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Introduction

Emirates Airline was founded on October 25th 1985 with a flight from Dubai to Karachi using a leased A300 Airbus. Now the airline has more than 150 airplanes, making 2,300 flights a week to 103 destinations in 65 Countries on 6 Continents. Emirates Airline is owned by the Government of Dubai, HH Sheikh Ahmed bin Saeed Al-Maktoum is the Chairman and Chief Executive.

2.0 Mission

Their mission is to be able to carry a passenger from anywhere on this planet, via Dubai, to any other place on the world. Their procurements division mission is ‘to provide an innovative and responsive service that positively supports the group in a commercially astute manner. We want to constantly renew ourselves, shedding the past, adapting to change and creating a promising future’.

2.1 Vision

The vision and the principles which propel the airline forward is for ‘a strong and stable leadership team, ambitious yet calculated decision-making and ground-breaking ideas all contribute to the creation of great companies. Of course, these have played a major part in our development, but we believe our business ethics are the foundation on which our success has been built. Caring for our employees and stakeholders, as well as the environment and the communities we serve, have played a huge part in our past and will continue to signify our future’

3.0 Competitors

When the airline first started, its main rivals were British Airways and Gulf Air. In 2007, Emirates airline dominates the Asian Pacific Continent market share with 39%, Singapore Airlines 26% with Gulf Air reduced to 8%, but with Dubai s tourism soaring, other locally based airlines are trying to increase their passengers. These two airlines are Etihad Airlines and Qatar Airways. Other rivals, jealous of the success of Emirates Airlines have prompted their governments to limit Emirates Airlines access to airports. These are Air France and Lufthansa.

4.0 Stakeholders

The stakeholders include the groups employment of more than 40,000 persons. Dnata Airport Operations is responsible for ground handling and Freighter handling. Like it parent company, Dnata is rapidly expanding and now is represented in nineteen international airports in eight countries. Emirates SkyCargo, as the name suggests, handles the cargo side of the business, it has eight freighters carrying 1.6 million tonnes of cargo a year to 25 destinations. This contributed 17.2% of the total transport revenue and on March 27th 2011 managed the first ever fully paperless flight having electronic air waybills in line with the groups green policy.

Other stakeholders include Alpha Flight Group Ltd (owned by Dnata) who supply over 120,000 in flight meals daily at 58 airports in 11 countries. Alpha directly employ nearly 6,000 persons. Emirates Engineering are responsible for the aircraft maintenance who can proudly boast there has never been a fatal incident involving any of their fleet. Emirates/skywards handle the frequent flyer programme and e-mail existing customers regarding special offers.

More diverse stakeholders are Mercator; this is the I.T. solutions provider to the global air travel industry for the Emirates group. Exploiting the tourism bonanza, Dnata Travel Services are the travel agents, Congress Solutions International provide professional congress organisation. Emirates Holidays are the official tour operators, Arabian Adventures sell overland explorer escorted trips as well as cruises down the creek and deep sea fishing in the Gulf Sea.

Away from the U.A.E., the group own the Wolgan Valley Resort and Spa in Australia; this is a 4,000 acre conservation resort

5.0 SWOT Analysis of Emirates
5.1 Strengths

One of the strengths of Emirates Airline appear to be their independence, they have resisted the temptation of mergers and acquisitions with other airlines. The thinking behind this is that they think that such actions will strangle their flexibility, being able to change direction quickly without having to seek agreement with outside partners. They also decided to allow free competition, the thoughts behind this decision was they believe encouraging competition would see an overall increase in the standards and the Emirates Airline are in a position to be a good performer, acknowledged within the industry. Furthermore, they wanted to show they were not frightened of any other airline, that they were forerunners not just trying to financially survive but were focussed at the most important part of the airline industry (with the exception of safety) in giving the customers what they want. This goes beyond the amount of leg room, the quality of the food served and keeping delays and cancellations to a minimum. Nowadays, people are aware of their carbon footprint and Emirates have made key decisions regarding their own environmental programme. Although the average age of the fleet is only 6.5 years, they are investing heavily in the 650 seat A380 Airbus which are the worlds most fuel and emission-efficient planes. The on-board kitchens are the most eco-efficient in the world and they recycle more than 100 tonnes of paper, plastic and aluminium a month. As per the official website of Emirate they are named the best airline of the year 2010-2011

5.2 Weakness

-Not all of diversification and approach have been successful and this can be considerate as one the flaws or weaknesses of the company. Analysts have accused the company for focusing too much on their high end acquisition’s and diversification inspite of the risky effect of such decisions

-Another potential weakness is that the operating profit is based on low wages paid to the general workforce for duties such as baggage handlers, cleaners, and caterers. They are generally recruited from India and are non unionised. These migrant workers face instant deportation if they show resentment to the wage structure.

5.3 Opportunity

-A huge opportunity for growth is the physical location of the Emirates. China has the fastest growing economy in the region and possibly in the world, and with that growth comes a greater demand for air travel and air-freight movements. If this requirement is aggressively marketed then Emirates Airline could fulfil this demand with its network of air routes and the ability to be flexible as previously described.

5.4 Threats

-Threats to the airline can come from other established airline companies. As they see their diminishing passenger numbers on their traditional routes, they see the traveller numbers to the U.A.E. increasing and will try to prise the Emirates Airline passengers away by undercutting the ticket price.

-The airline industry is notoriously volatile and subject to cyclical variations of trade. Emirates Airlines seems to weathered the storm in the current global recession, not cutting back on its ambitious expansion plans. Only time will tell if the correct decisions were made.

6.0 Emirates Strategy

-The cornerstone of Emirate Airline’s success is quality control. Creating and maintaining a state of the art airline for the sole purpose of keeping their customers happy.

-Extensive aviation training. The company not only trains young employees but also trains other people within the industry.

-Has successfully created a resort, hotel and tourism strategy. This was done by the creation and acquisition of various resorts and spas, even in this field emphasis was given on quality control and comfort.

-Emirates Airline have always strived to make their passengers satisfied, winning awards for the innovative in-flight entertainment system, immaculately dressed cabin crew. Because of this it is now a brand name globally.

-It has direct routes compared with the much hated stop-over that other carriers frequently use .

-The main reasons for the airline’s success is to make creative decisions, a unique business model, thriving on flexibility, made on a sound foundations but it may have to reel in part of its ‘open sky ‘policy and expand its global market in line with its vision of being able to take any passenger from one place on the planet to any other place on the planet via Dubai.

7.0 Conclusion

In conclusion, the rise of Emirates Airlines from its inaugural flight in 1985 to the now prestigious airline voted 8th best carrier in the world good luck or good judgement? Has the success been due to excellent planning and vision or merely success on the back of the tourism explosion in Dubai? Has the decision to shun any strategic alliances both regionally and globally, which for decades has been the main business tactic in the airline industry been correct?

Abstract

The airline industry has always been and continues to be the most fiercely competitive business sector in all facets of its operations. Operating on paper thin margins the drop in passenger traffic brought on by the events of September 11th, 2001 have affected domestic United States airlines as well as all global carriers. The events of that day have caused governmental intervention in the form of loan guarantees, compensation for terrorist attack losses, as well as insurance related to war risk (Shane, 2003). The Associate deputy secretary of Transportation stated that the industry is in its “aˆ¦worst financial crisisaˆ¦”(Shane, 2003), since the industry was deregulated in 1978. It is important to understand that two differing types of airline carriers exist in the United States. The majors refer to airlines earning revenues in excess of $1 billion USD annually and generally they provide national as well as international service. These airlines cater to the business class customer and passengers who either expect or desire full in flight services such as meals and related amenities. American Airlines, Delta Air Lines, United Air Lines, U.S. Airways, Continental Airlines and Northwest Airlines fit these designations (Mayer, 2002). The discount air carriers have changed the face of the airline industry with their no frills, low-cost airfares and have put pressure on the majors in terms of eroding their market share.

The preceding battle between discount carriers has further exacerbated the majors thin operating margins and has resulted in Delta, Continental, Northwest, United and US Airways (Beck, 2005) filing for protection under Chapter 11 of the United States bankruptcy laws while they restructure and renegotiate union contracts and creditor agreements. United States Senate Commerce Committee Chairman John McCain has stated that the United States government should be “aˆ¦reluctant to do anything that might keep inefficient businesses afloat” (Shane, 2003). This is the climate in which the subject airline, American Airlines operates.

Chapter 1 – American Airlines
PEST Analysis

The utilization of a PEST analysis with regard to American Airlines takes into account the political, economic, social and technological (NetMBA, 2004) environment the industry is embroiled in and how this has, is and will threaten to impact its operations and profitability. It must be remembered that the number of possibilities concerning macro-environmental aspects is almost limitless, thus concentration will be paid to those areas perceived to have the highest impact.

Political

The political stability of the United States was severely shaken by the terrorist events of September 11, 2001, and this directly resulted in a catastrophic drop in business as well as personal air travel (Ito et al, 2003). The preceding along with the following areas have impacted negatively on earnings as well as profitability among the majors:

Pricing regulations

Wage legislation and union requirements

Deregulation policies of 1978

Increased emphasis on national and airport security

Economic

The overall economic climate in the United States prior to the events of September 11, 2001 called for a mild recession and the airline industry was wrestling with discount carriers. The pre 9-11 airline climate forecast a slight contraction as a result of the reversionary climate which was dramatically impacted by the events of 9-11 and the resulting economic aftermath (Ito et al, 2003):

Dramatic slowdown of the economic growth rate

Increase in fuel costs

Balance of trade accounts

Inflationary and fluctuations of the dollars against the Euro, and Yen

Social

The emphasis on September 11th throughout these varied analysis is due to the sweeping impact that event had on global events in all theatres. The social implications thus shaped or amplified are as follows (Mayer, 2002):

Increased layoffs impacting all income groups

Sharp decrease in lower and middle class travel

Decline in airline related vacations destinations

Negative impact of air travel safety brought on by the events of 9-11

Decrease in general airline related travel plans by consumers

Low-fare travel stigma attitude shift to an acceptable alternative

Technological

The Internet’s impact on business and consumer purchasing habits heralded in a new age of information exchange which changed the manner in which airline tickets are sold.

Airline SABRE system

Decrease in airline travel agencies

Introduction of Internet airline ticket reservations and ticketing

Entry of Travelocity, Orbitz, Cheaptickets, Expedia and other best price shopping services

The availability of the Internet as a consumer and business fare and flight shopping tool

Porter’s Five Forces

Michael Porter’s ‘Five Forces” model (QuickMBA, 2005) provides a framework to view the airline industry from the perspective of five forces that influence it:

Rivalry

American ranks as the world’s largest airline in terms of passengers carried, however is rated number 11th in terms of overall airline quality (Holderbach, 2004).

Low-fare airlines garnered three of the top four spots in airline quality ratings, 1. Jet Blue, 2. Alaska, 3. Southwest, 4. America West. All but Alaska Airlines are low fare carriers. The remaining airlines are 5. US Airways, 6. Northwest, 7. Continental, 8. AirTran, 9. United, 10. ATA, 11. American, 12. Delta, 13. American Eagle and 14 Atlantic Southeast (Holderbach, 2004).

Some of the more important facets within this category of the Five Forces model are:

slow market growth since 9-11

high fixed operating costs

low relative levels of product differentiation among the majors

inroads of the low-fare carriers in the changing perception of air travel

shake out of the industry since 9-11 in terms of bankruptcies and failures

Threat of Substitutes

Within Porter’s model substitute services come into play when demand exceeds supply, or vice versa. In the airline industry the excess supply has been attacked by low-fare carriers who have continually gained market share.

Buyer Power

The airline industry suffers from oversupply as well as fixed costs which served as the foundation for low fare carriers who offer no frill flights in return for discounted fares. This approach effectively pulled the casual traveler and spread to frequent travelers and some classes of business travel for companies seeking to cut costs. Buyer demand is re-shaping the airline industry as a result of these options.

Supplier Power

In terms of this category, fuel is the single largest airline cost expenditure item which affects all firms equally. Low Fare carriers by eliminating frills lower their per flight operating costs which have and is attracting scores of travelers to their fold.

Barriers to Entry / Threat of Entry

Traditionally, the high cost of entry in the airline industry reduced the treat of entry by competitive companies. However the business model offered by low fare carriers exploited the lower end segment of the market via price and provided a foundation for the entry of Southwest, Jet Blue, America West and others (Ito et al, 2003).

SWOT Analysis

The strengths, weaknesses, opportunities or threats internal to a company represent the strategic environment known as a SWOT analysis (QuickMBA, 2004).

Strengths

Some of the advantages that American Airlines has in comparison to its competitors are (American Airlines, 2005):

Recognizable brand name

Largest global airline in terms of passenger traffic

National and International routes serving all corners of the globe

Perception as a major carrier with the commensurate levels of service

Weaknesses

internal flight amenities draining profits

inability to compete with low fare carriers on price

lack of competitive pricing to attract casual traveler base

vulnerability to pricing

Opportunities (American Airlines, 2005).

code sharing agreements with domestic and international airlines

SABRE ticketing system

Presence at most airports

American Eagle regional routes

Lucrative route structure

Threats

thin operating margins favoring low fare carriers

public acceptance of low fare carrier concept

customer quality perception of low fare carriers that exceeds the majors

prolonged slow economy favors low fare carrier pricing structure

segmentation of the industry into business and discount carrier classifications

high fuel prices

government intervention

Chapter 2 – Conclusion

The intense competition in the airline industry along with thin operating margins and fuel costs along with other expenditures existed before the dramatic events of September 11th. The strengths of American Airlines in being the world’s largest airline provides it with a huge customer base that is familiar with the airline. This represents the core of all marketing, customer retention as well as the foundation to attract new customer trial. Customer retention and utilization represent the primary advantage that American Airlines enjoys and needs to utilize to protect its position as well as build upon. The American Eagle division provides the company with an additional customer convenience marketing tool via intra city (regional) destination traffic. In order to accomplish the preceding objective the company must increase its quality of service from its current 11th position to increase customer satisfaction. The 50/50 mix of business and leisure travelers that comprise its customer base has remained relatively constant and business class travelers contribute heavily to profits as a result of the higher fares paid for first class and business class seating (American Airlines, 2005).

