2 2 Organizations in Tourism Organizations in Tourism Industry and Markets for Industry and Markets for Tourism ProductsTourism Products

Learning outcomes Learning outcomes By the end of this session students should By the end of this session students should

be able to:be able to: distinguish between private sector and public distinguish between private sector and public

sector organizationssector organizations understand the differences in finance, control, understand the differences in finance, control,

structure and objectives of organizationsstructure and objectives of organizations understand ways in which capital can be understand ways in which capital can be

raisedraised analyse movements in share pricesanalyse movements in share prices analyse the effects of different organizational analyse the effects of different organizational

structures on organizational behaviourstructures on organizational behaviour

Public and Private Public and Private organizations in Tourism organizations in Tourism

IndustryIndustry Public and private organizations are Public and private organizations are

different in many aspects, including different in many aspects, including organizational goals, missions and organizational goals, missions and structure. structure.

Public organizations tend to focus on Public organizations tend to focus on providing support for the improvement providing support for the improvement of overall industry.of overall industry.

Private organizations mostly Private organizations mostly concentrates on creating wealth and concentrates on creating wealth and growth of their businesses. growth of their businesses.

THE PUBLIC SECTOR ROLETHE PUBLIC SECTOR ROLE

The public sector role is expected The public sector role is expected mostly in the area of mostly in the area of infrastructural facility provisions einfrastructural facility provisions e..gg . . good roads, airport runways, good roads, airport runways, physical development and other physical development and other basic essential services basic essential services ((utility utility servicesservices ) ) ii..ee . . water, electricity, water, electricity, health and othershealth and others..       

The roles expected of the public sector includeThe roles expected of the public sector include::    ((11 ) ) Policy statement –Any serious government that is so Policy statement –Any serious government that is so committed to the development of tourism always committed to the development of tourism always formulate policies to serve as a guide for the private formulate policies to serve as a guide for the private sector participationsector participation . . These policies are translated into These policies are translated into plans and actions as to how the industry should operateplans and actions as to how the industry should operate..

((22)) Formulation of laws and regulations Formulation of laws and regulations- - It is only It is only Government that can make laws and orders to be obeyed Government that can make laws and orders to be obeyed by allby all..

((33))Enforcement of law – It is the responsibility of the  Enforcement of law – It is the responsibility of the  public sector ipublic sector i..e government to make sure that laws e government to make sure that laws made are enforced through the use of the law made are enforced through the use of the law enforcement agencies enforcement agencies ((the policethe police).).

((44)) Tourism promotion –It is also expected of  Tourism promotion –It is also expected of government to promote its tourism assets government to promote its tourism assets ((attractionsattractions ) ) both at home and abroad, through the use of both at home and abroad, through the use of

electronic and print media as well as organizing electronic and print media as well as organizing seminars and Exposseminars and Expos . . A National Promotion Board A National Promotion Board could be established with foreign offices to promote could be established with foreign offices to promote touristic image of the country.touristic image of the country.

((55))Physical Development –Government carries out Physical Development –Government carries out physical and fiscal projectsphysical and fiscal projects . . The developmental The developmental projects are always in favor of tourism, hence the projects are always in favor of tourism, hence the need for the government to play a vital role in this need for the government to play a vital role in this regard through an integrated kind of developmentregard through an integrated kind of development..

((66)) Funding – Government plays a prominent role  Funding – Government plays a prominent role here through adequate funding of tourism here through adequate funding of tourism projects, including, granting loans, subsidies, projects, including, granting loans, subsidies, grants and other forms of credit facilitiesgrants and other forms of credit facilities..

((77))Protection of lives and propertiesProtection of lives and properties -.-. This is a This is a role that should be played by no other    person role that should be played by no other    person but Governmentbut Government..

((88 ) ) Awareness campaign –It will be a waste of Awareness campaign –It will be a waste of effort if  people are not told of the meaning and effort if  people are not told of the meaning and value of tourism, as they will always find it very value of tourism, as they will always find it very difficult to appreciate what ever effort is made difficult to appreciate what ever effort is made towards tourism developmenttowards tourism development . .

((99))Manpower DevelopmentManpower Development- - It is the responsibility It is the responsibility of government to ensure that manpower capacity of government to ensure that manpower capacity building structures are put in place, like the building structures are put in place, like the training institutionstraining institutions . .

