the results of the situation analysis and a strategic plan can be formulated which will provide details of how to achieve these objectives.

Environmental analysis begins from the identification of environmental factors (internal and external), assessing their nature and the impact of these factors and making various profiles for positioning of the firm. All the decisions taken by the organization and the impact of these decisions depend on the organization’s internal and external environmental factors. These environmental factors should be carefully analyzed before taking any decisions. Environmental analysis is made up of the processes which scan, monitor, analyze, and forecasts the situations which the organization can face and variables of the environment. Scanning is done to get information from the environment. Monitoring is done to test the impact of the environmental factors. Analyzing deals with data collection and the use of tools and techniques to study and measure the environmental factors. Forecasting is a method to find the possibilities of the future based on the historical data and present scenario. (Business Environment Analysis n.d.)

Different tools, methods, and techniques are used for environmental analysis. Some of the major methods of analysis are benchmarking, scenario building and network methods. Scenario building gives an overall picture of the total system with the factors which affect it. Benchmarking is the process of finding the best standards in an industry and comparing the strengths and weaknesses of the firm with these identified standards. The network method is used to assess organizational systems and its external environment to find the strengths, weaknesses, opportunities and threats faced by an organization. (Agarwal n.d.) Few of the techniques of primary information collection are brainstorming, the Delphi technique, conducting surveys, and historical enquiry. The Delphi technique collects independent information from the experts without mixing them. Brainstorming is done with a group of people usually cross-functional which discuss the problem in hand and try to come up with solutions irrespective of whether the solution is feasible or not. Conducting a survey first involves the design of questions and then asking these questions to people who become the participants. The historical enquiry technique is a case analysis of previous time periods. Analysis tools can be descriptive tools such as mean, median, mode, frequency or tools can be statistical such as ANOVA, correlation, regression, factor, cluster, and multiple regression analysis. (BADU 2002)

SWOT analysis:
Figure 2.1

A study of the internal and the external environment is a critical component of the strategic planning process. The firm’s internal environmental factors can be classified as strengths (S) or weaknesses (W), and those factors which act as external agents to the firm can be classified as opportunities (O) or threats (T). This is called SWOT analysis. (QuickMBA n.d.). This analysis gives information that is useful in matching the organization’s resources and abilities to the environment in which it operates.

2.1 The SWOT Matrix:

A matrix of these factors can be constructed. This matrix will be helpful in developing the strategies for the firm. The SWOT matrix (also known as a TOWS Matrix) is shown in the next page:

SWOT / TOWS Matrix

Strengths
Weaknesses
Opportunities

S-O strategies

W-O strategies

Threats

S-T strategies

W-T strategies

Table 2.1

S -O strategies – helps to pursue identified opportunities fit well according to strengths of the firm.

W-O strategies – helps to overcome weaknesses to pursue opportunities identified.

S-T strategies – identifies ways in which the firm can use its strengths to reduce its vulnerability to external threats.

W -T strategies – establishes plans to overcome the firm’s weaknesses and less vunerable to external threats.

Environmental analysis or external audit:

The organizations should adapt themselves and their strategy to the external environment which is constantly changing. The external environment is also called macro environment. These forces of the external environment cannot be controlled and can be analyzed using a variety of tools and techniques such as Environmental Scanning and PEST analysis.

3.1 Environmental Scanning

Environmental scanning is defined as the process that seeks information about events and relationships in a firm’s environment, the knowledge of which help top management chart the firm’s future. Environmental scanning is used to gather information from the environment.

In this process, the external environment is divided into sectors or areas such as political, economic, cultural, technological and further analysis such as PEST analysis can be done after scanning the environment. Information is collected by monitoring and forecasting any changes that occur to the variables of the environment that have been identified earlier. This collection of information helps the organizations to find out where they are lacking and what exactly they need which helps them in formulating the strategies. (Acar 1995)

3.2 PEST Analysis

PEST analysis identifies the external forces that affect the organization such as Political, Economic, Social and Technological drivers. It is very useful for the organization when used together with other tools such as the SWOT analysis. (wikipedia n.d.)

Political Factors

These factors may have a direct or an indirect impact on the way the organization operates. Laws made by the government may have a huge impact on the way business is conducted by the organization.

Economic Factors

Economic factors such as the market prices and market cycles which in turn affects the buying power and the behavior of the organization’s customers.

Sociological Factors

Sociological factors include the lifestyles, demography characteristics, and the cultural habits and characteristics of the customers. These factors have a huge sway on the requirements and desires of the customers and also affects the size of potential markets.

Technology Factors

Technological changes have an important role in modeling how organizations operate with the resources that they have. Technology is a factor which is very important to gain a competitive advantage over the closest competition. Technological innovations can also improve the efficiency of production, speed and quality. Evolving technologies will change how organizations operate.

3.3 Porter’s Five Forces Model Analysis:

Michael Porter is credited for his five forces model of competitive strategy. The power of each of these forces varies from industry to industry, but taken together they determine long-term profitability. These five factors will affect the strategies which will be adopted by the organization and hence should be carefully analyzed. To be successful, the organization must respond in an effective manner to the environmental pressures exerted on it. (Kazmi 2002)

The diagram given on the next page shows the five forces of this model.

