HOS62004 Business of Hospitality and Tourism Study Guide PDF

HOS 62004 Business of Hospitality, Food and Leisure Management 2020 HOS62004 BUSINESS OF HOSPITALITY AND TOURISM STUDY GUIDE 1 HOS 62004 Business of Hospitality, Food and Leisure Management 2020 SYLLABUS Content outli...

HOS 62004 Business of Hospitality, Food and Leisure Management 2020 HOS62004 BUSINESS OF HOSPITALITY AND TOURISM STUDY GUIDE 1 HOS 62004 Business of Hospitality, Food and Leisure Management 2020 SYLLABUS Content outline of the Course / Topic Contents: Module and the SLT per topic : Introduction to Tourism & Definition of Terminologies and Jargons 1 Hospitality Industry Tourism and Hospitality Umbrella (Sectors) Different types of travelers Introduction to Tourism & Forms of tourism 2 Hospitality Industry (Cont.) Types of tourism Tourism History and Evolution of the Hospitality 3 Tourism & Hospitality industry Food Service International Governing bodies and policy National 4 makers Regional Local Tourism organizations Travel companies 5 Tourism Distribution Channel Tour operators Specialty challengers The various types of Hotels in the hospitality industry 6 The Hotel Industry ( Part 1 ) Types of hotel classifications Guest contact areas in the Hotel Revenue and Cost Centers in the Hotel 7 The Hotel Industry ( Part 2 ) Major Hotel departments and their responsibilities Organization of a hotel Types of catering - Commercial catering and Institutional The Food And Catering Segment 8 catering ( Part 1 ) Related food and beverage departments Types of Restaurant ownership Independent The Food And Catering Segment 9 Chain ( Part 2 ) Franchise Management contract Impacts of the Business of Tourism Positive and Negative Impacts 10 & Hospitality Economic Impacts 2 HOS 62004 Business of Hospitality, Food and Leisure Management 2020 Socio-cultural Impacts Impacts of the Business of Tourism Positive and Negative Impacts 11 & Hospitality Environmental Impacts International Trends 12 Hospitality and Restaurant Trends Regional Trends Local Trends International Trends 13 Tourism / Event/Festivals Trends Regional Trends Local Trends Airline Cruise-line Other ground, air and water- transportation 14 Travel and Transportation Trends International Trends Regional Trends Local Trends 3 HOS 62004 Business of Hospitality, Food and Leisure Management 2020 5. TOURISM DISTRIBUTION CHANNEL Class Objectives This topic will help you to: Identify the role of travel agents and tour operator To list the reservation and distribution system for travel and hospitality industry 1. The Channel of Distribution The Channel of Distribution is a model which can be used to show how a tourism product or service is distributed from its ‘manufacturing’ source to its eventual customer. The model illustrates the core sectors in the tourism industry. Note the ‘middlemen’ (sometimes called intermediaries). Traditionally in any distribution process there are middlemen. They buy the product and sell it to others in the channel. With international travel this has tended not to happen because the distribution channels between the suppliers of tourism products and their potential customers have been imperfect. However, with the arrival of the internet, this is now changing, with more and more customers being willing and able to put together their own ‘package’ to suit their needs. However, the middlemen are still widely used and provide a good channel of distribution 2. Travel Companies Tour operators Generally, the tour operator and / or the wholesaler in the tourism industry, takes on the bulk of this work. Tour operators buy or reserve in bulk, i.e. accommodation, transportation and other necessary services. These are then combined into packages. The components of the package are secured at a discount so that the price of the product is usually much lower than if the consumer has assembled a package him/herself. The final product is known technically as an inclusive tour, but is more commonly called a package tour. 4 HOS 62004 Business of Hospitality, Food and Leisure Management 2020 Tour operators can be likened to wholesalers since they buy in bulk from the producers of travel products and services, break the bulk into manageable packages and offer these for sale to prospective travellers. The service they provide is valuable to the producers, the retailers and the customers. They help producers by guaranteeing to buy their product (whether it be seats on a plane or rooms in a hotel) and take on the role of marketing the product. Many producers are dependent on contracts with tour operators. Most mass-market tour operators choose to sell through travel agents. So again, we see how the various levels of the chain are interdependent and how their role is critical in linking customers to products and services. Some tour operators deal directly with the consumer and are known as ‘direct sell’ e.g. Portland or Direct Holidays who profess to sell holidays at reduced prices because they cut out the travel agent. There are also very small specialist operators who prefer to deal directly with their clients and who advertise in newspapers or special interest magazines. Basically, there are four different types of tour operator: Mass-market operators Companies that sell high volumes of ‘packaged operators products’, primarily to overseas destinations at