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The purpose of this paper is to evaluate a successful and well-organized strategic planning for airline industry providing Jet Airways strategic plan. Jet Airways is the India’s market leader in airline industries, however has faced increasing competition over the last decade resulting attrition in their market share.

The report begins by analysing the current internal and external environment of Jet Airways. Through strategic evaluation it’s recommended that Jet airways focus on their fundamental service delivery to restore their competitive advantage within the industry. This will require putting into practice a combination of two strategies; a people processes strategy and a strategy focused on technological advancement.

The people processes strategy was derived from a number of industry sources outlining Jet Airways decline in customer satisfaction. The technological advancement strategy coincides with the renewal of Jet Airways aircraft fleet and will further improve the overall customer experience.

INDEX
Objectives:

The main objective of this paper is to develop the internal and external environmental analysis and strategic planning with risk management and business ethics.

Specific objectives are following,

Evaluate the current strategic position of Jet Airways.

Examine the strategic Planning Models for Jet Airways.

Examine Jet Airways internal and external environment.

(1.0) Overview of Jet Airways:

Jet Airways is an airline based in Mumbai, India. It is India’s third largest

airline after Air India and Kingfisher Airlines. It operates over 400 daily

flights to 64 destinations worldwide. Its primary base is Mumbai’s

Chhatrapati Shivaji International Airport with secondary hubs at Bangalore,

Brussels, Chennai, Delhi, Hyderabad, Kolkata and Pune as focus cities.

In July 2008, Which? magazine ranked Jet Airways as the world’s best long-

haul airline after Singapore Airlines. In a poll conducted by

SmartTravelAsia.com in September 2008, it was voted as the world’s

seventh best airline overall. It has also won an award for the quality of its

catering. In February 2009, Jet Airways had 846,000 passengers,

making it the second largest airline in India behind Kingfisher Airlines.

Jet Airways also operates two low-cost airlines, namely Jet Lite (formerly Air Sahara) and Jet Airways Connect.

(1.1.1) Corporate Structure:

Mr. Naresh Goyal – Chairman

Mr. Ali Ghandour – Director

Mr. Nikos Kardassis – Chief Executive Officer

Mr. Saroj K. Datta – Executive Director

Mr. Abdulrahman Albusaidy – Group Executive Officer

Mr. Sudheer Raghavan – Chief Commercial Officer

Capt. Hameed Ali – Chief Operating Officer

Mrs. Anita Goyal | Executive Vice President – Network Planning & Revenue Management

Mr. Raja Segran | Sr. Vice President

Mr. P. K. Sinha | Regional Vice President

Mr. Gaurang Shetty | Sr. Vice President – Customer Services & Alliances

Capt. Hassan Al-Mousawi | Sr. Vice President-Operations & On Time Performance

Mr. Abdulkhaliq Saeed | Sr. Vice President – Engineering & Maintenance

Mr. Mahalingam Shivkumar | Sr. Vice President, Finance

Mr. Rajesh Sharma | Vice President – Internal Audit

Mr. K. G. Vishwanath | Vice President – Commercial Strategy and Investor Relations

Dato K. Jeyakanthan | Sr. Vice President – Engineering Services

Mr. Jay Shelat | Vice President – Cargo

Mr. Raj Sivakumar | Vice President – Network Planning, Revenue Management & Distribution

Dr. Samar B. Srivastava | Vice President – Human Resources

Mr. Ashok Barimar | General Counsel & Vice President – Legal

Ms. Ragini Chopra | Vice President – Corporate Communication and Public Relations

Ms. Monica Chopra | Company Secretary & Sr. General Manager – Legal

(2.0) Environmental Analysis:

For success within the airline industry, an awareness of the external environment is essential. This section aims to highlight the position of the industry, in particular looking at competitors and assessing Jet airways capability to meet current and future challenges.

(2.1) PESTEL Analysis Of Jet Airways:

Political Issue

License issue for international operation.

Infrastructural constraint.

ATF price policy.

Open sky policy.

FDI Limits: 100% Greenfield airport

74% existing airports.

100% through special permission.

49% for airlines.

Economic Effects

The income level is rising.

Contribution to the Indian economy.

There is a rise in the cost of fuel.

Investment in the sector of aviation.

The growth of the middle income group family affects the aviation sector.

Reduced fare but yet not enough.

Social Effects

Developing of the cities to better services and airports.

Employment opportunities.

Safety regulations.

The status symbol attached to a plane travel.

Technological Effects

Modernization of aircrafts.

The growth of e-commerce and e-ticketing.

Satellite based navigation system.

Modernisation and privatisation of the airports.

Modern technology like CAT3 and ILS.

Environmental Sector

There is an increase in the global warming.

The sudden change and the unexpected behaviour of the climate and to depend on the atmosphere.

Shortage of the infrastructural capacity.

There is a tourism saturation.

Legal Factors.

FDI limits.

Bilateral treaties.

Airlines acquisitions and the leasing cost.

(2.2) SWOT Analysis Of Jet Airways:

Figure 2.2 shows SWOT Analysis:

S

Market driver.

Experience exceeding 14 year.

Only private airline with international operation .

They have a strong brand value and their reputation is very high in the mind of the customers.

The service quality is good.

Largest fleet size.

There is a continuous innovation in their business.

W

Loosing domestic market share .

Old fleet with average age around 4.79 years.

Scope for improvement in in-flight service.

High ticket pricing.

Facing a tough competition from the competitors.

O

Untapped air cargo market .

Scope in international service and tourism.

The non penetrated domestic market.

T

Strong competitors.

Fuel price hike.

Overseas market competition.

Infrastructure issues.

Tourism saturation.

Economic slowdown.

Promotion and sponsorship declining.

(3.0) Strategic Planning Model:
(3.1) Porter’s Five Forces Model Of Jet Airways:
(1) The threat of the entry of new competitors:

The threat of the new entrants is very high for Jet Airways, because right now there are so many new airline company that has come with new strategies and services. The more profitable the industry is the more attractive it will be to new competitors. And as we know that Jet Airways is a very well known airline company of India since many years and it has a brand image and has a good reputation on the customers mind but then also Jet Airways has to give the best service quality to the customers to remain the market leader in the business.

(2) The intensity of the competitive rivalry:

The intensity of the competitive rivalry is high for Jet Airways. Jet Airways has many competitive rivals like Kingfisher Airlines, British Airways, Air India, Virgin Atlantic, etc. Jet Airways has both long haul flights and short haul flights. They are losing the domestic share market so in this competitive industry they have to bring some innovation in their business. Their strategy is very powerful because they are concentrating more in the service quality. Their aircrafts are modernised and they have the modernised technology like CAT3 and ILS.

(3) The threat of substitute products or services:

The threat of substitute for Jet Airways is low. There are few substitutes for Jet Airways:

For short haul flights they have: Jet Connect and Jet Lite.

For long haul flights they have: No notable substitute.

(4) The bargaining power of customers (buyers):

The bargaining power of buyer is medium. Jet Airways has the option to switch the suppliers and according to that the customers of Jet Airways also has the option to switch.

(5) The bargaining power of suppliers:

The bargaining power of supplier is high. The supplier can switch to any other option at any time.

(4.0) Managing Risk:

Every business faces risks that could present threats to its success.

Risk is defined as the probability of an event and its consequences. Risk management is the practice of using processes, methods and tools for managing these risks.

Risk management focuses on identifying what could go wrong, evaluating which risks should be dealt with and implementing strategies to deal with those risks. Businesses that have identified the risks will be better prepared and have a more cost-effective way of dealing with them.

The types of risk your business faces

strategic, for example a competitor coming on to the market.

compliance, for example responding to the introduction of new health and safety legislation.

financial, for example non-payment by a customer or increased interest charges on a business loan.

operational, for example the breakdown or theft of key equipment.

(4.1) Managing Risk Of Jet Airways:

Jet Airways falls in the strategic risk and the operational risk.

Strategic and Operational Risk:

Overview of cyber-security and best practices in fraud prevention.

Understanding key fundamentals of PCI Data Security Standards and what airlines need to do to align with the necessary requirements.

Risk management in Jet Airways: Fraud prevention strategies and processes.

Strategies in IVR risk control.

The way forward in risk management.

(5.0) Strategy and Ethics of JET AIRWAYS:
Strategy of Jet Airways:

The main strategy of Jet Airways is to maintain service quality. Jet Airways (India) Ltd. has earned the distinction of receiving the IATA Operational Safety Audit (IOSA) Registration. The airline has successfully completed the Operational Safety Audit and has entered into the IOSA Registry.

One of the strategies that Jet Airways is following:
Jet Airways strategy: removing a row to gain passenger space

Mumbai: After having removed a row of seats from some of its planes to increase overall leg room for passengers, Jet Airways (India) Ltd is using an innovative, three-dimensional billboard campaign to sell the concept.

Developed by Mudra Group’s outdoor unit Primesite, the Mumbai billboards have images of two chairs sitting close to each other, and then one drifting on railings to reveal the message: “We’ve removed a row to give you more space.”

The row of seats has been done away with in Jet’s 737-800s series planes. Removal of rows to create space for cramped passengers isn’t a new idea as many airlines, especially in the US, have used similar tactics and messages to differentiate their planes from rivals. Several other companies, such as auto makers (with sections of cars) and even coffee companies (Bru used chairs and tables) have used three-dimensional billboards to stand out.

Says Gaurang Shetty, vice- president, marketing, Jet Airways: “We wanted to create an impact and effectively communicate that we have removed a row of seats from our domestic flights, thereby giving more space on our domestic flights. The outdoor innovation has only been done in Mumbai considering the restrictions on the same in other metros. We would be communicating through hoardings in Delhi, Chennai, Kolkata and Bangalore.”

Sanjeev Hajela, president, Primesite, says the campaign has a budget of Rs55-60 lakh. Jet is a large user of outdoor media and is believed to spend as much as Rs10-Rs12 crore a year, some 20% of the airline’s marketing spend. Jet Airways was one of the early entrants in the aviation business, as also the first private airline to fly to overseas destinations and had a relatively simple creative message: “Jet Flies to 44 Domestic and 8 International Destinations”.

Notes Jagdeep Kapoor, managing director of Samsika Marketing Consultants Pvt. Ltd: “Earlier, the positioning of the Jet brand was such that it reflected aspirational value. It was an aspired brand while all the rest were tired and perspired brands. Today it’s different. They have found a competitor in their own league in form of Kingfisher. There is a switch taking place, with some customers shifting loyalties to Kingfisher.”

He classifies Jet’s growth in terms of three Ss: Sustenance, Service and the need to (Speed Up). “In spite of not being the first entrant in the aviation space, the Jet brand grew steadily, sustained and survived. Later on, Jet grew to be the best premium brand in the whole country by highlighting the service aspect. In service, they were unparalleled and premium. Today, its different and Jet needs to speed up. They need to aggressively build themselves as a brand, and advertise themselves like a consumer brand if they need to beat Kingfisher.”

2) Ethics of Jet Airways:

The Code of Business Conduct and Ethics (Code) has been adopted by Jet Airways (India) Limited to comply with applicable law and the rules and regulations of the Stock Exchanges on which the securities of the Company are listed.

(6.0) Strategic and Operational Conflict:
Strategic Planning:

Long term.

Affect widely.

Generic.

Org. People and other org. People.

Operational Planning:

Short term.

Narrow/limited scope.

Detailed.

Within org’s. People.

Strategic v Operational Conflict:

Jet Airways has some strategic v operational conflict and they are:

Jet Airways (India) Ltd.’s three- day conflict with its pilots is costing the nation’s second- largest airline passengers and may hamper plans to raise $400 million to buy new planes.

“The last thing investors want to see when the airline’s trying to raise funds is a crisis like this,” Kapil Kaul, chief executive officer of the Indian unit of Centre for Asia Pacific Aviation, an industry adviser said yesterday. “This is a wildfire and they need to put out as soon as possible.”

Alternate Arrangements:

“Jet Airways is endeavouring to make alternate arrangements on other airlines wherever possible and our airport teams will assist its guests to the fullest extent,” Jet Air said.

(7.0) Recommendations:

As a result, we can say that Jet Airways is following different types of environmental analysis and strategic planning models to run their organization and their main strategy is to give service quality to the customer.

So from this, we have conclude that Jet Airways is focusing on the services which they are giving to the customer’s to gain their loyalty and trust and to become the world’s no.1 airline industry.

Due to lack of primary research we can’t access more information about the company.

References:
Online links:

http://www.jetairways.com/EN/GB/AboutUs/QualityCertification.aspx, contains the strategy of Jet Airways.

http://www.jetairways.com/EN/KE/AboutUs/CodeOfConduct.aspx, contains The Code of Conduct.

http://www.scribd.com/doc/8718529/Jet-Airways, it contains SWOT analysis and PEST analysis of Jet Airways.

http://www.livemint.com/2007/11/25233107/Jet-Airways-strategy-removing.html

A Jenoir management consultant is providing consultant service for strategic management of the companies. Senior management team of Ryan air details on the contracts signed with Jenoir management consulting company for get the consulting service in strategic management of the Ryan air’s future. As a result of this we carried out a strategic analysis in terms of the environment, industry and also regarding the internal performance of Ryan air.

The aim of this report is to provide consulting services to Ryan air for its strategic management in the future. This report will focus on:

The strategic analysis of the Macro Environment taking into account the PESTEL factors which will draw out the opportunities and threats,

Industry analysis using the Porters Five Forces Model and a Strategic Group Model and

Internal analysis drawing out the resources and capabilities and the VRIO using the Value-Chain Model for Ryan air.

Thereafter, recommendations will be given as to how Ryan air can improve which will be continued in the second part of this report. Hence, this report will show how Ryan air can perform better in the long run by identifying the key strategic issues.

Table of Contents

EXECUTIVE SUMMARY 1

Table of Contents 1

1.0 INTRODUCTION 3

2.0 CRITICAL ISSUES 4

2.1 Company Background 4

2.2 Core Problem 5

3.0 ANALYSIS (MODELS / THEORY USED) 5

3.1 EXTERNAL ANALYSIS 5

3.1.1 PESTEL ANALSIS 5

3.1.2 Porter’s Diamond Model of Ryan air 6

3.2 INDUSTRY ANALYSIS 6

3.2.1PORTER’S FIVE FORCES ANALYSIS OF RYAN AIR 6

3.2.2 Strategic Groups 7

3.3 INTERNAL ANALYSIS 8

3.3.1 VRIO/ VRINE of Ryan air 8

Barney’s Model for Ryan Air 9

3.3.3 Ryan air Value Chain Analysis 9

4.0 EXTERNAL ENVIROMENTAL ANALYSIS 10

5.0 INTERNAL ENVIORNMENTAL ANALYSIS 11

5.1 Resources and capabilities 11

7.0 CONCLUSION 13

8.0 RECOMMEDATION 14

9.0 REFERENCES 15

10.0 APPENDIX 16

10.1 Appendix 1 16

10.2 Appendix 2 17

10.3 Appendix 3 18

10.4 Appendix 4 19

10.5 Appendix 5 20

10.6 Appendix 6 21

10.7 Appendix 7 22

10.8 Appendix 8 22

1.0 INTRODUCTION

The present business world is highly complex, competitive and fast changing. Ryan air started in year 1985 with only 57 staff members and with one 15 seated turboprop plane from the south of east of Ireland to London Gatwick which carried 5000 passengers on one route. Ryan air was the first budget airline in Europe and also more successful low cost airline in Europe. Ryan air’s competitive advantage is its ability to grow and outperform others as it is Europe’s first low-fares, no-frills carrier and in spite of economic instability there has been a growth in profits. (Ryan air 2006)

According to Viljoen and Dann (2003)strategic management is defined as “the process of identifying, choosing and implementing activities that will improve the long run performance of an organisation by setting directions and by creating on going compatibility.

Currently in 2006 European air line industry facing a backdrop and the burgeoning budget sector. In order to analyse Ryan air’s strategic will be focus on External, Internal environment and Industry.

External environment will be analysing the factors in the macro environment which influence future industry growth and development, factors affecting current and future profitability, position of competitors and strategic groups within the industry, to gain the driving forces of the industry, dynamics and finally to understand international competitiveness.

Further more this analysis focus on how Ryan air wants to create value for customers, its customer value and competitive advantage, its activity value chain, customer value the value proposition and determining the business model to deliver the value position, short term and long term focus and sustainability and methodology of analysing business strategy.