Utilization of target marketing with concentration on the frequent flier base represents American’s primary advantage to capitalize upon since is does not compete in a low fare platform. Tightened restrictions on fares has closed a lot of the gap, thus consumer perceptions in the higher income categories represent a huge customer base for American to capitalize on in stealing customers from the other majors as a primary strategy and eroding the fringe low fare customer base as a secondary target market. Technology in terms of software advances along with code sharing, peaking and American’s route and connection structures offer convenience. Increased international travel also helps the company as a result of its global routes and destinations. American’s size, reach, reputation, fleet and presence at over 154 airports reinforces the preceding (American Airlines, 2005). The company’s corporate vision states its objectives are to:

set industry standard for safety and security,

provide superior customer service,

produce returns for stakeholders and shareholders by increasing business and thus revenue opportunities for vendors and allied firms

further solidify the brand name and image as a premier carrier

increase creative ticketing, promotions, vacation packages and associated areas to distance the company from low fare carriers and thus minimize their effects,

capitalize upon inherent advantages

As the world’s largest carrier American Airline’s business and leisure base provides the customer foundation to enable it to compete successfully against other majors as well as differentiate itself from low fare carriers. This ability to be the choice in the full flight service category along with the number of airports, seamless domestic and international route structure that enable it to offer direct service to the most destinations via its own branded airline represents a key convenience and thus marketing factor to garner success in this highly competitive environment.

INTRODUCTION:

American Airlines was the U.S.’s largest carrier in 1992. It had a fleet of 622 jet aircraft, flying 2,450 flights daily to 182 locations. It also had innovative technology and programs. They were the first to introduce a computerized airline reservation system called Sabre, ‘Super Saver’ fares and frequent- flier programs. Despite these innovations, American Airlines and the airline industry as a whole was still not operating as profitably or providing customer satisfaction the way it should in 1992. There were two main reasons. First, the airline industry was suffering from the economic downturns in 1990 and 1991. In 1991 alone, the industry’s cumulative losses were $1.87 billion, which exceeded the total amount of profits the industry had ever earned throughout its 60-year history. American Airlines itself reported losses of $77 million in 1990 and $165 million in 1991. In terms of customer’s flying, the dollar volume of pleasure travel grew only 8% in the 1989-91 period compared to 19% for 1987-89. The comparable figures for business travel were a 9% increase for 1989-91 in contrast to 28% growth experiences in 1987-89.

April 9th, 1992 American Airlines announced that their yields were too low and they were going to bring value back to air travel through a new pricing strategy termed, ‘Value Pricing’.

SWOT ANALYSIS:
Strengths

Market leader: American Airlines is the largest U.S. airline in 1992 with a 19.15 market share in 2001.

Strong Innovation

Technology: American Airlines created the first and largest Computer Reservation Service, SABRE, which was a valuable resource for yield management and extra profits. It was such an effective technological innovation that in 1992, 92% of domestic reservations were made through Computer Reservation Systems in the United States.

Marketing Promotions: American Airlines were the first to create a frequent flier program aimed to increase brand loyalty with business customers in 1981.

Distribution: The use of hubs meant replacing non-stop flights with a set of connecting flights, and this benefited both carriers and consumers. Airlines could serve more locations with fewer planes. American Airlines benefited by having six hubs in 1992, two of which are ranked as the largest airports in America: Chicago and Dallas.

Market Growth: Between 1981 and 1991, passenger volume grew by almost 80%, the equivalent of a compound annual growth rate of 6%. There are still opportunity gaps to further increase demand.

Strong Brand Image: A survey that generated the ratings of domestic airlines on service quality, American Airlines had the joint highest satisfaction index of 76. This implies that American Airlines has a stronger image of high quality service, relative to competitors.

Problems:

There are high risks of delays and inbound flight delays of even a few will inevitably delay connecting flights and then affect large portions of the network thereafter.

Enormous transaction costs from the extreme complexity of capacity planning, crew roistering, flight scheduling, ground handling and fare structures.

High risk of missed connections and lost luggage with connecting flights

Opportunity

Increase the demand for air travel through reaching more customers and increasing the frequency of travel per customer: There is already a growing percentage of Americans is using air travel. In 1991, 76% of American Adults reported that they had flown at some time in their lives and 32% had flown in the past year. The increase in American air travel can be seen in the table below:

Percentage of American adults who have:
1981
1989
1990
1991

…ever flown?

65%

78%

74%

76%

…flown in the last 12 months

24%

34%

31%

32%

The table implies that American’s are increasingly adapting to air travel and this means that their is an opportunity for American Airline’s to continue their expansion.

Price discrimination models: Price discrimination models provide an opportunity for American Airlines to capture the two main customer segments, business and pleasure travelers in the most profitable way. Using price discrimination models provides an increasing opportunity.

Percent of American Adults traveling on:
1989
1990
1999
2001

Business

52

51

42

41

Pleasure

47

49

53

57

This provides an opportunity for American Airlines because the two segments have different demand fluctuations and buying characteristics and if American Airlines can capture both markets through different pricing fares then it will increase their yield per customer, smooth out overall demand fluctuations and achieve profit maximization. The differences can be distinguished by demand and buying values.

Buying differences: Business travelers are more loyal to one particular airline because they have the ability to build up frequent flier miles. They are less pricing sensitive due to being more time sensitive. On the other hand, leisure travelers are less loyal, more price sensitive and more flexible in terms of time, date etc.

Online Reservations: Like low cost airlines and adopt online reservations, which mean less need for travel agents, no paper tickets and convenient booking.

American Airlines currently only serves 80 destinations worldwide, compared to 182 locations in the U.S. mainland and Hawaii. Therefore, there is a strong opportunity to focus on increasing long haul, international flights as opposed to short haul flights.

Threats:

After the deregulation of the airline, industry competition intensified as national and regional airlines grew or merged and became fixated on profit maximization. American Airlines major domestic competitors are United Airlines and Delta Airlines as they both operate with similar scope and service to American. American Airlines main competition from regional airlines includes US Air, America West, Southwest, TWA, Northwest and Continental. US Air serves primarily eastern and southwestern markets. American West and Southwest are discount carriers serving the Southwest and California areas. TWA that offered primarily coast-to-coast service, Northwest that served the Northern tier of the U.S. and Continental that served the southern tier. Furthermore, mergers meant that the combined market share of the four largest airlines rose from 54.2% in 1982 to 64.8% in 1987.

Growth of low cost airlines: Low cost airlines are expanding rapidly. Southwest in particular is successfully promoting its bargain fares, low cost and no-frills approach to service and are the seventh largest U.S. carrier, though only operating in 15 states for local, and short haul markets. The low cost airlines are able to charge extremely low discount prices because:

Distribution costs are reduced using direct selling through the internet or call centers and having no tickets

Pricing segmentation only occurs on two variables: the date of booking and the effective demand of that specific flight so there are less complex fares and less restrictions imposed to increase customer satisfaction

The operating expenditure passenger and their operating margin are also significantly higher. American Airlines does not have the ability to compete directly through matching such low prices because they could never achieve such low costs, nor does the brand image of American Airlines compliment this strategy.

Airline Industry is vulnerable to price wars: Industries that have extra capacity, high fixed costs, and low differentiation and are price elastic are the most vulnerable to price wars.

High Fixed costs and extra capacity are profit-damaging combinations because it means that airlines must have high yields through yield management in order to maintain profitability, which is very complex.

Low Differentiation means customers see airline travel as a commodity- like business. In general, they simply want to get from one city to another in the shortest amount of time, at a convenient time that fits their schedule, and at a reasonable price.

High Price Elasticity: Due to the combination of the above, airline travel is typically price elastic. Therefore, airline companies are becoming more inclined to lower prices in order to stimulate demand.

Sensitive to economic downturns due to high fixed costs structure, for example in 1991 the industry’s cumulative losses were $2.67 billion

The dominant distribution channel is the travel agent. Therefore, the cooperation of travel agents with the Airline is necessary. Airlines get the agents cooperation through giving them commissions from ticket sales.

Key Issues

Develop a pricing strategy that will increase the demand of air travel and the long term profitability of the airline industry.

Identify and evaluate alternatives by considering competitors reactions, customer impact on yield, costs and long term profitability.

1. Value Pricing

The main objective of this pricing strategy was to provide ‘simplicity, equity, and value’ for air travel, compared to the existing system with a multitude of ever changing fares and discounts.

Value Pricing:

Segmented Pricing: On any given flight, there would be only four different fares: First Class, Regular Coach, Discount Coach (booked seven days in advance) and Discount Coach (booked twenty-one days in advance). Each fare had different restrictions and offerings. E.g., Discount coach involved Saturday night stay over, advanced purchases (21 days), not refundable but they could be re-issued for another flight and priced 49% below the regular coach fares.

New fares will be 38% below the levels of comparable existing fares and will be the same for everyone, meaning no need for special deals.

Advertising: American Airlines would spend $20 million on media time and space over two weeks. They anticipated that revenue would increase additionally by $300-350 million annually and cost savings of $25 million per year.

Pros

· Business travelers will benefit from ‘value pricing’. The advantages for business travelers is that, they no longer need to worry about inflexible restrictions attached to reduced fares, forcing them to pay higher prices. Now they can get the advantage of being able to book at short notice but ensuring that they will still receive the same 38% off full Coach with no restrictions with any time fares. Furthermore, if they can book in advance they can pay even less.

Reduced Costs: American Airlines forecasts cost savings of $25 million per year through the reduction in the number of fares offered, as it will reduce its CRS from 500,000 to only 70,000. Secondly, as all flights will be priced based on the distance of the flight path, so the variable costs actually determine the prices, in theory providing higher revenue.

Cons

Price elasticity: Air travel has quite high price elasticity as a review found that the majority of estimates were between the range of -.8 and -.2, with the elasticity for business travel generally being less than unity, while that for pleasure travel typically exceeding unity. Therefore, leisure travel demand changes with changes in price more than business travel because of a price change.

American Airlines, the price sensitive customers will be highly dissatisfied by the new ‘value pricing’ and they will be encouraged to switch to low cost airlines.

American Airlines will no longer benefit from the business travelers that were typically price insensitive but time sensitive and so prepared to pay the higher costs. This will have incremental affects on yield and profitability as the high fixed costs of airlines previously depended upon business travelers to buy higher priced tickets.

Competitors Reactions: For air travel demand, which in turn creates the lack of customer brand loyalty to airlines, a 38% reduction in American Airline prices in theory would cause customers to switch to American Airlines. However, American Airlines has failed to consider competitors reactions in their ‘value pricing’.

Lower their prices to match American Airline prices to guarantee the consumer the lowest fare without committing to a lower price but ultimately keeping their customers and sending the message to American Airlines that they should increase their prices.

In turn, this will reduce the profitability of the Airline industry, as airlines will need to keep lowering prices in order to remain competitive, leading to a decrease in profit margins and economic growth.

Competitor’s reactions will ultimately prevent American Airlines from reaching their forecasted revenue for 1992.

Promotion problems: The travel agents are less likely to promote this reduced fare platform and the CEO only plans a one-time $20 million advertising effort.

High Fixed Costs of Airlines: American Airlines has a high cost structure and as a result, they rely on high-yield and high traffic. Therefore, it is not feasible and it will be disastrous for them to lower costs in the long term without reducing their fixed costs.

They expect market share to increase by an additional one-half of 1% of the total U.S. market.

They believe that in the second quarter of 1992, revenues could decrease by $100 million, but that revenues will increase by $300-?350 million for the entire year.

They assume that the demand for air travel as a method of transportation will increase by 3-4% with the new pricing structure.

American Airline’s yield and revenue assumptions are flawed because the value pricing is assuming that all present factors in the industry will remain the same but in reality competitors will match prices and travel agents will not be so cooperative.

Break Even changes: American Airlines would need to increase their sales dramatically in order to break even, which will be very difficult.

Regular Coach
1990
1992

1992

Route: New York- Chicago
Old
New
New (including $20m advertising)

Selling Price

$854

$500

$500

Total Revenue (assume sell 1000)

$854000

$500000

500000%

Variable Cost as a percentage of the total costs

3.60%

3.60%

3.60%

Variable Costs per person

$40

$40

$40

Total Variable Costs

$40000

$40000

$40000

Unit Contribution= selling price- variable cost

$814

$460

$460

Fixed Costs as a percentage of the total costs

96.40%

96.40%

96.4% + ?20m

Fixed Costs ( 96.4/3.6=26.777?40000= 1071111.111)

1071111.111

1071111.111

21071111.11

Break Even= fixed cost/ unit contribution

1315.861316

$2328.502415

45806.76328

Break Even sales change

1012.641099

44490.90196

Break Even Point % sales change

176%

3481%

Pros

Product Differentiation will be valued: On long haul flights added ‘frills’ are valued because passengers are on the plane for longer so they will require more services in order to feel comfortable. There are a range of services and products that American Airlines has the opportunity to offer customers to differentiate their fare prices..

Reduce the risk of a price war.

Through concentrating on long haul flights and maintaining low but profitable prices, competitors will be less likely to reduce their costs because American Airlines is the market leader and every competitor wants to have profit maximization. Furthermore, it will increase the long-term profitability of the industry as demand and profitability will increase.

Increase customer brand loyalty: American Airlines are differentiating their products from competitors and if these differences are valued then customers will be encouraged to be loyal to American Airlines, as they will receive the extra benefits from the products on top of their frequent flier program.