comparatively cheap prices. Specialist Operators Companies that focus on specific market segments, e.g. activity holidays, senior citizens, a particular country or a specific type of tourism, e.g. New Age Therapy Breaks in Skiathos Domestic Operators Companies providing arrangements for residents of their own country. Incoming Tour Operators Companies in a particular destination who specialize in putting together holidays and services for overseas visitors to the destination The mass-market - operators include the ‘big four’ operators –Thomson, Thomas Cook, First Choice and MyTravel. The specialist operators - meet the needs of a growing number of consumers who require specialist travel advice and flexibility in their travel arrangements. Some specialist operators concentrate on offering particular countries, others focus on specialist activities – anything from ‘extreme skiing’ in Canada to tours of Alaska for the over 50s. Domestic operators - are probably Wallace Arnold and Shearings who provide holidays by coach mainly for the senior citizens market. Short breaks are proving increasingly 5 HOS 62004 Business of Hospitality, Food and Leisure Management 2020 popular and companies such as Super breaks and Rainbow have led the sale of city and country breaks offered through travel agencies. Incoming tour operators put together packages and services at destinations and sell them to overseas travel organisers and tour operators. For example, an individual in Auckland, New Zealand, may visit a local agency and ask for a coach tour of the Scottish Highlands and Islands. The agency might then fax a known incoming tour operator in Edinburgh, e.g. Scot World Travel and reserve a place on a scheduled tour. Scot World sell these tours all over the world, so the client from New Zealand will be joined on tour by Europeans, Americans, Africans etc. Similarly, incoming operators can work with outbound tour operators in tourist-generating countries to produce tours to meet specialist needs. VisitScotland can provide a lengthy list of incoming tour operators in Scotland, most of which are little more than handling agents offering a transfer or meet- and-greet service on behalf of the overseas operator or agent. The experienced incoming operators who can provide complete packages in Scotland are mostly based in Edinburgh and London. 6 HOS 62004 Business of Hospitality, Food and Leisure Management 2020 ACTIVITY 1 Brochures and holiday types fall into many different categories. From the brochures available in internet, find an example of each of the following and name the tour operator: City Breaks Cruising Lakes and Mountains Touring Theme Parks Kayaking Casino Beach resort 1) Select one of the above brochures which might help the following choose their holiday. (a) Two friends in their early twenties looking for sun and lively nightlife. ----------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------- (b) An older couple who want a touring holiday abroad but don’t want to drive. --------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------- (c) Clients who are keen on France and Italy but want to steer clear of the coast. They enjoy walking, and peace and quiet. --------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------- (d) A couple looking for some sun in January. --------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------- 7 HOS 62004 Business of Hospitality, Food and Leisure Management 2020 Incentive travel is claimed to be the fastest growing sector of the business travel market. The objective of incentive travel is to reward salespeople or people who achieve targets of various kinds with a unique holiday experience. Incentive operators therefore have to exercise their creative imagination and persuade museums, historic houses, castles, palaces and other suitable visitor attractions to open exclusively to incentive groups for meals and entertainment and to create a unique theatrical occasion that is not generally available to the normal tourist. Travel Agents These packages are then sold either direct to the consumer or through a retailer, i.e. the travel agent. Travel agents make the bulk of their money through commissions received from principals for selling package tours and airline tickets. An agent may also offer travel-related services such as insurance and foreign exchange. Travel agencies provide a service to customers requiring business or leisure travel arrangements. They also act as agent for companies supplying the travel products. When you visited your local travel agency you probably saw principals’ brochures. These would be mainly tour operators’ products, but a good travel agent will also have promotional materials from airlines, coach companies, ferry companies, cruise lines, car rental firms, hotels, theatres, travel insurance and travellers’ cheque firms. They will also be able to provide information pamphlets on passports and visas. Sometimes travel agents will put together package tours for independent travellers using commissions from principals in transport and accommodation. These are known as FIT tours – Fully Inclusive Tours for independent travellers. 