In final this analysis will focuses on Ryan air’s current strategic management views and how it can benefit by using strategic management theories and the means by which the organisational efficiencies of Ryan air would be improved and recommend to management team of Ryan air for improving strategy implementation.

2.0 CRITICAL ISSUES
2.1 Company Background

Ryan air started in year 1985 with only 57 staff members and with one 15 seated turboprop plane from the south of east of Ireland to London Gatwick which carried 5000 passengers on one route. Ryan air was the first budget airline in Europe and also more successful low cost airline in Europe. Ryan air’s competitive advantage is its ability to grow and outperform others as it is Europe’s first low-fares, no-frills carrier and in spite of economic instability there has been a growth in profits.

In identifying the current business strategy we would be analysing the vision, mission and objectives of Ryan air. The mission of the Ryan air is to become Europe largely gainful low fare by rolling out proven low cost no frills in all markets in which we operate to the benefits of passengers, people and share holders. (Ryan air Report, 2007) Ryan air’s social responsibility is providing good service to the passengers.

The vision is “to firmly establish itself as Europe’s lading low fares scheduled passenger airline through continued improvement and expanded offerings of its low fare service” (Ryan air Report 2007). Ryan air’s objectives are 40 percentage increase the market share within the low fare airline sector, in 2012 double the annual passenger transportation to eighty million and to quadruple Ryan air’s annual profit up to 1,230 billion.

2.2 Core Problem

Ryan air being one of the leading budget air lines in Europe, which is currently facing crisis. Though they were performing well during the last few years, currently European air line industry facing a backdrop and the burgeoning budget sector. Therefore it is necessary for Ryan air to consider the causes of the crisis and necessary action well on time. Due to this reason Jenoir management consultants will be analysing the external, internal and industry, whether Ryan air could over come this barrier.

3.0 ANALYSIS (MODELS / THEORY USED)
3.1 EXTERNAL ANALYSIS
3.1.1 PESTEL ANALSIS

Pestle analysis is important for identify Ryan air’s strategies through macro external factors. These factors are in the airline industry to understand Ryan air’s future external threats and opportunities.

(Refer Appendix 1)
Political and Legal

Security solution is the current move of government about airline industry, which will increase the cost of service. Governments can take an action if there will be any dispute in business deals from Ryan air with Airport. The Ryan air must also adapt its strategies to suit the government legislations and policies and must give more attention to the political of the country where they operate. Ryanair have been involved in various legal disputes with governments both in Ireland and the EU regarding their business deals with airports and airline regulating bodies.

Economic Factors

Global Economic recession in 2001-2003 had adversely affected many countries and in had collapse the financial strategies of the company. Due to the recession the income level of the people has come down due to that most people are postponing or cancelling their air travel.

Socio cultural Factors

After the September 11th incident in USA air travel as become a high risk in business in air line industry. More security measures are taken and the passengers are facing difficulties. This has become a huge threat to air line industry.

Technological- Ryan air’s website is the largest travel website in Europe and this could help them to increase e-commerce and advertising revenue. Their in flight internet gambling, satellite television and web-based check-in is an added advantage for Ryan air.

Environmental Factor: The notion that the world is ‘becoming smaller’ and a move towards eco friendly environment by controlling noise levels and green-house carbon emissions.

3.1.2 Porter’s Diamond Model of Ryan air

Porter’s diamond model for Ryan air is stated in appendix 2 respectively.

3.2 INDUSTRY ANALYSIS
3.2.1PORTER’S FIVE FORCES ANALYSIS OF RYAN AIR
Bargaining Power of Supplier

Ryan air’s main aircraft supplier is Boeing and other one is Airbus. Switching cost will be high when change the aircraft. Fuel prices will affect Ryan air’s cost directly, so they are highly dependent the fuel prices and also it is very big threat of their strongest side. Generally regional airports have little bargaining power if they are heavily dependant on one airline but day by day their bargaining power increasing because of the competition between low cost airlines. Besides of those regional airports, bigger airports have very huge bargaining power. (Refer Appendix 3)

Bargaining Power of Customers

Ryan air is the low cost airline for all Europe destinations and customers are especially in recession times highly price sensitive. It is very easy to change their airline and it is In this customer’s knowledge about the cost of service is high and there is no customer loyalty for Ryan air. Even though there is no customer loyalty, bargaining power of customers is low. Ryan air is the cheapest airline for all Europe destinations and customers are especially in recession times highly price sensitive.

Threat of New Entrants

There are lots of barriers to entry and it is very risk to be new in airline industry. The capital that will invest in this sector is very high. It is also hard to take a place current competition and also hard to find suitable airports for the flights.

Threat of Substitutes

There is not any brand loyalty of customers and Ryan air preferred customer relationship is not close relationship. If their customers find better way to travel they will not feel any hesitation to chose it. So the threat of direct and indirect substitutes is very high and the most important point is there are no switching costs for the customers.

Competitive Rivalry

The market is highly competitive. Most of Ryan air’s cost advantages can be imitative immediately. In Europe it seems like there is an agreement between Ryan air and Easy jet about not to compete head to head. However if any company does decide to compete on the same basis as Ryan air it will be highly critical for Ryan air.

3.2.2 Strategic Groups

Strategic Groups have been defined by Finlay (2000) as groups of business that are likely to respond similarly to environment changes and be similarly advantaged or disadvantaged by such changes. Porter (cited in John et al, 1997), suggests that an industry can have only one strategic group if all firms followed essentially the same strategy. At the other extreme each firm could be a different strategic group.

Strategic Group Map analysis below of the European Airline industry will indicate that Ryan air has to compete with Aer Lingus and EasyJet very closely while British Airways and other national carriers are in the region. Other smaller budget airlines based across Europe such as FlyBE, German Wings and Hapag Lloyd Express also pose competition in routes which they commonly compete (Little Masters, n.d.).

This diagram also shows how the Mega carriers compete within their strategic groups as opposed to the Mid-Sized carriers.

Private

Mega Carriers:

American Airlines

British Airways

Mid-Sized Carriers:

FlyBE

German Wings

Aer Lingus

EasyJet

Government-Owned Carriers:

British Airways

Bulgaria Air

Government

No: of Destinations

High

Low

Ownership

3.3 INTERNAL ANALYSIS
3.3.1 VRIO/ VRINE of Ryan air
VRINE MODEL

The top management should be able to identify the resources available in the organisation presently in order to assess whether the resources available are sufficient enough to implement the strategies. So the outcome of the reconstruction depends on the resources available at that time.

VRIO of Ryan air – Value, Rarity, Imitability, Organization

Ryan air values its high service performance. The airline is known for its strict observance on punctuality, high rate of flight completion, and low baggage loss. It purchased modernized fleet which leads to less expensive maintenance with uniform brands used while high aircraft utilization strengthens its business and financial sheet. The rarity of Ryan air is based primarily on its strategic positioning and management operations. Its implementation on low fares service and high level of customer service delivery made Ryan air strong and competitive compared to other firms in the same field. Other firms in the same industry hardly find their ways in imitating the same operations and strategic planning. Ryan air produced effective planning and management operations in which it leads others to imitate. Not all of the tangible and intangible resources like software, fleet designs, infrastructure, organizational culture, and knowledge management can be imitated. Causal ambiguity, time compression diseconomies and path dependencies are factors which affect the difficulty of other firms to imitate effective plans of successful firms like Ryan air.

Barney’s Model for Ryan Air

The top management should be able to identify the resources available in the organisation presently in order to assess whether the resources available are sufficient enough to implement the strategies. So the outcome of the reconstruction depends on the resources available at that time.

According to the Barney’s model can analysis Easy Jet as Ryan air’s competitor. Easy jet has enough recourse. For an example they have large number of air craft and their skytrax star rate level is high, so easy jet is valuable. Easy jet is not rare because same strategy what easy jet currently using is other competitors also using. Easy jet can easy to imitate to another company because low fare and also they have enough substitutes (for an example Train, ship). Easy jet is competitive parity. (Refer Appendix 4)

3.3.3 Ryan air Value Chain Analysis

Ryan air strongly manages and forms relationships with different suppliers for an example. Boeing and food, beverages etc, to make sure goods are received of requirement standards and on time in order to add value through out its value chain. In order to add substantial value for its service by providing low cost and directly monitors relationships with airports around Europe, so they provide subsidies to the airliner in order for them to provide low cost and seen as adding grater value for customers.

In order to reduce the cost and provide low cost to customers Ryan air contracts staff for aircraft handling, ticketing and baggage handling to third parties at competitive rates as well as engine repairs and heavy maintenances of its aircrafts. Therefore reduces direct exposure to employee relationships and disputes reducing costs all through value chain.

In order to add greater value for customer, the aircraft staff e.g. pilot, cabin crew, they holds close relationships, giving the right training making them to feel confident to answer on flight questions. The airliner has a commission placed for its aircraft crew linked with the sales of duty paid goods. Therefore close management with aircraft crew ensures good labors turnover reducing the threat of staff being absent for flights, thus seen as adding value for customers. (Refer Appendix 5)

4.0 EXTERNAL ENVIROMENTAL ANALYSIS

The external organizational environment includes all elements existing outside the boundary of the organization that have the potential to affect the organization (Daft, 1995). The environment includes competitors, resources, technology and economic conditions that influence the organization. The external environment can be further conceptualized as having two layers generally and task environments.

The general environment is the outer layer that is widely dispersed and affects organization indirectly. It includes social, demographic and economic factors that influence Ryan air. The most important part concerning in the task environment which is closer to the organizations; its includes the sectors that conduct day to day transaction with the organization and directly influence their basic operations and performance: – suppliers, competition, customers and the labour market.

(Refer Appendix 3, 6)
5.0 INTERNAL ENVIORNMENTAL ANALYSIS

All organizations have strength and weakness in its areas of business. No organization is equally strong or weak in all areas (David, 2005). The process of internal environment parallels that of the external analysis. Resources come in many forms form common factor inputs to highly differentiated resources that are developed over a man years and are very difficult to replicate (Collins and Montgomery 1998). Internal environment analysis involves a study of culture, structure and resources including technology adapted by the origination.

5.1 Resources and capabilities

Ryan air’s main tangible resource is air craft. Their intangible resource includes things such as company’s reputation (first budget airline and low fare airline), brand name (Ryan air), technical knowledge (100 percentage online ticket booking), patent and trademark. A competitive advantage is the set of factors and capabilities that allow firms to consistently outperform their rivals.

(Refer Appendix 7)
Tangible Resources
Air craft
Technical Advancement
Equipements
Competencies

Price, Quality service, Reliability

Competitive advantage of Ryan air

Capabilities

Low cost, High profit

Intangible Resources

Ryan air’s Reputation

Brand name

Low fare

Technical knowledge

Figure 1: Resources based view if competitive advantage of Ryan air

6.0 SWOT ANALYSIS

This analysis is an effective way of identifying internal strengths and weaknesses of Ryan air and of investigative opportunities and threats of the external environment. (Refer Appendix 8)

Strengths

Ryan air is the largest and most successful of Europe’s low cost airline. This fact is strongest selling point for Ryan air. Result of this low cost strategy, which increases customers and airline, is expanding rapidly. Ryan air’s website was the largest travel website in Europe. And the fifth most recognized brand on Google. According to the Ryan air annual report 2006, Ryan air’s ancillary revenues (include non flight schedule services) had climbed by 36 percentage.

Weaknesses

Ryan air is the least favorite airline in the world. Passengers who travel in Ryan air lose their luggages very often. Ryan air staffs are considered to be very unfriendly and there is common issue that the process always delays. Ryan air was only mid range or below average in its P/E multiple relative to peers like easy jet, whose shares had risen by 46% during the year. Ryan air has been criticized for many aspects of its customer service.

Opportunities

They have potential market share. Because low cost airline market share not reached the peak level. Ryan air has better opportunities to dominate and catch up with the competition in the European airline industry in terms of providing more quality service. The continuous initiatives of the company in diversification of its revenue resources also open new opportunities to make the business become stronger to outgrow all its competitor companies.

Threats

Ryan air faced various challenges as it entered the second half of fiscal 2007. The airline itself predicted that its extra capacity building would create uncertainty about the success of new routes, locations and other difficulties. These were extra marketing and discounted fare costs incurred in launching new routes, as well as overcapacity leading to price cutting by rivals.

7.0 CONCLUSION

By taking into consideration the above analysis, Jenoir management consultant believe Ryan air has gained competitive advantage since there is a greater opportunity and strengths regarding to the air line industry. Based on the External, Internal and Industry analysis, there are some major issues which were identified by Jenoir management Consultant analysis team in relation to Ryan air have weaknesses and threats. There are many areas which Ryan air should workout.

Systematic, healthy and an organic organization contribute much to the success of Ryan air. An organization with clear objectives and capable to draw everyone to work with these objectives will lead to its success. For airlines, the future will hold many challenges. Successful airlines will be those that continue to tackle their costs and improve their products, thereby securing a strong presence in the key world aviation market.

Therefore taking into consideration these detrimental impacts to the entity Jenoir management Consultant analysis team formulated certain recommendations for Ryan air to perform the task of a guideline in overcoming these weaknesses and threats, by systematically utilizing these recommendations. Ryan air will be able to convert its current weaknesses into opportunities and strengths in the future. However risk management in the strategic management must be given an important consideration in strategic management plan implementation process.

8.0 RECOMMEDATION

Based on External, Internal and Industry analysis, Jenoir management consultants is recommended that Ryan air consider the move their business with low cost strategy in to international market, so Ryan air should has a detailed plan for this and be able to provide good customer service to the customers like by having discounted flights, promotion to keep the competitive advantage at a stable mode within its competitors and also will need to focus more on the core competition that will help Ryan air to practically designs suitable airline operation within their market.

There are some other recommendations for Ryan air,

Ryan air, being the market leader in the budget airline industry is performing very well as of now. But it does need to take into account all the factors discussed above. Ryan air also has to make sure that even though Michael O’Leary’s tactics work today, they may backfire tomorrow.

Ryan air should slow down on the aggressiveness of its strategic planning and implementation so that it can avoid getting into trouble with the governments and end up paying millions.

In order to retain its employees, motivate them and also another means of cutting costs, Ryan air can adopt a similar strategy that of Jet Star’s JEN (Jet star Employee Network). This intranet software is both the sophistication and the functionality necessary to gather, share and communicate key corporate, HR and time critical staffing information. Head of Corporate Relations, Simon West away says “JEN delivers ongoing savings of about $130,000 annually” (Story, 2009, p.18).

9.0 REFERENCES

Collins, D.J., Montgomery, C.A. (1998), “Competing on resources: strategy in the 1990s”(Volume 73), Harvard Business Review

Daft, Richard L. (1995). Organizational Theory: Cases & Applications. (4th edition.) : West Publishing Company

David, R.D.(2005). Strategic management: concepts and cases. (10th edition): Prentice Hall of India

Find Article (2005). EasyJet to enter Irish Market for first time. Retrieved April 21, 2010, from http://findarticles.com/p/articles/mi_m0CWU/is_2004_Nov_23/ai_n7074328/?tag=content;col 1

Find Article (2009). Company Watch – Ryanair. Retrieved April 22, 2010, from http://findarticles.com/p/articles/mi_6781/is_2009_August_24/ai_n42028112/?tag=rel.res1

Hodgson, N. (2009, November 20). Ryanair set to overtake EasyJet in JLA ranks. Daily Post Liverpool. RetrievedApril 19, 2010, from http://findarticles.com/p/articles/mi_8008/is_20091120/ai_n42256727/

Hubbard, G. Rice, J. & Beamish,P. (2005). Strategic management thinking analysis action. (3rd edition). Pearson education Australia

Lagadec, K. (2008). Airbus and Boeing face a dark and painful future. Post Carbon Institute. Retrieved April 20, 2010, fromhttp://www.postcarbon.org/article/40546-airbus-and-boeing-face-a-dark/13913-energy

The Airline Industry. (n.d.). retrieved April 21, 2010, from http://adg.stanford.edu/aa241/intro/airlineindustry.html

Viljoen, J., & Dann, S. (3rd Ed.). (2003). Strategic Management: Planning and implementing successful corporate strategies. NSW, Australia: Pearson Education Australia.

10.0 APPENDIX
10.1 Appendix 1
PESTLE ANALYSIS OF RYANAIR
Political Environment

National airlines supported by certain countries

Europe union expansion with new routes and new competitors.