Opportunity gap in the market: Expanding into new markets will increase their customer base and market share as long haul flights e.g. 15-18 hour will become more and more popular through increasing international business communications.

It is impossible for American Airlines to match the leading low cost airline fares while at the same time operating at a profit due to their higher cost per seat mile.

The current brand is image of a high quality service airline.

Simplifies pricing without the need to price too low and curbs demand, so customers will be willing to pay more and also they will better maximize flight capacity through curbing demand and so they will not suffer from opportunity costs found in ‘value pricing’.

Cons

Increasing the number of services will increase their variable costs per customer. Fixed costs will rise dramatically from initial expansion.

Risk of International Business Problems:

As American Airlines expand they must ensure that they maintain good communication or else their costs could increase

Foreign markets will bring more challenges when facing new competitors

Currency differences

American Airlines does not react to the growing number of low cost airlines by matching their low prices then they will expand further, increase their market share within America with price sensitive customers and decrease American Airlines competitive advantage. This could reduce the profitability of the U.S. air travel industry in the long term.

Require heavy investment, funding, planning and advertising in order to implement and communicate the difference of services between flight fares to customers and get customers to value these differences.

Recommendation:

Recommended that ‘Value Pricing’ be adjusted and combined with alternative three, to focus on long haul flights and segmented pricing through service differentiation as despite ‘Value Pricing’ being a very innovative pricing strategy it has many shortcomings. The ‘value pricing’ must be embedded in a broader and consistent marketing strategy.

The ‘value pricing’ aim to simplify fares through offering four fare structures should be implemented as this will reduce CRS costs and increase customer understanding of fare prices. However, the restrictions imposed should be reduced on the discount fares, otherwise customers will go to low cost airlines. Instead, it is recommended that fences be built between the different fares to prevent customers from switching from higher fares to discount fares through service differentiation, not just the transportation and a few marginal restrictions. Furthermore, American Airlines should focus on long haul flights as opposed to short-medium haul flights within America because it is within these flights that service differentiation is highly valued. In addition, if American Airlines can expand into more markets it will increase their market share and long-term profitability. This will also prevent the erosion of profitability in the airline industry because it will prevent a price war.

Haridwar

Haridwar, literally translated means Gateway to God, is a holy city in the Haridwar district of Uttar Pradesh. It is also regarded as one amongst the seven holiest cities by Hindus.

Haridwar is a place rich in culture and civilization which blend smoothly into each other giving this city a typical, rustic charm that is irrestible for many. It is amongst the first places where the river Ganga touches the plains after flowing down the mountains. Haridwar is also the entry point to the four main centers in Uttar Pradesh namely Badrinath, Kedarnath, Gangotri and Yamunotri.

Significance

Haridwar is a town steeped in rich history and traces its root back to the vedic ages. According to popular Hindu mythology, the city of Haridwar was created when a drop of nectar spilled over from the kundalini which was being carried by the celestial bird Garuda after the mythical Samudra Manthan.

Haridwar is home to numerous temples presided over by different deities. Another attraction that Haridwar offers is the Ganga Snan, a dip in the holy waters of river Ganga which, according to Hindu belief, washes away all sins and allows the chance to start life afresh, devoid of any sins and ill deeds.

Attractions

Hari – ki – Pauri: This is a ghat constructed on the banks of the Ganga by king Vikramaditya to commemorate his brother Brithari’s penance to invoke divine blessings. The most sacred and pious amongst all ghat that comprise Hari ki Pauri is Brahmakund. The evening aarti, an enchanting and spiritually rewarding experience, is offered to Goddess Ganga where, after the aarti, diyas are set afloat in the river. The sight of these diyas bobbing up and down in the water is a mesmerizing experience and is bound to leave you spellbound.

Chandi Devi Temple: Constructed in 1929 by Suchat Singh, the king of Kashmir, this temple is dedicated to Goddess Chandi.

Mansa Devi Temple: Situated atop the Bilwa Parvat and offering a panoramic view of the city below, Mansa Devi temple is the place to go if you need your desires (mansa) to be fulfilled. The cable car ride to reach this temple is very popular amongst tourists and pilgrims alike.

Other Attractions

Neel Dhara Pakshi Vihar: A bird watcher’s delight, the Neel Dhara bird sanctuary is situated approximately 3.5 km from the city.

Sati Kund: Another place of historical and cultural importance. This is the place where, if legend is to be believed, Sati immolated herself.

How to Reach

Like the other dhams in Uttarkhand, Jolly Grant airport in Dehradun is your best bet to reach Haridwar. The city is well connected with other cities by road and easily accessible. You could also board a train at Delhi and alight at Haridwar station.

Abstract

This project “A study on Bangkok tourism- The Future of Bangkok tourism” puts forward a detail study on tourism in Thailand especially Bangkok as a tourist destination. This study is made at the appropriate time because the tourism sector plays an important role in tourism industry and in the recession period right when people are thinking that tourism industry in down.

This paper aims to provide a light on how tourism has made the economy to boost over the past three years. Research was conducted to understand about the efforts taken by the government to boost tourism in Bangkok. Finally recommendations are also provided at the end of the research which would help in the further development of the tourism in Bangkok. The analysis and the discussions based on the questionnaire is also given in detail.

Introduction
About Bangkok

Bangkok is a famous tourist destination in south East Asia. It is one of the most cosmopolitan, contrasting and, above all, compelling of Asian cities. More than ten million reside here and it is a steamy and pulsating metropolis there is no dull moment in Bangkok city. Whether you’re a spectator, looking for an entertainment or physically active, you’ll be surprised with the vast choices the city has to offer.

Bangkok’s modern, multi-storey shopping malls are a shopaholic’s paradise… you will find the city’s finest fashion stores, global brands, book shops, specialty stores, accessories stands and all kinds of luxury designer lifestyle goods. There are two important malls in particular which attracts more people than others.

According to a leading tourism site, The Emporium “is like a glossy magazine come to life. Behold the seven layers of shopper’s paradise, where the first three floors are dedicated solely to fashion. Exclusive world-class brand names dominate the ground floor, hot international designer items, leather and jewellery the first floor, and glamorous garb for the young and trendy, the second. Fashionist as, this is your playground”.

And here is another mall under this review,

‘From a sporty yellow Ferrari to a pair of Jimmy Choo shoes, Siam Paragon is a shopping mall without rival in Southeast Asia when it comes to luxury goods. This shopping and entertainment complex is an up market, five-storey colossus with 500,000 square metres of retail space. The gleaming, modern mall opened in December 2005 at a cost of 15 billion baht (US$ 375 million), and is home to more than 250 famed international and local luxury brands…’

Tourism Industry in Bangkok

Over all Bangkok is a mix of old and new, classic yet trendy and very traditional yet modern. Visitors from all over the world visit Bangkok to experience the beauty of the Buddha’s smile.

Thailand’s tourism industry makes up about 6.5 percent of the country’s GDP. When seeing the number of tourists, and the number of tourist destinations and hotels, one would actually expect a more substantial portain of GDP. But Thailand’s tourism industry, while very visible, brings in much less money than other service industries, and certainly less than its manufacturing industry.

Nevertheless, international visitors spent more than 547 billion baht (something like 16 billion U.S. Dollars) in 2008. The average length of stay per tourist in 2007 was 9 days.

Impact of the Regional

Interestingly, the tourism sector does not only depend on foreign visitors. The number of domestic tourists actually dwarfs the number of foreign tourists. But domestic tourists (mostly Thais) do spend much less per day and their trips are shorter, on average two days and a half. In 2007 there were reportedly more than 83 million in-country travel trips. This created 380 billion baht in revenue.

Average daily expenditure was around 1770 baht per person in 2007 (as compared to 4120 baht per person for international tourism).

In 2008, 52.37 % of international tourists were East Asian, with Malaysia and Japan providing the most visitors. Close to two million Malaysians visited Thailand. I assume they take short trips over the Thai-Malaysian border, and I think the number of Malaysian visitors, excessively inflates the total number of international visitors.

Europeans provided close to 4 million visitors in 2008, about 27.22 % of the total. The number of visitors from the Americas, South Asia and Africa, is much smaller. However, close to 700,000 Australians visited Thailand, which is actually an enormous number, when taking the total population of Australia into account.

The number of foreign tourists visiting Thailand over the first eight months of this year (2009) dropped 14.1 per cent from the same period last year to only 8.9 million, according to deputy spokesman of the Democrat Party, Atthawit Suwanphakdee,

Mr Athhawat attributed the declining to impacts of the Songkran riots by the anti-government red-shirts in April and the pandemic of the A (H1N1) flu virus.

However, he was confident that the situation of the tourism sector will improve in the fourth quarter of the year as the number of foreign arrivals is increasing.

The graph below shows the number of tourist arrivals in the first quarter and second quarter of 2009 were 3,64 million and 2,96 million respectively. These figures were lower than during the first 2 quarters of 2007 or 2008. In the third quarter of 2009 we see that the number of visitors is similar to the number of visitors in both 2007 and 2009, suggesting that the worst in over. Preliminary data for October 2009 show an increase in visitors as compared to October 2008.

Based on these reports the aim of this project is to find the shopping experience of people visiting two malls namely, the Emporium shopping Mall and Siam Paragon Shopping Mall. We planned according and executed this survey successfully and hence we submit our report, analysis and discussions based on the survey results.

Source: ThaiWebsites.com

Literature review

Trying to get information from books I went to the library and local book stores to get books on Thailand and to know about Bangkok, its history, culture, religion and traditions etc. one book which I found was ‘Eyewitness Travel Guide to Thailand’. This travel guide was written by Philip Cornwel and the book is published by the Dorling Kindersley Publishing. It had 504 pages and was priced at $17.50. it offers easy access to Thai history, politics, music, festivals, sports and culture. It also has lists of hotels and restaurants, shopping places, golf, diving, white water rafting and several pictures and maps related to the information provided. It was a very practical guide overall.

The next book I took for reference is ‘Lonely Planet Thailand’, written by Joe Cummings, Sandra Bao, China Williams and Steven Martin. I got it from Amazon books and it was priced $18.19. it was more like a survival guide with in depth information on Thai spa, resorts, culture and some important phrases and words to remember etc. it has nearly 148 maps which were very easy to follow and I found this particular book very helpful.

Lonely planet is a series of books focused on specify locations in Thailand such as, lonely planet Thailand’s Islands and Beaches, Lonely Planet Chiang Mai Northern Thailand, Lonely Planet Bangkok etc. As I was to go to Bangkok I ordered the “Lonely Planet Bangkok”, from Amazon for $14.00 it was authored and published by Michelin Publications. This book had a 4 star review in Amazon and true to this fact this book was a tourist marvel.

It is recommended to everyone traveling to Bangkok as it is a treasure house of information’s on all aspects of the city and overall about Thailand. The food, night markets, day bazaars etc which no travel guide will take you in real can be seen reviewed here in this book. A total and complete guide t the shopping festivals and other celebrations in Bangkok and the right time to visit, places to see and other attractions in around the city is all focused and explained very well. Many more online resources are also helpful but nothing can be more comfortable than having a travel guide in hand with maps to read.

It is not always possible to carry your laptops and work on them for details. I carried all the books with me during the trip and found them to be very useful. I learned some common phrases and I used them. Local people were very delighted to see a foreign student speaking their language. Thus these books made my trip more memorable and lively. My experiences were enhanced through these books.

Methodology

When we decided to conduct a survey the first thing we did was plan. We first prepared the questionnaire as per our requirement and choose two famous shopping malls as our target for this survey. Once the questions were ready we decided how many people we should target. We set the number as 60. We took print outs of the 60 copies of the questionnaire and set out on our educational tour to Bangkok.

We successfully finished the survey in the two malls, Emporium shopping Mall and Siam Paragon Shopping Mall. It was a great experience interacting with tourist from different nations. They were very co-operative and were happy to help us by answering the questionnaire.

Based on the questionnaire we prepared an analysis and discussion below. We found out why people visit Bangkok and why they loved to shop in the malls. We also found some online data about the tourist flow in Bangkok over the period of years. The local residents were not that co operative as foreigners. They were very serious and some refused to take the survey.

The staff of the mall and many shop owners was very friendly and they asked us about why we were conducting survey and what we were doing. It was great experience to interact with local businessman. We even asked them about how foreigners come to the mall and what exactly attracts them in their stores. They agreed that economic slowdown has affected tourism in Bangkok as fewer tourists turned up this year.

This indeed had effect on their own business they said very sadly. Overall it was a great exposure to us as we knew how to interact and communicate with people. We were able to balance between the good and bad aspects that we encountered in the malls. We learned to address all types of people and we learned how to communicate politely.

Analysis and discussion
Analysis of the Questionnaire

Emporium Shopping Mall

In the above graph you see the first question from the questionnaire asking “Are you resident of Bangkok? Almost 80% of people who took the survey were residents. And among the 20% who were non residents answered the second question which was “is this your first visit to Bangkok?” almost 90% tourist were first time visitors.

The third question was how they knew about the mall. In this question we did find one major factor that travel sites helped lesser in finding the best shopping malls in the city. People found out more from friends, online forums and social media networks. Next coming to the main topic about what they liked about the Emporium mall many answered that they like the service and the ambience more. The cost they felt was bit costly yet they found it worth the money they spend. The food wasn’t very impressive in the food court in the mall. Overall service was the leading force for the malls success.

The overall rating was GREAT as against good (30%), bad and not bad (1%) the same feedback was also noted about the shopping experience.

Many liked the interiors and the ambience. The huge area and space attracted others and they were not very attracted by the food and other things. Almost 95% wanted to come back again for the same experince.

Almost 95% felt they can relate this mall to that they show in other countries. This is alarming as this means this mall is not as unique as it looks like. Similarities do exist between others and this mall. 90% of the people felt that they got what they wanted or found things which were very impressive.