8 HOS 62004 Business of Hospitality, Food and Leisure Management 2020 3. Concept of the package holiday What’s in a package? Most package holidays contain 2 key components: transport to the destination accommodation at the destination Depending on the package, other things may be included such as: transfers from point of arrival to accommodation services of a resort representative employed by the tour operator meals car hire kids recreation centres entrance to attractions (e.g. Disneyland) excursions Activity 2: Main Sectors of the Tourism Industry The tourism industry – who’s involved? The tourism industry is made up of businesses that do three key things: Setting up travel and holiday arrangements Getting people to their destinations Providing for their needs and enjoyment when they are there. Identify below the types of business which might be involved in each of these three stages: Setting up arrangements Getting you there At the destination 9 HOS 62004 Business of Hospitality, Food and Leisure Management 2020 4. Role and Functions of Travel Agencies Travel agencies, in their role as “middlemen,” combine tourism activities originally carried out on an unconnected, individual basis, linking customers with tourism service suppliers and thereby promoting the development of the tourism industry. 1. Outbound Travel Agent An outbound travel agent means a person who carries on business as an outbound travel agent, and such a person is required to obtain a travel agent's license. A person carries on business as an outbound travel agent if, in Hong Kong, he carries on the business of obtaining for another person: (a) carriage, by any means of conveyance, on a journey which is to commence in Hong Kong and which thereafter is to take place mainly outside Hong Kong; or (b) accommodation at a place outside Hong Kong for which payment is, or is to be, made to that person by or on behalf of that other person of an amount on account of the cost of that accommodation. A travel agent shall be liable to pay a levy, the amount of which is specified by the Secretary for Commerce and Economic Development, in respect of every outbound fare received by such a travel agent for the provision of an outbound travel service described above. 2. Inbound Travel Agent An inbound travel agent means a person who carries on business as an inbound travel agent, and such a person is required to obtain a travel agent's license. A person carries on business as an inbound travel agent if, in Malaysia, he carries on the business of obtaining for a visitor to Malaysia: (a) carriage, by any means of conveyance, on a journey which is to commence outside Malaysia and which either (b) accommodation in Malaysia for which payment is, or is to be, made to that person by or on behalf of the visitor of an amount on account of the cost of that accommodation; or following prescribed services: (i) sightseeing or visits to local places of interest. (ii) restaurant meals or other catered meals. (iii) shopping trips. 10 HOS 62004 Business of Hospitality, Food and Leisure Management 2020 (iv) local transport in connection with an activity 3. Online travel agents (OTA) - Online Travel intermediaries There is amazing amount of online travel intermediaries on the internet. In fact, in electronic commerce (online business), Travel is the top selling product (Mintel Consultancy, 2014). The world’s largest global online travel company is Expedia, who owns other brands such as Hotels.com, Hotwire.com, trivago, Egencia, Venere, Expedia Local Expert, Classic Vacations and eLong. The second largest brand is Travelocity, also an American-based OTA (owned by the GDS Sabre). The third largest is Orbitz, Travelport-owned, which includes brands such as CheapTickets, HotelClub, etc a. Benefits for Tour Operators & Tourism Product Suppliers Processes transactions online through a shared master merchant account which save on online merchant start up fees and monthly fees. Provides booking, inventory control, sales, customer analysis and banking reports. Offer a “hot seat” features: Advertise products at a discounted price and sell those last minute empty seats. Gives the end user the ability to search and compare and buy from multiple operators in one place – a place that is easy and convenient. Real-time inventory booking system allows multiple distributors to sell your product without the hassle of time-consuming callbacks and double booking. 4. Specialty Channels Specialty intermediaries include such organizations as incentive travel firms, business meeting and convention planners, corporate travel offices, association executives, hotel representatives, travel consultants, and supplier sales offices. While specialty intermediaries are force in distribution compared to travel agencies, they have considerable power to influence when, 11 HOS 62004 Business of Hospitality, Food and Leisure Management 2020 where and how people travel. Such group can represent either buyers or sellers, receiving either a commission or a salary from their employer. Specialty intermediaries are experts in their aspect as travel. As tourism becomes more specialized, these types of channels will become increasingly important. Reservation and Distribution Systems for Travel and Hospitality 12 HOS 62004 Business of Hospitality, Food and Leisure Management 2020 5. Functions and Services of Travel Agency Today, Travel Agencies have been recognized as a vital component of travel and tourism and have become an integral part of the travel and tourism industry