New European Union rules and regulations.

Due to the government stability tourism will be increase, which is good for Ryan air.

New different tax policy for different countries.

Economic Environment

Threat of Ryan air is increasing fuel price.

Taxes and Interest rates

Decrease of US dollars

Increasing business class travelling

The threat of the substitutes

Rise of airport handling charges

SOCIAL FACTORS

Increasing grey market, which is the trade of a commodity through distribution channels, which while legal, are unofficial, unauthorized, or unintended by the original manufacturer.

Populations growth – does an ageing population affect them i.e. baby boomers, lots of people in that life stage have more disposable income to spend

Safety solutions

Trend

TECHNOLOGICAL FACTORS

Internet sales and Increased internet competitions

High speed trains

Online check in

Low fuel use

LEGAL FACTORS

Privatizing of airline industry

Illegal subsidies from airports

Competition laws in aviation industry

Allegations of false advertisement

Rules and regulations about Carbon emission level

ENVIRONMENTAL FACTORS

Noise level controls ,

Global warming ,2.6% of Carbon emission in the EU, so this gas will effect Green house

10.2 Appendix 2
Porter’s Diamond Model of Ryan air
Factor
Condition
Demand Condition
Firmly strategy structure and Rivalry
Related & supporting Industries
Change
Government
Firm Strategy, Structure and Rivalry

Environmentally concerned.

Entrants of other Low Cost Carriers

Factor conditions

Technological advancement.

Demand conditions

Demand is increasing for Low fares air travel.

Related and supporting industries

Car hire, Hotels, Travel insurance, Baggage tracing, Free city guides, Ticketing, Aircraft handling ,Airport coach and other services

10.3 Appendix 3
Porter’s Five Forces model
Bargaining power of Supplier
Bargaining power of Buyers
Threat of New Entrants
Threat of Substitutes
Competitive
Rivalry
10.4 Appendix 4
(Source: VRIO model / Barney’s model
http://www.web-books.com/eLibrary/ON/B0/B58/033MB58.html)
Competitive Implications from Recourses ( Easy jet as Ryan air’s competitor)
Valuable
Rare
Difficult to Imitate
Without substitutes
Competitive Implication
Yes
No
No
No
Competitive parity
10.5 Appendix 5
Value Chain Analysis of Ryan Air
Firm Infrastructure

(Head Quarters)

Technology Development

(Internet, Integrate system, Low tech marketing , Internet sales)

Human Resource Management

( In house, Low cost training, Management control, Limited crew, performance contracts)

Procurement

(Boeing discount, Alliances, Low cost, out sources & private)

Inbound Logistic

(Quality training, Low cost supplier, Airport agreement)

Operation

(No frill, low cost )

Outbound Logistic

(Reliable service, quick turn around)

Marketing and Sales

(Free publicity, Low cost, promotions, Internet sales)

Services

(High productivity, Limited resourses)

10.6 Appendix 6
Location of the organization general task and internal environments

Technological

CUSTOMERRS

Task Env

Internal Environment

Socio cultural

LABOUR MARKET

Employees

Culture

International

COMPETITORS

Management

SUPPLIERS

Legal/ Political

Economic

It can be noted that SUPPLIERS forms an integral part of task environment and the role of importance of suppliers of components.

10.7 Appendix 7
Resources

There are two kinds of resources, tangible and intangible which can further be categorized into financial, human, physical and intellectual capital.

Physical Resources – which Ryan air possesses is 196 Boeing aircrafts. Huge amount of money was being spent for the aircraft maintenance and they need to keep the resources proper and running to make sure that these will not harm their low cost structure. They also have the youngest fleet in the whole of Europe with a highly fuel efficient capacity.

Financial Resources – Ryan air is the highest profit making low cost structured airline. According to O’Higgins (2007), Ryan air’s profits have been increasing 8.5% on average per year. It also goes onto say that in its Annual General Meeting in 2006; the airline had delivered 12% increase in net profits despite a 74% increase in fuel cost.

Human Resources – Initially Ryan air started with only 25 employees and had 3500 people by the year 2006 and all of them are entrenched with a cost cutting approach. Ryan air employees a very much dedicated as Ryan air pays its employees well. In its 2006 annual report it claimed to have the highest pay figures than any other major European airline. Also by tailoring rosters, the carrier maximized productivity and time off for crew members. The biggest HR advantage Ryanair has is Michael O’Leary.

Intellectual Capital – The high

Mass Market tour operators have dominated in the outbound market for years, with the rise of holidays abroad becoming more and more popular since the end of the Second World War. Thomas Cook, Thomson and First Choice are examples of mass market tour operators. Thomson and First Choice belong to TUI, these are known as mass market tour operators as they sell/sold holidays that appealed to the majority of holiday makers. Some of the larger mass market tour operators have diversified in now offering more specialised products such as safari and skiing.

TUI (www.tui-group.com/en/company/sectors/tuitravel)

TUI AG is the largest travel group in the world; Thomson belongs to TUI and is a travel agency as well as having its own airline. First Choice is another travel agent that has its own airline, which belongs to TUI.

TUI travel was formed in 2007, with the merger of TUI; their existing distribution, tour operators, air-lines and destination groups; with First Choice Holidays Plc.

TUI AG is separated into three sectors:

TUI Travel

TUI Hotels & Resorts

TUI Cruises

TUI also has a shipping container department.

TUI travel is the majority shareholder of the company and is listed on the London Stock Exchange. They operate in 180 countries worldwide, making TUI the leading tour operator within Europe; to become this they provide a wide and varied service for over 30million customers. TUI is a British based company, with their head office in Crawley, West Sussex, not too far from Gatwick Airport; one of the UKs busiest international airports.

TUI has over 200 different brands to over, over 140 aircraft and 3,500 retail shops across Europe, employing approximately 50,000 employees.

TUI is separated in too four sectors of business, covering all 200 plus brands, these are:

Mainstream

Specialist

Activity

Accommodation and Destinations

The mainstream sector is the largest of the four sectors in size, operating profit and the number of employees. The 3,500 retail outlets through-out Europe, providing over 25million customers per year, with package, self-package, sun and beach holidays. This sector operates over 140 aircraft to a wide variety of destination through-out the year, incorporating a large number of high street retail stores.

The Specialist and Emerging Markets sector includes 40 specialist tour operator companies, providing and selling tour destinations to a smaller demographic, this sector is becoming more popular as people are starting to spread away from the usual “package beach” holiday. Specialist travel and emerging markets are places such as tours in North America, Europe and further afield such as China and Russia, the emerging markets that have not been popular in the past due to inaccessibility. This sector also provides escorted tours to the Galapagos, around-the-world trips and student gap years to Australia for example.

The Activity sector is designed in providing customers that are seeking adventure or active holidays unique tours or packages to suit them. These specialised tour operators operate in the marine, adventure, ski, student and sporting segments, for example hiking in Kilimanjaro, polar expeditions, skiing in Canada and chartering yachts in the Caribbean.

The Accommodation and Destination sector provides on and offline accommodation and destination services worldwide; selling accommodation directly to the customers through online hotel booking sites, such as Laterooms.com; Hotelpedia.com and Asiarooms.com. It also provides accommodation, transfers, excursions and a destination agencies portfolio to tour operators, travel agents, cruise lines and other corporate customers.

Thomas Cook is another example of a mass market tour operator. As with TUI, Thomas Cook has travel agencies, airlines, hotels and tour operator; Club 18-30. In 2007, Thomas Cook merged with MyTravel; this was to cut costs; a predicted ?75million per year saving; and to combat competition from the low-cost airlines and web-based travel agents, that are on the rise in where customers are buying their holidays from.

All tour operators that offer air inclusive packages are required by law to have an Air Travel Organisers’ Licence (ATOL). This protects customers from losing their money and/or being stranded abroad if something was to happen to the flights. ATOL is managed by the Civil Aviation Authority (www.caa.co.uk)

Specialist Tour Operators

Specialist tour operators cater for niche market holidays, they specialise in particular destinations and/or in a particular product. For example Journey Latin America specialises in the particular destination of Latin America (www.journeylatinamerica.co.uk) and Active Diving specialise in Scuba Diving holidays around the world (www.activediving.co.uk).

Journey Latin America (www.journeylatinamerica.co.uk) specialises in holidays to Latin America; some of the destinations they include are:

Antarctica

Argentina

Belize

Chile

Cuba

Caribbean

El Salvador

The Galapagos Islands

The Falkland Islands

Guyana

Peru

Mexico

Nicaragua

Venezuela

They provide a wide variety of different types of holidays for a wide range of different markets. The types of holidays available are:

Tailor-Made Tours

Small Group Tours

Value

Active

Beach

Wildlife

Expedition

Honeymoon

Responsible

Family

Learn to… (learning a new skill)

Cruise

JourneyLatinAmerica markets to everyone, with holidays suitable for low-budgets to the higher budgets, family holidays to romantic honeymoons.

Wildlife holidays with JourneyLatinAmerica offers the traveller a vast array of wildlife and birdlife to see, from giant tortoises to llamas to sloths and penguins, all depending which country has been chosen to go to, there is the added advantage of there being the largest rainforest, driest desert to the longest mountain range and biggest river within the territories of the holidays available.

There is plently of advantages of travelling with a smaller, specialised tour operator, the service is more personal and the smaller operators tend to have more of a passion for the area they specialise in. Smaller operators are experts in their destination, enabling them to give first-hand advice and recommendations to the holiday maker. They also have more care towards to the places, the people and the environment and try to minimise the negative effects of the holiday.

Inbound Tour Operators

Not only is there tour operators for outbound tourists, either specialised or/and mass market; there is also many tour operators for inbound tourists, specialised and/or mass market. These tour operators specialise and cater for inbound tourists to the UK from many different countries. They provide tours and holidays in many different languages and for different budgets. One example of an inbound tour operator is British Tours.

British Tours (www.britishtours.com) specialise in tours of Britain. They provide tours to all size groups, from private groups up to 7 persons by car with their own guide; to larger groups by mini-bus or coach, with own guide. All prices are per car not per person. Tours are available in most languages, at an extra cost; including French, German, Spanish, Russian, Italian, Japanese and Chinese. Tours are suited to individual travellers, families, people with special interest, people with special needs and anyone who wants the freedom to travel at their own pace with their guide to help and inform. The tours of Britain cover the main tourist attractions and sites; the more famous to the lesser known authentic tourist sites; all with guide that are local to the area with a vast knowledge and interest of the particular site. Some of these tours are Stonehenge at Dawn, Legal London, Harry Potter and England’s Gardens.

British Tours offer private day tours leaving London as well as personally guided tours of Scotland, Wales and England, special interest tailor-made tours. They also provide European destination tours, such as Paris, Normandy Beaches by private plane and private bus tours of Rome and Italy.

British tours work with 100’s of travel agents worldwide, as well as many UK companies for sightseeing, ground-handling, interpreting and corporate entertainment within the UK. British Tours is a member of the London Tourist Board, the British Incoming Tour Operators Association, The Society of the Golden Keys and the American Society of Travel Agents.

An example of a tour and costs with British Tours:

Harry Potter Tour includes the locations where the Harry Potter films have been made, including London, Oxford and Gloucester. Oxford and Gloucester tour only (not including the London sights) for up to 7 people taking roughly 10 hours to complete would cost ?655 per car; price includes private car and guide, collection and return to hotel; anywhere in London; entrance and meals are not included in the price. These tours are also available in most languages.

The tourism industry is a major contributor to the gross state product of many countries Reige and Perry, 2000 and in the last 50 years, tourism has developed into one of the world’s most powerful, yet provocative, socio-economic forces (Sharpley and Telfer 2008). Travel & Tourism industry has become one of the world’s most important and fastest growing economic sectors, generating quality jobs and substantial wealth for economies around the globe (WTTC, 2007). The recent global recession has not caused the tourism industry to grind to a complete halt, and the World Tourism Barometer indicated that the recession only caused a 4% decline in global tourism from 2008-2010 (UNWTO, 2011b) and now it is expected to grow again. WTTC President and CEO, David Scowsill (2011) says “Over the next ten years, its total contribution to GDP will rise by 4.2% per annum to US$9.2 trillion, bringing with it 65 million new jobs, but for that growth to be achievable and sustainable, governments must work together with the industry towards smarter policies and legislation that will help Travel & Tourism to thrive.” In Third world countries, governments encourage tourism investment because of the assumption that it will contribute to economic development of their countries (Hall, 1995). Third world nations and developing nations always seeks the potential benefits of tourism such as increased income, foreign exchange, employments and economic diversification (Sharpley and Telfer, 2008). According to Ferguson (2007) “The tourism industry directly provides around 3 per cent of global employment, or 192 million jobs – the equivalent to one in every twelve jobs in the formal sector”. As with other industrial sectors and fields of academic study, tourism has also developed over the decades and has been influenced by a multitude of internal and external factors. It is not surprising that many aspects of tourism are totally different than they used to be before because of the vast rate of technological change along with social, economic and environmental changes.

Bangladesh is one of the world’s most densely populated countries, with its people packed into a delta of rivers that empties into the Bay of Bengal [BBC] (2011). It’s implementing its developing plans for a long time. They are not only trying to secure their economic growth but also trying to improve their social living standards. In Bangladesh, tourism was almost non-existent at the country’s independence from Pakistan in 1971. More recently tourism has seen as a means of the contributing to their attainment. Tourism contributes 4.8 % to Bangladesh’s Gross Domestic Products (GDP) and employs over 1509100 which contribute 1.9% of direct employments (WTTC, 2011). According to Bhatia (1986 in Jenkins and Tosun, 1998), many countries in the third world do not know the importance of tourism and the impacts that it can have, and Bangladesh is one of those countries. Essentially Jenkins and Tosun (1998) argue that, “tourism development took place in most of the places of this world as an unplanned activity” (p 102). “Like sustainable development sounds attractive” (Butler, 1992: 64), the phrase of sustainable tourism accepted immediately by this country even the meaning of this term is not understood fully. “Though “sustainable tourism” is the in thing across the world, Bangladesh, in spite of being endowed with nature’s bounties and beauty, still struggles with the concept” (Mahmud, 2010). Several destinations in Bangladesh such as Chittagong hill tracts, the Sundarbans, Saint Martin coral island, Nijhum Island, Srimanagol Lawachera rain forest, Tangua Hoar and Cox’s Bazar, which could be used as sustainable tourist spots (Mahmud, 2010).

Cox’s Bazar is the tourist capital of Bangladesh. By popular choice, Cox’s Bazar has recently been ranked as one of the ‘New Seven Wonders of the World'(Zamir, 2009), located conveniently on the east-west air-corridor making it a gateway to the Far East. It is endowed with resources and the potential for a tourism industry. In the southern edge of the country has a 125 km (77.6 miles) long beach of soft silvery sand, the world’s longest (Qadir, 2003) and a chain of hills that run parallel to the sea for almost the entire length, towering cliffs, colourful, ancient pagodas and Hindu temples (Anonymous, 2007), in a Riviera-like setting with crescent-shaped low hills overlooking the Bay of Bengal, and most visited tourist destinations in Bangladesh. The range of the hills covered in luxurious green groves is precious locations for tourists. Cox’s Bazar is located at the head of this terrain. Cox’s Bazar is also known as “Panowa”, literature meaning yellow flower. “Palonkee” was its other name.

The daughter of the sea Bangladesh is a beautiful surprise for the tourist. Since the tourism is reported as a relatively easy way to earn foreign exchange, many countries are eager to enter international markets as fast as they can (Jafari, 1974) and Bangladesh is one of them. According to Jafari (1974), tourists and news media of a developed countries come to be a kind of promotional agents for a developing country or for a under developing country. Though Hasan in his book “development tourism in Bangladesh” blames the international news media for representing a wrong appearance of the country and news media carefully avoid telling the world of the brighter side of Bangladesh than the rough side of it (Khairuzzaman, 2008) still there are some positive approaches from the international media. Lonely planet is one of them. The world leader in publishing travel guides and guidebooks ‘Lonely planet’ recommended Bangladesh as one of the top ten interesting travel destination in 2009 (Thomsen, 2009). This UK based publication ‘Bradt Travel guide’ is known as a “pioneer in tackling ‘unusual’ destinations, for championing the causes of sustainable travel and for the high quality of writing” (Thomsen, 2009). The first guide on Bangladesh published in 2009 and the back cover text states: “Bangladesh has a reputation for being poor and beset by flooding, but this ‘republic of rivers’ rewards those willing to look beyond the headlines. Leave luxuries behind and embark on the richest of travel experiences among some of the sub-continent’s friendliest people” (Thomsen, 2009). This kind of positive focus on Bangladesh is not possible to buy for money. Lack of consistent strategy on cooperation, appropriate knowledge and sustainability; are the great barrier to a positive development of Bangladesh tourism sector.

