Tourism Network and Supply Components PDF

TH2107 The Tourism Network and Supply Components Tourism Network The tourism network is defined as “a partnership involving different interacting elements, such as the tourists, enterprises,...

TH2107 The Tourism Network and Supply Components Tourism Network The tourism network is defined as “a partnership involving different interacting elements, such as the tourists, enterprises, institutions, and the host communities.” The travel industry is a tourism network, which includes both the public and private sectors. The travel industry is a composite of organizations, both private and public, that are involved in the development, production, and marketing of products and services to serve the needs of travelers. Tourism businesses and corporations regarded as components of the tourism industry are categorized as: Direct Providers. This category involves businesses that provide services, activities, and products consumed and purchased directly by travelers/tourists. They also represent the sectors of the industry that are accessible to travelers. These businesses are associated with travel such as airlines, hotels, restaurants, ground transportation, travel agencies, and retail shops. Support Services. They lend support to direct providers. Support services provide products and services to direct providers who then sell these products and services directly to tourists. A good example is a tour wholesaler who prepares tour packages and sells them through travel agencies that directly sell them to clients. In this example, the traveler who purchases the tour package receives the service indirectly from the support service provider. This category includes specialized services such as tour organizers, travel and trade publications, hotel management firms, and travel research companies. The term support services also entail other basic supplies and services such as laundry and food services. Developmental Organizations. This category deals with tourism development that is more complex and broader in scope compared to the production of daily travel services. Developmental organizations, government agencies, in particular, create and enforce laws or rules for the benefit of tourism stakeholders. The impact of their decisions is more long-term in nature than the direct providers and support services that focus more on operations. These organizations include planners, government agencies, financial institutions, real estate developers, and educational and vocational training institutions. The above categories identify both the direct and indirect components of the travel industry. Direct providers sell to travelers directly; support services directly sell to direct providers and indirectly to the travelers, while development organizations directly and indirectly, affect the direct providers, support services, and travelers. Tourism System The tourism system can be defined as a framework that shows the interaction between tourism demand, the bridging components between supply and demand, and the tourism supply at a destination. The components of the tourism system are the following (Vanhove, 2005): Tourism Demand Tourism demand is the number of people that plan to purchase tourism products supported by sufficient purchasing power (IGI Global, n.d.). Demand consists of the determinants of demand, motivations, and buyer behavior. The determinants of tourism demand are those factors at work in any society that drive and set limits to the volume of a population’s demand for holidays and travel. The determinants of demand consist of economic factors, comparative prices, demographic factors, geographic factors, socio-cultural attitudes to tourism, mobility, government/regulatory bodies, media communications, and information and communication technology. Tourism demand is also sensitive to changes in the supply of products and the capacity of supply. For an individual consumer, tourism competes with other products or services (such as a personal computer, home improvements, or fitness services) for a share of the budget. A widespread reaction to special offers on occasions or fairs can shift tourism demand in a country. Travel motivation is the inner state of a person or certain needs and wants of the tourists that can be considered one of the most important psychological influences of tourist behavior or buyer behavior. As discussed in the previous topic (01 Handout 1), there is a great variety of tourism motivations. These 03 Handout 1 *Property of STI  [email protected] Page 1 of 4  TH2107 motivations and buyer behavior created a competition to serve customer needs, and it is that competition that governs the actions of the travel trade. Bridging Components The bridging components in the tourism system are suppliers connected to tourists through tourism marketing channels consisting mainly of intermediaries (such as tour operators, retail trade, and meeting and convention planners) and facilitators who assist in the efficient functioning of the tourism system (i.e., flow of information, marketing, money, knowledge). The bridging elements of the tourism system are very often considered as an extension of the tourism supply. These components are visible in transport infrastructures, such as highways, roads, railways, air and sea connections, and marketing intermediaries. While the service in the travel trade is intangible as the service they provide is coordination between their customer and the suppliers at the destination. Tourism Supply Tourism supply refers to all assets, services, and goods enjoyed or purchased and occasioned by tourists. In the tourism system, the supply at the destination is the key element, with the ability to attract people to destinations. Most tourists want to go to other places for various reasons, and the attractions or services of the destination are part of their motivations. The following are the components of the tourism supply: Natural resources refer to the physical characteristics of an area that can be generalized as natural scenery, climate, and environment. These include the elements in an area for the use and enjoyment of visitors, such as climate, landforms, terrain, flora, fauna, bodies of water, beaches, natural beauty, and water supply for drinking, sanitation, and similar uses. Examples are the beaches in the Maldives, Pagsanjan Falls in Laguna, Rizal, and Mt. Daraitan in Tanay, Rizal. Infrastructure comprises all underground and surface developmental constructions that make business activity possible. It also supports superstructure by providing water supply systems, sewage disposal systems, electrical and communication systems, drainage systems, and