C:UsershaiDesktopPorter.GIF

Figure 3.1
Internal environmental analysis:

The resources, strengths, behaviors, weakness and distinctive competences are major components of the internal environment of an organization. An organization uses different types of resources which help them achieve their objectives and the way in which they utilize their resources can be the source of their strengths or weaknesses. This can also be defined as organizational capability which is used to develop the strategies and objectives which the organization can achieve and these should not unrealistic according to its capabilities.

Some of the components of the internal environment of an organization are:

4.1 Organizational Resources

These are all the tangible and intangible inputs used in the organization to create the outputs of the organization’s product or services.

4.2 Organizational Behavior

The behavior of an organization demonstrates is the result of forces operating internally which will determine the abilities of the organization or constraints in the usage of resources.

4.3 Competency

Competency of an organization is the ability to do what its competitors cannot do or the ability to do better than what they can do. This concept is used for strategy formulation.

Conclusion:

It can be seen that the analysis of the environment is critical to the success of the decisions that managers have to make which have widespread impact on the functions and processes of the business.

According to international trade body airlines body, International Air Transport Association (IATA), India’s domestic air travel demand grew at 14% in June compared to last year figures, making it the second fastest in the world. India recorded second fastest growth rate after Brazil, which reported a demand expansion of 15.1% in June [1] . The industry recorded a load factor of 78.3%, which is consistent with the global average of 79.4% [2] .

It has been observed that the air ticket prices vary with the passenger load across different time slots in a day and routes (different set of origin-destination (O-D) combinations).

The heavy traffic routes like Delhi-Mumbai have significant passenger volume for most of the time in a day and hence, the number of airlines operating between these routes is greater in number. This results in competitive pricing of tickets on these routes. Similarly, the prices also vary across different times, for example, the morning and evening flights having greater passenger volume. To reap maximum benefits, the airlines explore attractive pricing opportunities. Mostly, the aircrafts employed on these routes are bigger to cater to this heavy demand.

On the other hand, for low traffic routes like Mumbai-Nagpur, very few airlines operate and hence, they set monopolistic prices. The aircrafts employed on these routes are smaller, so to cover the fixed cost of operations, the airlines charge exorbitant prices per ticket on these routes. The airlines set different prices for the same distance on across different routes.

For the same distance, the saturated domestic airline industry in the US shows far more volatility in air ticket prices. The heavy competition in this market results into this kind of trend in pricing behaviour.

This implies that the price of an air ticket is a variable entity dependent on various factors. The objective of the project is to study the ticket pricing behaviour in Indian Airline Industry. Also, we aim to benchmark these on some of the parameters with saturated domestic airline ticket prices in the US.

Research Methodology

For the purpose of this project, a set of air routes catering to tier-1 and tier-2 Indian cities were chosen. To compare and benchmark the outcome of the study, US domestic routes and a low distance international route were chosen. The details of the routes are given below [3] :

Origin-Destination Routes

For the purpose of our study we have taken the following combinations of O-D pairs:

Heavy Traffic domestic routes in India

Delhi-Mumbai

Bangalore-Kolkata

Low Traffic domestic routes in India

Mumbai-Nagpur

Delhi-Indore

Domestic routes in the US

JFK-Los Angeles

JFK-Chicago

JFK-Pittsburgh

Low distance international route from India

Mumbai-Singapore

Bangalore-Singapore

Chennai-Singapore

Data Collection

The price points for the chosen routes were collected on a daily basis. The criteria used for collecting the price points are described below:

The price points collected were for one-way trip only.

Flights offering lowest fare between the selected O-D pairs were chosen.

Days to Fly: Two sets of price points were collected – Date of Journey (DoJ) as July 17th (15 days to DoJ) and August 1st (30 days to DoJ). During the initial phase of the project, the prices were recorded on alternate days. When the ‘days to fly’ were 14-15 days, the price points were recorded on a daily basis.

The price points were collected for different times of the day – morning slot (6 am – 9 am), afternoon slot (12 noon – 3pm) and evening slot (6 pm – 9 pm) for each O-D pair and for each of the ‘Days to fly’ combinations.

Channels for booking of air ticket: Only internet (online) mode for booking of air tickets was used. The price points were collected from airlines’ websites and travel websites (Makemytrip.com and Yatra.com) for Indian domestic and India-Singapore air ticket booking. For studying the US domestic routes, three travel websites were chosen – Expedia.com, Travelocity.com, and Orbitz.com.

The price points collected are inclusive of the base fare and all the taxes levied. The flights chosen for the study are non-stops flights as the prices change with the stops (distance increases with diversions).

Data Analysis

The data collected for air ticket pricing was grouped as domestic heavy traffic routes and domestic light traffic routes. The data for routes, Delhi-Mumbai and Bangalore-Kolkata, was grouped as domestic heavy traffic. The data for routes Mumbai-Nagpur and Delhi-Indore was grouped as domestic light traffic. Then, two regressive models where developed based on these data sets with price as dependent variable and distance, time slot, days to fly, mode of booking (airline website and travel websites), and type of airlines as independent variables. The regressive model gave us the basic relationship of price with the independent variable parameters.

A correlation matrix was generated to assess the impact of competition on the prices of air tickets.

The data was analysed to compare the price per km for Indian domestic heavy traffic and Indian domestic light traffic routes.