Environmental resources are an important asset not only in Cox’s Bazar but to other tourism destinations in all other third world countries. The tourism in Bangladesh is especially popular due to its coastal areas of Cox’s Bazar. If environmental resources are important economic assets in Bangladesh, the immediate action that need is that of sustainable utilisation of resources to benefit for present and future generations (Mbaiwa, 2005). It is well established that the presence of tourism in destination always brings with it environmental, socio-culture and economic benefit and this is why it is an effective development tool in any under developing countries and in the case of Bangladesh, A sustainable tourism strategy will have a major positive impact (Thomsen, 2009).

When carrying out a broad research on any substance, it is essential to become acquainted with contextual of that topic, by using relevant literatures. For this dissertation, it is most significant to obtain information in a number of different sources. Academic books, journals, newspapers, where available, will be used in the gathering of information for this dissertation. Here in this project, I will outline the history of sustainable tourism development first which will provide the context of how it is developing and will answer either it exists in the Bangladesh, particularly in Cox’s bazar. In order to gain this knowledge I will look at different publications related to research issue will be collected from academic books, daily newspaper, projects, related archives and tremendously up to date journals. For this purpose it will be extremely useful to look at relevant internet websites such as the websites of different ministry of Bangladesh and tourism industry based websites. Internet websites will be an important source to fill in the gap by providing useful information where books and periodicals are not so unequivocal.

2.0: Literature review

All tourism includes some travel but not all travel is tourism (Page, 2007). Tourism used to be recognised as an activity undertaken by those who travelled away from home for holidays, to visit relatives or to carry out professional business, in the past. Tourism is a composite of activities, services and industries that deliver a travel experience: transportation, accommodations, eating and drinking establishments, shops entertainment, activity facilities and other hospitality services available for individuals and groups that are travelling away from home (Goeldner and Ritchie, 2009). Therefore it encompasses a wide variety of purposes. The officially accepted definition by UNWTO (1993) is: “Tourism comprises the activities of person travelling to and staying places outside their usual environment for not more than one consecutive year for leisure, businesses and other purposes”. This definition challenges the commonly held perception that tourism is purely concerned with recreation and having fun (Holden, 2008). But according to Gunn (1994) the best working definition of tourism is that of by Mathieson and Wall (1982 in Gunn, 1994): “Tourism is the temporary movement of people to destinations outsides their normal places of work and residence, the activities undertaken during their stay in those destinations, and the facilities created to cater to their needs”. At the present time, tourism is even more far reaching with wider implications. Specialists have illustrious between ‘mass tourism’, which involves those features just mentioned, and ‘alternative tourism’, which can include cultural, educational, social, environmental, agricultural and political tourism (Wearing and Neil, 2009). Tourism promotes better cross culture understanding. For any third world and developing countries, tourism is seen as an important tool of their regional development, culture, environmental and in most cases; the tourism portfolio is attached to Economy. This provides us with an initial insight into the impact of tourism within all countries it has.

In addition to social, political and economic concerns, tourism has become a vastly important and global feature of environmental argument. Tourism development which consistently ignores environmental concerns is unlikely to remain viable in the longer term (Pigram, 1990). High volume of tourism can cause environmental including water, air and noise pollution which are extremely destructive to a location’s sustainable well-being. It is as a significance of the growing awareness of the harmful effect that tourism has on the environment, as well as a general heightened understanding of how global warming is affecting our planet, that tourism has been given an environmental focus. Indeed, sustainable tourism is now a widely known outlet of tourism, with the state of the environment being given more and more consideration. The term ‘Sustainable Tourism’ has been introduced in the context of wider debate about environmental sustainability and logically implies a form and level of tourism which maintains a total stock of natural resources (Sinclair, 1998). The growing awareness of environmental damage in this modern technological world is the reason to address this term. Getz (1986) says that when tourism planning was first developed in the 1960s, the discipline’s main focus came, “almost totally from the perspective of maximizing economic growth” (p. 21). Over the decades, the focus has shifted and is now, “more sensitive to non-economic issues” (p. 32). Murphy (1985) argues that it is the responsibility of the tourism industry to, “develop and protect its attractions, whether they are natural or man-made, and become a hospitality industry to make visitor experiences as enjoyable as possible” (p. 10). Though it is argued that too much emphasis is placed on relatively short term economic impacts at the cost of considering the long term social and environmental impacts of tourism, thereby encourages in a better awareness of the problems that the industry creates (Holloway et al., 2009). The importance of sustainable development is to carry growing successes into the future in such a way that future generations are not troubled (Pearce et al., 1990).

Sustainability, sustainable tourism and sustainable development are all well-established terms (Liu, 2003). There are two components in the definition of sustainable development. The meaning of development and the condition necessary for sustainability are those two components (Miltin, 1992). Croall (1995) compares sustainability to the “link between development and conservation”, which should not conflict to each other. According to Bartelmus (1986 in Tosun, 2001), “development implies a process that makes an effort to improve the living conditions of people”. To meet human needs and wants is the main objective of development (WCED, 1987) which involves wider apprehensions with the quality of life (Pearce et al., 1990). When applied to tourism, as Godfrey (1996 in Gunn, 1994)) points out the concept of sustainable development relates to a form of environmentally friendly tourism. Aside, Rees (Gunn, 1994 p.85) define “sustainable tourism development as a positive socio-economic change that does not undermine the cultural, ecological and social systems upon which local communities and societies are depended”.

The concept of sustainability first appeared on the public sense in the report by the World Commission on Environment and Development in 1987. The outline of sustainable development is that the economic growth and the environmental conservation are not only friendly but they are partners and one cannot survive without than other. The Brundtland Commission Report defines sustainable development as ‘development that meets the needs of the present without compromising the ability of future generations to meet their own needs’ (WCED, 1987). The Commission highlighted that sustainable development is not a fixed national agreement, but an active process of changes which ‘are all in harmony and enhance both current and future potential to meet human needs and aspirations’ (WCED, 1987: 46). A general weakness in the concept of the sustainable tourism development is that its principles and objectives have tended to manifest themselves in sets of guidelines that based on managing the limits of acceptable environmental and social change, which is unable to account for the almost infinite diversity of tourism development contexts (Sharpley and Telfer, 2008). In a research Liu (2003) found that sustainability is praised by Bramwell and Lane (1993 in Liu, 2003) and according to them “it is a positive approach intended to reduce the tensions and friction created by the complex interactions between the tourism industry, tourists, environment and the host communities to maintain the long term capacity and quality of both natural and human resources”.

“Miles of golden sands, towering cliffs, surfing waves, rare conch shells, colourful Pagodas, Buddhist Temples and delightful sea-food – all this makes what Cox’s Bazar is today , the tourist capital of Bangladesh” (NTO). Cox’s Bazar is one of the most attractive tourist spots, not only in the Bangladesh but also in the world. “The warm, shark free waters are good for bathing and swimming & while the sandy beaches offer opportunities for sun-bathing” (NTO). The tourist capital of Bangladesh includes conch shell market, tribal handicraft, and salt and prawn cultivation. According to a census of aquatic birds, a total of 15933 birds of 52 species have been spotted in Cox’s Bazar (The Daily Star, 2009) can be seen as other attraction. “Aggmeda Khyang, a Buddhist monastery at the hills, Himchari picnic spot, just about 8 km from Cox’s Bazar, Innani Beach 32 km away from the city, is one of the most spectacular sea beaches in Bangladesh which is very close to the world’s longest sandy beach in Cox’s Bazaar and it is situated within the Inani protected forest; Sonadia island with very little human visitation, Teknaf peninsula, some 80 km from town and picturesque St. Martin Island to the south at 13 km distance from mainland” are the around attraction of Cox’s Bazar (Ahammed, 2010). All these places are located around Cox’s Bazar and easily accessible by road and water sides what makes this place hub of tourism.

As an international destination, Bangladesh has a mixed image. Tourists from abroad perceive a negative awareness of Bangladesh from news media. People from outside perceive as place where the population is living in poverty, corruption and in natural disasters. Though the new seven natural wonders search 2009 have made the country attractive for tourism and is also charted as one of the top ten interesting destinations by new travel books (Quader, 2010). Bangladesh is still one of the countries in South Asia with the fewest arrivals and the lowest revenue earned from the tourism industry. WTTC (2011) predicts that the contribution from travel and tourism will increase 6.3% per annum till 2021. According to Bari (FE, 2010), “At present, around 0.50 million international tourists visit Bangladesh each year, It employs one million people”. Most of the tourists visited the country for business purpose, and “their stay in the country was brief as they had not been offered to explore the hills, seas and forests of the country brimming with natural beauty” (Mahmud, 2010). The only cause for this is the lack of awareness and proper arrangements. Though the economic contribution of tourism and the share of Cox’s Bazar to the national economy are not studied with reliable statistics (Ahammed, 2010) still the tourism industry leaders said in Financial Express (FE, 2010) that Bangladesh can earn US$2.0 billion in annual revenue from the tourism sector if it can attract two million international tourists. According to the general manager of Bangladesh Parjatan Corporation, revenue earning from the tourism sector is experiencing a downward trend and the revenue from tourism sector was approximately ?51 million in 2008, which came down to ?47 million in 2009. Till June 2010, the revenue was ?26 million (FE, 2010).

Tourism in Bangladesh is managed by Bangladesh Parjatan Corporation under the Ministry of Civil Aviation and tourism. There is no doubt that tourism is an effective development tool, helps economy to generate revenue, country gets benefited as well as the private sector and local community, Consciousness on preservation of nature and protection of environment tends to increase. Though Cox’s Bazar is easily accessible by road, still there is no rail links in this city. The government spending huge amount of money to get Cox’s Bazar rail linked within 2 years. Government’s infrastructure development planning includes the work on the upgraded submarine cable connection of Cox’s Bazar Landing Station to increase the bandwidth (Unb, 2011). Development of major infrastructure to serve resorts should be coordinated to meet the demands of the industry with boarder economic and social needs (Brohman, 1996). The presence of tourism in any destination always brings environmental, socio- culture and economic impacts. Less developed destinations like Cox’s Bazar are more susceptible. Development of tourism in Cox’s bazar brings external money flow which drives the living standard of the locals to higher level. Development of tourism in Cox’s Bazar on a long-term basis is to give due importance to the above impacts for its sustainability. It needs a long term planning, continuous development work, avoid the negative impacts and investment timing have to be predetermined (Quader, 2010). The current growth in tourist numbers to Cox’s bazar has led to the recognition that consideration needs to be given to a sustainable tourism development strategy if the site is to be maintained for future generations.

3.0 Aims and objectives

In undertaking this investigation, this dissertation has number of aims and objectives. As sustainable tourism is a very well established term in modern tourism industry due to a heightened environmental awareness, it is important to understand how it functions and whom it targets. The goal of environmentally sustainability is a maximum level of desired outcome such as economic profit, quality of life what will maintain in a steady way, subject to constraints imposed by environment. Basis on this concept it can be said that environmentally sustainable tourism implies a key importance on maintaining a certain level of environmental quality. This is highlighting that, a sustainable environment and a viable tourism industry are essential elements to make an environmentally sustainable tourism (Johnston & Tyrrell, 2007). In order to do understand the term and the function of environmentally sustainable tourism, it will first be necessary to outline the basics of the tourism industry in less developed country like Bangladesh and how it has changed over the years. By doing this it will be possible to better understand how the sustainable tourism industry fits into Cox’s Bazar.

3.1: Aims

The core aim of the social and economic perspectives of tourism is to inspire more international and domestic tourists to promote the growth of tourist value which focus on creating employment, achieving revenue, developing local engagement (Gilmore et al., 2007) and enable some members of the population to move from the informal sector to higher paid jobs in the formal sector (Sinclair, 1998). The environmental aim is often conflict between the economic and social perceptions which is to protect and to conserve both culture and the environment (Gilmore et al., 2007). The host population is itself a part of the tourism product. The rapid growth of tourism in any less developed countries and destinations raises questions of sustainable tourism development, particularly the access and economic benefits to local economies. For this dissertation, it is most important to know the various facets of the relationship between host population and tourism industry of Cox’s Bazar of Bangladesh. The locals are subjects to be viewed and interacted with, or settings for tourist activities, and their attitudes and behaviour constitute the ‘hospitality’ resource of a destination (Smith, 1994). According to the World Tourism Organization (UNWTO) (1993), tourism is sustainable when it “improves the quality of life of the host community; provides a high quality of experience for the visitor; and maintains the quality of the environment on which both the host community and the visitor depend”. Cox’s Bazar have limited opportunities and resources for agriculture or industrial development and are turning to tourism to create the major source of economy though a huge part of population are still involved in fishing, collecting sea foods and sea products for their livelihood. Traditionally, it is a conservative society and socio-culture, economy and the “quality of life” is still below than national average (Ahammed, 2010). The aim of this project is to critically assess whether Cox’s Bazar in Bangladesh can be developed in a sustainable way.

3.2: Objectives

Finally, having completed a thorough investigation and after evaluation of the data collected will leads up to the current prevalence of the sustainable tourism in Cox’s Bazar, it will then be possible to imagine how the industry may develop in future.

Objectives are

?? To evaluate and define sustainable tourism development in term of environment, economic and culture.

?? To investigate and find the specific requirement for sustainable tourism development in Cox’s Bazar.

?? Critically discuss whether the people of tourism industry in Bangladesh really know the meaning of sustainable development?

?? To illustrate useful conclusions and make effective recommendations on sustainable tourism development for Cox’s Bazar that can be implemented by the tourism authority of Bangladesh.

4.0: Methodology and Method

The following section of this dissertation shall outline the methodology and the method that shall be employed for the primary research section of this dissertation.

4.1: Methodology

In tourism research there is an on-going need for statistical insights but qualitative research offers a great deal of understanding at social life from in a different way (Phillimore and Goodson, 2004). Phillimore and Goodson (2004) argue that tourism researchers are not bound to adopt a simple set of methods, and are therefore free to combine a wide range of approaches with a more sophisticated attitude to use qualitative research.

This project used both primary and secondary data resources. In terms of primary data sources, this dissertation relied on the research work that I have carried out on sustainable tourism development in Cox’s Bazar. Priority was given to the semi structured interviews I took in April 2011 which resulted in to develop conclusions and recommendations based on the findings that could be implemented in Cox’s Bazar.

In order to give concrete load to the primary research conducted this research will also contain some secondary research. Collecting data from people who are involved with the tourism industry in Bangladesh will give considerable ideas that will have been formed by looking at secondary literature. It will also provide the dissertation with a personal insight which cannot be gained from conducting qualitative research alone.

4.1.1: Primary Research

From the outset, I decided that my research objectives more easily lend themselves to more qualitative forms of analysis. This study is essentially attempting to determine how a number of complex concepts impact and relate to one another. It requires the subject area to be looked at from a number of different perspectives and for links between these separate perspectives to be determined. Britten et al (1995) suggest that employing qualitative methodology allows for the researcher to, “Address research questions of immediate relevance which are otherwise difficult to investigate” (p. 105). Flick et al (2004) go on to point out that the use of qualitative methodology can aide in, “the understanding of complex relationships rather than explanation by isolation of a single relationship, such as ’cause’ and ‘effect’” (p. 8). Sofaer (1999) further argues that this can result in, “rich descriptions of phenomenaaˆ¦it not only serves the desire to describe; it also helps move the enquiry towards more meaningful explanations” (p. 1102). It is for these reasons that this study will approach the research objectives from a qualitative, rather than giving practical weight to quantitative, approach.

4.1.2: Secondary Research

Secondary analysis has a well-established pedigree. This will provide the useful information in order to understand the background of the subject. Hakim (1982) state that, “secondary data analysis is any further analysis of an existing dataset which presents interpretations, conclusions or knowledge additional to, or different from, those produced in the first report on the inquiry as a whole and its main results”(p 1). Secondary data can embrace a whole range of experimental forms; it can include the data generated through systematic reviews, through documentary analysis as well as the results from government sponsored surveys (Smith, 2008). Secondary literature provides a considerable source for appreciative which is necessary when making decisions regarding any topic and placing advance theories to develop situations.