Another astonishing fact was that people felt that it was a mix of west and east. Not many felt it was old fashioned, eastern or western in particular. Some people felt irritated by the huge crowd but many others loved and had no irritations.

The mode of transport to and from the mall was by Taxi mostly and the next important mode of transport was the public transport like bus, metros etc. many people like the tuktuk ride across the city. Many people who stayed nearby walked to the mall. Most of them felt that reaching the mall was very easy.

Many visitors felt that this mall was a one stop place for all their needs. But many felt they had other options. They visited the place for specify items alone. People in the age group of 20-30 visited the malls very often and the next was people from age group 40-59. Youngsters below 20 were the next in lead and not many silvers above 60 were seen around.

Almost without any gender bias men and women were seen coming to the mall. There was no big difference. Married people seem to come her more than singles. It is more sophisticated and hence singles don’t prefer coming here. It is also very crowed and not a preferred hangout for singles.

Among the visitors almost 90% were Asian and closely following were Americans. Other nationalities counted less. Many were into private sector jobs or owned their own business establishments. Students also visited these malls more than the government employees. The occupation mostly of the visitors was public sector.

Siam Paragon Shopping Mall

In the above graph you see the first question from the questionnaire asking “Are you resident of Bangkok? 10% of people who took the survey were residents. And almost 90% who were not residents answered the second question which was “is this your first visit to Bangkok?” almost 90% tourist were first time visitors.

The third question was how they knew about the mall. In this question we did find one major factor that online information and travel sites helped a lot in finding the best shopping malls in the city. People found out from friends, online forums and social media networks. Next coming to the main topic about what they liked about the Emporium mall many answered that they like the service and the ambience more. The cost they felt was bit costly yet they found it worth the money they spend. The food wasn’t very impressive in the food court in the mall. Overall ambience was the leading force for the malls success.

The overall rating was Good as against great(60%), and not bad (1%) the feedback was just the opposite about the shopping experience. People found it Great to shop here and many felt it was not bad.

Many liked the ambience,interiors and the huge area. The food attracted others. Almost 90% wanted to come back again for the same experince

Almost 95% felt they can relate this mall to that they show in other countries. This is alarming as this means this mall is not as unique as it looks like. Similarities do exist between others and this mall. 90% of the people felt that they got what they wanted or found things which were very impressive.

Another astonishing fact was that people felt that it was a mix of west and east. Not many felt it was old fashioned, eastern or western in particular. Some people felt irritated by the huge crowd but many others loved and had no irritations.

The mode of transport to and from the mall was by Taxi mostly and the next important mode of transport was the public transport like bus, metros etc. many people like the tuktuk ride across the city. Many people who stayed nearby walked to the mall. Most of them felt that reaching the mall was very easy.

Many visitors felt that this mall was a one stop place for all their needs. But many felt they had other options. They visited the place for specify items alone. People in the age group of 20-30 visited the malls very often and the next was people from age group 40-59. Youngsters below 20 were the next in lead and not many silvers above 60 were seen around.

Almost without any gender bias men and women were seen coming to the mall. But men were seen slightly more than women. There was no big difference though. Married people seem to come less than singles. It is a heaven for singles to hang out.

Asians visited this mall most followed by other nationals like Americans, Africans, Latino and others. As for the occupation of the visitors who visited the mall, it was found that students came here the most. They liked the place very well and it was their favorite hangout with friends. People working in government and public sector jobs came lesser and business people visited lesser.

Discussions:

When comparing the shopping experience in both the malls we found a vast difference in the data we collected through the questionnaire. The results were totally in contrast in some areas and in some fields both were almost the same. We found that more residents visited the Emporium Mall while more foreigners visited the Siam Paragon Shopping Mall. Most of the visitors were first timers.

Both places people liked the ambience and the services. The cost in the malls was high in both malls and the type of people visiting the malls also varied a lot. Many young people and single people preferred visiting the Siam Paragon Shopping Mall. It was a best hangout for youngsters and students in particular. Senior people preferred the Emporium mall. We were able to find this out through questions like their age and occupation.

Next comes the source of information. Many people found information about the city online through forums, social media networking sites and travel sites. This sows how online media is helping tourism a lot. And as for the ethnicity we find Asians visiting the place more than the westerners. Which means this area is still to be tapped by the tourism industry. By promoting Bangkok in the western world there are greater chances of attracting people from European and American countries. Overall the goal to find out the shopping experience in the two malls was achieved and very important details were analyzed.

Limitation

We faced certain limitations and problems when we started our survey at the two malls. First was the reluctance from the individuals to spend few minutes to fill up the questionnaire. Many westerns were too obliged to help and they even spend some time to ask us about our education. They were very friendly and concerned. But local residents were irritated when we stopped them and most of them refused to stop.

After the survey we found out that unique websites must be created to promote Bangkok tourism. A best tourism promotion strategy must be developed by the tourism depart to invite foreigners to Bangkok. We also saw placed which were not well maintained. Government should take steps to maintain its rich tradition and culture. Moreover the fees for entering historic places and Buddha temples were very high. This also must be reduced.

Conclusion

My trip to Bangkok was a great success as I was not only enjoying with my friends I was also learning new things that was enriching my knowledge. The city of Bangkok is thronged by tourists from all nations who come here for many varied reasons. Our plan was to find out what made Bangkok a preferred tourist destination in the eyes of the tourists. We planned to conduct a survey in two famous shopping malls in Bangkok. We prepared the questionnaire accordingly and finished the survey successfully. After analyzing the report we have discussed certain issues and limitations. Overall this entire trip was very useful for my studies. It gave me self confidence and the courage to go to new countries and converse and relate to people who come from many nations.

Bangkok is a great city rich in culture, religion, tradition etc and is also a very modern city with a touch of western culture too. So foreigners prefer this city and they come here to see the eastern tradition, to know more about Buddhism, to visit all historic places in and around Bangkok, and also to experience the exotic Thai food which is world famous. The aim of this project was to find the shopping experience of people visiting the two malls, namely the Emporium shopping Mall and Siam Paragon Shopping Mall. Our goal was achieved successfully and we are now confident enough to conduct more studies and surveys in future.

References

(Lonely Planet, 1992) Lonely Planet Phrasebook

Thai for Lovers (Nit and Jack Adjee, 1997)

Top 10 Bangkok (Eyewitness Top 10 Travel Guides) by DK Publishing

Thailand (Country Guide) by China Williams

Thailand’s Islands & Beaches (Regional Guide) by Celeste Brash

Top 10 Hong Kong (EYEWITNESS TOP 10 TRAVEL GUIDE) by DK Publishing

Thailand (Country Guide) by China Williams, Austin Bush, Brandon Presser, and Tim Bewer (Paperback – Aug. 1, 2009)

Thailand: The Golden Kingdom by William Warren et al and Luca Invernizzi Tettoni (Hardcover – Sept. 15, 1999)

Thailand’s Islands & Beaches (Regional Guide) by Andrew Burke and Austin Bush (Paperback – Aug. 1, 2008)

http://en.wikipedia.org/wiki/Bangkok

http://www.bangkok.com/tourism-first-time-visitors/index.html

http://www.tripbase.com/Bangkok-Tourism-Thailand.html

http://www.city-travel-guide.co.uk/travel-guide/bangkok-travel-guide.html

http://www.1stopbangkok.com/

Nestled in the shadow of the Nilkantha peak, in the northern Indian state of Uttarakhand, lies one the the most revered shrines for Hindu pilgrims – Badrinath.

Badrinath is in the Chamoli district of Uttarakhand, in the Garhwal hills, and lies on the banks of the Alakhnanda river.

Significance

The town of Badrinath has always found a prominent mention in religious Hindu texts and scriptures and was established as a major pilgrimage site in the ninth century by Adi Shankara. Mythology has it that Lord Vishnu had chosen this town for penance to ensure the welfare of all beings. Badrinath is also one of the char dhams (the four abodes) that have tremendous religious significance amongst devout Hindus.

Attractions

The Badrinath Temple: The temple, built by Adi Shankara, is the prominent attraction of

Badrinath and attracts thousands of visitors every year who come to seek the divine blessings of Lord Vishnu. The main shrine houses the balck stone idol of Lord Badrinarayan sitting under a gold canopy, under a Badri tree. Lord Badrinath is the presiding deity but there are several other deities that are worshipped at this temple. Tapt Kund: Believed to be the abode of Agni, the Hindu God of fire, Tapt kund is a thermal spring that devotees take a holy dip before entering the Badrinath temple. The spring is also said to have curative properties.Other famous natural springs that can be found at Badrinath are Narad Kund and Suraj Kund.

Brahma Kapal: On the banks of the river Alakhnanda, this is where pilgrims perform rites for their departed near and dear ones.

Sheshnetra: This is a rock boulder with an impression of Sheshnag, a mythological serpent. You can also visit ‘Charanpaduka’ a boulder that bears Lord Vishnu’s footprints.

Alka Puri: Is where the daring tourist goes in search of adventure. This place is famous for white water rafting.

Panch Prayag: While in Badrinath, be sure to visit the Panch Prayag, again of religious importance. Devprayag is famous for its rock inscriptions, Rudranath is famous for Chamunda Devi temple, Nandaprayag is known for the Gopalji temple, Karnaprayag for temples of Uma & Karna and Vishnuprayag is the place where people flock to visit the Lord Vishnu temple.

How to Reach

You could fly to Jolly Grant, about 300 km from Badrinath, and then hitch a bus ride to Badrinath. The nearest rail station is Rishikesh which is 297 km from Badrinath. Being a

place of religious significance, Badrinath is well connected by road to the tourist spots nearby namely Rishikesh, Haridwar & Dheradun from where you could take a bus and ride to Badrinath. We recommend the bus ride as you will get to see breathtaking scenery on the way to Badrinath.

This is the strategic report on the Britannia International Hotel industry. It discusses the scheme of the strategic management in the business with the analysing of the tools of the strategy in the day to day operations of the business. Strategic report is focusing on the impact analysis of the business strategy of the hotel industry with the giving of the overall view on the strategic management scheme in the hotel industry. It is ideally giving of the recommendation for the improvement of the performance level of the hotel industry in the current market with the adoption of the suitable , feasible and acceptable techniques of the Hospitality Management to improve the level of the performance in the business.

This is the strategic assignment focusing on the Britannia International Hotel Industry in London. The aim of the assignment is to discuss the strategic policy management of the Britannia International Hotel industry in London in the relation to their internal and external business environment. The Britannia International is one of the prominent hotel industry in the London situated at the heart of the city at Canary Wharf, London. They are having 35 hotels across United Kingdom using 7000 bedrooms, One of the hotel at the prime location of the city in London at the Canary Wharf is the key success factor nearer to the major airports and the seaside resorts surrounded by stunning country side (Lehman,2007) The strategic aim of the hotel industry is to provide the optimum money value at the desired level of the satisfaction facilitating to the easy opportunity of the decision-making to the guests who are coming ion the hotel industry (Buidcon,2009) As the London is an international city in the world many guests are used to come here from the different parts of the world in order to enjoy the city of London with its greenery, atmosphere, surroundings – due to which there is a wide scope of the development of the Hospitality industry in this area in order to hospitalise the visitors in this country. As a result many hotel industries are the wide popular in this city used to earn the good source of the potential income and sales turnover. The Britannia International at the Canary Wharf is offering the extremely competitive rates in the combination with the flourishes decoration with the facilities including restaurant, health club, night club, bars and free wireless internet access. (Gary,2010) The hotel is situated on the water’s edge next to the Canary Wharf, at the Docklands of the London in the internationally developed renowned office development, the hotel industry is fully modernised in the traditional culture having up to date facilities (Simson,2009) Modern style hotel located on the waterside in London’s docklands closed to Canary Wharf where there are many international businesses as well as large shopping centre , various restaurants and Bars (Gilston,2010)

Literature Review

Business Strategy of the Britannia hotel industry is purely of the functional and authoritative nature, Hotel industry is rationally divided in to four parts of the line of the organisational set up in which there are the functional departments are diversified as per the core area of the business management, Strategic planning of the hotel industry is made on the basis of the grouping of functions in to four imperative divisions they are the Operations, Human Resource, Marketing and Finance, Information Management section is the co-coordinator of all the departments which is involved in the transfer of the information with in the different active departments as a core functional chain in the business (Tandon,2007) Strategic Management of the hotel industry is having a dynamic and imperative weight in the international cities as per the depending of the nature and scope of activities , many guests and visitors are used to come in the city of London which has created an enormous beauty and scope of the activities of the hospitalisation in the city of London, different services are provided as per the capability and intensity of the hotel industry at the reasonable rates in order to achieve an optimum level of the satisfaction from the customers, supplier power of the hotel industry is really is magnificent they are providing the restaurant, Bar, Kitchen, living and boarding facilities having 4 big halls for the conducting of events such as marriages, birth day parties, functions, meetings, ceremonies in which the area of the potentials of the hotel industry are based, recently they are planning to start the travel and tourism operations as their supportive area of activity to the core functional scheme which is the additional source of the revenue recognition (Rodrics,2010) Glance situation of the hotel industry at the magnified location is the measured strength of the hotel industry at the Canary Wharf , the increasing the number of the people with the large scope for the sale of the food items in the glorious location of the hotel industry are some of the ideal characteristics of the hotel industry giving the prominent scope of the development and hospitalisation (Small,2009) Intensity of the buyer towards the hotel industry is strategic and sound as they are willing to get the supreme level of the services with in the reasonable costs and achieving the enjoyment of the city of London, Docklands area near to sea shore is giving the glance opportunity of the business development to the Britannia international hotel industry at the higher rate of income with the global status and the exclusive customer support, they are having a stratified customer relationship management strategy in which functional scope of the CRM dimensions has been predicted through the norms of the customer identification , customer attraction, customer development and the customer retention (Philip,2008) The strategic Management of the Hospitality industry in London is the core activity of the management in which functional scope is administered as a tool of the resource management, Operational activities are coming under the day to day performances of the business and regular services to the guests who are coming in the hospitality industry in order to acquire services and potentialities for the earning of the higher revenue generation in the day to day operational management, Human resource strategy is the core activity of the functional management in which major concentration is given on the process of the recruitment and selection of the new candidates in the service so as to get completion of the business activities in the right strategic order and at the right time with in the reasonable resources, Marketing Activities are the activities which are relating to the development of the market through the making of the strategic relationships with the customers and attracting them in the shoes of the customer in order to develop and expand the business activities, Finance department is involved in the strategic financial operations including the accounting , internal audits, finance management, investments in the area of the business so as to maintain the liquidity and the cash management in the day to day business operations, Information Management department is the channelising information department in the business with the providing of the time to time information in the order to regulate the departmental activities in the business organisation (Shardul,2010)