The concept of price volatility index (PVI) was developed to compare the price fluctuations over days for Indian domestic and US domestic airliners.

Interviews

To understand the pricing mechanisms adopted by different airlines, telephonic interviews were conducted with the marketing and operations executives of MakeMyTrip.com and British Airways. The objective was also to understand the price variations on different travel websites. For example, the rationale for these price variations could be different fee/ commissions charged by travel websites.

Qualitative Results
Heavy Traffic domestic routes in India

Typically, the heavy traffic domestic routes in India are between the metro cities like Mumbai, Delhi, Chennai, Kolkata and Bangalore. These cities are commercial hubs and power centres in the country. Heavy traffic is observed between these pairs of cities in all modes of transport. The airway is no exception to this phenomenon. From the collected data points, it was observed that the price volatility on Delhi-Mumbai and Bangalore-Kolkata routes was not very significant. Also, the price fluctuations between the different times of the day were not significant. The prices for all the airlines flying on these routes were comparable. Mostly, the price increased during the last 3-4 days of departure of the flight. Otherwise, it was mostly constant. The price was more or less constant across various travel websites and airline websites. The main factors responsible for this typical behaviour exhibited in air ticket pricing on these routes are as follows:

Competition: Almost all the domestic airlines fly between these O-D pairs. Also, each player flies 4-5 flights between these O-D pairs. The competition has led to each airline charge its price close to its marginal cost of flying and operations, which explains why the fares of all the airlines are comparable. No airline has the incentive to deviate from their marginal cost covering pricing strategy. They rely on the volumes rather than higher margins on these routes. The reason for the ‘not varying prices’ across different times is the presence of option for leisure travellers to go for other airlines at slightly different time and get a better deal for flying. So, this has led to a constant price across different times. As all the airlines fly on these routes, all of them have tie ups with the all travel agencies and websites. Each of them has a similar discount schemes for each of these travel agencies and hence, the price variations across these websites cannot be observed for these O-D pairs.

Differential Slab-based Pricing Scheme: The air tickets for most of the domestic airlines in India are classified as Business class and Economy class. Business class travel is maximum between the metros and hence, all the airlines offer that at comparable prices. The economy class is further divided into O, P, M, N, etc. slabs. In each slab, there are 7-10 seats and are priced differently. At any given time, the prices indicated on the company or travel websites reflect the lowest fare slab ticket available at that time. If the tickets are booked well in advance, say 25-30 days before of the date of travel, passenger is expected to get a ticket in the lowest fare slab. As time for departure comes by the tickets in the lower fare slab get exhausted and the passenger gets exposed to higher price slab tickets. But on heavy traffic routes like those of Delhi-Mumbai, this effect of slab-based pricing is slightly diluted as the airlines adjust the prices to take into consideration the intense competition and fear of losing their passenger to other airlines. This slab-based effect is prominently observed when there are 3-4 days left for departure and almost all the airlines have sold their low fare slab tickets. At this point of time, it was observed that there was a significant increase in the price of tickets by all airlines across travel websites.

Bulk ticket deal for air travel websites: Many times, it is observed that the air tickets available on air travel websites are cheaper than those of airline website, as is the case with Air India. The reason for this is that these air travel websites go for a bulk deal with the airlines and tickets in the lower fare slab. So, once the tickets in lower slab are sold by the airline to passengers it moves to the higher slab, but the travel websites have tickets in lower slabs available and hence, the passenger benefits by booking the tickets from travel websites rather than from the airline websites.

Travel Distance: The air travel distance also determines the air fare for the metros. The distance between Delhi-Mumbai is less as compared to Bangalore-Kolkata. The ATF requirement is higher for Bangalore-Kolkata route than Delhi-Mumbai route. Also, the operational expense is lesser in Delhi-Mumbai case. As a result of this, the air fare is significantly less on this route as compared to Bangalore-Kolkata route.

The trends highlighted in the above discussion can also be observed graphically.

Figure 1: Price patterns from company website for morning slot flight (Bangalore – Kolkata route)

Figure 2: Price patterns for morning slot flight [data recorded from three different websites] (Bangalore – Kolkata route)

Low Traffic Domestic Routes in India

Typically, these routes are between metros and tier-2 cities like Delhi-Indore, Mumbai-Nagpur, etc. There are few frequent fliers on these routes. Mostly people travel between these routes for business purposes and vacation. Vacation travel forms a bulk of the traffic. These travellers are very price sensitive and mostly look out for the cheapest of the options available. They are willing to travel at later dates and times if they get better deal. Few airlines operate with a direct flight on these routes; most of them have break-journey (one-stop). Mostly, they exhibit a monopolistic behaviour but consider the elastic buying behaviour of the customer while pricing the tickets. There is a difference in the prices of the tickets at different times of the day. The main factors which determine the air ticket prices on these routes are as follows:

Competition: Very few airlines operate on these routes. There are very few players who offer direct flights. The lack of competition gives a monopoly to the operators. They charge the tickets at a higher price for morning flights, but charge them at lower prices during afternoon. The morning flights usually cater to the needs of the people who go to metros for business purposes and are indifferent to prices and hence, are willing to pay higher price. The afternoon flights usually cater to the needs of price sensitive vacation travellers and hence, provide them with lower prices.

