Tourism Management Lecture 1 PDF

Lecture 1: Introduction (9/9) ============================= What is tourism? Tourism is a social, cultural and economic phenomenon which entails the movement of people to countries or places outside their usual environment for personal or business/professional purposes..." (World Tourism Organizat...

Lecture 1: Introduction (9/9) ============================= What is tourism? Tourism is a social, cultural and economic phenomenon which entails the movement of people to countries or places outside their usual environment for personal or business/professional purposes..." (World Tourism Organization -- UNWTO) Parts that are important: - - - Key concepts: Tourism includes any activity concerned with temporary short-medium term movement and staying of people outside the places where they normally live and work. The word tourism is thought to originate from the Grand Tours to continental Europe, which were undertaken by young, aristocratic Englishmen in the 18th century, as part of their training to become artists, administrators and political leaders. Key indicators and concepts to familiarise with (KPI's) - - - - - Where are we?\ International tourism trends → Top of tourist destination. Important to name that you count and talk in arrivals, not in people (as they could visit more often)\ Also fastest growing countries (change %)\  → Europe by far the biggest in terms of tourism → US performs the best in terms of seasonality, flattest curve → Keep in mind that there was a big shock from covid that has shaped and will influence tourism from now on, still in the recovery period but getting back to the levels **The key components of tourism\ !!** - - - - - - Lecture 2: (10/9) ================= **Tourist vs excursionist** The **tourist** is a visitor that spends at least an overnight stay The **excursionist** is a visitor that arrives and leaves on the same day +-----------------------+-----------------------+-----------------------+ | **Stakeholder** | **Tourists** | **Excursionists** | +=======================+=======================+=======================+ | Lodging | - - | No relevance | +-----------------------+-----------------------+-----------------------+ | Food & beverage | - - | Relevant market | +-----------------------+-----------------------+-----------------------+ | Catering | Potential market | Potential market | | | (depending on the | (depending on the | | | positioning and | positioning and | | | localization)\ | localization) | | | Potential clash with | | | | resident clients | | +-----------------------+-----------------------+-----------------------+ | Retail | Potential market | Potential market | | | (depending on the | (depending on the | | | localization) | localization) | +-----------------------+-----------------------+-----------------------+ | Tourist attractions | Core market\ | Core market\ | | | Potential clash with | Clash with residents | | | residents | | +-----------------------+-----------------------+-----------------------+ | Tourist services' | Core market | Relevant market | | providers | | | +-----------------------+-----------------------+-----------------------+ | Public services | Have to satisfy their | Have to satisfy their | | | potential demand\ | potential demand\ | | | Potential negative | Potential negative | | | externalities | externalities | +-----------------------+-----------------------+-----------------------+ | Local community | Potentially wealth | Potentially some | | | generators\ | wealth generators\ | | | Negative | Negative | | | externalities | externalities | | | generators | generators | +-----------------------+-----------------------+-----------------------+ **Tourists** generate negative externalities on the territory, while potentially generate wealth **Excursionists** generate negative externalities on the territory and, in addition, generate low (or no) wealth **The tourism product** - -...a **combination of tangible and intangible elements**, such as natural, cultural and man-made resources, **attractions**, **facilities, services and activities** around a specific centre of interest which represents the core of the destination marketing mix and **creates an overall visitor experience** including emotional aspects for the potential customers. A tourism product **is priced and sold through distribution channels and has a life-cycle** (UNWTO). The tourism product... The elements of the tourism product may be perceived differently depending on: - - The kind of product Each product may be built upon a specific kind of offer, or it may involve more Some examples: - - - - - - Destination --- Tourism product ---- Tourism offers\ Location Transport services Landscape Accommodations\ Attractions (natural, man made) Activities Tourist facilities Infrastructure DMO, information Accessibility\ Institutions\ People Image Lecture 3: 16/9 =============== **The sense of the place** → The way one person perceives a location (Adams et al 2017) The particular sense that individuals have of places they know by experience; through experience in a destination, visitors or inhabitants associate it with physical characteristics and thus gain a sense of place A sense of the same place is experienced in many ways by many different people A sense of place can be gained only from being or becoming deeply involved with a place... is the association with place as home Jorgensen and Stedman (2001) identify four dimensions to consider: 1. 2. 3. 