4.2: Method

The first method that was considered was focus groups. MacNaghten and Myers (2004) suggest that this method is most useful for researchers who perhaps, “are not entirely sure what categories, links and perspectives are relevant” (p. 65). However, this method can yield data that can be difficult to understand and interpret. For an inexperienced researcher this could present a problem and could lead to data that is perhaps not as rich as it could be.

I finally chose semi-structured interviews as my primary research method. Kvale (1983) states that the use of this method presents the researcher with the opportunity to, “gather the life-world of the interviewee with respect to interpretation of the meaning of the described phenomena” (p. 174). It is this real world experience that will give my data real depth and will hopefully help me to understand some of the complex problems faced by my respondents. Another advantage of this method is outlined by Blee and Taylor (1995) who argue that semi-structured interviews places human agency, “at the centre of the movement analysis. Qualitative interviews are a window into the everyday world of activists, and they generate representations that embody the subjects’ voices, minimizing, at least as much as possible, the voice of the researcher” (p. 96).

I had hoped to be able to conduct this research in Cox’s Bazar. However, it became clear to me early in my research that this was not likely to be popular. Instead, I chose to focus my research on travel agencies in the UK who offer holidays to Cox’s Bazar and other parts of Bangladesh. I chose to draw my sample group from agencies located in Bangladeshi communities. Tower Hamlets, Manchester and Oldham have arguably the highest concentration of Bangladeshi’s in the country, so I chose to target travel agents here. As people working in the industry are answering my questionnaires, I assured them that they will remain anonymous to make them feel more confident to give honest answer.

I phoned round several agencies and managed to secure interviews with 5 travel agents. A few days before the interviews, these respondents were sent an outline of my study so that they could perhaps begin to prepare their responses. This would hopefully yield richer data for me to use. These interviews were mostly conducted face to face, although two was conducted over the phone and Skype. I recorded the interviews and took extensive notes during them. I was conscious of the fact that, “in semi-structured interviewing, analysis and interpretation are on-going processes” (Blee and Taylor, 2002: 110). Unlike in quantitative data collection where one waits until all the data is collected before starting the analysis process, with qualitative data collection, the analysis is an on-going process. In the analysis of the data, I employed a fairly liberal interpretation of the grounded theory method. Stern (1994) suggests that this method is most helpful for researchers exploring new subject areas or who simply want to gain a fresh perspective on a familiar situation (p. 30). The use of this method demands that the researcher constantly re-evaluates the data collected and then categorizes and codes it. I decided that my codes would be the objectives set at the start of this dissertation. I re-listened to my interviews to my interviews a number of times to find parts of the data that best met my objectives.

The following section of this dissertation will present the findings from the primary research and discuss these in light of the findings from the literature search. The objectives of the study (see 3.2) were used as markers in the interviews. Although the respondents were allowed to ‘veer off track’, I always tried to bring the discussion back to the four main objectives guiding this research.

Notes: I did not add references cause of the word limits. Once I finalised this work I will go through Gold proofread again.

Chapter 22.0Literature 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. This literature review will be completed by searching for journal articles, relevant studies which have been previously done on the topic.

2.1.1 Overview of Tourism

Tourism is an active 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. Sheldon & Abenoja argued that 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. Positive and negative feature of tourism can be moved to the tourists and the host population as a tourism product can only be consumed in a destination.

One of the most influential socially based plans refined to examine the impact of tourism has on local people and the environment in which the local people live is 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.

2.1.2Resident-visitor relations: Doxey’s ‘Irridex

It became clear that without the support of stakeholders, tourism would not be successful in the long term. This is specifically suitable for the communities who host the visitors. Doxey (1975), Doxey suggested an easy set of stages, demonstrating a host community response to and relationship with an increasing number of visitors. He suggested that local toleration thresholds and the the resistance of the host community to the increasing number of tourism development established a fear that they might lose community identity. Moreover, Doxey’s (1975) Index of Irritation (Irridex) symbolizes the ascending sensitivity of local residents as the impact that visitors cause increases.

Kreag (2001) said that the number of impacts from tourism is physically wide and it often has the authority on areas beyond those usually linked with tourism. 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).

2.1.3 Socio-Cultural Impacts of Tourism

Oppermann & Chon, (1997), 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. Smith (1995) reported that the socio-cultural impacts of tourism occur when there is the interaction between the “host”, or local people, and “guests”, or tourists. 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.

Cooper et al., (1998); said that socio-cultural impacts have both positive and negative forms and it is the hosts and the guests who are affected, Oppermann & Chon, (1997). Moreover, Pi-Sunyer, (1973), stated that socially and culturally, tourism has often been victim of social tensions. Boissevain, (1979); Tsartas, (1992) argues 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. During their stay in a destination tourists interact with the local residents and this interaction 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).

De Kadt (1979) have stated that 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. Another type of encounter which occurs 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, White (1974); Brougham and Butler (1977); Jeffs and Tavis (1989); Wallace (1997) reported that socio-cultural impacts of tourism also include change in the language that is used in a destination 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.

2.1.4 Communities Perspective of Tourism

Fredline, (2004) considered 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. 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 say 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.

Resident’s reponse to tourism impacts

It is important to know the reaction of residents to tourism and the strategies that they use to minimize the negative impacts from the tourism exchange. Two theories which is the Doxey Irridex model and the tourism area life-cycle model by butler (1980) were used to to explain resident’s reactions to tourism. However it has been said that these two theories are too unidirectional and monolithic, being not able to identify that different sets of strategies may be available simultaneously within a region, Dogan (1989). The theories that have been viewed in the past years as the most efficient ones, were based on the alternative of the Butler (1975) and of Dogan (1989): Butler (1975) reporting a past work by Bjorkland and Philbrick, analysed the progress that occurs when two or more cultures come into interaction and suggested this work within the resident’s-tourist relationship; he stated that the resident’s attitudes can be favourable and unfavourable during their communication and resident’s behavioural response towards tourism could be functioning or enduring from these differences, a four-cell continuity topologies was developed.

2.1.5 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.

2.1.6 Positive socio-cultural impact of tourism

United Nations, (1996); Jamaica Sustainable Development Network, 2001; Tourism Product Development Company (2005); du Cros; (2001), 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.

2.1.7 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). According to Hejazeen (2007), he distinguished the socio-cultural impacts of tourism on five communities at five historical sites around Jordan. In Petra Hejazeen (2007) noticed that there were a number of negative impacts such as people starting to consume alcohol drinks, children who are not going to school, and the problem of co-modification whereby the local people imitate the tourists.

2.1.8 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.

2.2.8 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.

2.2.9 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.

2.2.3 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.

2.3.1 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.

2.3.2 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:

2.3.3 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.

2.3.4 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

2.3.5 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.

2.3.6 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.

2.3.7 The economic impacts of tourism

Loomis and Walsh (1997) stated that 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, said 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, reported Osti & Faccioli, (2011).

2.3.8 The benefits that tourism bring in an economy

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.

2.3.9 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 reported Dritsakis, (2008); Boopen, (2006). Tourism does not only lead 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.

2.4 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.

2.4.1 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.

2.4.2 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.

2.4.3 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 impacts 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.

2.4.4 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.

2.4.5 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.

2.4.6 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:

2.4.7 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.

2.4.8 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.

2.4.9 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.

2.5 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.

2.5.1 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.

2.5.2 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.

2.5.3 Natural resource depletion

Natural resource depletion, the usage of land change, pollution and the degradation of the environment are the dominant impacts on the environment because of the quick expansion of tourism in many destinations and without appropriate strategies to protect natural-cultural resources from the pressure of tourism Bramwell and Lane, (2010); Davenport and Davenport, (2006); Gossling, (2002); Favro et al., (2010); Kuvan, (2005); Madan and Rawat, (2000). According to Welford et al., (1999) said that sustainable tourism has been fighting with uncontrolled and unplanned tourism and this includes measures to diminish the negative impacts that mass tourism causes such as the destruction of fragile ecosystem and local culture and also the depletion of natural resources.

2.5.4 Ecotourism

Society (Ties) which is an ecotourism society argued that ecotourism is people travelling responsibly to areas of nature and they keep the environment clean by being conscious about their act towards the environment and ameliorate the well-being of the local people. With the activity of ecotourism, most of the profits remain in the local economy and it is of a smaller proportion and having low import leakage.

2.5.5 The destination lifecycle

Almost all destinations have a lifecycle. According to the butler model, the basic idea of 1980 is that a destination starts approximately unknown and there is also a limited number of visitors as due to lack of access, facilities, and local knowledge which is labeled as the exploration stage Miller and Gallucci, (2004).

Butler’s Tourism Area Lifecycle Model

2.5.6 The 7 stages of tourist development

Exploration: The exploration stage is when only a small number of tourists visit a destination. At this stage, the area remains unspoilt since there are few tourists and the availability of facilities is limited. The destination is deserted and has a sleepy appearance with little or there might be no development. At this stage, a limited number of businesses exist and the provided facilities are owned by the local people.

Involvement: The involvement stage includes local people that start to provide facilities to tourists within the destination and it becomes to be recognized as a tourist destination. In the involvement stage, there is an interaction between the locals and the visitors and this will remain high. Tooman (1996), said that the involvement stage is where tourism does not affect the economy, it can create desirable effects and the benefits goes to the local people be producing linkages, economic diversity, and more time to establish the account to control growth of the tourism sector.

Development: The development stage takes place when the host country starts to make people aware about the destination through advertising and the area starts to be recognized as a tourist destination. At this stage the local people tend to support the effect that tourism bring to their country because it contributes economically, Bramwell (2003).

Consolidation: This is where the destination continues to attract the number of tourists. The growth of tourists’ numbers may not be fast as in the other stages as there exists some tensions between the host community and the tourist.

Stagnation: The stagnation stage takes place when the facilities that are provided to tourists start to become old as tourists are bored with the facilities which has been provided long ago. At this stage, the number of tourists in a destination may lead to a decline.

Rejuvenation: Rejuvenation occurs when there is the need for improvement. At this stage, investment and modernization may occur and may result to an increase in visitors’ numbers.

Decline: The decline stage occurs when the rejuvenation (stage) has not taken place yet. As a result, people working in the tourism industry lose their jobs and the image of the destination also suffers.

2..5.7 What is culture?

Culture has a specific role in the reconstitution of an urban economy and identity, an expanding literature appears on culture-led regeneration in the cities of the improved world. Regeneration is the complete change of a place that is showing proof of physical, social and economic decline, said Evan (2005). However, culture is said to be an incentive for the regeneration development, although the evaluator articulate the main clashes. Jensen (2007) reported that while culture-led regeneration work try to re-build the urban economy and image, they often offer concern to development goals such as economic, property development and urban entrepreneurialism rather than the kind of life objectives, the safety of local existences, social justice. Hofstede, (2001); Reschner, (1969) reported that culture can progress slowly over time or may modify completely in a short time period due to a fluctuation in technology, modification in values, inclusion by another more commanding culture and calamity of large-scale and area as wars affliction and natural man-made disasters.

Moreover, Richards and Wilson, (2006); Zukin, (1995) reported that cultural heritage is the principal attraction of cities, cultural heritage preserves the cultural values of the place and links people to their assembled memories, they also said that cities have now made a business of culture and cultural places in most cases become more market-oriented because of decreases in the level of public funding, reported Richard, (1996). However, while culture remain an important element for tourism and urban economy, the signification of culture becomes more uncertain. Jensen (2007) defines culture as a way of life, while cultural assets becomes the creation of a place that includes both tangible and intangible qualities. Hence cultural tourism is no more slightly the imaged diminution of high culture artworks such as galleries, theaters and architecture, but is growing for the inclusion of giving visitors the opportunity of drenching off the atmosphere, Galdini, 2007; Richards, 1996).

Reisinger &Turner, (1999) stated that while there is no universally agreed definition of culture, there is no transcultural variable by which culture can completely differentiated and successfully compared. In researching in the image of a destination, nationality is likely to be the key inquiring variable to understand differences in perception among visitors having various cultures, Beerli & Martin, (2004); Campo & Garau, 2008; Joppe et al., (2001); MacKay & Fesenmaier, (1997); Mayo & Jarvis, (1981); Prayag & Ryan, (2011); Ryan & Cave, (2005).

Dann (1993, pp 108-109) argued as “tourism is a global phenomenon” societies in a destination are not anymore in an orderly way and this does not make sense to take into consideration national identification within many societies as many tourist have different nationalities and the country where they have taken birth may not be the same as the country of their nationality. Moreover, culture and identity issues must be taken into account as these are a challenge in offering sustainability in tourism, as regards assuring sustainability in tourism, preserving real culture and identity of people who are living and working at tourism destinations. Additionally, tourism will lead to a disappearance of local identity and values Griswold, (2004); Hitchcock, (1999); Santos & Buzinde, (2007).

2.5.8 Social Exchange Theory

Blau (1964, p.91) stated that (SET) refers to social exchange as “voluntary actions of individuals that are inspirited by what they expect in returns to bring and usually perform in fact bring from others. (SET) makes partners in a relationship more attached and organizes mutual trust, Moore and Cunningham III, (1999). According to Long, Perdue and Allen (1990) reported that there has been a favorable attitude toward tourism was directly linked to support for growth of the tourist base. SET consists of a psychological and sociological perspective that demonstrates the change and stability as a method of discussed exchanges between people in society. In taking into account of the human social interactions, social exchange theory operates on the belief that individuals are in most cases rational and get into calculations of costs and benefits in social exchanges. This exchange of benefits is also encase in the cultural concept of “guanxi” or relationships among the Chinese people which have affected business relationship for centuries in Asia. Mo

ABSTRACTINTRODUCTION

Today, tourism is one of the largest and dynamically developing sectors of external economic activities. Its high growth and development rates, considerable volumes of foreign currency inflows, infrastructure development, and introduction of new management and educational experience actively affect various sectors of economy, which positively contribute to the social and economic development of the country as a whole.

Most highly developed western countries, such as Austria, Italy, and Switzerland have accumulated a big deal of their social and economic welfare on profits from tourism. According to recent statistics, tourism provides about 10% of the world’s income and employs almost one tenth of the world’s workforce. All considered, tourism’s actual and potential economic impact is astounding. Many people emphasize the positive aspects of tourism as a source of foreign exchange, a way to balance foreign trade, an “industry without chimney” – In short, manna from heaven.

But there are also a number of other positive and negative sides of tourism’s economic boom for local communities, which not always considered by advocates of tourism perspectives. Therefore in this paper I will consider the main social and environment impacts of tourism at the country level.

Singh, L. (2008). “Ecology Environment and Tourism” pp. 87-89

‘Travel and tourism’ does not necessarily involve travelling abroad. Much tourism takes place within people’s home country, on visits to attractions, city breaks, trips to business meetings, sports events or concerts, and visits to friends and relatives (abbreviated as VFR). There are three main types of tourism: domestic tourism, incoming or inbound tourism and outbound tourism.

According to World Tourism Organisation (WTO) – affiliated to the United Nations and recognised as the leading international body on global tourism – tourism is defined 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.’

World Tourism Organisation, 1993

Domestic Tourism: This is when people take holidays, short breaks and day trips in their own country. Examples would be:

A couple taking a weekend break in their own country;

A family visiting relations in another part of the country, even if they live only a few miles away.

Incoming / Inbound Tourism: This describes people entering the country in question from their home country, so it is a type of international tourism. Examples could be:

A group of Chinese visitors coming to Egypt on a recreational trip;

Teams from different countries entering a country for an international event, such as the Olympic Games;

Outbound Tourism: This term applies when people travel away from their home country to visit other international countries for leisure or business. Examples of this could be:

Business people from the India travelling to Germany to visit a major exhibition;

A day tripper from southern Malaysia visiting Singapore.

It is possible to divide the components of the travel and tourism industry into six key areas, as represented in the Figure below,

IMPACTS OF TOURISM

Tourism has three major impacts namely, Socio-cultural, environmental and economic impacts.

SOCIO-CULTURAL IMPACT OF TOURISM

Tourism may have many different effects on the social and cultural aspects of life in a particular region or area, depending on the cultural and religious strengths of that region. The interaction between tourists and the host community can be one of the factors that may affect a community as tourist may not be sensitive to local customs, traditions and standards. The effect can be positive or negative on the host community.