Discussion

The strategic report is discussing on the management policy of the Britannia International Hotel industry. In the international city of London the wide scope is available for the hospitalisation sector as many visitors are used to come here from the different parts of the world in order to pursue their education, jobs, picnics and visits, living. In due course of the same there is a wide scope available for the development of the hospitality industry in this city to entertain the visitors . There is a wide scope of the strategic management in the hotel industry so as to administer the group of activities in the business management policy of the hospitalisation. Business strategy has been constructed as per the model guideline of the core hospitalisation. Hotel industry is using the effective and efficient Customer Relationship Management strategy in order to make the long lasting relations with the guests, visitors in the shoes of their customers . The strategy of the Customer Relationship Management has been constructed in the view of the implementation of the efficient and effective CRM dimensions of the customer identification, attraction, retention and development to make the expansion of the business activities to capture the wider segment of the market. Market development strategies used to be formed with the using of the effective marketing communication techniques such as advertising and publicity , sales promotions, direct marketing , public relations and personal selling which will be helpful to develop the good communication system of the hotel with the creating of the Goodwill in the business. Business strategy of the Britannia international is constructed as per the ideal divisions of the functional activities in the four major departments specifying the executive strategy of the hospitality operations.

Critical Analysis

Strategic Management policy of the Britannia hotel industry is a constructive idea of the operational profile in which there is a wide scope available for the coverage of the functional area of activities. The strategic idea of the functional approach of the management policy is depending on the availability of the strategic factors which are in the support of the management and get inverse with the management. Following are the SWOT analysis are focusing on the internal and external factors of the hotel industry –

a) Strengths – Glance location of the hotel industry in the midlands nearer of the dockland airport is facilitating the visitors to take stay in the hotel. Availability of the feasible facilities including the air conditioned rooms, lodging and boarding, Restaurants, Bar,Kithen are all giving the strengths of the business. Staff operations are commensurate to the strategic development of activities , with the expertises of the staff and availability of the potential capacity of the labour services. Availability of the tourism operations is creating an additional constructive strength of the business . The scope of the information management department is to handle the ideal activities of the marketing function through the implementation of the different strategic marketing techniques. Availability of full fledged well furnished rooms , with the big halls for the events, ideal structure of the hotel set up is an added advantage.

b) Weaknesses – No scope for the parking facility of the vehicles in the surrounding area of the hotel industry. Increasing the rate of the labour turnover in the business with the improper workforce management activities. There is a serious increases in the budgeted expenditures of the hotel industry in due course of the increasing the labour turnover of the business. Reduction in the profitability of the business over the period of time is affecting on the performance level of the hotel industry. Increasing in the costs expenditures will commensurate to the revenue recognition from the day to day operational control of the business.

c) Opportunities – There is a greater scope available for the hospitalisation in the area of Canary Wharf. As London is one of the international city in the world many visitors are used to come here for the visits , picnic, education,travel,living,jobs. So that there is a wide scope of the opportunities for the development of the business is available towards the international visitors. Performance level of the hospitality industry is at the optimum rank , further there is a wide scope of the development to increase the level of the performance of the business with the employment of the skilled, efficient labour in the day to day business operations. Level of the business management can be used as a basis of the chanelising the information management function in order to acquire the objectives of the business.

d) Threats – As the London is an international city in the world, many spectators are used to come here from the different parts of the world. It is therefore there is a wide scope for the development of the Hospitality industry in this area. The scope of the Hospitalisation is quite more in this city of London. Due to which many hotel industries are used to operate in this city to entertain the globalise visitors, guests. It is leading to the emergence of the different hotel industries. Hotel Hilton Metropolitan, Hotel Syon Park, Hotel Chariot Mirror are some of the leading hotel industries in the city competing the Britannia International.

SWOT analysis is pertaining to the focus on the internal and external business environment which shows an exact picture of the hotel industry in a strategic manner.

In depth focus further can be made in the business activities through the applications of the tool of the Porter’s five forces –

Supplier Power – It is the creative idea of the different facilities offered by the Britannia hotel industry in the hospitalisation. They are having Bar , Restaurant, Kitchen services , lodging and boarding facilities , full well furnished air conditioned rooms which are attracting the visitors in the hotel. At one time more than 100 of people can have stay in the hotel in the well furnished rooms. There is an optimum level of the food facility available for the guests and visitors. Bar services are more timely and co-efficient. Operational strategic management has been done based on the implementing the ideal strategy of the hospitality management and its core area of the knowledge. The Hotel industry is having the strategic supply power which can attract the large number of customers in order to increase the capacity sales.

Buyer Power – This is the power of the buyer intensity in which study of the buyer behaviour has been conducted. Buyer power is created with the availability of the financial position of the buyer leading to increase in the level of consumption. Understanding of the buyer behaviour in the business is a strategic task of the assessing of the demand position in the current market. On the basis of which the supplier power can be built up in the day to day business operations. In every business intensity of the buyer capacity is playing a strategic role. As the Uk is in the recovery stage of the credit crunch situation in the market, it is leading to the increase in the level of the economy along with the employment opportunities in the business. With the help of that the earning potential capacity of the buyer is now upgrading leading to the increase in the level of consumption.

Market Competition – There is a strategic competition in the market. As the London is an international city there is a major scope for the development of the Hospitality sector because people who are coming from the different parts of the world are need to have facility for their hospitalisation and care. In due course of which many hotel industries are used to operate in this city creating a challenging business environment for the hospitality industry. With the availability of the international Hotels such as Hilton Metropolitan, Syon Park, Mirror Chariot there is an ultimate reduction is felt in the business of the Britannia international.

Threat of New Entrants – There is a serious threat of the new entrants who are coming in the market. As this city has a wider scope of the hospitalisation business in due course of the international visitors, the scope of the hotel industries has been increased in this area. For the entertaining of the guests, visitors there is a need of the new resraurants,hotels which ultimately had given rise to the commencing of the new hotel industry businesses , which can create a challenging threats for the Britannia International as the same quality food may be available at the more cheaper rates in the new hotels for the sake of the capturing of the market.

Barriers to New Entrants – There are the certain barriers are available in this country for the new hotel industries. Govt. Licensing is a challenging task which requires the many compliances of the documents and still no assurance of the sanctioning of the license. Another problem is of the capital funding as London is one of the costly city in the world , there are the many requisites are raised for the mobilisation of the capital and still there are the issues which are arising in the starting of the business. These are the serious challenging barriers to the new entrants.

Findings

It has been found on the basis of the strategic analysis that there are the different strategies and customs are applied in the business. The normative strategic planning of the business is based on the Porter’s generic scheme.

a) Cost Leadership – There is a cost efficiency and effectiveness is maintained in the business which is leading to the maximisation of the profits. Quarterly budgets are prepared indicating the schedule of the expenditures and the actual performance is used to compare with that schedule in order to improve the strategic performance of the business. Executive cost control is maintained in the business as a strategic tool of the business.

b) Focused – The ideal focus of the activities is based on the restaurant and lodging and boarding activities. In the restaurant the strategic activities which are focused are the kitchen services, Bar services, Operating services. In the lodging and boarding activities the ideal services are the well furnished rooms along with all the facilities of the toilets, bathrooms.

c) Differentiation – With the continuing of the focused core area of activity of the business hotel industry is planning to develop the new activity of the Travelling and Tourism operations which will facilitate the additional source of income of the business as the supportive level of activity to grow the business in the Hospitality sector.

Conclusion and Recommendation

The Britannia international is one of the reputed hotel industry in London having its strategic significance all over the world. Wide scope of the business with the glance opportunity is available for the expansion and development for the hotel industries. The Britannia hotel is having the imperative strength of the good supplier power , ideal resource management scheme which will be commensurate for the strategic management policy of the business. Good location of the hotel industry , facilities available are of the restaurant, bar , kitchen services , lodging and boarding services which are giving the scope for the business expansion and development. However, as the London is an international city in the world many spectators are used to come here for the travels, visits, education there is a wide scope of the development of the hospitality sector in order to catch the wide area of the business development. This is giving scope for the development of the many hospitality industries creating the market competition . Hotel Hilton, Hotel Syon Park, Hotel Passage to India are the hotels creating a challenging environment for the business. It is recommended to the hotel industry to give scope on the marketing communication techniques of the sales promotions and direct marketing in order to grow and expand the business. In the sales promotions focus can be on the giving of the different attractive discounting offers which can catch the customers. In the direct marketing hotel industry can use the strategic technique of the e-mail communications system to contact directly with the customers.

The Republic of Kenya is located along the Equator of the eastern side of Africa, boarding the countries of Somalia, Uganda, Ethiopia and Tanzania. The country covers an area of 582,264 km2 and house approximately 28.8 million people and growing at a rate at a rate 6f 1.6 annually. The climate take a tropical origin which tourist can experience sunshine all year round ,however the temperature may differ throughout the country for example warm & humid at the cost ,cool & humid at central high lands and hot & dry in the north and east. Rain on the other hand is seasonal for which the heaviest occur during the months of April to June.

Kenya is a country rich in culture which gives home to a number of different tribe, religions and approximately 45 different ethnic groups. Some of these larger populated ethnic and religious groups include: Kikuyu 22%, Luhya 14% and Protestant 45%, Roman Catholic 33%, Indigenous beliefs 10% and Muslim 10% respectively. (About.com)

The native language of Kenya is Swahili which is also known as Kiswahili which is widely spoken among natives however English is becoming the official language of Kenya.

This cosmopolitan country has a number of different amenities to bring to the tourism arena. With tourism being one of main finical drivers Kenya’s economies, they engaged in the following types of tourism which are: Domestic, Culture, Business and Community and Eco Tourism.

This type of tourism helps in a number of different ways. Firstly, it helps to educate the natives about their country and what it has to offer. Secondly, it gets them more involved in the tourism sector. Domestic tourism also helps in balancing off the tourism industry in low period of nation and international guest and tourist arrival.

Kenya’s tourism industry is closely bonded to environment, culture and the community, wildlife in relation to eco tourism in particular is one of the top tourist drivers. Safaris, national parks and forests, show the countless species of Flora and Fauna that can be found throughout the country. Tourist can also experience true tribal life through the community national parks where rich Kenyan culture is displayed together with tours and hikes through deserts, mountains rainforests, beaches etc.

BUSINESS TOURISM

In addition to wild life, the accommodation and conference sector play an important role in the tourism sector. Hotels range from budget, express, luxury and national parks where sleeping under the element is now possible. These establishments offer first class service together with computer, telecommunication and internet services.

ANALYSIS
HOSPITALITY & TOURISM INDUSTRY IN KENYA

Tourism in Kenya dates back to pre-independence days and as recorded in history as early as the 1930’s (Tourism in Kenya). In the past, the bulk of the tourist that visited Kenya did so mainly to take part in the gaming industry in the game – hunting expeditions, while the other visitors represented the typical old tourist that travelled for sun, sand and sea which is one of the tourism products offered by Kenya’s tourism industry. In particular, the tourism industry in Kenya traditionally attracted first world rulers. e.g. The Queen of England, Queen Elizabeth II and the President of the United States of America, Theodore Roosevelt.

INFRASTRUCTURE

In the 1930s, Kenya’s infrastructure was less than ideal or/and adequate to facilitate this new trend, tourism. Nevertheless, the tourism industry was steadily growing. Kenya gained independence in December 1963 (Kenya Timeline) after which the infrastructure developed a bit but still required improvements. The government with cooperation of both the public and private sector worked cohesively to fully develop the infrastructure that in turn made Kenya more attractive to tourists.

Approximately 10% of the country has been reserved for the preservation of the natural attractions and wildlife in Kenya which helps to boost tourism. (Tourism in Kenya) The tourism industry has evolved with the emergence of the new tourist, which brought along new forms of tourism for the country notably sports tourism, community and culture tourism etc. Eco tourism is the prevailing form of tourism accompanied by 10% of the natural reserve dedicated by the government.

Kenya Eco tourism attractions:-

Game viewing expeditions (Flora) -the evolution of the new tourist brought along the new game viewing expeditions, where the tourist no longer hunt the animals but view the animals on a Safari. Kenya’s popular animal attractions are commonly called “the big five” which includes: elephant, rhino, lion, buffalo and the leopard (Tourism in Kenya)

Plant watching (Fauna) – The viewing of trees and flowers in Kenya is part of the Kenyan agricultural industry, which is the main contributor to the Kenyan GDP. Kenya climatic seasons are similar to those in the Caribbean with a dry and rain season annually. The rainy season in Kenya is responsible for the boom in the fauna of the country. This is the season where the trees and flowers bloom whereas the dry season is quite different. The trees drop their leaves and the flowers dry up. A tourist that visits Kenya in the dry season would have a different experience to a tourist that visit in the rainy season in regards to the country fauna.

Safari – this allows the tourists to observe and understand the native people and their natural lifestyle.