4. What makes a great place? Sociability, uses & activities, access & linkages, comfort & image **Tourism is an experience-based industry** Tourism experience can be defined as: 'An individual's subjective evaluation and undergoing (i.e. affective, cognitive, and behavioural) of events related to his/her tourist activities which begins **before** (i.e. planning and preparations) **during** (i.e. at the destination) and **after** the trip (i.e. recollection) (Tung & Ritchie, 2011) ***Tourist experience - before the trip*** Tourists look for information about possible destinations, create their own expectations and then complete the purchase. Their choice can be influenced by: - - - - The central role of tourism planners is to facilitate the [development of an environment] (i.e. the destination) [that enhances the likelihood that tourists can create their own memorable tourism experiences] (Tung & Ritchie, 2011)  ***During the trip*** Tourists look for attractions and service providers that allow them to make the experience they are looking for. Their on-site experienced can be influenced by: - - - - ***After the trip*** Tourists' emotions favourably influence evaluation of overall image and satisfaction. It is important for marketers and specialist organizations, such as travel agencies and tour operators to promote a holistic and consistent image (Prayag et al. 2017). Tourist emotions influence the willingness to combe back and to generate positive word of mouth Tourism providers should strive to activate, stimulate and promote positive emotions (Prayag et al. 2017)) The four realm of an experience\ **Entertainment:** tourists participate but don't affect the performance at all. For example, symphony-goers, for example who experience the event as listeners or a visitor to an art gallery **Educational:** tourists play key roles in creating the performance or event that yields the experience; the experience makes the participant benefit some learning **Esthetic:** participants are immersed in an activity or environment but they do not have active participation and have little or not effect on it - for example: a tourist who views the grand canyon from its rim **Escapist:** escapist experiences can teach just as well as educational events can or amuse just as well as entertainment, but they involve greater customer immersion. Acting in a play, playing in an orchestra or descending the grand Canyon involve both active participation and immersion in the experience **Designing memorable experiences** **[Five key experience-design principles]** **Theme the experience** Hard Rock Cafe, Planet Hollywood: we instantly know what to expect when entering the establishment *Envisioning a well-defined theme* is the first, crucial step in staging an experience. It forms its foundation An effective theme is *concise and compelling*. It is not a corporate mission statement or a marketing tagline. The theme must *drive all the design elements and staged events* of the experience toward a unified storyline that wholly captivates the customer. The theme unifies the experience in the tourists' minds and helps make the learning memorable. **Harmonize impressions with positive cues** The experience must be rendered with indelible impressions. Impressions are the 'takeaways' of the experience; they fulfill the theme. To create the desired impressions, companies must introduce cues that affirm the nature of the experience to the guest. Each cue must support the theme and none should be inconsistent with it. When a restaurant host says "your table is ready' no particular cue is given. \~But when a Rainforest Cafe host declares "your adventure is about to begin", it sets the stage for something special. It is the cues that make the impressions that create the experience in the customer's mind. *Eliminate negative cues!!:* Ensuring the integrity of the customer experience requires more than the layering on of positive cues. Experience stagers also must eliminate anything that diminishes, contradicts or distracts from the theme **Mix in memorabilia** Certain goods have always been *purchased primarily for the memories they convey*. Golfers purchase a shirt or cap with an embroidered logo to recall a course or round and teenagers obtain t-shirts to remember a rock concerts They purchase such *memorabilia as a physical reminder of and experience*. These goods generally sell at price points far above those commanded by similar items that don't represent an experience. A concert-goer, for example, will pay a premium for an official t-shirt emblazoned with the date and city of the concert. That's because *the price is a function of the value the buyer attaches to remembering the experiences.* **Engage all five senses** The sensory stimulants that **accompany an experience should support and enhance its theme.** The more senses an experience engages, the more effective and memorable it can be. Individuals have an increased social and environmental consciousness, seeking for 'authentic' tourism experiences - - - - The search for experiences is linked to the increasing need for consumers to define their identity through the things they consume or the activities they do Storytelling is the way travellers internalise a place/experience into a valued set of memories, by verbalising and sharing their experiences with others. It is also critical in creating longevity as holidays take on a life of their own in consumers' minds and are then spread through word of mouth, which then (hopefully) fuel the inspiration phase of another person's holiday In terms of the luxury traveller, storytelling is important firstly because it helps establishing social status: telling people back home about something new and unique increases the individual's social status and prestige among peers. *From memorable to transformative experience...