Differential pricing slabs: On these routes, the airlines don’t put differential pricing slabs but change the prices purely on demand at given point of the time. They keep the prices low if you book the tickets 25-30 days in advance. Then, based on the demand they increase it. But as the departure date approaches, if they find that there is not enough demand and there is a probability of some seats going vacant due to higher fare, they reduce the fare to make people travelling by train switch to their airlines. The airlines slightly mark-up the ticket prices on Friday evenings and Monday mornings to benefit from the inelastic demand on these routes. The airlines operate on these routes clearly to cater price sensitive crowd and IT employees from tier-2 cities working in metros.

Seasonality: The prices of tickets for these routes are significantly higher during the festive seasons as the airlines predict a heavy demand for the people travelling to their home towns during festivals and switching air travel due to shortage of train and bus tickets during festivals.

Travel Distance: The air travel distance and occupancy per Km determines the price of the air tickets on these routes. The Mumbai-Nagpur distance is greater and also its occupancy per Km is more as compared to Delhi-Indore. Hence, Mumbai-Nagpur air ticket price is higher as compared to Delhi-Indore.

The graphical representation of the trends observed on Delhi – Indore route are shown below.

Figure 3: Price patterns for evening slot flight [data recorded from three different websites]

Figure 4: Price patterns for evening slot flight for the airlines offering non-stop flights

Figure 5: Price patterns for morning and evening flights (Airline: Jetlite)

Pricing of Air Tickets on the US Domestic Routes

As with any airliner, the operators on US domestic routes set price bands for various categories, for example, L, M, N, O, etc., of seats. These prices depend on the flexibility given to a passenger for cancellation, upgrading to next level, refunds, etc. The airlines allocate only a certain number of seats at each fare level for each flight. The number of seats allocated at each fare level depends on many factors, such as the route involved, the time of year, the usual business/leisure passenger breakdown on that route, the time of day, etc. Airlines have inventory control departments to determine how many seats are allocated at each fare on each flight. Since the time span of the project is limited, the analysis may not capture all the parameters that play a role in the pricing of air tickets.

For studying the pricing trends on US domestic routes, three travel websites – Expedia, Travelocity and Orbitz – were used for collecting the prices. The routes chosen for the study include New York (JFK International Airport) to Los Angeles (NYC – LA) [flight distance: 3,994 Kms], New York to Chicago (NYC – CHI) [flight distance: 1,149 Kms], and New York to Pittsburgh (NYC – PIT) [flight distance: 4,150 Kms] [4] .

The airlines sell on first-come first-serve basis. Passengers get cheaper fares by booking earlier. The price thus automatically responds to variations in demand. From the data collected, it was observed that the volatility in the prices was higher prior to 12 – 14 days from the date of journey.

Comparing the airfares on three travel websites considered, it was observed that the fares were more or less same on all of them. Some of the websites (for example, Travelocity) also have provision for price comparison functionalities. This indicates that the market in the US is very competitive.

The pricing of air tickets also depends on the route. On the NYC – LA route, the demand is higher compared to NYC – CHI, or NYC – PIT route. Los Angeles being the hub of business, international trade, entertainment, culture, media, fashion, science, technology, and education in the US, the demand is much higher. This is the reason for a large number of operators scheduling multiples flights on this route. Because of the high demand, the airfare is usually higher and there is a significant movement in the prices compared to other routes. The flight distance of NYC – PIT route is higher by 161 Km than the NYC – LA route, but the fares are much less than the latter.

Similar kind of argument can be extended for NYC – CHI route. The flight distance of the route is 1,149 Kms, much less than the distance of 4,105 Kms for the NYC – PIT route. However, the prices on both the routes are very similar. There is more number of players offering non-stop flights on NYC – CHI route than the NYC – PIT route. This implies that the pricing on US domestic routes is governed by the demand and the number of flights to compete on the route.

As can be observed from the charts below, higher volatility in price movements is seen 12-14 days prior to the date of travel. This volatility increases during the last 4-5 days depending on the availability of seats. Companies and travel sites charge very high prices for the last few seats.

Figure 6: Price comparison for three time slots for New York (JFK) – Los Angeles route (Delta Airlines)

Figure 7: Price comparison across three travel websites for New York (JFK) – Los Angeles morning flight (Delta Airlines)

Figure 8: Price movement for New York (JFK) – Los Angeles morning flight across airlines

Comparison between Indian and US domestic Routes

The demand for air travel is always higher in the US domestic routes than on the Indian domestic routes, although the latter is increasing at a fast rate. This demand is primarily generated by business travellers.

The price movements on the US domestic routes are more volatile than the Indian routes. It is our understanding that there is deeper categorization of seats based on sub-classes, compared to Indian airlines. Therefore, there are multiple price bands. The price gap among the bands increases as the booking of seats approaches the date of travel. Higher volatility on US domestic routes can be due to higher number of cancellations, which is quite common in case of business travel. Indian consumers show reluctance for cancellations.

Also, since the demand for business travel is very high in the US, the US airlines charge exorbitant prices if the number of seats left is very low. In Indian context, the consumer is very price conscious. Indian customer always takes into consideration the price and time factors before choosing a mode of transportation. If the prices will be very high, Indian customer will choose other mode of transportation such as train or road transportation. Therefore, Indian airline companies can reap benefits of shorter supply only to an extent.