ECONOMICAL FACTORS

Multiplier Effect – Kenya’s tourism industry is heavily dependent on other industries to be a successful industry. The tourism industry is mainly dependent on the agriculture industry. This sector is predominantly responsible for providing the food and beverages that are served to the tourists.

NEGATIVE FACTORS AFFECTING THE TOURISM INDUSTRY

Lacks of awareness of the people – The people of Kenya are included in the decision making process or informed about tourism development initiatives. As a result of this, nationals act negatively towards the tourist.

Socio-culturally – With the improvement in the tourism industry and the influx of tourist into country, the ways and attitudes of the new world, have negatively affected the culture Kenya by the increase of prostitution, lack of traditional rituals and performances.

Terrorism Threat – The bombing of the US Embassy in 1998 and attempted bombing in Mombasa 2002, prompted countries to issue negative travel advisories which greatly affected the tourist arrivals to Kenya as depicted in the statistical data.

Kenya is a country with a diverse range of tourism products that cater to many types of tourism as mentioned previously. The country is heavily focused on maintaining its natural aspect as well as developing in a sustainable manner keeping with its eco tourism trend as it foremost tourism product. Overall the tourism industry is slowly increasing despite the negative factors that are occasionally experienced; they were able to press forward.

IDENTIFICATION & DISCUSSION OF TERRORISM IN KENYA

WHAT IS TERRORISM?

According to the U.S. Department of State terrorism is “premeditated, politically motivated violence perpetrated against non-combatant targets by sub-national groups or clandestine agents, usually intended to influence an audience.” Likewise, international terrorism is defined as “terrorism involving citizens or the territory of more than one country.” ( )

TERRORISTS ATTACKS IN KENYA

US EMBASSY ATTACK

Around 10.30am on August 7th, 1998, Kenya’s US Embassy in Nairobi, was bombed by terrorists where an estimated 12 Americans and 227 Kenyans were killed. Approximately 5000 people in the vicinity at the time of the blast were injured. The destruction spanned a two to three block radius and the Al Qaeda terrorist group were the suspects behind the incident.

MOMBASSA ATTACK

The Al Qaeda terrorist group again launched another attack in Kenya this time at an Israeli – owned hotel. About 8.30am on November 28, 2002, 2 Israelis and 12 Kenyans were killed and over 80 people were injured in the bombing of the Paradise hotel in Mombasa. This attack was

only the first part as a missile attack on an Israeli aircraft was concurrently taking place however, this mission failed.

WHY DO TERRORISTS TARGET KENYA?

Geographic location, poverty and unstable neighbours are some key elements that have contributed to past terrorist attacks faced by Kenya.

Kenya’s unique geographic location acts as a passageway from the Middle East and South Asia to East Africa and beyond. Therefore, Kenya had to cater for the many activities that would now exist because of this pathway so an extensive seaport was constructed as well as two international airports, one in Mombasa and one in Nairobi along with rail, road and communication infrastructure. With these additions, travel and entry into and around Kenya is quite easy and usually obscure due to its penetrable borders coupled with its surrounding neighbours and unmonitored coastline. In particular, the Arabs in Kenya that occupy the coastal areas are closely linked to the Arabs in the Middle East as they both share a common religion and language. This has made it quite convenient for terrorist to blend into the community. For these reasons, Kenya is a preferred choice for terrorist to strike.

Due to poverty and the high rate of unemployment that exists in Kenya, the youths are targeted by terrorists for recruitment to carry out their activities. The terrorists are able to lure these young people by giving them money to join their cause. In this way, they gain new recruits who would provide them with the relevant local information needed to proceed with their activities. Again, Kenya is seen as an ideal destination for terrorists to attack.

In Somalia, Kenya’s neighbouring country, political instability is quite prevalent. For the past 14 years, Somalia has not been run been run by a government and this has given way to terrorists to move across the border. This has therefore hampered Kenya’s security. Immigrants from Somalia reside in Kenya making it easier for terrorists to blend in and thereby bring terrorism into Kenya.

Another challenge for Kenya is its ties to the US which make them susceptible to terrorists’ attacks. Kenya, among other countries, has been selected by the United States Agency for International Development to be provided with the necessary resources to fight HIV/AIDS. ( ) Also, the US Center for Disease Control and Prevention located in Kenya is the

TERRORISM’S IMPACT ON THE HOSPITALITY & TOURISM INDUSTRY IN KENYA

Tourism, one of the foundation blocks of Kenya’s economy, constitutes 25% of the Gross Domestic Product (GDP) and has been adversely affected by the repercussions of terrorism.

Firstly, the influx of tourist to Kenya can be estimated to over 500,000 visitors each year. Europe and the United States of America (USA) represent Kenya’s traveller generating region with 70% of the market being Europeans (Switzerland, Italy, Belgium France and Britain account for the bulk of tourists). In addition, visitors come from Japan, Asia, Scandinavia, and other African countries.

USA, Germany, Great Britain and some other countries, upon receiving the news about the terrorist attacks on Kenya’s US Embassy in Nairobi, immediately issued travel advisories to their citizens and imposed travel bans to refrain travel to Kenya as it was deemed unsafe. Moreover, the extensive media coverage of the attacks particularly focused on Kenya’s vulnerability to terrorism severely tarnished its image. These responses lead to a decline in travel to Kenya and some neighboring countries as travelers feared the spillover of the terrorist attacks. For example, tourism businesses were terribly affected by the travel warnings. Tourism brought in US $500 million in annual revenue and was losing at least $1 million everyday due to the decline in tourism. ( ) Consequently, Kenya’s tourism industry was paralyzed.

Kenya suffered a decrease in tourist arrivals. This had a ripple effect on all sectors of the industry. The cancellation of leisure trips and business conferences were rapidly on the rise. Kenya’s reputation plummeted and this lead to the loss of its competitive value. Kenya was no longer an option to be considered for vacation or investment. Tourism catered to the employment of 500, 000 Kenyans ranging from tour operators, tour guides, travel agencies, safari driver, dancers, hoteliers, restaurateurs, small business operators to airport and airline personnel. Subsequently, there was a significant increase in unemployment as many Kenyans lost their jobs. Employees that were still employed received salary cuts. For instance, at the Carnivore restaurant; all of the 330 staff had their salaries reduced, including Dunford the chairman (National Geographic 2010).

The bombing of the US Embassy had a massive impact on Kenya’s infrastructure. The Embassy was stationed at the crossroads of two streets in Nairobi, adjacent to the Ufundi Building and the Co – op Bank Building. The explosion destroyed these three buildings and other buildings and amenities within a two to three block radius.( ) The rubble consisted of broken glass from windows, window frames, furniture and fixtures, concrete block walls, cars, buses, electric poles, street lights and the list goes on. The transportation sector within Kenya suffered major setbacks as the streets were seriously damaged and likewise vehicles. Additional problems surfaced as resources (medical) were delayed as it was difficult to get in and around Nairobi. Access was restricted to rescue and emergency personnel. Nairobi, the capital of Kenya, was known for its many tourist attractions but these business operations declined as a result of the bombing. With the loss of power and telecommunication, tour operators, travel agencies and hotels were unable to update their websites or communicate with potential visitors who would usually book their reservations, tours or tickets online.

Another hindrance to Kenya’s tourism industry in light of the terrorist attacks is the slump in foreign direct investment (FDI). Investors were inclined to nullify their FDI in Kenya due to some of the ‘shocks’ felt by the terrorist attack such as the direct destruction of infrastructure, the rise of operating costs due to an increasing need of security measures, and the rise of recruiting costs due to missing incentives to work in terrorism – prone regions. ( ). This further contributed to the loss of revenue specifically for tourism development initiatives.

An important issue on the agenda of Kenya’s government to combat terrorism is now the introduction of more security. The notion about safety is not confined to the citizens of Kenya alone but is extended to the tourist as well. For this purpose, government spending had to be diverted from productive investment designed to promote growth, eradicate poverty and sustain tourism development. ( ) Expenditure on high tech security equipment such as surveillance cameras, metal detectors and screening machines had to be implemented as strategies to counteract terrorism.

Kenya’s financial costs continued to escalate in aftermath of the terrorist attack as more funding was required for the cleanup, restoration and reconstruction of the infrastructure, buildings and other amenities destroyed in the blast including tourists’ facilities. As an illustration,

Similarly, another expense incurred is that of extensive advertising to attract more and new tourists to Kenya. This strategy was employed to portray Kenya as a once again safe place and to neutralize the negative media attention received after the bombing.

Apart from the above mentioned negative effects of terrorism on Kenya’s tourism industry, some positive effects were identified. With the decrease in tourist arrivals to Kenya, domestic tourism was being promoted. Locals provided a portion of revenue needed to sustain some tourism businesses. Likewise, a new ‘must see’ tourist attraction was developed. The August 7th Memorial Park was constructed on the site where the US Embassy was once situated. This memorial was built to commemorate the lives that were lost and represents a tribute to the courage of the several thousand others who have had to cope with permanent injury and/or the loss of loved ones. It is a place where people come to reflect, remember and relax. ( ) This attraction is quite similar to the September 11 attraction ‘Ground Zero’ which has been included in many tour packages offered by tour companies in New York City.

With regard to the Kenya’s transit route region, terrorism is no exception. The negative effects of US embassy bombing trickled down to the airline industry. Flight cancellations increased as airline travel declined. There were numerous staff cuts and a major loss of revenue for the industry. For instance, the suspension of British Airways regular and charter planes flying to Nairobi, coupled with travel advisories, closed down access to 90% of Kenya’s overseas markets (The Effect of Terrorism 2004). Car rental companies were also affected.

KENYA’S RESPONSE TO TERRORISM

There is a need for the development of an anti-terrorism legislation in Kenya: following the 1998 bombing of the US Embassy in Kenya the government recognized that there were no adequate measures in place to deal with such acts and therefore the need to develop and implement legislation to deal with terrorism was essential. According to Kenya’s Counter Terrorism committee, the Government on two occasions made attempts to implement such laws with the ‘Suppression of Terrorism Bill’ in 2003 and the ‘Anti-Terrorism Bill in 2006 respectively. However, both bills failed to be introduced to parliament. (Google 2010)

Another point to be considered is the need for revamped management policies to be set in place for Kenya’s border line and costal security control. Google 2010 also stated that the need for heightened security is vital in these areas, for example: the border between Kenya and Somalia poses a great threat to Kenyan nationals and tourist due to fact that Somalia has been without a government of over fourteen years and is known to be politically unstable. This can be done by putting measures in place such as; heightened security checks for persons entering Kenya through Somalia, denial of entry for suspicious entrants and denial to unnecessary travellers especially during the peak tourist seasons. Proper execution of security in these areas may allow tourists’ to feel safer and therefore increase overall visits to Kenya.

The tourism board of Kenya could try to mitigate some of the negative impacts of the past terrorism attacks on the country by creating a new image for the destination. In order to effectively do this, Kenya’s perspective about tourism has to be more holistic. For instance with respect to community tourism, the Maasai Mara tribe not only protects the environment but they engage in certain practices to reduce harm to the environment. Though terrorism would ultimately have a devastating impact on any country being affected, repositioning Kenya in the minds of tourists by focusing on the positives of the destination rather than the negative aspects of terrorism can aid in the process of moving forward. In addition, the tourism board can also shift some of their attention to local tourist by creating special packages in such a way that would be attractive to the local population.

Another option to combat this issue of terrorism in Kenya should be the development of crisis management portfolio. This would first of all distinguish terrorism from other forms of crisis. It should then outline in detail the measures that should be implemented before and after such a crisis. Next the portfolio should assist in painting a clear and clutter free process that should be followed after an act of terrorism to facilitate a timely recovery for Kenya’s image. Since terrorism severely tarnished the image of Kenya, it is very crucial that only specific and highly qualified individuals should address the public and media issues. Hence the reason, the portfolio should also outline all individuals that should be involved in this process with clearly defined roles and objectives.

CASE STUDY

SEPTEMBER 11 AND KENYA BOMBINGS

Both the September 11 attacks on the United States and the US Embassy and Mombasa bombings in 1998 and 2002 respectively were carried out by the Al – Qaeda terrorist organization.

NEGATIVE EFFECTS

Both the US and Kenya bombings resulted in a decline in outbound and inbound travel.

The airline industry in both countries experienced significant revenue losses following the decline in travel.

Businesses that were dependent on tourism as their main source of revenue suffered and were unable to continue operations.

Staff cuts were also experienced again due to the decrease in travel because of the acts of terrorism faced by both countries.

POSITIVE EFFECTS

Both countries introduced new high tech security equipment and measures to combat the threat of terrorism.

Both countries were able to develop a new tourist attraction, Ground Zero and August 7th Memorial

There are 1.7 million employees engaged in the hospitality industry in the UK, which is almost 6 of the total working class people. Yearly turnover is ?55-?60b from the hospitality industry, includes all sizes or types of hospitality businesses or organisations. It is so difficult to say that which is the biggest organisation, as it is depends on so many factors. There are some top operators in the market specialised in own sectors. Generally, they are based on their yearly turnover, sizes, types, number of employees, sectors, sub-sectors etc.

According to VisitBritain, 27.7m overseas visitors came to the UK in 2004. There is a 13 increase in terms of like for like sales than the previous year. Visitors have spent an estimated value of ?13b in the year 2004 increasing 10 than 2003, according to VisitBritain.

On the other hand, domestic tourists spent 70.5 million on holidays of more than one night within the UK. Domestic business trips were also made, estimated more than 22 million, in 2003. An estimated total domestic spend was ?59 billion. In the case of tourism, there are an estimated 1.4 million jobs in the UK, which is 5 of all working people.

Scope:

There are 14 industries included in the hospitality sector; from hotels and restaurants through to events, gambling, pubs, and food contracts, school meals, catering for parties, conferences, Night clubs and travel services.