Positive impacts on an area include benefits such as:

Local community can mix with people from diverse backgrounds with different lifestyles which through ‘demonstration effect’ may lead to the development of improved lifestyles and practices from the tourists’ examples.

There can be an improvement in local life through better local facilities and infrastructure (developed to sustain tourism) which could lead to better education, health care, employment opportunities and income.

More cultural and social events available for local people such as entertainment, exhibitions etc.

Conservation of local and cultural heritage of an area and rebirth of its crafts, architectural traditions and ancestral heritage;

Urban areas which may be in decline can be revived and the movement of people from rural areas to urban areas for employment may be reversed as jobs will be available in the tourism industry.

Dubai is an ideal example of a tourist destination which has reaped the benefits of the positive impact of development, on the socio-cultural aspects of in the country. As noticed, considerable financial investment by both public and private sectors has resulted in development of the existing infrastructure and to job creation. Archaeological and heritage sites have been preserved, and local traditions are maintained. The hospitable culture of the Arab world and acceptance of others’ lifestyles implying that tourists are welcomed but do not threaten existing ways of life.

However, tourism may have negative effects on an area, such as,

Existing infrastructure (roads, railways, health care provision) may not be able to cope with the greater stress created by influx of people by tourism.

Local population’s activities and lifestyles may suffer intrusion from tourists leading to resentment towards tourists.

The local population may copy lifestyles of tourists through the ‘demonstration effect’ and the result could be loss to local customs and traditions as well as standards of behaviour.

Increased crime could develop through decline in moral values, leading to greed and jealousy of wealthier visitors.

Traditional industries may be lost and local goods substituted by imported and mass-produced goods which lack authenticity but appeal to a mass market.

Tourists may act in an anti-social manner which could cause offence to the local population. Unless sufficient information is provided by the host nation and tourist providers on the standards of behaviour expected in that area, local populations come to resent tourists and act aggressively towards them.

Language barriers between the tourist and the host community which may create communication problems.

ENVIRONMENTAL IMPACT OF TOURISM

Negative impacts from tourism occur when the level of visitor use is greater than the environment’s ability to cope with this use within the acceptable limits of change. Uncontrolled conventional tourism poses potential threats to many natural areas around the world. It can put enormous pressure on an area and lead to impacts such as soil erosion, increased pollution, discharges into the sea, natural habitat loss, increased pressure on endangered species and heightened vulnerability to forest fires. It often puts a strain on water resources, and it can force local populations to compete for the use of critical resources.

The quality of the environment, both natural and man-made, is essential to tourism. However, tourism’s relationship with the environment is complex. It involves many activities that can have adverse environmental effects. The negative impacts of tourism development can gradually destroy the environmental resources on which it depends.

On the other hand, tourism has the potential to create beneficial effects on the environment by contributing to environmental protection and conservation. It is a way to raise awareness of environmental values and it can serve as a tool to finance protection of natural areas and increase their economic importance.

Direct impact on natural resources, both renewable and non-renewable, in the provision of tourist facilities can be caused by the use of land for accommodation and other infrastructure provision, and the use of building materials.

Water, and especially fresh water, is one of the most critical natural resources. The tourism industry generally overuses water resources for hotels, swimming pools, golf courses and personal use of water by tourists. This can result in water shortages and degradation of water supplies, as well as generating a greater volume of waste water.

Forests often suffer negative impacts of tourism in the form of deforestation caused by fuel wood collection and land clearing. For example, one trekking tourist in Nepal – and area already suffering the effects of deforestation – can use four to five kilograms of wood a day.

In areas with high concentrations of tourist activities and appealing natural attractions, waste disposal is a serious problem and improper disposal can be a major despoiler of the natural environment – rivers, scenic areas, and roadsides. Solid waste and littering can degrade the physical appearance of the water and shoreline and cause the death of marine animals.

Construction of ski resort accommodation and facilities frequently requires clearing forested land. Coastal wetlands are often drained and filled due to lack of more suitable sites for construction of tourism facilities and infrastructure. These activities can cause severe disturbance and erosion of the local ecosystem, even destruction in the long term.

Source: United Nations Environment Programme (UNEP), 2001

ECONOMIC IMPACTS OF TOURISM

Tourism’s economic benefits are touted by the industry for a variety of reasons. Claims of tourism’s economic significance give the industry greater respect among the business community, public officials, and the public in general. This often translates into decisions or public policies that are favourable to tourism. Community support is important for tourism, as it is an activity that affects the entire community. Tourism businesses depend extensively on each other as well as on other businesses, government and residents of the local community.

Economic benefits and costs of tourism reach virtually everyone in the region in one way or another. Economic impact analyses provide tangible estimates of these economic interdependencies and a better understanding of the role and importance of tourism in a region’s economy.

Tourism activity also involves economic costs, including the direct costs incurred by tourism businesses, government costs for infrastructure to better serve tourists, as well as congestion and related costs borne by individuals in the community. Community decisions over tourism often involve debates between industry proponents touting tourism’s economic impacts (benefits) and detractors emphasizing tourism’s costs. Sound decisions rest on a balanced and objective assessment of both benefits and costs and an understanding of who benefits from tourism and who pays for it.

Tourism’s economic impacts are therefore an important consideration in state, regional and community planning and economic development. Economic impacts are also important factors in marketing and management decisions. Communities therefore need to understand the relative importance of tourism to their region, including tourism’s contribution to economic activity in the area.

A variety of methods, ranging from pure guesswork to complex mathematical models, are used to estimate tourism’s economic impacts. Studies vary extensively in quality and accuracy, as well as which aspects of tourism are included. Technical reports often are filled with economic terms and methods that non-economists do not understand. On the other hand, media coverage of these studies tend to oversimplify and frequently misinterpret the results, leaving decision makers and the general public with a sometimes distorted and incomplete understanding of tourism’s economic effects.

Tourism has a variety of economic impacts. Tourists contribute to a destination’s sales, profits, jobs, tax revenues, and income. Primary tourism sectors, such as lodging, dining, transportation, amusements, and retail trade, are affected directly: most other sectors are impacted by secondary effects. An economic impact analysis of tourism activity usually focuses on regional tourism-related changes in sales, income, and employment.

A standard economic impact analysis traces the path that money takes once it leaves a tourist’s pocket: this is also referred to as the flows of money from tourism spending. The first flow, (direct effect), is to the businesses and government agencies to which the tourists pay money directly. The money then flows through the economy as:

Payments from these direct recipients to their suppliers,

Salaries and wages for households who provide labour for tourism or supporting industries,

Various government taxes and charges payable by tourists, businesses and households. Continuing the fluid analogy, a leakage occurs when money escapes the economy of a region because a local consumer, (household, business or government), has purchased a product from an outside supplier.

DIRECT AND SECONDARY ECONOMIC EFFECTS

Economists distinguish direct, indirect and induced economic effects. The total economic impact of tourism is the sum of direct, indirect and induced effects within a region. Indirect and induced effects are sometimes collectively called secondary effects. These impacts or effects may be measured in terms of gross output, sales, income, employment, or value added. Although they are often used somewhat loosely by non-economists, these terms have precise definitions that are important when interpreting economic impact study results.

Direct effects, are production changes associated with the immediate effects of changes in tourism expenditures. For example, an increase in the number of tourists staying overnight in hotels would directly increase room sales in the hotel sector. The additional hotel sales and associated changes in hotel payments for wages, salaries, taxes, supplies and services are direct effects of the tourist spending.

Indirect effects are the production changes resulting from various rounds of re-spending of the tourism industry’s receipts in backward-linked industries. For example, industries supplying products and services to hotels). Changes in sales, jobs and income in the linen supply industry, for example, represent indirect effects of changes in hotel sales. Businesses supplying products and services to the linen supply industry represent another round of indirect effects, eventually linking hotels by varying degrees to most other economic sectors in the region.

Induced effects are the changes in economic activity resulting from household spending of income earned directly or indirectly as a result of tourism spending. For example, hotel and linen supply employees supported directly or indirectly by tourism, spend their income in the local region for housing, food, transportation, and the usual array of household product and service needs. The sales, income, and jobs that result from household spending of added wage, salary, or proprietor’s income are induced effects.

Total Economic Impact
Total Economic Impact = Direct + Secondary Effects
= Direct + (Indirect + Induced Effects)

A change in tourist spending can affect virtually every sector of the economy by means of indirect and induced effects. The magnitude of these secondary effects is directly related to the propensity of local businesses and households to purchase from local suppliers. Induced effects are easily visible when a large regional plant closes: supporting industries are hurt by the indirect effects, but the entire local economy usually suffers due to the reduction in regional household income. Retail stores may close, thereby increasing leakages as local consumers turn to outside suppliers. Similar but reversed induced effects are observable when there is a significant increase in regional jobs and household income.

INPUT-OUTPUT MODELS

An input-output (I-O) model is a mathematical model that describes the flows of money between sectors within a region’s economy. Flows are predicted based on the inputs that each industry must buy from every other industry to produce a dollar’s worth of output. I-O models also determine the proportions of sales that go to wage and salary income, proprietor’s income, and taxes. Multipliers can be estimated from input-output models based on the estimated re-circulation of spending within the region. Exports and imports are determined based on estimates of the propensity of households and firms to purchase goods and services from local sources (often called RPC’s or regional purchase coefficients). The more self-sufficient a region is, the fewer the leakages, so that the multipliers are correspondingly higher.

Input-output models make a number of basic assumptions:

All firms in a given industry employ the same production technology and produce identical products.

There are no economies or diseconomies of scale in production or factor substitution. I-O models are essentially linear: double the level of tourism activity/production and you must double all of the inputs.

Analysts generally report the impact estimates as if they represent activity within a single year, although the model does not explicitly keep track of time. One must assume that the various model parameters are accurate and represent the current year.

I-O models are firmly grounded in the national system of accounts which relies on a standard industrial classification system (SIC codes), and on various federal government economic censuses in which individual firms report sales, wage and salary payments and employment. I-O models are generally at least a few years out-of-date: this is not usually a problem unless the region’s economy has changed significantly. An I-O model represents the region’s economy at a particular point in time: tourist spending estimates are generally price adjusted to the year of the model.

Multiplier computations for induced effects generally assume that jobs created by additional spending are new jobs involving the movement of new households to the area. Induced effects are computed assuming linear changes in household spending with changes in income. Estimates of induced effects are frequently inflated when these assumptions are not accurate, (for example, when new jobs are staffed by existing residents). As induced effects usually comprise the vast majority of secondary effects of tourism, they should be used with caution.

Measuring the Economic Impact of Tourism

The economic impacts of tourism are typically estimated by some variation of the simple formula:

Defining the Economic Impact of Tourism:
Economic Impact of Tourism = # of Tourists * Ave. Spending per Visitor * Multiplier

Where ‘# of tourists’ = numbers of tourists and ‘ave.’ = average

Estimate the change in the number and types of tourists to the region that will result from the proposed policy or action:

Estimates or projections of tourist activity generally come from a demand model or some system for measuring levels of tourism activity in an area: economic impact estimates rely on good estimates of the number and types of visitors, which come from carefully designed measurements of tourist activity, a good demand model, or good judgment. This step is usually the weakest link in most tourism impact studies, as few regions have accurate counts of tourists, let alone good models for predicting changes in tourism activity or separating local visitors from visitors who originate outside the region.

Estimate average levels of spending (often within specific market segments) of tourists in the local area:

Spending averages come from sample surveys or are adapted from other studies. Spending estimates must be based on a representative sample of the population of tourists, and should take into account variations across seasons, market segments or types of tourists, and locations within the study area. As spending can vary widely by type of tourist, we recommend estimating average spending for a set of key tourist segments based on samples of at least 50-100 visitors per tourism segment. Segments should be defined to capture differences in spending between local residents vs. tourists, day users vs. overnight visitors, type of accommodation (motel, campground, seasonal home, with friends and relatives), and type of transportation (car, RV, air, rail, etc.). In broadly-based tourism impact studies, it is useful to identify unique spending patterns of important activity segments such as downhill skiers, boaters, or convention & business travellers multiplying the number of tourists by the average spending per visitor, (making certain that units are consistent), gives an estimate of total tourist spending in the area. Estimates of tourist spending will generally be more accurate if distinct spending profiles and use estimates are made for key tourism segments. The use and spending estimates are the two most important parts of an economic impact assessment. When combined, they capture the amount of money brought into the region by tourists. Please note: multipliers are needed only if one is interested in the secondary effects of tourism spending.

Apply the change in spending to a regional economic model or set of multipliers to determine secondary effects:

Secondary effects of tourism are estimated using multipliers, or a model of the region’s economy. Multipliers generally come from an economic base or input-output model of the region’s economy. Often, multipliers are borrowed improperly or adjusted from published multipliers or other studies. Avoid taking a multiplier estimated for one region and applying it in a region with a quite different economic structure. As a general rule, multipliers are higher for larger regions with more diversified economies. A common error is to apply a state-wide multiplier (since these are more widely published) to a local region. This will yield inflated estimates of local multiplier effects.

Stynes, D., (1997). ‘Economic impacts of Tourism’. pp. 1-19 Urbana, IL: University of Illinois, Cooperative Extension Service bulletin.

The social impact of the cruise industry on the destination has a few positive effects. When cruise tourists arrive at ports of destination, interactions between local residents and cruise tourists benefits both parties. The cruise tourists can gain knowledge of the destinations lifestyle and culture. This is the same respect to the inhabitants. Locals can gain knowledge from people around the world. Residents can learn about lifestyles of their guest from around the world. However, a high interaction level between residents and cruise tourists has drawbacks by limiting the personal space of residents due to the high population of cruise tourists. Eventually, high interactions between cruise tourist and inhabitants would change their unique lifestyles. This brings the point of social damage in mind where social and cultural damage is one of the main arguments against tourism. In context of tourism, cruise tourists are evidently wealthier than locals from popular cruise destinations. This evidently creates social problems because it creates hierarchy which leads to tension between cruise tourists and locals. Furthermore, interactions between cruise tourists and residents show further negative impacts because new, unusual ideas brought in cruise tourists can make locals envious and would desire to copy the nature of tourists who seems so rich and stylish.

Further social damage caused by the cruise industry can be supported by the idea of “competition of space.” This is triggered when large amounts of cruise tourists, usually two or three cruise ships arrive at small ports. When large amounts of cruise ships arrive, the number of cruise tourist’s ratio to locals is large. According to Espinal, 2005, Bahamas has 11 cruise guests to 1 local; Aruba has 8 cruise guests to 1 local; Antigua and Barbuda, 7 to 1; and Dominica, 5 to 1. However, this ratio is only true to small parts. Large cities such as Miami, Barcelona, and European countries differ. In fact, highly populated cities have the opposite effect, because cruise tourist numbers are rather small compared to on-land tourists or residents. The competition of space enhances through the fight for cruise ships by neighbouring ports to attract cruise ships for economic benefits. The fight continues between the cruise ship industry and the cargo shipping industry to gain port space. Another dilemma of space continues between on land tourist and cruise tourists. When cruise tourist arrive at destinations, on land tourist are forced to wait in line for attractions such as monuments and museums, and they wonder why it is overcrowded at the beach. Finally, the idea of competition of space limits the transportation benefits, what hurts the transportation the most is when large amounts of cruise tourists arrive at destinations which cause volatile in the demand for taxis.

Environmental Impact of the Cruise Industry

The cruise industry is the fastest growing industry in the travel industry. With enormous growth in the number of passengers, the number of cruise ships at sea, and the increased variety of destinations, followed by bigger and more luxurious cruise ships to keep up with the increase of demand; the substantial growth in the industry follows with increasing impact on the environment. Like many hospitality and travel industries, the negative impacts on the environment outweigh the positive impacts. Even though the cruise industry is relatively small compared to the airline industry, cruise ships and their passengers generate more volume of waste and pollutant emissions while travelling and docked in port. According to the United States Environmental Protection Agency, a one week voyage generates more than 50 tonnes of garbage. During that same week 3.785 million litres of waste water is produced. That is water that is harmful to the ocean life and cannot be dumped back into the ocean without it being treated. Furthermore, 794,850 litres of sewage, 95,000 litres of oil contaminated water, and 568 litres of hazardous waste is produced. These numbers are multiplied by more than 200 cruise ships sailing the world 365 days a year. In comparison to other travel industries, a cruise ship such as Queen Mary 2 emits 0.43 kg of Carbon dioxide per passenger mile, compared to 0.257 kg for a long-haul flight (Climate Care). In comparison to on-land tourists, cruise ship passengers generate 3.5 kg of garbage while 0.8 kg of garbage is generated by on-land tourists. (http://www.uneptie.org/pc/tourism/sust-tourism/env-3main.htm). In addition to pollution, coral reefs are taking a significant damage. According to ocean planet, there are 109 countries with coral reefs. In 90 of them, reefs are being damaged by cruise ship anchors and sewage. It is said 70% of cruise destinations are in these biodiversity hot spots.