((1010 ) ) MonopolyMonopoly- - To avoid monopoly over pricing To avoid monopoly over pricing and the usage of facilities government and the usage of facilities government involvement is required in this aspectinvolvement is required in this aspect . . The The development of major Tourism Projects is beyond development of major Tourism Projects is beyond the powers and resources of the private the powers and resources of the private enterprise, as such it require the state enterprise, as such it require the state participation very well in respect of innovations, participation very well in respect of innovations, financial and cofinancial and co--ordinations through the use of taxordinations through the use of tax- - payers moneypayers money..   

THE PRIVATE SECTOR THE PRIVATE SECTOR ROLEROLE

    Given the necessary public sector Given the necessary public sector backing, the private sector can be backing, the private sector can be motivated to fully support the motivated to fully support the domestic and international domestic and international tourism development through the tourism development through the provision of super provision of super --structural structural facilities e g Hotels, Motels, facilities e g Hotels, Motels, Guest houses, Restaurants etcGuest houses, Restaurants etc..                

The expected roles of the private sector can extend toThe expected roles of the private sector can extend to::    11..    Physical Structural Development    Physical Structural Development- - The private sector The private sector plays an important role in the provision of physical plays an important role in the provision of physical structures like the Hotels, Guest houses, Motels, structures like the Hotels, Guest houses, Motels, Restaurants, Entertainment centers, shopping centers, Restaurants, Entertainment centers, shopping centers, resorts, cinema houses etcresorts, cinema houses etc . . These are all revenue generating These are all revenue generating activities to both government and the private individualsactivities to both government and the private individuals..

22..    Promotion of own business – The private sector helps in     Promotion of own business – The private sector helps in the promotional aspect of tourism when they are engaged in the promotional aspect of tourism when they are engaged in the promotion of their own businesses or facilitiesthe promotion of their own businesses or facilities . . This This effort goes a long way in the general promotion of tourismeffort goes a long way in the general promotion of tourism..

33..     Transport Sector     Transport Sector- - In relation to safety, comfort and In relation to safety, comfort and reliability the private sector helps a lot in the provision of reliability the private sector helps a lot in the provision of these services e g taxis and bus services these services e g taxis and bus services

44..    Travel Agency Business    Travel Agency Business- - This is a private sector affair, This is a private sector affair, tourists require services of these agencies all the time as tourists require services of these agencies all the time as they play vital roles in the tourist activitiesthey play vital roles in the tourist activities..

55..     Tour operation     Tour operation- - This is also a private sector business This is also a private sector business as tourists need to be moved around places of interestsas tourists need to be moved around places of interests . .They are the masters of the tourist transport servicesThey are the masters of the tourist transport services..

66..    Development and management of attractions    Development and management of attractions--  The   The dance troupes, local traditional dances and festivals like  dance troupes, local traditional dances and festivals like  paddle and the lantern parade,  resorts, clubs, sports,etcpaddle and the lantern parade,  resorts, clubs, sports,etc..

77..     Training Programs     Training Programs- - By organizing an inBy organizing an in- - house training of personnel, the private sector house training of personnel, the private sector plays a very prominent role in this area of plays a very prominent role in this area of training which a sustainable tourism training which a sustainable tourism development requiresdevelopment requires . . To ensure a quality To ensure a quality tourism product, training is very necessarytourism product, training is very necessary..

88..    Funding – The private sector also plays an     Funding – The private sector also plays an important role in the area of funding. (e.g. important role in the area of funding. (e.g. banks, finance companies)banks, finance companies)   

Tourism is a private sector affair; Tourism is a private sector affair; government should therefore leave government should therefore leave out what private sector can do and out what private sector can do and always willing to do for the private always willing to do for the private sector bodysector body..  Tourism is a market   Tourism is a market driven activity guided by driven activity guided by investment strategies known only to investment strategies known only to those who knows the business, i e those who knows the business, i e the private sector as the body plays the private sector as the body plays a complimentary role in the public a complimentary role in the public sector effortssector efforts . .

Public sector Public sector organizationsorganizations

Ministry of Tourism and Ministry of Tourism and sportssports

VisionVision "" Being a major organization to lead Thailand  Being a major organization to lead Thailand

to become the center of tourism in Asia with to become the center of tourism in Asia with quality and sustainability, in order to quality and sustainability, in order to enabling a thoroughly income distribution to enabling a thoroughly income distribution to the community by focusing on the distinctive the community by focusing on the distinctive and graceful Thai culture, and to develop the and graceful Thai culture, and to develop the national sports to become one of the Asian national sports to become one of the Asian leading nations in sports, as well as the leading nations in sports, as well as the center of sports that generates income, center of sports that generates income, occupation, sports excellence and develops occupation, sports excellence and develops sustainable quality of life in societysustainable quality of life in society   ."  ."