Diversity:

There are many types of Hospitality services available in the market, such as Luxury hotels (5*-7*), Boutique hotel, Mid range hotel, Budget hotel, guest house/B&B, residential serviced apartments, destination resorts, Time share, Unusual hotels, cruise ships, Conference venues, Coffee shops, fast foods, Public house etc.

There are many brands we can see in the local or global markets, such as Hilton, Marriott, Holiday Inn, Doncaster, and Sheraton etc. Services and prices may vary according to size/type and locations. As we know Luxury and Boutique hotels are quite expensive.

Hilton: Its history and development in the market

Hilton Worldwide provides business and leisure customers the finest in accommodations, service, amenities and value in the UK and worldwide. In 1919, Cisco, Texas, Conrad Hilton bought his first ever hotel, since then they have expended globally, kept original and travel concepts, and developed innovative technologies to maximize the guest experience. Hilton is the global hospitality organisation, straddling the accommodation sector from luxurious full-service hotels and resort to extended-stay suites and mid-priced hotels (About us: Hilton Worldwide, 2010).

There are more than 3,600 hotels in 81 countries; their reliable group of hotel brands includes the Waldorf Astoria, Conrad Hilton Hotels & Resorts, Doubletree, Embassy Suites, Hilton Garden Inn, Hampton Inn & Suites, Homewood Suites by Hilton, Home2 Suites by Hilton and Hilton Grand Vacations (About us: Hilton Worldwide, 2010).

Hilton’s commitment to creating extraordinary guest experiences remains unaffected and their more than 130,000 team members continue to introduce the quality of service to the UK and the world’s visitors for 90 years of operations (About us: Hilton Worldwide, 2010).

The organisational structure of various hospitality businesses
Large full-service hotel:

A well-run large full-service lodging facility, this requires the following department heads:

General manager

Assistant general manager

Controller

Plant engineer

Executive housekeeper

Human resources manager

Recreation director

Athletics director

Marketing and sales director

Gift shop manager

Front office manager

Food and beverage director

Garage manager

Mid-Size Hotel:

Figure 1outlines the organization of a somewhat smaller lodging property.

Figure 1 Medium size lodging property

The department heads required include:

General Manager

Maintenance/groundskeeper

Front office manager

Controller

Restaurant manager

Housekeeper

Small limited-service hotel:

Organisation chart of a limited-service hotel much scaled down from that of a large hotel.

Figure 2 Small Limited-service hotel structure

The department heads include:

General Manager

Front office manager

Housekeeper

Maintenance manager

Hilton’s vision, mission and organisational development
Vision:

To fill the earth with the light and warmth of hospitality (About us: Hilton Worldwide, 2010).

Mission:

We will be the pre-eminent global hospitality company – the first choice of guests, team members and owners alike (About us: Hilton Worldwide, 2010).

Values:

Their values as follows:

H

HOSPITALITY – passionate about delivering exceptional guest experiences.

I

INTEGRITY – do the right thing, all the time.

L

LEADERSHIP – leaders in our industry and in our communities.

T

TEAMWORK – team players in everything we do.

O

OWNERSHIP -the owners of our actions and decisions.

N

NOW – operate with a sense of urgency and discipline (About us: Hilton Worldwide, 2010).

Setting the standard:

Sustainability is a brand standard. It’s now a critical performance measure of the business just like quality, service, or revenue. They are the first major multi-brand hospitality organisation to make such an important rise.

Framework for Action
Measurement:

LightStay, proprietary system, analyses and reports sustainability performance at each property.

Figure 3 Framework for Action

Reporting:

Use third party to verify their system, processes and result. Validate current performance while establishing benchmarks for continuous future improvement, just like a financial statement.

Learning:

They understand the impact of property level and corporate initiatives and share best practices across the global system.

Continuous Improvement:

Sustainability is not a program. Instead, sustainable actions are incorporated into how they distribute hotel performance around the globe and a better experience for their guests.

2.1 The contemporary focus of the managing hospitality

The importance of delivering continuous quality service in hotels, as defined by the guest. Successful extension of hospitality starts with management’s commitment to a service management program. Preparing a service strategy statement will focus the planning efforts of the owners, management, and employees. Principles of total quality management provide a manager with an opportunity to involve frontline employees in analyzing the components of delivery of service and methods to improve existing services. The development of the service management program requires the involvement of frontline employees, discussion of the guest cycle, moments of truth, employee buy-in concept, screening of potential employees prior to hiring, empowerment, training, evaluation of the service management program, follow-through, and interfacing with other departments in delivering hospitality. A long-term commitment to a successful service management program is necessary.

2.2 Operational and managerial issues reflecting on developments

Specific review of the role of the front office manager revealed many related concepts. Success in providing effective supervision begins with a review of the resources available to the front office manager, such as employees, equipment, room inventory, finances, and sales opportunities. After analyzing these resources, the front office manager can direct the department more effectively; the objectives of making a profit and delivering hospitality to the guest can be achieved more easily.

The functional role of the front office manager can be understood by preparing a job analysis and job description. This process allows the future professional to see the major responsibilities of the job and the various departmental relationships involved.

The many positions found on a front office staff have the common goal of providing hospitality to the guest. Training, empowerment, and flexibility are necessary to make the team work.

Forecasting, scheduling, developing a supervisory style, motivating personnel, balancing staff personalities, delegating tasks, training, and effectively communicating are only a few of the skills a good supervisor must master. It is a lifelong effort developed through continuing education and trial and error.

Development is critical and essential to the sustenance and growth of any nation. The main goal of each and every country is to reach development of the country. The term development encompasses the need and the means by which to provide better lives for people in a country. Itincludes not only economic growth, although that is crucial, but also human development providing health, nutrition, education, and aenvironment. However, in executing development is a complex issue and the basic perspective of it is equates development with economic. According to the United Nations Development Programme (2009) development is ‘to facilitate a valuable long and healthy lives, to be knowledgeable, to get opportunities to use the resources needed for a good level of living and to be able to take part in the community life.

Gboyega (2003) captures development as an idea that embodies all attempts to improve the conditions of human existence in all ramifications. implies improvement in material well being of all citizens, not the most powerful and rich alone, in a sustainable way such that today’s consumption does not imperil the future, it also demands that poverty and inequality of access to the good things of life be removed or drastically reduced. It seeks to improve personal physical security and livelihoods and expansion of life chances. Thus, development aims at improving important aspects of people’s lives such as livelihood, security, environmental, physical and mental well being. Enhance in knowledge, experience and resources is helped people to build a better life.

The goal of development is to expand the capabilities of people to live the li ves they choose to lead (Amartya Sen 1999). It is most defined with their active participation. Development is different from growth. It has broader and deeper meanings. Economic growth is necessary but not sufficient condition for development and hence it can be viewed as a multi-dimensional phenomenon. The major dimensions of it include the level

of economic growth, standards of education, quality of housing, level of health, distribution of goods and services, and access to communication (W

orld Bank

Ingredients for development and economic growth are capital formation, human resources, natural resources, and technology/entrepreneurship. Capital formation is essential to invest in sectors with high economic output, saving capital, investing in infrastructure creates jobs directly indirectly by attracting investors. Human resources are a key to development in any country. There is need to develop a mechanism to address lack of health facilities, lack of education, poverty, malnutrition, and disease. Human resource development is important if people are to make use of ICT for development. Natural resources are crucial in development. Development activities need to be harnessed more of their natural resources. It is imperative that they should improve farming techniques and develop better land ownership methods. Technology and entrepreneurship are important developing countries to improve the know-how and know-what. Openness to ideas is important if any economy is to develop. The formation of regional and international blocks encourages technology and entrepreneurship

Development should be a sustainable long-term condition for humanity’s multidimensional well-being. It has been clearly explained in the Rio Declaration, of United Nations Conference in 1992, held in Rio de Janeiro in Brazil as; “Humanat the center for sustainable development. They are entitled to productive life in harmony with nature called “equitable and balanced,” meaning that, in order for development t, it should balance the interests of people, same generation and among generations, in three major interrelated areas social, and environmental and economic. Sustainable development equity, opportunities for well-being about objectives.

Not all the countries in the world have same level of development. While developed countries have reached higher level of development or standard living due to better standards in their societies, developing countries have faced several issues and challenges along their way towards development Developed countries are countries whose lives are patterned industry and have some specific characteristics like higher level of average per capita income, level of education, life expectancy of the population and al so low level of population growth rate and death rate. Life style is based on the market economy and economic activities are mostly related with industry sector as well as export oriented. Furthermore, majority of the population lives in cities and there i s relatively higher level of health of the population. Countries that have Human Development Index (HDI) of or over are in the category of developed countries. According to th e IMF index of HDI released in 2011, there are 47 countries in the and classified as possessing a “Very high human development

On the other hand several common negative characteristics can be seen among developing countries as well. These are preventing the development of those countries. Low living are manifested qualitatively in form of low incomes , inadequate housing, poor l education, low life and work expectancy, many cases, a general malaise and hopelessness are some of them. Moreover, low levels of productivity in many areas like labour productivity, agriculture or farm productivity. In addition, low level industrial development, high unemployment, small domestic market, small amount of disposable income and uneven regional development, problems in institutional changes , credit and banking, honest s and the restructuring of educational. Most of the developing countries population growth by high birth rate but declining rate

Rural development in developing countries

Rural development is an integral part of the national development of a country. Rural development actions mostly to the social and economic development of areas (Chigbu, 2012). Especially in developing countries, very high emphasis has rural development, aiming to gain equitable and balance development throughout the country. Rural Development concerned with economic growth and social justice, improvement in the living standard of the rural people by providing adequate and quality minimum essential. The present rural development poverty alleviation, livelihood opportunities, provision of infrastructure facilities programs of wage and self-employment

Rural development process of improving life and economic wellbeing in relatively populated areas (Malcolm, 2003). Although rural development has on the exploitation natura lresources such as agriculture and forestry, due to changes in production networks urbanization have changed the areas. Increasingly, and recreation resource extraction and agriculture drivers (Neil and David, 2009). The need for approach a wider perspective has created on a range of development goals creating incentive for agricul tural or businesses. Education, physical infrastructure, infrastructure all play role developing regions (Conn, 1996). Rural development emphasis on locally produced economic development strategies (Malcolm

Furthermore, rural development is the ways to improve the participation of the rural people as to meet the required need of the rural area. As people themselves in their rural development. When development is concerned, in one point of view it can be explained as the development consists of a wide variety of new activities such as production of high quality and region specific products, nature conservation and landscape management , agritourism and the development of supply chains (Knickel & Renting, 2000). These new activities in rural areas mean new income sources to local people. Therefore it

doing diversification and utilizing multi-functionality of agri culture and formation of agritourism can be used as a strategy to enhance rural development Rural Development and national development in developing countries

In developing countries, the rural development is one of the most important factors for the growth of the national economy. Desai (2009) recorded “Rural Development is an important segment of national development”. Developing countries are primarily agriculture-based countries and majority of the population are in rural areas. Agriculture contributes for a significant share of the gross domestic product (GDP) of those countries Agriculture, mining, forestry, handicrafts, fisheries, poultry, diary and rural tourism are the primary contributors to the rural business economy of developing countries

However, in many developing countries sufficient amount of investment in rural sector doesn’t take place (United nation, 2011). The rural sector not able to contribute its full potential for the national development. For example, in the Asia-Pacific region governments implement strategies, including fiscal policies, which are the rural sector in general. Policies affecting the livelihoods development of producers and producers areas (United nation, 2011). As a consequence of the biased polic ies allocations government most concerned unable promote agriculture and rural development provision of timely and production services areas making lesser contribution for the national development (FAO, 2003).

Not only in Asia-Pacific has this problem existed in other regions of the world as well. The countries of the Caribbean need to invest in rural communities econo mic contribution development is officially believed, according World Bank report recently. The report evaluates the rural sector on poverty reduction, environmental degrada tion both in the rest of the economy, as the public policies that ts contribution to development (Viveros and Morrison 2005). A study of Onyemelukwe (1981) on the assessment of the performances of the rural the typical African country Nigeria in national development contexts has found out the critical role of the sector and the system effects of inadequate equipment of the sector for such role. The Nigerian situation is used to illustrate the prospects and the problems of the rural sector in most African countries

Rural sector in Sri Lanka is mainly consisted of farming community. The agriculture sector is the cornerstone in Sri Lanka’s economy with more than of the population living in rural areas depending on agriculture for their livelihoods. Currently this sector contributes to about 18% of the Domestic Product (GDP) and 30% of the employment (Central bank of Sri Lanka, 2011). Therefore, without taking into consideration agricultural development, we can’t even imagine rural development in this country What is Agritourism

In general, agriourism is the practice of attracting travelers or visitors to an area or areas used primarily for agricultural purposes. In particular, it refers to farm enterprises and community events that showcase the activities and produce of rural families and the agricultural heritage of farming regions to travelers. Agritourism provides “rural experiences” to travelers with the goal of generating revenues for farmers and surrounding communities. These experiences typically include a wide range of attractions and activities that take place in agricultural areas Important ingredients of agritourism’s “rural experiences” include open spaces, low levels of urban or industrial development, and opportunities for visitors to directly experience agricultural, pastoral, and natural environments.

Moreover, agritourism is a type of rural tourism. It is a combination of two complex industries; agriculture and tourism, to open up alternative income sources for the farmers as well as surrounding community (Wicks and Merrett, 2003). Brscic (2006) has explained agritourism as a of tourism which takes place within the family farm that symbolizes a specific form of business, giving a number of benefits to the families involved, with multiple impacts on the socio-economic relations and the space in rural areas. It is a form of farm diversification aiming some benefits from exiting farm resources. Agritourism can be also explained that gives as an activity, enterprise , which help or business that combines most important characteristics of agriculture, industry investment and tourism that helps and provides an experience that stimulates economic activity and community income.