Low Distance International Route from India

In order to study the price volatility on international routes with respect to the chosen Indian domestic airlines, Mumbai – Singapore, Chennai – Singapore and Bangalore – Singapore routes were chosen. Mumbai-Singapore and Chennai-Singapore routes are mature routes with a good amount of competition on these routes with Air India, Jet Airways, Kingfisher and Singapore Airlines being the main players. The prices on these routes are more or less constant across the 15 and 30 days time frame with a drastic increase in prices during last 4-5 days before the day of departure. The ticket prices for all the players are almost comparable because there is stiff competition. The players price the tickets so as to cover their marginal cost of flying and operations. Towards the last 4-5 days to the date of departure, the increase in price across all airlines is sharper because they intend to take benefit of the last minute booking by price insensitive business passengers.

Singapore Airlines is only airline which has a direct flight on the Bangalore-Singapore route. Due to its monopoly on this route, the prices of tickets are quite high as compared to a similar distance route of Chennai-Singapore across all time frames. The monopoly on this route helps Singapore Airlines to serve the entire demand and charge very high premium.

Quantitative Analysis

A regression analysis was done for driving a pricing model for the routes. The parameters considered for the analysis were air fare from different travel websites (including company websites), days to fly, time of flight (i.e. morning, afternoon, or evening slot), flight distance, and type of flight (whether a low cost carrier, or not). The variables ‘time of flight’ and ‘type of flight’ were treated as dummy variables.

The regression output for the heavy traffic routes (Delhi-Mumbai and Bangalore-Kolkata) is given below:

Price, P = 7415.83 – 100.28 (Days to Fly) + 1194.05 (Morning) + 1200.53 (Afternoon) – 2.43 (Distance) + 233.09 (company website) + 36.80 (Yatra.com)

Similarly, a regression model was run for the light traffic (Mumbai-Nagpur and Delhi-Indore) route. The regression output is given below:

Price, P = 7550.48 – 64.9 (Days to Fly) + 664 (Morning) + 0 (Afternoon) -7.25 (Distance) + 649.84 (Flight Type) + 1083.266 (company website) + 1124.26 (Yatra.com)

The two regressive models clearly justify our qualitative observations. The R2 values in range of 0.4 for these two regressions make the regressive models reliable tools to show the relationship between the price and various other independent parameters. The negative co-efficient of the independent variable ‘Days to Fly’ explains that as the days to fly come close by, it has a positive impact on the price of the air ticket and hence, result in increasing it. The positive co-efficient of independent variable ‘Morning’ clearly indicates that the price for morning flights is higher. Distance has negative impact on the price; this may be mostly due the fact that the regression data was not sufficient to show the real trend on this parameter. The positive co-efficient for ‘Flight Type’ indicates that the prices for airlines like Indian, Kingfisher and Jet Airways are more as compared to airlines like Indigo, Spice Jet, etc. It also explains the fact that due to bulk dealing many times the travel websites are able to offer the air tickets at a better price than the airline website in India.

Thus, the regressive models are successful in explaining the relationship between price and independent variables in a statistically significant way.

Impact of Competition on price

As we could not capture the impact of competition in the regressive models, we developed a correlation matrix for this. A high value of correlation of -0.7219 between price and competition clearly indicates that price of air tickets decreases with increase in competition on the route, whereas it increases significantly when there is monopoly kind of situation on the route.

Comparison of price per unit km for low and high traffic routes
Days to fly
Price per Km (RS)

Figure 6: Comparison of price per unit Km for low and high traffic routes

It is observed that price per km on Indian domestic heavy traffic routes is more as compared to Indian domestic light traffic routes. The reason for this is that on low traffic routes people tend to travel more by train and road. So as to encourage the people to switch to air travel, the airlines charge the prices low as compared to more matured air routes.

Days to Fly
Impact of timeslot on the average of prices of air tickets
Air fare (Rs)
Time slot

Figure 7: Impact of timeslot on the average of prices of air tickets

On heavy traffic Indian domestic routes, there is demand for air tickets at all the times of the day, so the prices do not vary much across various time slots of the day. On the other hand, for low traffic Indian domestic routes, there is more demand for air tickets during the morning and evening slots and less demand during the afternoon slot. Hence, the prices are higher during morning and evening slots of the day, whereas it is less during afternoon slot.

Price Volatility Index (PVI)

The price volatility index has been defined as the percentage change in price of air ticket today as compared to previous recording day. It is given by the formula:

PVI = (Pt-Pt-1)/ Pt-1

where Pt : Today’s air ticket price

Pt-1: Price of air ticket on previous day

It is observed that the price volatility on US domestic routes is more as compared to Indian domestic routes. The main reason for this is attributed to the real time responding air ticket pricing mechanism which responds immediately to change in demand rates in US as compared to Indian pricing systems which updates prices only at the end of the day.

Figure 8: Price Volatility Index (PVI) across India and US domestic routes

Scope for Further Research

It is advised that a larger time frame is taken for data collection. The ideal situation would be to choose the ‘date of journey’ and start recording the price points from the day bookings are opened. Our time frame for data collection was one month, and the bookings usually open before three months from the date of journey.