at global. They account for more than 90% of international and 70% of domestic tourist traffic Further, more than 60% of all travel agency revenues are derived from business travel. Most travel agencies sell both commercial and leisure travel but there are many travel agencies which only specialized in one sector or the other. The operation of each travel agency is based on the scope of its activities and organizational size. Here we discuss the functions of a large-scale travel agency that performs all types of activities such as Retail travel agency, wholesaling, and tour operations etc. The main function of large-scale travel agency is: Travel Information Whatever the size of a travel agency, it must provide necessary travel information to tourists. A travel agency must give up-to-date, accurate, and timely information regarding destinations mode of travel, accommodation, sight-seeing, shopping, immigration, passport, visa, customs clearance and procedure, health and security rules and about various permits required to travel areas etc. Itinerary Preparation The term tourist’s itinerary is used to identify the origin, destination and all the stopping points in a traveler’s tours. It is a composition of various elements and designed after a detailed study of the market. Travel agencies prepare an itinerary for tour packages. Airline Ticketing and Reservation A travel agency sells a variety of tourism products. Airline ticketing and reservation is still a major source of revenue. Travel agencies perform a function of airline ticketing and reservation on the behalf of various airlines. Tour Packaging and Costing Travel agencies prepare tour package and sell them to tourists. The coasting and pricing of tour packages depend to a large extent on the ability of travel agent as to how effectively he can negotiate with the principal suppliers. 13 HOS 62004 Business of Hospitality, Food and Leisure Management 2020 Reservation It is a very important function of all types of travel agencies. A travel agency consistently makes linkage with the accommodation sector, transport sector and other entertainment organizations to reserve rooms, and seats in the cultural programs and transportation. Travel Insurance Some large-scale travel agencies perform additional functions to serve its clients. Travel insurance protects the travelers against the personal as well as baggage losses resulting from a wide range of travel related happenings and problems. Currency Services Approved travel agency authorized by Govt. body provides currency exchanges services to tourist. Organisation of Conference/Conventions Large-scale travel agencies offer a complete convention/conference package which includes registration of the participants at the venue to be picked up for dropped to the airport/hotel, overhead projectors, slide projectors, TV, VCR, information counter, sightseen etc. 6. GDSs (Global Distribution Systems) GDSs are the key technology infrastructure connecting suppliers/producers, tour operators, and retailers. The GDSs aggregate billions of possible airfares, hotel and car rental, availability information, and present these options in a real-time shopping and immediate booking via travel intermediaries. GDSs processed more than 1.1 billion transactions in 2008. That equates to just over 2,100 transactions per minute. The 4 major GDS companies are Amadeus, Sabre, Galileo & Worldspan Most large organizations choose to deal through intermediaries due to: 14 HOS 62004 Business of Hospitality, Food and Leisure Management 2020  Cost related: it is generally cheaper for a company to deal through agencies than to set up its own network or retails outlets (commissions are generally provided as remuneration to these agents)  Wider network reach: to buy the existing distributive network of the intermediaries is able to reach more consumers (potential consumers)  Convenience and speed: wide product range are offered under one roof/one website instead of having to visit producers separately  Value-added: consumers are able to save on such time and money on such value-added convenience which makes it most attractive 15 HOS 62004 Business of Hospitality, Food and Leisure Management 2020 Conclusion The motivation to travel must be matched with the products and services that a destination can offer, through a very big distribution network with today’s technology. And as the industry evolves, as apparent as it had been changing over the decades, this highlights the need for tourism and hospitality practitioners to keep abreast with the trends of the industry. Hence, after the next chapter on governmental roles in this industry, more depth into understanding trends and forecasts in each different sector will be covered. References Walker, John. R., (2013) “Introduction to Hospitality”, Sixth Edition, International Edition, Pearson Case Study Included in text above Recommended Reading Airlines deregulation and its consequences: http://www.forbes.com/sites/richardfinger/2012/08/20/airlines-who-can-tolerate- them/ Additional Reading http://edition.cnn.com/2012/07/02/world/asia/china-florcruz-olympics/index.html Discussion/Review Questions 1. Explain the role of GDSs in the travel distribution chain, and why are they so successful. 2. What is the role of the OTA? Do they overlap function with Kayak and Tripadvisor? 16