Relationship between agritourism and rural development

Several research findings in many developed countries have shown that agritourism as a possible rural development strategy. For example, Haghiri Okech (2011) discovered role of the agritourism in developing the economy of rural areas in the province of Newfoundland. According to Topcu (2009), agritourism is a new element for rural development in Turkey. Agritourism as an effective vehicle for development in the Canadian province of Saskatchewan (Dernoi, 2002; Weaver and Fennell, 1998). Study of Hightower (2011) is being used as a catalyst for additional income and triggering economic growth in rural areas.” Disez, (1999) revealed represents and innovative activity taking place within the framework of rural development in Massif Central region in France, agritourism is the best way for the preservation of traditions and customs in the rural areas, supplying a sustainable rural development. In some countries like Italy, Spain, Greece, Austria, Denmark, England, France, Germany, Ireland and Norway it is a growing sector with the policies of the governments aiming to benefit from it as a regional development instrument (Demirta? Topcu, 2007; Frater, 1983). Rural tourism benefits to local areas by bringing visitors to the region, increasing awareness for agricultural products and showcasing produce to the local

regional community. It can also provide incentives for local heritage and conservation groups to preserve unique heritage landscapes and built heritage. Most studies have highlighted the multiple benefits that agritourism brings to the farm, local communities, agriculture heritage and natural resources (Fleischer and Pizam, 1997; Busby and Rendle, 2000; Ventura and Milone, 2000; Sharpley, 2002; Wicks Przezb? rska, 2005; Fleischer and Tchetchik, 2005; Mitchell and De Agritourism Research conducted in developing countries

A small number of researches have been conducted in some developing countries in Asia. Malaysia, Taiwan, Indonesia, Philippines, Thailand, and India are examples of such countries. When South Asian countries are concerned, the number of research is very few. India is the country leading in agritourism in this region

According to Tiraieyari and Hamzah (2011) in Malaysia, there are potential benefits of agritourism for farmers and local communities in general. Further indicated that agritourism as an economic development instrument has great potential to contribute to rural development as Malaysia is one of the tourist countries with great potential to develop agritourism. As per the national Council of Agriculture and fisheries (COA) of Taiwan, after registering a huge and wide decline of GDP in 2001, 173 Farms had been soon established for tourism sector and this created the development of rural Taiwan such as chi-ching Shwei-Li in (Murangwa, 2 010) A recent research study on agritourism in Thailand discovered that “agritourism has been utilize the agricultural holdings produce for such as scenery from paddy fields and farm lands , food and fibre from products (vegetable, fruit, e from local products, accommodations from farm stay or vacated property to gain local development in area ” As reported by the South East Asian Regional Center for Graduate Study and Research in Agriculture ( SEARCA), in Manila Philippines, could be a nich? tourism product that would help improve farm incomes provided a well-planned program is put in place. It will consolidate initiatives in agriculture and tourism sectors nationwide that contribute d to poverty reduction, natural resources management, and rural development in Aguiba.

A research in Chitwan District in Nepal found out the importance of agritourism for the rural development in Nepal. Agritourism is the concept of diverting the tourists to those rural areas, where there is range of agricultural activities, services and amenities provided by farmers and rural people attract both internal as well as international tourists in order to generate extra income for their business. The living standard of the farmers and rural poor can be raised by identifying high value-low volume crops, which have comparative advantages and by optimally utilizing the available resources for sustainable development (Maharjan, 2008). However, the available literature evidence that our neighboring country India engaged in agritourism successfully. According to the research on “Agritourism – the potential for sustainable development and growth” explore the scope for developing agritourism in India has been conducted by Raghunandan et al.,(2010). This research has concluded that potential for Agritourism in India to grow into an important source of income for the rural population if the development is focused on integration and participation. Furthermore, Agritourism has been identified as a source of generation of alternative income for farmers and local employment opportunities, reduction of gender bias and accelerate growth rate by Chadda and Bhakare (2010) based on their research on Socio-Economic Implications of Agritourism in India Agritourism in Sri Lanka

Evidence on only one study related to agritourism and rural development of Sri Lanka was found as a result of the vigorous literature search during the study. One study i s the research conducted by Senanayaka and Wimalaratna (2010) about agritourism and rural development in Sri Lanka. Special reference to Nuwara Eliya District. They have found that the economic problems as well as development potentials remain in areas side by side in the country. Only a small fraction of the vast rural agritourism resource base is being utilized by the industry now with little or no benefits to rural people. Dedicated research work on agritourism will promote the sector with the participation of policy makers, communities and private investors on a sustainable manner while trickling down a reasonable fraction of the benefits to the rural people. This would diversify their agricultural livelihoods and improve their income and living standards

As per the literature review, agritourism in most of the countries has a short history and it is at the developing stage (Maumbe, 2012; Bernardo et al., 2007). Several countries have the research findings mainly based on preliminary research and pilot studies. Therefore, there definitely a need for future research to verify the preliminary findings of these researches especially in developing countries. Moreover, several researchers have shown that agritourism ha s lots of strengths and opportunities for the improvement of rural areas and rural development. However those researches have been conducted in specific condition which is unique to that particular country itself. Therefore, generalization of the findings to other countries is not so valid specially, for developing countries having lots of variations in geographical, political, economical and environmental conditions. Not only the differences among the developing countries, there are several regional level differences within a country. Furthermore, in a country, rural areas are different from each other. Thus, testing the level of contribution of the rural development at provincial level is the best way to identify the real potential of it. Since a very few number of research have been conducted at provincial level in developing countries, there is a need for lots of research of this kind. Even though in Sri Lanka there may be potential in this regard, no sufficient research have been conducted in this field. Therefore, this kind of research is highly important.

Problem statement

Sri Lanka is a developing country and there is a need to enhance the living condition of the people by developing the total economy of the country There is a gradual, but comparatively slow increase in GDP in the country for several years (Figure

Figure 1.1: Improvement of the GDP from 2002 to 2012

Source: Central Bank of Sri Lanka

Sri Lanka tourism has contributed to the growth of total economy for several years. However, due to existing civil war during 2008-2009, tourism being faced a declining trend. Alon g with ending the war in 2009, tourism industry restated to flourish and contribute for the significantly. As a result, by now it is one of the main contributors of the national income of the country and expects to have further growth in future. The total annual direct contribution of Travel and Tourism GDP in 2011 was LKR219.7 (3.4% GDP). This is future based forecast to rise by 5.6% to. This figure has primarily reflects the economic activity really generated through the industries such as hotels, restaurants, parks, travel agents, airl ines and other local and foreign tourist transportation services (excluding commuter services). The average gross direct contribution of travel and tourism is expected to grow by 5.7% per annum to of GDP) by 2022

Figure 1.2: Contribution of travel and tourism to GDP from

Source: World Travel and Tourism council

Moreover, travel & tourism generated 236,500 jobs directly in 2011 (3.0% of total employment) and this is forecast to of total employment). This includes employment by hotels, tour operators travel agents, airlines, sea line and other passenger transportation and helping services (excluding supportive services). It includes, for example, the prent activities of the restaurant, hotels, villas, and leisure industries directly and highly supported by tourists. By tourism will account for 293,000 jobs directly, an increase of 2.2% per annum over the next ten years.

Figure1.3: Travel and tourism’s contribution to employment opportunities from 2011

Source: World Travel and Tourism council

Rural sector performs a significant contribution for the national development in the country. About 70 percent of Sri Lanka’s population lives its rural areas. In rural areas, main sectors that are helping for rural development are agriculture, forestry, fisheries, mining, art and craft and rural tourism. Among these sectors, the most important one is agriculture. A large number of people in the rural sector engaged mainly agriculture and allied activities.

Agriculture sector can generate regionally equitable economic growth, rural livelihood improvement, and food security through efficient production of commodities for consumption for agro-based industries. Since agriculture sector has multi-functionality, it can link with other sectors like tourism and form new opportunities for local and regional development. Considering the experience of other developing countries in Asia, it can be assumed that there will be a potential for agritourism for the rural development in Sri Lanka. Therefore, this study will answer the question “does agritourism represent a significant and viable rural development tool in Sri Lanka.

Objectives of the study

The broad objective of this research is to explore the potential of agritourism for rural development in Sri Lanka with special reference to demand, supply and impacts of agritourism issues.

Specific objectives of this research are

To find out the current supply of agritourism in the

To study the government policy interventions in tourism and agritourism sector of the country

To identify and assess the visitors’ needs and satisfaction of and demand for agritourism of the country

To find out the local residents’ attitude towards impacts of agritourism economic and contribution of agritourism for rural development and also

To study the national and provincial level support to the development of agritourism as a sector of rural development

To recommend ways and strategies to development of agritourism in Sri Lanka as a sector of rural development

Conceptual Framework

The aim of this research is to study the agritourism and its contribution for the rural development in the country. The main agritourism are agritourism providers, visitors, local residents and the government. Figure1.4 shows the relationship of the stake holder in agritourism and how agritourism links with rural development

Agritourism providers supply the agritourism. They can be farmers, private sector companies or organizations. Agritourism supply can be conducted by adding tourism activities to the existing farm and arranging facilities for the visitors to come to the farm, see those activities and get knowledge about them, spend leisure time at the farm. In supply agritourism three things are important. Things to see (farm animals, fruits, vegetables, Herbal plants) activities to do (feeding animals, milking cows, harvesting crops, climbing trees, picking fruits, threshing paddy)

farm products to buy (yogurts, curds, fruits, vegetable, jam jelly

Visitors can be local or foreign people those who are ready to buy the agritourism services. They make demand for agritourism. They come to visit the farm to see things, get a rest, enjoy farm activities and sometimes study on farming, Farm stay for few days, visit surrounding villages, buy local art and craft items, see cultural shows perform by local people and pay for the farm goods and services they consumed. In this way agritourism provider can earn extra income and other returns from agritourism which is the main aim of providing agritourism. Improvement of the level of income and living standard of the agritourism providers (especially farmers) is the main aspects of agritourism business. Other important point regarding agritourism is the presence of other tourism attractions in the area. Other tourism attractions can act as a motivational factor for visiting agritourism operation. Moreover, proper government interference through correct rules and regulations are essential to operate the agritourism industry smoothly

Also, on the way, visitors can buy local products of nearby local residents, can visit other interesting places in the village like religious places cultural sites, national parks, forests, waterfalls, traditional festivals, folk games. In this way, visitors can interact with local residents of the area. These interactions create economic, social-cultural and environmental that impacts for the rural development of the area. Furthermore local residents can sell their products and labour to agritourism operation and ear n some money. Enhancement of the level of income and living

standard of local residents are the other aim of agritourism along the way to rural development.

The other important factor is the government attitude towards agritourism and intervention to rural areas where agritourism operations are available. Especially provincial and local level governments have responsibility to enhance the condition of the area up to a good stand making it suitable for conducting tourism activities. So that, provision of infrastructure facilities such as road system, transport facilities, water, electricity telecommunication to the area have to be taken place. Not only that, banking facilities, safety and security, medical facilities for the area

also needed to be provided. In this way, provisions of infrastructure facilities directly help for the rural develop of the area

Figure 1.4 Conceptual Framework of the

Scope and Limitations of the Study

This study has covered important aspects such as the supply of agritourism (number of destinations, scale of operation, available facilities, number of visitors, length of stay etc). Demand for agritourism (demographic information of visitors, nature of their demand, visitors’ satisfaction towards agritourism, demand function) information of local residents (impacts of agritourism on them, their attitudes towards agritourism development) and

policies related to agritourism development in the country. Agritourism is a business process. However, aspects like establishment, management development, improvement, marketing and promotion of the operations are beyond the scope of this study

There were few limitations in this research. This is a small-scale research conducted at local level with four types of stakeholder; operators, visitor, local residents and government officials within only few districts without the whole country. In terms of operators, analysis like benefit cost ratio, IRR of agritourism etc., could not be done as they did not want to disclose financial information due to tax problems. With regard to agritourism visitor s, comparatively a low number of visitors were included in the study. The sample size resident is also comparatively low. The study was totally based on a cross sectional data, not the longitudinal data Organizing the Dissertation

This dissertation consists of seven chapters. Chapter one presents the background of the study, problem statement, objectives, conceptual scope and limitations of the study. Chapter two explains about tourism and agritourism. Introduction to tourism, definitions, industry, initiation of and development of agritourism have been discussed. Chapter three is focused on rural development Introduction to rural development, definitions of rural development, relationship between rural development and agritourism, agritourism, activities involved in agritourism, history of agritourism have been explained in detail. Chapter four explains the methodology. Different research philosophies, approached, designs have been explained at the beginning. After that justification of research approaches and designs related to this study have been presented. Then, introduction to research study area and the research designs have been explained in detail.

Chapter five discusses about Sri Lanka: tourism and development. Detail introduction to Sri Lanka in general and tourism in the country in particular have been presented. Furthermore, information about tourism policy and needs for agritourism policy in the country have been discussed at the end of the chapter. Chapter six devoted to present the research outcomes. Present situation of supply of agritourism in the country, different suppliers available facilities, agritourism activities, strength, weaknesses, opportunities and threats (SWOT) of agritourism have been discussed as the first section of this chapter. Then, profile of visitors and their satisfaction level towards available products and services are presented as the second section of this chapter. Thereafter, demand for agritourism, visitors’ awareness, desire on agritourism and factors affecting the demand have discussed as the third section. Furthermore, evaluation of the perception of local residents towards different impacts of agritourism in country has been done as the forth section and finally, government officials’ attitude towards impact of agritourism for the rural development in the country and national and provincial level support to the development of agritourism as a sector o f rural development have been explained in detail. Chapter seven is the last chapter. At the beginning of the chapter conclusions of the study have been presented and it is followed by the recommendations of the study.