However, it is not the amount of pollution and damages generated by cruise ships that most are concerned, but rather, the way cruise ships dispose their waste. Cruise ship waste disposal is highly unregulated, where waste can be dumped a few short miles off shore, which is later brought back to shore due to ocean currents. In the past, discharge from cruise ships exceeds the water quality standards set by National Authorities in relations to bacteria level, metals, and hydrocarbons and plastic. In most cases, there was no monitoring, no enforcements and no deprivation from local authorities if cruise ships violated the pollution standards. The cruise industry continues to promote itself as environmentally friendly, the truth is, there are many instances of cruise ships breaking the law. A single cruise company can accumulate hundreds of pollution violations, which have results in payments of millions of dollars in environmental fines. However, in some cases, environmental incidents has been accidental, due to simple human and mechanical error, such as fuel discharge from cruise ship loading fuel at ports

Since the increased harmful effects on the environment has come to light, cruse industries has done their part by improving their efforts in processing waste onboard. As technology increases, their ability to become more eco-friendly becomes a priority. Holland American Line has invested $1.5 million into a program called Seawater Scrubber Pilot. This program looks for opportunities to reduce engine emission on its ships. The Sea Water Scrubber system uses the natural chemistry of seawater to remove all sulphur oxide. The seawater is then treated to remove harmful components before dumping it overboard (world cruise industry review). Even though recycling and using green materials is only a small step, it makes a big difference. Take Crystal Cruises for example. They are introducing 100% recyclable coat hangers, which eliminates 9 billion wire and plastic hangers sent to landfills each year. They are also using washable and reusable garment bags instead of plastic laundry bags (world cruise industry review). On the major scale, most cruise ship companies are taking step to map out global routes where waste discharge will cause the least damage to delicate ecosystems. Other major efforts that some cruise ship companies are implementing are scheduling their arrival and departure time so cruise ships use less fuel while docking. Princess Cruises has invested $4.5 million to implement a cold-ironing program in Alaska. This is when ships plug into a ports electricity supply while docked in order to get hydroelectric power on board. This is the same concept as a hybrid car. The cost of equipping each ship is $500,000 where the benefits outweigh the costs. In California, 70% of cancer risk is due to the toxic air contaminants created by diesel. The biggest contribution to these toxins is cargo-handling equipment and the ships use of diesel engines while at port. With the use of the cold-ironing program, ships will not create this harmful pollutant that cause many environmental problems. Companies are taking the next step to keep their ships as cool as possible to eliminate excessive stress on air conditioners in addition to maintaining speeds at fuel efficient speeds. Crystal cruises has begun auditing it ships lighting and energy consumption. They are saving more than 960,000 kW/h, which is equivalent to nearly 200 tonnes of fuel a year.

Culture is defined in many ways and different authors have different views about culture for example Hofstede (1994) defines culture as “the collective programming of the mind, which distinguishes the members of one group or category of people from another”. (Cited in Needle, 2004) where as Belhassen and Caton (2006) have difined culture as “the sum total of learned beliefs, values and customs that serve to direct the consumer behavior of members of a particular society”. According to Richard(1994) culture is the blend of values, morals, behavioral norms, cuisine, and language. Therefore in this essay we will analyze the process of “Cultural homogenisation” to global tourism and hospitality industry.

Needle (2004) indentified globalization as a practice to describe the growing dispersion of cultures to become homogenous which results in advance technology and announcement. Products and services are becoming more identical because of the growing list of product all over the globe and also in spite of common cultural differences Levitt (1984). According to (Scheytt) 2007 the past of globalization can be seen as early as 14th century but most dramatic changes were observed in 1960s. Latter WTO (1999) bought about shift in occupation from agricultural to manufacturing because of the industrial revolution. As a result the common restructuring of Western Europe and America that was well known by accumulating industrial production of goods and services which is known as Fordism. Baum (2006) distinguishes fordism by mega consumption and production of goods, cutting down of hours and with high wages. According to Sharpley (2003) the basis for modernity was established by the 19th century at the time of industrialization and urbanization of the society. Therefore the tour operators pounced and started providing package tours which involved major hotels like Hiltons and Sheraton in us who thereafter took their business to Mexico, Florida and Caribbean which was observed by Holloway (2006).

However it was noted by Mlkula (2004) that in early 1970s that the system of mass production and consumption started encountering problems faced because of the fordism management because of the excess production. Likewise the upcoming countries like Taiwan, Korea and Japan faced high price competition from the western economies. This together resulted in high oil prices by the oil exporting countries which resulted the world economy to stabilize as the US power weakens which led to static and highly inflated economies as per Baker (2004). As a result Pizam (2005) realized that the oil prices in 1970 were a threat to deep shipping industry which leads to major crisis. However Pizam (2005) noted that in 1980’s and 1990’s by getting the labour from the third world countries allowed deep sea shipping to be more established which added to progressive stabilization of oil prices and also cutting down of labour cost.

Ritzer (1993) defines Mc Donaldization as the process by which the principles of the fast-food restaurant are coming to dominate more sectors of our society. Walton (2009) says that cultural homogenization is called as Mc Donaldization he also added by saying that they consist of four foundation they are efficiency, calculability, predictability and control. The main objective of any company is to go multinational to maximize profit through low labour as well as marketing advantages says Tribe (1995). Further Youell (1998) says that globalization is mostly seen in tourism and hotel industry, where on the other side multinational companies operates global level. For example Star alliance and World alliance.

Lucas (2004) added by saying that the term globalization has been repeatedly used to portray that modern technology and communication channels has made world smaller and this consequently is a concept of a global village. According to Sharpley (2003) globalization process is observed internationally in the society that indicates that world is becoming a global village. As globalization has a major part and spread all over the world through media, business etc. Mandell and Kohler (1990) points that information technology has a major role in compressing time and place, as a result the enterprises are able to do their business on a global scale through internet. He also stated that developed and developing worlds has allowed for interdependencies among nations due to the facilitation on cultural exchanges. Page and Connell (2006) futher added by saying that tourism helps to support and preserve culture by generating financial support and by instigating community pride. He also adds by saying that the emerging of western culture creates a major problem to developing nation to to adapt different views, attitudes and behavior etc. for eg tourist places like Kathmandu and Nepal have seen noticeable westernization oh home culture. Bocock (1993:78) also points that the present world brands that are made, packed and sold in a particular fashion of that particular cultural values of that country. The organization which uses global marketing techniques always keep in mind the culture of that region where the particular organization is held and accordingly products are being manufactured and sold in that particular region. A good example which clearly indicates that value of a particular region is shown up by Mc Donalds. The name Donald Mc Donalds is very much famous in Japan than Ronald Mc Donald just because the “R” sound is not used in Japanese language. The menu which served in Mc donalds is totally different which are served in Mc is US or UK .The meal which served in Mc is corn soup and green tea flavored milkshakes. Therefore this example says that globalization has caused uniformity but does not always undermine national cultures. Shaw and Williams (2004) also says that marketing plays a vital role to send such information to the local audience. He also adds by saying that the improved technology and vast media images has made so easy for the audience to know about the products and their services. Shaw and Williams (2004) says especially in tourism industry internet plays such a vital role that it provides all the information to the people and also helps in promoting particular destinations. According to Schiffman and Kanuk (1991) the supplier use means of communication to convey the message to the consumers and also make the consumers reacts in a desired way.

According to Holloway (2006) there was big decline in late 1980’s where the global market which more behaved in a individualistic way. As per the increase demand for consumers and because of the improved technology the demand of the consumers increased dramatically. People were not just happy with sun bathing they were looking for more adventure in their holidays. Page and Connell (2006) came out with an new idea of heterogeneity which allowed the homogenous products to be delivered in that way. Looking at this trend of heterogeneity Thomson (1992) named the above trent as post modernity that came in late 1980’s and 1990’s. he also add by saying that as the name suggest post modernity, the people will look for more different varieties and also for more individualistic products. Holloway (2006) further added by saying that because of improved technology and also a vast source of information through internet consumers have become more knowledgeable and therefore they know the place to travel. Walker and Miller (2008) noted that the global market has a tremendous increase in the niche tourism products like ecotourism, heritage tourism etc. Sharpley (2003) examined that the difference between the reality and portrayal of reality has declined in post modernity for example Cindrella castle in Florida and Lego Land near Windsor. The new ideas what tourism and hospitality industry has bought is the packages for ageing tourism, green tourism, gay tourism which allows people from all category to explore the tourist places all over the world.

Today’s niche market for ageing population is increasing considerably. The trend of changing demographics has lead to observe the international arrivals from this senior group will account for over 1:6 of global trips says (Smith and Jenner) 1997. The tourism market serves accordingly to the consumer’s needs and wants as the market is segmented on disposable income and travel habits of this mature market. For example specials deal for older people. Toursh and Hargie (2004) that UK firm SAGA has tapped this market totally globally. Similar Swarbrooke and Horner (2004) says that even package holidays and fly drive holidays are in so much of demand to meet the consumers needs and wants. He also adds by saying that this package holidays allows the consumers to be more flexible. Fly drive packages are those holiday packages which allows the consumers to pay as u go and select their own accommodation provided by the operators. And this market has not only impacted in that particular region or country but it has been used in the global market in today’s world. Swarbrooke and Horner (1996) have also put light on the green consumers which deals with the environment issues very seriously. For example TUI it’s a leading German tour operator company which provides environment checklist to all the hotels in which they provide services. And another example is of British airways where they try and create an environment awareness of various issues related to ecotourism. Swarbrooke and Horner (2004) has examined that more and more consumers are more into the packages than the early counterpart. As this package provides everything for the customers from meal to accommodation and also for all types of customers from two to three starts hotels to leisure travelers.

As noticed by Holloway(2006) gay and lesbians markets are one of the upcoming markets in hospitality and tourism industry. They are also named as “Pink Market”. Therefore the importance is given to this category of consumers as well where they take one domestic and two foreign trips per years. Holloways also adds by saying that outlet 4 travel UK is the first call centre who caters to such markets.

Thus in conclusion to this essay we can say that due to such advance technology and communication in hospitality and tourism industry globalization do facilitate the homogenization of consumer’s needs and wants. As the example shown in the essay about the fast food viewed differently by American and the Korean we can say that the homogenization of culture was also evident, but there were exceptions where consumers from different cultures perceived things differently. And on the other side due to such advanced technology and mass promotion it is very easy for the consumer to get information and get more educated and sophisticated and gain different experiences which led to cultural heterogeneity as opposed to the concept of globalization and cultural convergence.

The essay mainly focused on the significance of business development in hospitality, Business Development analyses and evaluates the different aspects of business growth routes and development processes in the international hospitality industry. It considers the essential features of the strategic business context, in which any hospitality organization operates. The hotel industry needs significance business development

According to Pizam stases further in the essay following things will be focused similar to, aspire of importance of business development, accepting requires of consumer, how to build up product that can make best to customer want, the main reason for failed hotel business. Victorious hotels are individuals who regularly involved in developing new product that can catch the attention of consumer, for the reason that client are the crucial base of any business, particular in the hospitality sector. “Discrimination refers to capability to offer exceptional value to client & produce brand loyalty that lowers customer senility to cost” (Pizam, 2005 p54)

Modifying the business development system features of new products and world class services, toward the inside new markets and the success of any hospitality business depends mainly help to increase hotel revenue, improves customer satisfaction, quality, and achieves important benefits for organizations.

According to Hassanien, Dale, Clark (2010) that Hospitality industry improvement refer to the method by which an association uses joint resources in order to launch, get better, modify or extend its present in an accessible in new market. (Hassanien A, et al, 2010 p1-p3)

Profitability

Successful Hotel industry organizations must regularly search to generate their profitability for new ways to reduce operating expense and grow revenues. Think about outsourcing as a way to reduce expenses, but also weigh up its effect on quality of service. Continuing improvements in technology and ideas have created new opportunities for profitability improvements, but technology improvements must be based on careful Return on profit. Hotel must look to both increases and decreases in room rates. Example

Increase in room occupancy and room price once again provides London with the great compliment of being the most money-making city of Europe’s key hotel markets. The United Kingdom capital was way ahead of the pack significance achieving gross operating revenue per available room. The statement well said David Bailey, deputy managing director, TRI Hospitality Consulting. London hotels enjoyed a strong boost to profitability 23% during December 2009 .The first time since December 2008, Budapest hoteliers achieved amazing growth in profitability.

To improve market shares have many wonderful ways, depending on the item for consumption or good service.

Customization of services or product refers that enlarge the customer’s willingness to continue to deal with hotel rather than bidding out the contract at every opportunity. The trick here is to ensure that the high revenue and very fast improve market shares .

Business growth goals

Doing well business expansion requirements a lot of factors to come together at the exact time. For business growth must have the time to plan and manage the growth, the sales and market strategies must carry in new consumer.

Unique product new unique product s creates an entirely targeted new market and provides that excellent improved performance better than old product. New products earn good profit and profit growth depends on market demand and new product introduction. The hotel offers a unique product to consumer. Hotel provides reimbursement that are planned to meet very precise needs, wants and desires of very specific target markets

Sustained customer service and a scope of preference in product and services bring in a distinctive relationship between customer and product. (Cedicci et al, July 2007) for example a 5 star hotel in Ramada hotel Jaipur in India has changed many new items in its guest room like Big Flat TV, free internet facility fresh flowers and fruit bucket, laundry facility for the guest staying for more than a week, Bottle of red and white wine to all rooms.

These unique ideas not only make easy the guest and make them happy this is shows business development of hotel.

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Every big hotel has new market opportunities in Boutique hotels are those hotels which provide outstanding accommodation, furniture in a themed and stylish manner and cater to corporate travellers. Example: The Taj Lake palace Udaipur is one of the best boutique hotels in India. According to (Jones, 2009) boutique hotels was firstly opened in 1980s in USA and then gradually it covered the whole of Europe and finally throughout world. He says that the luxury hotels are in danger zone some watt but at the same time the there has been no effect on the boutique hotels and its growing day by day. Customer or tourist are mostly attracted to the boutique hotels rather than going to the luxury hotels. Most of the largest groups of hotels like intercontinental group of hotel , the Marriott hotel and Taj hotel are launching many boutique hotels in Europe as well as in many others country in the world

Managerial urge

According to Clark, A(2007)

Budget hotels are those hotels which are designed and made according to meet up the fundamental require of the guest by provided that relaxing and very hygienic clean room for a comfortable stay in the hotel as well best budget fare. Budget hotels are totally new concept in all countries. These types hotel comes below five star hotels like as small property. Budget hotel discovered in USA Budget hotels generally comes under 4 star or 5 star property known as ‘Budget Hotels’. These kind of hotel do not recommend as many services as the other 5 star and luxury hotels offers, but offer reasonably priced accommodation to the extremely great price for the domestic customers and foreign travellers. Budget hotels are playing significant role Indian hospitality market.

Economies scale

The term Economies of scale refers to a firm’s abilityto reduces the cost of producing one unit of goodand services as the volume of production increases. Mass production and economies of scale werecentral concepts in the development of modern economic theory

According Economies survey Hospitality industry currently generates more than $100 million in annual revenues, giving significant “bulk” and purchasing power.

Customer attraction and Satisfaction

To understand guest is the main key to business excellent improvement. Understanding guest need, necessity is only doable when hotel keep in contact with guest during stay in hotel and after stay, by responsibility explore in the market, must take feedback from guest as regards what guest look forward to any more expectation for next time stay in the hotel.

The important of guest satisfaction has become an essential business issue as hotel has realized the significance outcome achieved when providing effective customer service in hotel industry satisfaction has always been important. The ability to satisfy customer, therefore.become the key ingredient of continued success

Coopers,P(2002) shows that firm is aware that customers satisfaction and quality can be more important than current financial result creating long term share holder

Competition is increasing national and international market new competitors growing fast day by day in hotel industry.