Another constraint due to shorter time frame is that not all the parameters (such as vacations, weather, etc.) can be included in the study and hence, their impact cannot be gauged.

References

http://www.yatra.com/

http://www.makemytrip.com/

http://www.travelguru.com/

http://www.dgca.gov.in/

www.cleartrip.com

www.goindigo.in

http://www.bts.gov/xml/atpi/src/index.xml

http://www.iata.org/Pages/default.aspx

http://www.docstoc.com/docs/14534885/AIRLINE-INDUSTRY

The Indian Airline Industry in 2008 by Rishikesha.T. Krishnan

www.airindia.in/

http://freeessays.essay-911.com/esay-examples/6197-research-paper-on-finance.html

http://www.ehow.com/list_6853080_factors-influencing-airfare.html

http://www.investopedia.com/features/industryhandbook/airline.asp

http://www.ehow.com/list_6889692_factors-setting-prices-airline-tickets.html

Tourists. They travel for sightseeing, recreation, visiting and non-business activities. They want to learn about the customs, the history and the language of every place they visit. They usually travel in groups. We have to provide them with any information that may need about the area, the transportation, any local events that may take place in the surround area etc. and to make them feel at home. They are looking for recreational facilities, food and beverage services and interior design. That kind of guests are usually very price sensitive.

Families. They usually travel on weekends and they want a short break from their everyday routine. They are looking for a quiet place to relax and enjoy their time. They are looking for recreational facilities, food and beverage services and the hotel should offer baby-sitting facilities, special meals for kids and an animation team.

The elderly. They can’t look after themselves as the years pass, so they are looking for a hotel with pleasant and friendly environment. We have to be kind and patient with them and to look after them without giving them the impression that we behave on them like children.

Business travelers. They are almost the most important travel market for many city hotels and this is the reason why the hotels who target this market have designed specific products and services to cover their needs such as a quiet environment. Most of business travelers do not like to stay in hotels because after a hard day they prefer to stay in a quiet place to rest and to relax rather than a noisy room in a hotel. Another thing that they worry about is their messages and how well the hotel can handle this. We have to offer them facilities such as: meeting space, computer services, internet access etc. Business travelers are usually not very price sensitive and often utilize hotel’s food (especially room service), beverage and recreational facilities. They considered desirable and profitable market and is an important segment because of its steady level of demand at high room rates.

Delegates. Meeting and conventions usually attract hundreds of people and this is the reason why we have to convince the meeting planner to choose our hotel. They are looking for fast service and they don’t like to stay in queues. Meeting and conventions have to do with people who attending seminars, trade association shows etc. The length of stay for meetings ranges from 3 to 5 days. We have to provide them a conference center for the meetings, computers services, internet access and when we have a large group some discounts are necessary because in this way we can attract them to visit again our hotel as leisure travelers. We have also to provide them in house banquet and cocktail receptions.

Describe the importance of welcoming a guest and the techniques that should be used.

Always the first impression plays the most important role when a guest arrives at the hotel and influences the rest of his stay. The receptionists should always be warm and friendly when they checking in the guests to make them feel comfortable like at home. A good greeting can make a guest feel better. A well-spoken receptionist by giving a smile of welcome from a charming succeeds to create a warm and friendly atmosphere also has to be able to recognise the guest’s personality and to adapt in order to satisfy the guest’s expectations. Some techniques that should be used are: keep eye contact and smile, be clear in your speech and use a pleasant tone of voice, avoid speaking too fast or too slow, use the guest’s names, always be polite and kind, always start and end with a positive note, always be: friendly, interested, helpful, never mechanical, never different and never impatient. There is a big possibility that when a guest leaves from the hotel with a good impression he will come back and he will be a good advertiser for our hotel.

Describe the guest registration process and explain its importance.

We have to follow several steps for the registration process. The guest registration process begins with the pre-registration activities which accelerate the registration process, guests can verify personal data and the time of the check-in the guests have only to sign the registration form. When the guests arrive we greeting and welcoming them and after we create the registration record and verify the guest’s identity name, the permanent address and the telephone number, the date of arrival and the departure, number of registered persons, method of payment, passport and signature. After this process we assign the room rate and we establish the method of payment. We continue by issuing the room key and ask the guests for any special requests. When all these finish we escort the guest to his/her room.

The guest registration is important because by completing this form let us know who stays in our hotel, especially during in an emergency situation. With guest registration we can also learn if a guest is a repeater, if he has already visited another hotel of our company. Also with this form we can find some information about the guest needs (in case that he is repeater), such as smoking or non-smoking room, allergies, any special requirements that he use to have.

Explain what guest history files are and why hotels keep them.

Guest history files are files in which the management records important information of all his regular guests and show any special requests and expectations that a guest have in case that the guest has stay once at the hotel. Hotels use to keep guest history files because these files help the management to improve the guest service and also to remind personal data of its repeater guests. These files contains details of credit cards, the date of the first stay, how many times a guest has stay at the hotel and how many nights, how much the guest spent in the different departments, how much he has spent on each stay and the room types that he prefers to stay. Also these files record any special needs (newspapers) and preferences that guests might have.