* In the tourism industry and particularly in the luxury subsector, customers have been shifting their preferences towards authentic experiences that generate psychological outcomes rather than material ones. Travel is not anymore just memorable, but it changes the tourist that change its way of living according to experiences made. "Transformative travel is any travel experience that empowers people to make meaningful,lasting changes in their lives, whether big or small". Transformative travel is an experience that allows tourists to know themselves better. No travel experience will be transformative if it doesn't stir up passions in its participants and provide them with a sense of meaning. Lecture 4: Cultural tourism and events ====================================== **The type of tourism** - - Leisure traveller: - - - - The business traveller: - - - **Leisure tourism** Further divide: *[Recreational vs cultural]* **Recreational tourism**: reflects tourist desire to use a particular geographic area to express or realise an amateur or hobbyist interest (Stebbins, 1994). Tourists need a skill or knowledge about the activity they are going to do Examples? Hiking, scubadiving **Cultural tourism** Technical definition: "all movements of persons to specific cultural attractions, such as heritage sites, artistic and cultural manifestations, arts and drama outside their normal place of residence' Conceptual definition: "The movement of persons to cultural attractions away from their normal place of residence, with the intention to gather new information and experiences to satisfy their cultural needs' Rome is a good example of this: just to be here is enough Within cultural tourism *Tangible vs intangible assets* Tangible: physical artefacts, museums, monuments, historical buildings, etc. Intangible: practices, traditions, representations, expressions, knowledge, skills - as well as the instruments, objects artefacts and cultural spaces associated therewith - that communities, groups and, in some cases, individuals recognize as part of their cultural heritage These kinds of resources are not simply rooted in a specific territory. Rather, they may also characterize the organizations that host the,. Firms that exploit such shared regional resources can enhance their performance and build competitive advantage. Tourists are important contributors to the economy of culture. They make up a *significant proportio*n of the audience for museums, galleries, theatres and concerts, particularly in capital cities It has been esteemed that from 40% to 60% of attendances at museums and galleries are tourists. Foreign visitors normally spend much more than day excursionists or residents; therefore they are a **target marke**t for policy makers devising urban tourism strategies. The development of cultural tourism demand has always been closely linked to the **supply of cultural attractions.** The rise of competing cultural perspectives has helped to create a **more diverse and specialised cultural tourism product.** E.g. the large national or regional museums now have to compete with a range of niche museums, offering regional, local and thematic interpretations of culture. Culture is seen as a **unique and authentic attribute of place,** which can be used to distinguish the tourism products of one region or country from. As the regions of Europe strive to create a distinctive image to attract tourists, so the number of cultural attractions offered at regional and local level multiplies. The rapid growth in cultural attraction supply, particularly in the last decades, has created a situation where supply is outstripping demand. In many countries, the cultural attraction market is becoming increasingly polarized between a few major attractions which attract millions of visitors every year, and a growing number of smaller attractions, who must share a declining pool of visitors between them. Cultural attractions must compete not just with other cultural attractions, but also with a wide range of other touristic and leisure attractions. Whereas commercial attractions cna be expected to adjust to demand, the same flexibility is not often available to cultural institutions such as museum, which must usually bear the burden of research, curation and other costly non-commercial functions. It is necessary to integrate cultural assets with other touristic attractions. **Sustainable cultural tourism** Tourism is an excellent way to encourage and provide accesses to cultural heritage, but it also brings with it challenges related to overcrowding, cultural appropriation, and the loss of authenticity. Tourism brings money and jobs to cities and regions, but it can also damage residents day-to-day lives, as well as the area's culture and heritage. Given the possible negative effects of overtourism and its impact on cultural heritage, some local communities and heritage experts have at times opposed tourism and its associated development. Sustainable cultural tourism offers a new perspective, as it places cultural heritage and local communities at the centre of decision-making processes. Involving local communities and their stakeholders in the decision-making processes is key to ensuring results benefit both cultural