Ministry of Tourism and Ministry of Tourism and sportssports MissionMission

11      .      . To promote, support and develop tourism and To promote, support and develop tourism and sports with effective management in order to generate sports with effective management in order to generate national revenuenational revenue . .

2.2.            To integrate and coordinate the tasks of tourism an To integrate and coordinate the tasks of tourism an d sports which systematically links to all sectors in order t d sports which systematically links to all sectors in order t o accomplish the sustianable national economic and socia o accomplish the sustianable national economic and socia

l development. l development.

33..      To enhance the regional and global competitiveness o To enhance the regional and global competitiveness o f tourism and sports industries. f tourism and sports industries.

Office of Tourism Office of Tourism DevelopmentDevelopment

Tourism Authority of Tourism Authority of ThailandThailand

Promote the tourism industry to be an Promote the tourism industry to be an important instrument in tackling the co important instrument in tackling the co

untry’s economic problem, creating job untry’s economic problem, creating job s for people as well as increasing incom s for people as well as increasing incom e for the country. Moreover, promotion e for the country. Moreover, promotion

should be done to make tourism play a should be done to make tourism play a vital role in the development of the qua vital role in the development of the qua

lity of life in all regions of Thailand as p lity of life in all regions of Thailand as p er the policy of the government. er the policy of the government.

Promote and develop the operation on proactive Promote and develop the operation on proactive marketing strategies for increasing the new marketing strategies for increasing the new markets as well as the niche marketsmarkets as well as the niche markets . . This is in This is in order to attract more quality tourists to visit order to attract more quality tourists to visit ThailandThailand . . At the same time, domestic travel for At the same time, domestic travel for Thais should be vigorously encouragedThais should be vigorously encouraged . . The The positioning of Thailand is to be drawn out clearly, positioning of Thailand is to be drawn out clearly, tootoo..   

Promote cooperation in all levels domestically an Promote cooperation in all levels domestically an d internationally on promotion for the developmen d internationally on promotion for the developmen t of tourism markets. This aims to get rid of all hind t of tourism markets. This aims to get rid of all hind

rancesi n t he t ouri smi ndust ry and pave t he way f or Th rancesi n t he t ouri smi ndust ry and pave t he way f or Th ailandt o be t he t ouri smhub of Sout heast Asi a. ailandt o be t he t ouri smhub of Sout heast Asi a.

Tourism Authority of Tourism Authority of ThailandThailand

Aim at organization and management d Aim at organization and management d evelopment as well as development of th evelopment as well as development of th

e human resources’ ability to create a ca e human resources’ ability to create a ca pable driving force in the operation. Mor pable driving force in the operation. Mor eover, this aims at strengthening the pot eover, this aims at strengthening the pot

entiality on international competition un entiality on international competition un der the good governance as well as devel der the good governance as well as devel

oping the strength of the organization on oping the strength of the organization on its technical roles as well as knowledge o its technical roles as well as knowledge o

n marketing. n marketing.

Tourism Authority of Tourism Authority of ThailandThailand

Accelerate the development of a Accelerate the development of a tourism technological system for tourism technological system for accommodating business activities accommodating business activities information information ((EE--TourismTourism ) ) on the Interneton the Internet . . Included here is also the carrying out Included here is also the carrying out

of electronic commerce as well as of electronic commerce as well as applying information technology in applying information technology in marketingmarketing . . The necessary mechanism The necessary mechanism on controlling and protection have to on controlling and protection have to be in place to ensure prevention of be in place to ensure prevention of problemsproblems..

Tourism Authority of Tourism Authority of ThailandThailand

International International OrganizationsOrganizations The World Tourism Organization The World Tourism Organization ((UNWTOUNWTO//OMTOMT ) )

a specialized agency of the United Nations and the a specialized agency of the United Nations and the leading international organization in the field of tourism. leading international organization in the field of tourism. It serves as a global forum for tourism policy issues and It serves as a global forum for tourism policy issues and a practical source of tourism know-how.a practical source of tourism know-how.