Explain up-selling and the techniques that can be used

Up-selling is the use of specific words and phrases that will lead the guest to buy something he would not otherwise have bought. We can succeed in up-selling if we think that is a way of helping out the guest by offering him a satisfying solution to cover his needs. Some techniques that we can use when we selling a room are:

Qualify the lead. Asking questions and try to understand exactly what your prospective guest is looking for, keep an eye contact and let him talk without interrupt him. Built a relationship and make your guest feel comfortable. By doing this you create a friendly atmosphere and gives you the advantage for a better sale. Make a presentation of your property. Provide brochures and prospects for what you offer and convince your guest that you know what you sale. You have to know your product inside and out and also to know your market area and your competitor’s rates. Close the sale by asking for the sale. Don’t be in rush for giving any discounts that probably your guest will ask, just focus on value. Follow up the sales visit by sending questionnaires. This is a good way to find out if your guest left satisfied from your hotel and gives an indication that this guest might return in the future and also bring and other guests with him. A satisfied guest is an advertisement for our hotel.

World Tourism Organization defined tourism as the activities of persons travelling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business, and other purposes.

Tourism Industry is well developed from an insignificant activity to the current world’s largest industry since World War Two. In developed countries, people travelling domestically as well as travelling to less developed countries had increased.

Since tourism industry had increased tremendously, as a result, tourism industry had become one of the industries which strongly influence an economy of a country. Therefore, individual countries had to develop more attractions to sustain tourism.

Hence, key concepts of sustainable development and sustainable tourism, values and ethics of sustainable tourism and the needs of sustainability shall be discussed in this essay.

Sustainable Development is an industry that aims to meet the needs of the people while protecting the environment, meeting the needs not only for the present, but also the ability to meet future generation’s needs.

As mentioned, tourism industry has been increasing over the years as more people are interested to spend their time in nature. As a result, ecotourism has become the one of the fastest growing sector in the tourism industry. Greater numbers of tourist make it more likely that natural attractions and wilderness habitats will be at risk.

Therefore, officials in charge for these areas will have to shoulder a huge responsibility for handling challenges and to decide how tourism development can be sustained over long term. Proper Planning is very important for sustainable development as planners must know the importance that consumers’ resources will creates waste and require certain kinds of infrastructure. It creates an issue over consumption of resources. Private investments take this opportunity to maximize its profits. This multi-faceted nature makes control tough. The challenge of sustainable development faced is to balance these facts and it can only be done only through integrated, cooperative approaches involving all directors and related activities in the area. Ecotourism create opportunities for villages, remote areas and natural resources as long as government aims to increase the numbers of tourist in these attractions and locals do participate in the process.

Values

There are values in Tourism which may allow to sustaining tourism and locals to lead a better future. Therefore, locals and tourist playing a part to sustain tourism are crucial.

Economic sustainability

Economic sustainability is focusing on improving the living standard of the locals and activities is properly maintained in the long term, creating opportunities in tourism, leisure and regeneration.

Ecotourism is usually calculated as the economic value added in relation to its aggregated ecological impact. This idea has been popularized by the World Business Council for Sustainable Development (WBCSD) under the following definition: “Eco-efficiency is achieved by the delivery of competitively-priced goods and services that satisfy human needs and bring quality of life, while progressively reducing ecological impacts and resource intensity throughout the life-cycle to a level at least in line with the earth’s carrying capacity.” (Desimone and Popoff, 1997: 47)

Ecotourism and social sustainability are working closely together to achieve an increase economic sustainability. In the process, both natural and social capitals were used to aim to benefit from a win-win situation.

Social Sustainability

Social sustainability has a focus on understanding human rights and provides equal opportunities in the society, recognizing and respecting individual cultures and avoids exploitation.

Social sustainability shows the relation between a company’s value added and its social impact. These can be either positive or negative. Corporate giving and creation of employment are examples of positive relations and accidents in workplace, mobbing of employees, abusing human rights are negative examples. The types of impact on socio-efficiency either try to minimize negative social impacts or maximize positive social impacts.

Environment Sustainability

Environmental sustainability is the process on conserving and managing resources, especially resources that are non renewable, making sure current processes of interaction with the environment are pursued with the idea of keeping the environment as naturally as possible based on ideal-seeking behavior.

Unsustainable situation occurs when natural resources are used up faster than it replenished. Sustainability requires human’s activities only uses natural resources necessary, at a rate that natural resources can be replenished naturally.

Sustainable Tourism

Sustainable Tourism is an industry which committed to obtain a low impact on the local culture and environment, while helping to boost the economy and decrease the unemployment rate for the locals. Sustainable Tourism is a continual process of improvement, ensuring a positive experience for Travel Agencies, tourists and even locals themselves and also applies in cities, resorts, rural and protected areas. Sustainable Tourism aims to conserve the environment while boosting economy, obtaining environmental benefits and socio-cultural.

Sustainable Tourism not only allows tourist to have a better knowledge about the country they are visiting but also helps locals to learn about tourists’ culture. Sustainable Tourism expects the participations from the locals, which also provide locals an opportunity to improve their living standard. Above all, Sustainable Tourism stresses pointedly upon integrity of the tourist places.

Tourism sector must be planned and managed suitably with the current and increasing numbers of tourist. Sustainable development of tourism is only possible when its follows its guidelines and principles.