heritage and the local population. The objective of sustainable cultural tourism is to ensure good conservation practices along with authentic interpretation that supports the local economy. Tourism should find a balance between the development and protection of cultural heritage **The European Cultural Capital event** The idea of designating a different city each year as 'cultural capital' of Europe was launched in 1983 by Melina Mercouri, Greek Minister of Culture The idea was adopted by the European Community in 1985. The origins of the Cultural Capital event were arguably purely cultural. The event was designed to 'help people bring the peoples of the member states closer together" through the "expression of a cultural which in its historical emergence and contemporary development, is characterised by having both common elements and a richness born of diversity.\ The aims of the event were basically twofold: - - The European Cultural Capital event First designated cites were - Athens, Florence, Amsterdam, Berlin The turning point for the cultural capital event came with the designation of Glasgow in 1990. Glasgow, unlike its predecessors, was not a capital city or one of the established 'cultural destinations' of Europe It won the nomination against competition largely on the basis of promised commercial sponsorship and the fact that it planned to use the event to stimulate urban regeneration and to boost the image of Glasgow as a cultural city. The Glasgow event had an impressive range of cultural activities, including big names such as Pavarotti and an equally impressive budget. The argument for this approach was that the investment would be repaid directly through tourist expenditure, and indirectly through improvements in the image of the city and increased economic investment. The number of candidates for the nomination has substantially increased, as the event is now viewed as a tool for economic regeneration rather than a purely cultural manifestation. Week 3: Event management & The tourism industry =============================================== Events are an important motivator of tourism and figure prominently in the development and marketing plans of most destinations Events can: - - - - - Cultural events are often seen as a solution to the problems of **product differentiation and seasonality** in an increasingly competitive tourism market. Events can help to animate static cultural attractions and create **specific motivations for repeat visits**, or visits in the low season or in non-traditional locations. The multiplication of events and festivals **increases competition**. Events can suffer from a '**waning effect'**, whereby increasing levels of investment are required to generate similar visitor numbers. Occasional mega-event Periodic hallmark events Regional events Local level Possible measures of "value" for specific events: - - - - - - - - How to plan an event? 1. 2. 3. 4. 5. 6. 7. Exercise: pick an event → Eurovision (local, regional, periodic or a mega event) Event: rotating event each year to have a contest about who wine, organiser: EBU (eurovision broadcasting union), host city organises it Venue: changes every year, but usually held in one the largest of the city that it is hosted in (usually a big city) Partners: national tv broadcasters, national delegations, biggest artists from the country + iconic eurovisions, hotel chains, pre-party venues Sponsors: few big sponsors (usually one or two very big ones + extra ones) (this moroccan oil, tiktok, baileys, royal caribbean, easyjet, idealista)\ Marketing and advertising: word of mouth, news channels, tiktok presence Stage: something creative each year (unique design, modern stage), transforming the arena Attendees: eurovision enthusiasts, European tourists: broad audience, gay people **MICE tourism** **Meetings:** single-day events set by an organization typically held in hotel conference rooms or at convention centers **Incentives**: travel rewards a company may provide in return for excellent professional performance from individual employees, groups or partners **Conventions (or conferences):** designed for a large organisation to share knowledge across several days. They often include not only key members of the organization, but also guest speakers and the general public **Exhibitions:** hyper-focused events that drum up business and help employees to networks and build lasting professional relationships MICE may bring several contribution to the location that hosts this kind of events: - - - - - - The tourism industry -------------------- What is an industry..... a group of companies that are related based on their primary business activities Industry classifications are typically grouped into larger categories called sectors or industry as well Can tourism be considered an industry? Tourism is not an industry, nor a product, but there exists a tourism industry **The structure of the sector**  The structure of the industry **Vertical & horizontal integration** **System integrators - institutions** Actors who are in charge of connecting actors of the industry System integrators maybe category associations, national or local institutions E.g. ENIT is the (Agenzia Nazionale del Turismo) Italian National Tourism Board and it offers made in Italy companies the opportunity to increase their visibility on foreign markets by sharing the Italia Turismo Brand, at the same time strengthening the effectiveness of our promotion abroad of Italian artisanal and industrial production **Distributors - tour operators** Tour operators are tourism intermediaries The tour operator is a person or company that builds up ideas for holidays, researches the ideas, designs the holiday itinerary and content, contracts the services needed for the holiday, accommodation, transport, guides, tour leaders or resort etc and then markets the resultant package → Tour operators create packages and products. Most of the times they are focused on few destinations **Distributors - travel agencies** Travel agencies are the major intermediaries in tourism Travel agents play the role of: - - - Travel agents do not usually design or create the holidays they sell Travel agencies can sell products developed by tour operators Travel agencies vs tour operators - - - - - - **Travel agencies** Key success factors: - - - - - **Distributors - online travel agencies (OTAs) (e..g Expedia, booking.com)** The digital revolution has strongly changed the way intermediaries run their businesses Due to this revolution, traditional travel agencies have strived to survive in the market, while new tourism giants have risen (Online Travel Agencies - OTAs) Moreover, this change has completely changed the industry dynamics as the OTAs have increased their bargaining power against tourism and travel providers. Business model canvas booking.com Business model canvas Expedia ***[The travel industry]*** The one that allows the movements of tourists internationally and on-site It entails: - - - - The industries: - - - - - - Airlines Global airline revenue forecast  Recovery scenarios Passenger volume recovery projection  Passenger numbers **Global economy** Resilience and strong recovery In 2022, COVID-related travel restrictions lifted further though aviation and the global economy continued to face significant challenges Industry cost pressure remains high Russia's invasion of Ukraine disrupted food and energy supplies, driving consumer prices higher and exacerbating inflationary pressures that had built up during the pandemic Air passenger markets Global passenger traffic recovery acccelerates  Uneven recovery across regions\ The tourism industry 2 ---------------------- Lodging industry vs hospitality industry Technically, hospitality industry involves: - - - - - The lodging industry - - - - - - Hotel industry - - - - - - Week 4 ====== **Hotel industry - the market segments:** 1 star hotels: economy hotels that only satisfy bare needs. Their services are mostly made of a bed and a bathroom. No other amenities or services provided. 2 star hotels: budget hotels similar to 1-star hotels with some basic additional service, e.g. television, restaurants and 24 hours open front-desk 3 star hotels: mid-scale hotels with larger rooms that offer a satisfiable number of amenities: e.g. business areas, pool, room service, gym 4 star hotels: upscale hotels with big rooms, a stylish design, and high-quality furnishing. They offer most of the high-quality amenities needed by many different kinds of tourists 5 star hotels: luxury hotels with unique style and top-quality personalised services. Carefully designed they may present pieces of art or starred restaurants. **Hotel industry - amenities** The hotel business bases its revenue stream on two distinct kind of products: rooms and amenities **Amenities** are those services alternative to the bare services offered by a room (a bed and a toilet) Most common amenities in hotels: - - - - - - - - - Some of these amenities are considered as basic services. The mix of these elements with most exclusive ones depends on the characteristics and the value proposition of the hotel. ***Chain hotels*** Chain hotel is a hotel that is part of a group of hotels operated by the same company. The hotel chain is the company that manages several hotels located in different areas. The hotel chain industry is becoming highly concentrated due to increasing M&A operations. Hotel chains [may] operate through multiple brands thus highly differentiating their offer. The differentiation depends on the segment of the market (price) and on the style adopted by the brand.\ So, different brands from the same group may operate in the same segment but still offering a different value proposition. JW Marriott is a luxury brand from Marriott Group: Inspired by the principles of mindfulness, JW Marriott is a haven designed to let guests focus on feeling whole -- present in mind, nourished in body, and revitalized in spirit. Each hotel creates nurturing environments and experiences for guests through impeccable service and a commitment to restoring a deep sense that "all is well.\" EDITION is a luxury brand from Marriott Group EDITION Hotels marks the next chapter in the lifestyle hotel story. Conceived by Ian Schrager in a partnership with Marriot International, EDITION combines the personal, intimate, individualized and unique lodging experience that Ian Schrager is known for, with the global reach, operational expertise and scale of Marriott. This delicate balancing act encompasses, for the very first time, not only great design and true innovation, but also great personal, friendly, modern service as well as outstanding, one-of-a-kind food, beverage and entertainment offerings... "all under one roof".   