UNWTO plays a central and decisive role in promoting UNWTO plays a central and decisive role in promoting the development of responsible, sustainable and the development of responsible, sustainable and universally accessible tourism, paying particular universally accessible tourism, paying particular attention to the interests of developing countries.attention to the interests of developing countries.

The Organization encourages the implementation of the The Organization encourages the implementation of the Global Code of Ethics for Tourism, with a view to Global Code of Ethics for Tourism, with a view to ensuring that member countries, tourist destinations and ensuring that member countries, tourist destinations and businesses maximize the positive economic, social and businesses maximize the positive economic, social and cultural effects of tourism.cultural effects of tourism.

The World Travel & Tourism Council The World Travel & Tourism Council ((WTTCWTTC ) ) is the forum for business leaders in the Travel & is the forum for business leaders in the Travel &

Tourism industryTourism industry . . With Chief Executives of some With Chief Executives of some one hundred of the world's leading Travel & one hundred of the world's leading Travel & Tourism companies as its Members, WTTC has a Tourism companies as its Members, WTTC has a unique mandate and overview on all matters unique mandate and overview on all matters related to Travel & Tourismrelated to Travel & Tourism . .

WTTC works to raise awareness of Travel & WTTC works to raise awareness of Travel & Tourism as one of the world's largest industries, Tourism as one of the world's largest industries, employing approximately 231 million people and employing approximately 231 million people and generating over 10.4 per cent of world GDPgenerating over 10.4 per cent of world GDP..

International International OrganizationsOrganizations

Private sector Private sector organizations organizations

Private sector Private sector organizations organizations

Profit-making organizationsProfit-making organizations Sources of financeSources of finance

Debt/EquityDebt/Equity Share prices and the stock marketShare prices and the stock market

Share priceShare price Roles of stock market and value of the Roles of stock market and value of the

organizationorganization Aims, missions, ownership and controlAims, missions, ownership and control

Ex. Ex. AirlinesAirlines , , hotelshotels, , restaurantsrestaurants, and , and travel agenciestravel agencies

Private sector Private sector organizations organizations

Non-profit-making organizationsNon-profit-making organizations AssociationsAssociations, , ClubsClubs, , SocietiesSocieties, , Unions Unions

and and Universities Universities Ex. Pacific Asia Travel Association Ex. Pacific Asia Travel Association

(PATA) and International Air Transport (PATA) and International Air Transport Association (IATA)Association (IATA)

PATAPATA

Mission Mission  The Pacific Asia Travel Association The Pacific Asia Travel Association

((PATAPATA ) ) is a membership association is a membership association acting as a catalyst for the responsible acting as a catalyst for the responsible development of the Asia Pacific travel development of the Asia Pacific travel and tourism industryand tourism industry . . In partnership In partnership with PATA’s private and public sector with PATA’s private and public sector members, we enhance the sustainable members, we enhance the sustainable growth, value and quality of travel and growth, value and quality of travel and tourism to, from and within the regiontourism to, from and within the region . .

IATAIATA IATA is an international trade IATA is an international trade

body, created some 60 years ago body, created some 60 years ago by a group of airlinesby a group of airlines . . Today, Today, IATA represents some 230 IATA represents some 230 airlines comprising 93% of airlines comprising 93% of scheduled international air scheduled international air traffictraffic . . The organization also The organization also represents, leads and serves the represents, leads and serves the airline industry in generalairline industry in general..   

Benefits of IATABenefits of IATA For For consumersconsumers, IATA simplifies the travel , IATA simplifies the travel

and shipping processes, while keeping costs and shipping processes, while keeping costs downdown . . Passengers can make one telephone Passengers can make one telephone call to reserve a ticket, pay in one currency call to reserve a ticket, pay in one currency and then use the ticket on several airlines in and then use the ticket on several airlines in several countriesseveral countries . .

IATA allows IATA allows airlinesairlines to operate safely, secur to operate safely, secur ely, efficiently and economically under clearl ely, efficiently and economically under clearl

y defined rules. y defined rules. IATA serves as an intermediary between IATA serves as an intermediary between

airlines and airlines and passengerpassenger as well as as well as cargo ag cargo agentsents via neutrally applied agency service via neutrally applied agency service standards and centralized financial systemsstandards and centralized financial systems . .