other constructed facilities such as highways, railroads, bridges, parking lots, parks, docks, and buses and train stations. Examples are the Golden Gate Bridge in New York, Grand Canal in Venice, San Juanico Bridge in Leyte, and Patapat Bridge in Pagudpud, Ilocos Norte. Superstructure includes above-ground facility services where business activities occur. Examples of superstructures are airport buildings, terminals, hotels, motels, resorts, restaurants, malls, museums, stores, and other entertainment areas. Examples of known superstructures are the National Museum in Manila, the Enchanted Kingdom in Santa Rosa, Laguna, The Forum Shops in Las Vegas, and Mirazur Restaurant in Menton, France. Transportation and Transportation Equipment. Transportation is the movement of goods or people from one place to another. Transportation equipment includes ships, airplanes, trains, buses, limousines, taxis, automobiles, cog railways, aerial tramways, and similar passenger transportation facilities. Examples are jeepneys and tricycles in the Philippines, underwater trains in Dubai, cable cars in Malaysia, and Tuk-Tuk vehicles in Thailand. Hospitality Resources. These refer to the general feeling of welcome that visitors receive while visiting a destination and how service providers deliver tourist services. It also includes the general feeling of warmth from the local population. In the tourism and hospitality industry, the success or failure of businesses and destinations depends on their service (Freeman & Glazer, 2015). Providing more hospitable services to tourists will leave them satisfied and willing to come back and give positive feedback and recommendations to other potential tourists through word of mouth. Hence, tourists enjoy their vacation more if the host population makes them feel welcome and comfortable, while bad service makes them feel awkward and unhappy. Hospitality resources can be improved by training personnel to be hospitable and approachable and encouraging positive feelings toward tourism and tourists by the public. Examples are the welcoming spirit of tourist business employees, residents’ attitudes towards visitors, sincerity, willingness to serve and get better acquainted with visitors, and other manifestations of warmth and 03 Handout 1 *Property of STI  [email protected] Page 2 of 4  TH2107 friendliness. Therefore, it is important to improve tourism workers’ behavior in providing their services to customers. Tourism System Flow The relationship between supply and demand, via the bridging components, is a two-way link (see Figure 1). Tourism demand (determinants, motivations, and buyer behavior) is assessed by the bridging components (transportation, travel intermediaries, and marketing intermediaries), providing the essential link between supply and demand. Travel intermediaries make agreements with destination supply firms to support their customers while at the destination. The tourism supply (includes but is not limited to attractions, services/facilities, and infrastructure) provides the resources enjoyed and consumed by tourists. Therefore, a tourism system is formed as transactions between these components are made. Figure 1. Components of the Tourism System Source: Economics of Tourism Destinations, 2005. p. 76 Tourism Supply Chain The tourism industry involves transactions with different sectors to operate. Zhang et al. (2012) defined the tourism supply chain (TSC) as “a network of tourism organizations engaged in different activities ranging from the supply of different components of tourism products/services such as flights and accommodation to the distribution and marketing of the final tourism product at a specific tourism destination, and involves a wide range of participants in both the private and public sectors.” Service Flow Figure 2 shows the tourism supply chain (TSC) wherein the service flow from the first tier is composed of direct suppliers (accommodation, transportation, and excursion providers) that directly supply tourism services to intermediaries (tour operators/agents). The tour operator/agent buys individual travel services from the suppliers and assembles them into tour packages sold to customers/tourists. Upon consuming the tourism products, service providers must ask for feedback from their customers and use this to improve their products and services. This will mitigate any chance of losing income and gain more clients due to the customer service- based nature of this industry. A more complex TSC may also include second-tier suppliers, which supply services or products to first-tier suppliers. As discussed in the previous sections, non-business entities are also involved in the TSC, such as the local government or business associations facilitating public and private sector collaboration through policy intervention (Zhang, Song, & Huang, 2009). Figure 2: A Typical Tourism Supply Chain (TSC) within a Destination Source: Tourism supply chain management: A new research agenda 03 Handout 1 *Property of STI  [email protected] Page 3 of 4  TH2107 References: Cruz, Z. L. (2006). Principles of tourism (Part I). REX Book Store. Dawson, B. (n.d.). Tourism network and supply components [PowerPoint slides]. SlidePlayer. https://slideplayer.com/slide/8251095/ Feliu, C. (n.d.). Determinants of demand in the tourism and travel industries. Datumize. Retrieved June 7, 2021, from https://blog.datumize.com/determinants-of-demand-in-the-tourism-and-travel-industries Freeman, R., & Glazer, K. (2015, April 18). Chapter 9. Customer service – introduction to tourism and hospitality in BC. BCcampus Online Publishing. https://opentextbc.ca/introtourism/chapter/chapter-9-customer-service/ IGI Global. (n.d.). Tourism network. In IGI Global. Retrieved August 21, 2021, from https://www.igi- global.com/dictionary/cooperative-optimization-of-tourism-networks/57353 IGI Global. (n.d.). Travel motivation. In IGI Global. Retrieved August 21, 2021, from https://www.igi- global.com/dictionary/modeling-tourists-opinions-using-ridit-analysis/57371 IGI Global. (n.d.). Tourism demand. In IGI Global. Retrieved August 21, 2021, from https://www.igi- global.com/dictionary/the-impact-of-exchange-rate-on-tourism-industry/49776 Palang, D., & Tippayawong, K. Y. (2019). Performance evaluation of tourism supply chain management: The case of Thailand. Business Process Management Journal, 5-6. https://doi.org/10.1108/BPMJ-05-2017-0124 Vanhove, N. (2005). Economics of tourism destinations. Elsevier Butterworth Heinemann. Zhang, X., Song, H., & Huang, G. Q. (2009). Tourism supply chain management: A new research agenda. Progress in Tourism Management, 30, 345-358. 03 Handout 1 *Property of STI  [email protected] Page 4 of 4