Tourism Supply Essay

Tutorial Three chapter 5 & 7 1. Why is an understanding of tourism supply fundamental to the analysis of how the tourism sector is organized and operates? Supply is the result of productive activities and exists to meet the tourism demand. Supply can be classified into three categories: a) Descriptions of industry, its operations, management and marketing. b) The Spatial (geographic development) and interactions which characterise the industry on a local, national and international level (DMOs). c) The Effects resulting from the development of the industry.

Because the supply covers almost every sector of tourism, so it’s of great importance for us to have a good understanding of tourism supply. 2. How do transnational tourism companies impact upon the organization and management of tourism? Transnational companies are those companies which operate in more than one country. And there are four prevailing market situations that a transnational company would have to cope with: a) Perfect competition (an easy market to get into; however not very profitable). b) Contestable markets (products in this market situation are with slightly difference). ) Oligopoly (harder for other to get in, e. g. airline industry). d) Monopoly (the market of one supplier controlled). The transnational company and tourism have impacts on each other which are like that chain hotels can stimulate the internal business and employment and as tourism being an export industry in where foreign exchange can be earned by host country. On the other hand there are disadvantages like if the head office would be charging the company with high tax rate. Moreover, advantages and disadvantages are showed in the diagram below: 3. What are the principal features of management relevant to the supply of tourism?

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Tourism is an industry that always changing and developing, the management in tourism industry should be always aware of changing. A tourism organization usually set duties and positions as a system composed by chief executive officer (CEO), top managers, middle managers and first-line managers. With this duty system and some competences and they can achieve their objectives. a) Understanding what needs to be done b) Getting the job done c) Taking people with you Additionally because of it is a changing industry, obviously that efficiency is also very important to management of tourism supply. 4.

What types of business strategy have airlines pursued to address competition? Airline industry is a competitive industry. Therefore having a strategy is very crucial in competition, which includes: a) Gaining economic of scale b) Accessing other airlines’ assets (share plane or staff) c) Helping share the market d) Achieving a high degree of adaptability to the industry There is an example of easyjet whose strategy is managing cost as a tool to stay in competition. They get to a low level of cost through minimal the service they provide, and as a result their customers get cheaper prices. 5.

What is a tourism distribution channel? A tourism distribution channel connects supply with demand, known as a middleman who cooperates with supplier and sell tours to customers, like tour operators or travel agencies. However with the development of e-tourism, direct selling becomes people’s first choice and there seems to be no longer need of these middleman because it is much easier to book a ticket online. Then the travel agencies these days don’t simply sell tickets instead they organize tours and holidays and sell them to people. 6. Why is the European tour operator sector becoming controlled by integrated tourism companies?

How is this impacting upon other operators and consumers? Since the 1960s, the UK has seen a number of massive tour operator collapse. With many combination took place, the market was changed and there seemed to be less competitions. They all seek for gaining economic of scale in the globalization. European tour operator sector has been taken over because integrated tourism companies offer more to customers, so the customers go to them. The key changing on consumers were that consumers got lower price, a wider range of choice of both tourism products and services.

The key changing on other operators are listed as follows: a) Expansion via acquisitions b) Integration of air and hotel businesses c) Further widening of distribution channels d) Widening geographical coverage of markets and tour operators merging e) Allow operators to buy capacity cheaper f) A gradual leveling of package holiday price g) Greater cost controls h) New business strategies towards products i) A greater alignment of business towards changing consumer behavior Integration types: a) Vertically, via the value chain b) Horizontally, by amalgamations c) In destination areas, by acquiring . How will travel agents evolve to compete with disintermediation? Disintermediation is also known as e-intermediaries. The amount of e-intermediaries has grown rapidly. They have been taking the market share of travel agencies since the 1990s. Challenged by those changes, travel agencies must have revolution and take specific actions as follows: a) Using of the ICTs b) Provide unique services and opportunities via ICTs c) Reduced number of high-street travel agencies Through these actions the travel agencies made their service more unique, customers can actually receive what they are after.

Also because of the uncertainty of quality provided from e-intermediaries, travel agencies focus on assuring the quality of their service. Additional value added to the service by arranging tourism product packages for customers. Then the traditional role of travel agency has vanished. Now they have diversity packaging and better quality ensuring. 8. How important is the e-revolution to consumer purchasing of travel products? Because of the e-evolution that customers can go online and get the travel products more easily if they have no time to go to town to the travel agencies.

It becomes possible for customers to search for all products at one time. Lower prices are offered then with e-intermediaries such as “grabaseat. co. nz or wotif. co. nz”. The change also takes the forms of the rise of last-minute portals and direct selling on internet. The technologies have phenomenal impact on travel agents and distribution of travel products: a) Packaging of tours far more flexible b) Yet more and more competitive c) Global players impact on local SMTE’s d) Small number of large operators impacts smaller SMTE’s e) Consumers heterogeneous f) Harness ICTs to work for buyers, sellers and intermediaries


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