EDDYSTONE C. NEBEL III states that Being successful in hotel business depends how much the hotel managing level is strong and power full and how much know about business development. Hotels industry has become very much competitive industry, this affects how hotel need to be managed.

Significance of business development in hotels are need to improve standard of service and understanding how the service business differ from good-producing business helps executives manage better to best. Hotels provide both a product and service. The main purpose is that ability to provide great service

Competition is main significance of business development Marketers must need to monitor other competitor’s product and must be development distribution method to make high competitions with other hotels.

Brand and image improvement.

In to have better brand image the particular brand should be advertize and marketed well and they should be innovative pricing which would attract more guests to visit the particular branded property

(Anon, 2008) In India has many highly branded hotels as like Taj, ITC,but Oberoi hotel group is one most highly trusted brand in Hospitality industry in India. An Oberoi hotel understands its guest and believes in designing, excellent developing services which make possible it to top their expectation. Oberoi hotels are always willing to take new challenges and needs of their guest, Oberoi hotel is most well organized and methodically managed hotel in India which is really wonderful effort to do its best, to make happy to guest, and hotel gives value for money to guest. Oberoi is mostly known as for world class and very excellence in service. Hotel meets the needs of guest and hotel keep on innovating new product.Brands are seen as product characteristics brand is associated in consumer mind and advertising has a significance influence of consumer image of brand

Globalization

In all world countries, where Travel and tourism have grow to be a most important export industry, the hospitality sector is the central position for concepts of globalization. Hospitality industry has become the world?s largest export industry. The hospitality industry is one of the world?s largest employer and arguably one of the largest traders of foreign currency. The hospitality industry plays significance branch bodily in bringing people together with a global community

Internationalization

The twentieth century was the rapid supply in h internationalization hotel market. Hotels companies expanded market across the world. Example Marriot hotels spread from 29 countries in 1996to 56countries in 1999.

Best western is largest internationalization working under a single brand name and western has more than4000 separately owned and operated hotels in the world. Best western offers over 300,000 sleeping bedrooms in 78 countries all over world.

Business development the process by which a Hotel industry can get better performance through modify feature and attribute of it recent product or services developing new product or service toward the inside new market In the hospitality industry.

Conclusion

This essay y highlight the importance of business development within hospitality industry a. what significance of business development

This paper mainly presents the service culture at Ritz Carlton. The paper discusses the service culture in the Ritz-Carlton Hotel. This paper covers some background history of the hotel as stated on the corporate website, service strategies – golden rules incorporated by the hotel chain. With real life examples taken from interviews by professionals the service culture is illustrated and explained. The purpose of this is to inform and educate what the service culture includes and how Ritz Carlton maintains outstanding service atmosphere in all its branches across the world. This paper also states how Ritz -Carlton executes the service offered as stated in an interview taken by Jankowski. The line-up for which the hotel is known for is also discussed along with employee feedback, empowerment and their focus on service.

The heritage of Ritz-Carlton Hotel Company, L.L.C. started with The Ritz-Carlton, Boston. The service standard set by this Boston landmark provided a standard for all Ritz-Carlton hotels and resorts across the world.

In 1927, Mayor Curley requested Edward N. Wyner, who was a Boston real estate developer, to construct a world-class hotel. During this time, Wyner was constructing an apartment building. He agreed to change the apartment building into a hotel. Wyner was aware both of Ritz’s reputation in Europe and Boston’s cosmopolitan society and knew that the name would definitely bring success. After getting authorization from The Ritz-Carlton Investing Company and The Ritz Paris’ for using their name, he started work on the luxury hotel in Boston. The Ritz-Carlton, Boston opened its doors on May 19, 1927 charging $15 per room.

As was the tradition of Cesar Ritz, Wyner maintained the privacy of his guests that attracted the elite. This policy is followed till today at all Ritz-Carlton hotels. Considered a private club for rich people, until 1960s the hotel was very formal and hotel guests had to be in the social register or admirable. It was believed that the hotel sometimes checked the quality of writing paper used by the guests when requesting reservations, having refused a few for having used inferior quality.

As Boston society was formal, strict dress code was specified for all guests. Even the restaurants were strict regarding who they chose to entertain. The Cafe did not allow women to lunch alone and until 1970, the Ritz Bar did not allow unescorted women.

The hotel had its own upholstery, print shop and an in-house craftsman who was assigned to color gold stripes on the hotel’s furniture. Many guests were pampered and every care was taken to make them feel special. For Winston Churchill, the room’s fabric on the furniture was redone in red, as it was his favorite color.

After Edward Wyner death in 1961, Cabot, Cabot & Forbes (land developers) with their chairman and majority stakeholder, Gerald W. Blakely, took over the hotel. To continue with the Ritz legacy, Charles Ritz, son of legendary Cesar Ritz, was appointed on the board of The Ritz-Carlton until his death in 1977. In 1983, Blakely sold the hotel and the rights to William B. Johnson, who then established The Ritz-Carlton Hotel Company.

The Ritz-Carlton logo created by Cesar Ritz is a combination of the British royal seal (the crown) and the logo of a financial backer (the lion). In 1965, Cabot, Cabot and Forbes revised the logo which is used till date.

In many Ritz-Carlton hotels and resorts tables are set with the signature cobalt blue glasses which were considered a status symbol in 1920s Boston. These glasses were originally made to go with the blue Czechoslovakian crystal chandeliers present in the original Dining Room in The Ritz-Carlton, Boston. The window glasses which were imported from Europe chemically reacted with Boston’s climate and turned blue. Having blue glass windows meant the owners could afford imported glass so Ritz ordered them in blue color (Ritz Carlton Hotel Company LLC, 2010).

Discussion

Gold Standards

This is the base on what The Ritz-Carlton Hotel Company, L.L.C. stands. They cover the values and philosophy on what the hotel bases its operation:

The Credo

The Motto

The Three Steps of Service

Service Values

The 6th Diamond

The Employee Promise

1. The Credo

At Ritz-Carlton Hotel genuine care and comfort of guests is of highest importance. Emphasis on providing the finest personal service and facilities for guests is important. Guests are offered a refined ambience which they can experience while relaxing. In their words ” The Ritz-Carlton experience enlivens the senses, instills well-being, and fulfills even the unexpressed wishes and needs of our guests” (Ritz Carlton Hotel Company LLC, 2010).

2. Motto

At The Ritz-Carlton Hotel Company, L.L.C., “We are Ladies and Gentlemen serving Ladies and Gentlemen.” This motto exemplifies the anticipatory service provided by all staff members (Ritz Carlton Hotel Company LLC, 2010).

3. Three Steps of Service

A warm and sincere greeting. Use the guest’s name.

Anticipation and fulfillment of each guest’s needs.

Fond farewell. Give a warm good-bye and use the guest’s name. (Ritz Carlton Hotel Company LLC, 2010)

Service Values: I Am Proud To Be Ritz-Carlton. These include:

I build strong relationships and create Ritz-Carlton guests for life.

I am always responsive to the expressed and unexpressed wishes and needs of our guests.

I am empowered to create unique, memorable and personal experiences for our guests.

I understand my role in achieving the Key Success Factors, embracing Community Footprints and creating The Ritz-Carlton Mystique.

I continuously seek opportunities to innovate and improve The Ritz-Carlton experience.

I own and immediately resolve guest problems.

I create a work environment of teamwork and lateral service so that the needs of our guests and each other are met.

I have the opportunity to continuously learn and grow.

I am involved in the planning of the work that affects me.

I am proud of my professional appearance, language and behavior.

I protect the privacy and security of our guests, my fellow employees and the company’s confidential information and assets.

I am responsible for uncompromising levels of cleanliness and creating a safe and accident-free environment. (Ritz Carlton Hotel Company LLC, 2010)

The 6th Diamond

Mystique (service value 1 to 3),

Emotional Engagement (service value 4 to 9) and

Functional (service value 10 to 12) (Ritz Carlton Hotel Company LLC, 2010)

According to Coffman (2006), who led the Ritz Carlton team to define new service value, the middle piece of the Sixth Diamond is reviving the emotions and memories of guests by genuinely caring and making them feel recognized, important and unique. Creating the Mystique happens when we hear guests’ requests even before the guest knows them, going so above and beyond the call that folklore (“wow” moments) spreads throughout guests and hotels.

The Employee Promise

At The Ritz-Carlton, our Ladies and Gentlemen are the most important resource in our service commitment to our guests. By applying the principles of trust, honesty, respect, integrity and commitment, we nurture and maximize talent to the benefit of each individual and the company. The Ritz-Carlton fosters a work environment where diversity is valued, quality of life is enhanced, individual aspirations are fulfilled, and The Ritz-Carlton Mystique is strengthened. (Ritz Carlton Hotel Company LLC, 2010)

The Lineup

In Ritz-Carlton new employees learn the Golden Rules and they spend every day of their employment discussing one of the 20 Basics. This is done during “The Lineup” which is considered as the hotels most important tool.

To illustrate the working of this tool we can imagine an employee who works with the kitchen staff and for initial 10-15 minutes of the day speaks with their team. They like others in the hotel, discuss one of the 20 Basics. A day’s discussion could center on Basic 10 which states that each employee is empowered. Therefore, when a guest needs help or suggestion, employees should break away from regular duties, address and resolve the issue immediately. Similarly, senior management meets with their top executives and respective teams. Dishwashers, doormen, and maintenance staff meet their groups respectively and discuss the meaning of Basic 10. The discussion revolves around situations, both hypothetically and in present reality. All 25,000 Ritz-Carlton employees act similar in their respective locations. So when the discussion cycle is completed with all Basic 20, the next day, everyone starts all over again, with Basic 1 (Lamton, 2003).

Employee Empowerment

The word “empowerment” is believed to be originally thought by the Ritz-Carlton. An amount is fixed on the employee’s resources for solving a problem immediately, without checking with a supervisor. An employee can use up to $2,000 to find an instant solution to a guest’s problem. An employee cannot avoid difficult situations by saying that it’s not their job. One cannot be limited with ones job descriptions when guest satisfaction is at stake. Employees need to step outside job boundaries, and no one questions them when they do so because it is more important to solve the issue (Lamton, 2003).

Ongoing Employee Feedback

Employees are empowered when occasional problems comeup and the hotel’s executives support, and reward continuous employee input. The hotel believes that employees are aware of what is happening, and the management must listen to them. The new employees might be asked about their opinion on improving service several times a month. Decisions are made by a small number of management staff and their reports are put into practice without any difficulty. The selection of employees is a team effort too. A supervisor does not hire an employee without taking opinions of candidate’s potential colleagues nor does Human Resources hire a new employee without group consultation (Lamton, 2003).

Telling Wow Stories

Stories can be used promote the culture and values of a company. In Ritz Carlton during the lineup, someone reads a “wow story” of the day. A story is communicated to all hotels in different countries. An employee in New York will hear the same story as an employee in Bali; same for one in Shanghai. These stories focus on a staff person who performs beyond his/her job description and offers a perfect service which creates an aura that alters luxury one time guests into repeat guests.

There is a wow story of a family which stayed at the Ritz-Carlton, Bali. This family had carried with them special eggs and milk for their son who was suffering from food allergies. When they arrived they noticed that the eggs were broken and the milk had gone bad. The Ritz-Carlton manager and dining staff tried to look for alternatives in the local market could not find the any suitable items. Luckily the executive chef at this particular resort knew of a store in Singapore that sold them. He immediately got in touch with his mother-in-law, and asked her to buy the products and fly to Bali to give it to him at the hotel. The family was extremely happy. After such an experience, this particular family was definitely converted into a repeat customer.

These stories have two functions. The first is to identify an employee’s dedication in front of colleagues and second is to emphasize a service value. In the above story of a family in Bali the intension was to reinstate service value No. 7: Use teamwork to meet the individual needs of our guests. This can be considered as an ideal way to express what is expected from the employees. Each story restates the way Ritz expects employees to act and shows how each employee contributes to the service values.

Gallo compared two lineups; first a general one and second a more specific meeting for the housekeeping staff on the morning shift. Gallo noticed about both meetings that there was a keen interest these employees showed had outshined the enthusiasm that was observed in other companies. Employees were enthusiastic to share. The stories served as teaching tools. Two, 15-minute lineups across 61 hotels, 365 days a year. The hotel offered many hours of training to its employees but it all will not result in anything concrete unless employees were connected on an emotional level. Sharing stories helps in this matter (Gallo, 2007).

Focus on Service

Every single Ritz-Carlton staff member is entrusted to use up to $2,000 on a guest. That’s not per year but per incident. It is not used often, but it shows a deep trust in the staff’s decision. They could use more than the designated amount after the general manager’s permission. The notion is to create an extremely amazing stay for a guest. It is not necessary that there is a problem, it could be something as simple as a guest’s birthday, an employee arranging champagne and cake in the room. Many times $2000 is to create an outstanding experience.

The stories include instances of a carpenter being hired to construct a shoe tree for a guest; a laundry manager who when not being able get a stain out of a dress after trying two times took a flight from Puerto Rico to New York and returns back the dress personally; or in Dubai when a server overhears a guest speaking to his wife, on a wheelchair, that he felt bad that he was not able to take her to the beach. The waiter informs the maintenance, and the next afternoon a wooden walkway was created down the beach leading to a tent set up for dinner for them. The general manager was not made aware of this until it was complete (Reiss, 2009). Listening to customers makes it easier to personlize the service. Computers make it easier today. Ritz has a guest recognition system that has data on clients’ individual preferences (Janelle & Maul, 2000, p.225).

In an interview conducted with Diana Oreck, Vice President Ritz Carlton Leadership Centre, she throws light on how Ritz Carlton executes service culture.

Following are the points made by her:

Determine Culture

The credo has to be clear and easy to understand. The hotel has “steps of service” that shows the attitudes toward interactions between employees and customers. The Ritz-Carlton’s three steps are:

Greet guests warmly and sincerely, and use their names.

Anticipate and fulfill the guests’ requests.

Bid guests a fond farewell, and use their names.

From the above, the most difficult is the second point. One can easily provide service if asked directly. It gets challenging when one has to develop an attitude that enables one to be sensitive enough to clients to foresee their needs (Jankowski, 2008).

Surprise and Delight

Wanda Jankowski states that recently she had stayed at a Ritz-Carlton to give her presentation. She was losing her voice and was surprised to notice that within five minutes of her arrival, the front desk person who received her during check-in sent to her room a handwritten note and a tea bag in the envelope. The note stated that hot water, lemon, and honey was coming. Hotels can train employees to anticipate client’s needs. It can range from being able to sense whether a client needs more information or a suggestion regarding a storage facility while their house is being remodeled. The key is to surprise and delight customers. Employees are not expected to be on autopilot when clients’ needs are to be anticipated. It is important management and owner of the company to practice what they preach. If they’re not practicing service-centric values, they can’t expect it from their employees (Jankowski, 2008).

Reinforce Values Daily

Ritz Carlton has a two-day formal orientation for its employees. 15 minute meeting are then held daily so that employees can register the cultural values. The company’s values and ways to apply them in different situations are discussed. The attendances for these meetings are nonnegotiable. Every Monday and Friday, outstanding examples of customer service are discussed. These examples help in motivating employees and help them absorb service values. These examples include how each employee can treat another employee and guests. An example stated in Ritz -Carlton Atlanta, is of a guest who was asked his preference in a newspaper he would like in the morning. The guest replied that he did not need a paper, but desired a pizza right that moment. Within half an hour a sizzling hot pizza was delivered in his room. Ritz-Carlton has been able to measure through research that satisfied customers spend more money. On average employees have 40 hours to find a solution and make an impact on the customer (Jankowski, 2008).

Conclusion

Ritz Carlton is a hotel chain that signifies excellence. The service culture that was created in the first hotel in Boston was used as a model to replicate in other branches. Going beyond their call of duty is what Ritz Carlton’s employees pride themself on. The Gold Standards created by the hotel is followed in all its branches and any one is expected to be discussed every single day. The execution of service culture as stated by the Diana shows how the hotel chain considers it as an integral part of the hotel. Ritz-Carlton’s success has be in effectively using the information provided by its customers. Treating customers like guests and providing an unforgettable experience is what Ritz-Carlton believes in.