Principles of Sustainable Tourism
Minimizing Environmental Impacts

Tourism should know the importance of both local and global environmental issues. Tourism should preserve the visual quality of landscapes and prevent having an impact on the environment by minimizing water, land, pollution of air and generation of waste. Tourism should also seek attention to matters like greenhouse gas emissions and usage of non-renewable resources.

Achieving Conservation Outcomes

Tourism should preserve natural resources like natural areas, habitats, wildlife and even using the profits from these resources to enhance the qualities to attract more tourists visiting the country. Such achievements not just attracting more tourists, but it also an instrument in telling a story and invoke an emotional response from tourists. Tourism and Conservation can be achieved from a mutually beneficial alliance.

Being One of a Kind

One of the keys factor to be a successful and sustainable tourism is to achieve a difference from other competing destinations. It can be obtained by developing and marketing on the strengths and attributes of the Country. Attractions that relevant to the culture, history, lifestyle and natural resources of the Country are most likely to be successful. As it can tell a story about the features of the attraction, as a result, providing a more rewarding experience to tourists while conserving natural resources of the destinations.

Community Values

Tourism is able to reflect community values which means, representing the present, past and future aspirations of the Country community in a living and dynamic way which preserve the past.

In order to obtain a richer tourism experience, adding values to current strengths is crucial, which include sales outlets or dining accommodation, in association with established industries.

Understanding and targeting the market

Understanding the needs, the broad market trends and expectations of specific segments is crucial which involves the development of specialized products based on the inherent attributes of an area.

Ethics Platform towards Tourism

Ethics which also know as moral philosophy is a philosophy which questions about morality, concepts such as good and bad, right and wrong and justice. Ethical are often to be subjective.

World Tourism Organization has published a global code for tourism but we are unable to view ethics on the basis of individual as we all have to understand, every individual have their own perspective.

Pro and Cons

Certainly, we are unable to correct people whom does not practice codes of ethics as they have their own believe, and people hates a third party to correct their believe. There are certain guidelines to allow people to practice good codes of ethics and people who practices good codes of ethics are definitely a role model to follow. Below are some examples of good code ethics and bad code of ethics.

Good codes

Gain commitment of leader in organization and front line workers. Offer clear statement of objectives, expectations, obligation and rules, a continuous flow of information and a resolution system which is transparent. Outline meaningful benefits for participation. State negative repercussions if principles are not complied with.

Bad codes

Not backed by action, lead to deceptive or misleading advertising, bring bad publicity, leading to a loss of consumer trust, discourage competition and encourage collusion, create an uneven playing field and attracts negative attention.

These are cases that people exploiting tourist just because they are unfamiliar with the area, taking advantage of the situation and aim to have an easy income; charging more than the market rate.

Implications

Tourism is one of huge industries that influence the global economy. Above, this essay had shown the importance to achieve sustainability in tourism with good codes of ethics. But in a global context, can it be accomplish? Is achieving sustainability in tourism for the benefits for everyone?

Government in individual country definitely will not allow other governments to take advantage of their own land and every government wants the best out of it. Therefore, if every government tends to have such mindset, it will only bring harm to their people and the economy. “The Horns of the Dilemma” the Dilemma that one cannot solve both crises at once (Sachs’s 1999)

In Burma, Burmese are forced to make way for huge new tourism development from their home. In India, locals have to walk miles to get water just because of hotels build nearby siphon it off from the groundwater for their own excessive uses. “Achieving sustainability may be unethical because it benefits some while the costs are born by others, usually the lower income groups or poorer nations” (Stabler 1997)

Adaptive paradigm

Sustainable tourism must be regarded as an adaptive paradigm that accommodates both weak and strong interpretations of the sustainable development idea. (Hunter 1997)

Weak sustainable tourism strategies which also know as anthropocentric approach, apply to environments like town areas where protection of natural habitat become irrelevant. Hotels, Resorts and Theme parks are modes of tourism which stresses on the word development in Sustainable development and it can be influenced by the Advocacy Platform.

Strong sustainable tourism strategies which also known as biocentric approach, is when even a small movement in tourism-related activity could cause an unacceptable environmental costs. According to Adaptancy platform, any form of action that consequences are unknown, should be avoided. This approach stresses on the word sustainable in Sustainable development and it can be influence by both, Advocacy Platform and Adaptancy Platform.

Conclusion

Tourism industry has now become one of an influential industry to the global economy and it is also the creator of jobs across the globe. To sustain tourism, sustainable developments and sustainable tourism are crucial and have to be well planned and managed, as these two elements play a big role to sustain tourism.

Everybody do also have a part to play to sustain tourism, they must all share a same vision to preserve the natural resources to meets the current and future generation needs. Government should host more programs to allow locals to understand the importance of protecting the resources that they have and not taking them for granted. Inconsiderate behavior should be minimize and practice good ethic behaviors.

Developers should consider for the locals, respecting their human rights when they are planning an investments and not purely ignore them. Locals should invite tourist with a smile in their country, giving them a good experience upon leaving the country, and not having the idea of making easy income. As this will only leaves a bad impression in tourist when leaving, making them thinking twice visiting into the country again.

With all people playing a part to this tourism industry, locals will only improve their living standards and people having a wider knowledge for individual culture and enjoying themselves without any worries even they are at an unfamiliar environment and last but not least, boosting the global economy.