Benefits of IATABenefits of IATA

A large network of A large network of industry industry supplierssuppliers and and service providersservice providers ga ga

thered by IATA provides solid expert thered by IATA provides solid expert ise to airlines in a variety of industry ise to airlines in a variety of industry

  solutions.  solutions. For For governmentsgovernments, IATA seeks to , IATA seeks to

ensure they are well informed about ensure they are well informed about the complexities of the aviation the complexities of the aviation industry to ensure better, longindustry to ensure better, long--term term decisionsdecisions..

Summary the roles of Summary the roles of public and private sectors public and private sectors

in Tourismin Tourism

3 The 3 The market for market for recreation, recreation, leisure and leisure and

tourism tourism productsproducts

Learning outcomesLearning outcomes By the end of this session students should By the end of this session students should

be able to:be able to: identify a market and define the attributes of a identify a market and define the attributes of a

perfect marketperfect market analyse the factors that affect the demand for analyse the factors that affect the demand for

a good or servicea good or service analyse the factors that affect the supply of a analyse the factors that affect the supply of a

good or servicegood or service understand the concept of equilibrium priceunderstand the concept of equilibrium price analyse the factors that cause changes in analyse the factors that cause changes in

equilibrium priceequilibrium price relate price theory to real world examples relate price theory to real world examples

DefinitionsDefinitions

Effective demandEffective demand Ceteris paribusCeteris paribus MarketsMarkets Perfect market assumptionPerfect market assumption

many buyers and sellersmany buyers and sellers perfect knowledge of prices throughout the perfect knowledge of prices throughout the

marketmarket rational consumers and producers basing rational consumers and producers basing

decisions on pricesdecisions on prices no government intervention – e.g. price controlno government intervention – e.g. price control

MarketsMarkets

A market is a place where buyers and A market is a place where buyers and sellers come into contactsellers come into contact

Do all markets have a physical Do all markets have a physical presence?presence? Ans: No – eBay, small ads etc.Ans: No – eBay, small ads etc.

The demand for recreation, The demand for recreation, leisure and tourism leisure and tourism

productsproducts

Demand Demand and own and own priceprice

The demand for recreation, The demand for recreation, leisure and tourism leisure and tourism

productsproducts

Demand and Demand and other other factorsfactors IncomeIncome

Normal Normal (superior) (superior) and and inferior inferior goodsgoods

The demand for recreation, The demand for recreation, leisure and tourism leisure and tourism

productsproductsDemand and other factorsDemand and other factors

other pricesother prices substitutes and joint demandsubstitutes and joint demand

comparative quality/value addedcomparative quality/value added fashion and tastes (changing in each fashion and tastes (changing in each

period)period) advertisingadvertising opportunities for consumption (e.g. opportunities for consumption (e.g.

leisure time)leisure time) Population (Aging/majority of population)Population (Aging/majority of population) other factorsother factors

Joint DemandJoint Demand

What’s the connection?What’s the connection? A fall in the value of the Thai Baht can A fall in the value of the Thai Baht can

lead to a rise in the demand for holidays lead to a rise in the demand for holidays to Thailand (to Thailand (ceteris paribusceteris paribus))

The supply of recreation, The supply of recreation, leisure and tourism leisure and tourism

productsproducts

Supply Supply and own and own priceprice

The supply of recreation, The supply of recreation, leisure and tourism leisure and tourism

productsproductsSupply and other Supply and other

factorsfactors prices of other prices of other

goods suppliedgoods supplied changes in changes in

production costsproduction costs technical technical

improvementsimprovements taxes and subsidiestaxes and subsidies other factors (e.g. other factors (e.g.

industrial relations)industrial relations)

Supply and CostsSupply and Costs

How does no frills Ryanair cut costs How does no frills Ryanair cut costs compared to full service QANTAS?compared to full service QANTAS?

What effect does this have on its supply What effect does this have on its supply curve?curve? Shifts to the rightShifts to the right

Equilibrium priceEquilibrium price

Changes in equilibrium Changes in equilibrium priceprice

S

D1D2

P1

P2

P

Q0

A leftward shift in demand (D1>D2) causes price to fall (P1>P2).

What factors would cause a fall in demand for a UK hotel?

Changes in equilibrium Changes in equilibrium priceprice

Supply shifts to leftSupply shifts to left

The price mechanism in The price mechanism in actionaction

maximum maximum pricesprices

black black marketsmarkets

queuesqueues

Markets in actionMarkets in action A queue is an A queue is an

indication of indication of a a disequilibriudisequilibrium between m between demand and demand and supplysupply

The EndThe End