Advantages of managing a chain hotel: - - - - Disadvantages of managing a chain hotel: - - - Chain hotels can be run through different business models that determine the strength of their relationship with the group Business models: - - - **Management contract** In a hotel run through a management contract, the owner and the manager/operator of the hotel are two separate entities that established a contract. Most of the times the manager is the hotel chain that run the hotel with one of tis brands. Thus, in management contract, the hotel chain invests financial, strategic and organizational resources. *The hotel management contract has become an intricate web of terms and clauses that defines the relation between owner and operator. The balance of power in this relationship needs to be carefully established, which was and unfortunately still is not always a given. Owners need to be on their toes and bring in expert advice from consultants and lawyers to navigate the complexities of an agreement, which can bind them for decades.* **Franchising** In a hotel run through a franchising contract, the hotel chain (franchisor) grants to third parties (franchisee) the possibility to use its brand, operation methodologies and other support to run the business. The franchisee operates the hotel in exchange of an initial payment and periodical royalty fees (as a percentage of the income) **Group strategy** The weaker the relationship between the group (chain) and the hotel, the harder will be for the hotel chain to control the hotel operations. On the other side, stronger relationships mean higher investments and a massive commitment of financial and organizational resources. For this reason, franchising is the most used agreement by hotel chains to open new hotels, expanding their business and brand internationally at the expense of the control over hotel operations. For the same reason, owned-hotels are the less diffused form of hotel management in hotel chains. **Independent hotels** The hotels that are not part of a chain are independent hotels The brand is unique and both owner and operator (maybe the same person/organization) are not contractually linked with hotel chains. However, they could decide to adhere to international standards that allow them to be easily recognized in the market. Such standards involve also other hotels: e.g. Leading hotels of the world. Independent hotels have: - - - - Independent hotels have on average: - - - - The soft brand Soft brand are rapidly expanding in the market as a blended form of independent and chain hotels. They allow independent hotels to become affiliated to a hotel chain in a soft way without the obligation to respect strict rules and standards and only benefiting from few services (e.g. The Autograph Collection by Marriott) The member hotels are granted branded distribution, sales and marketing, CRS and loyalty systems in exchange for royalties and franchise fees. A soft hotel brand company offers individual hotels the opportunity to affiliate with major hotel chains while keeping their unique design, name and orientation. **Boutique hotels** New market trends → small and intimate hotels, held in stylish design decor with a personal note. It has a unique character and distinguishes itself from other hotel brands. It is true to its heritage, provides guests with great and ultra-personalized service and is typically situated in a fashionable urban location. - - - - - - - **Aparthotels** Aparthotels or apartment hotels are a type of hotel that has long-term housing for guests but may still have hotel services like housekeeping and on-site dining. Apartment hotels usually include a full kitchen and one or more bedrooms. The difference between these hotels and apartments is that there is no monthly commitment. If a guest wants to check out. They do not need to give notice to the hotel, like you would with an apartment rental. This also allows guests to book these hotels for a longer period of time without commitment or the receiving of a higher priced bill known from traditional hotels. **Albergo Diffuso**  A growing hotel category born in Italy which can be conceived as half house and half hotel. It consists of a single accommodation entity but with rooms that are located in different buildings across town, generally no more than 200-300 metres away from the central hub. In this formula does not require the construction of new structures but rather aims to restore and recuperate existing houses in accordance with local cultural and historical features. AD can be considered as a new sustainability-oriented hospitality model which, by creating synergies with its territory, positively affects the competitiveness of the destinations where ADs are located. **Hotels (main) KPIs (most significant ones in red)** **Average daily rate (ADR):** average price for each room sold → ADR = room revenues / number of rooms sold **Average rate index (ARI):** hotel ADR compared to competitors **Best available rate (BAR): l**owest rate available for guests to book **Occupancy rate:** rooms sold / available rooms **Total revenue per client (TREVPEC):** total revenue (accommodation + services) / total number of guests **Revenue per available room (REVPAR):** room revenues / available rooms (or ADR \* occupancy rates) **Revenue generating index:** hotel revpar compared to competitors **Cost per occupied room:** total rooms cost / number of rooms sold **Gross operating profit per available room (GOPPAR):** operational profitability per available room → gross operating profit / available rooms **Market penetration index** : hotel occupancy rate compared to average market occupancy **Revenue management (RM)** Process of revenue maximization through constant price adjustments Before (ROM), hotels or airlines companies used to set prices choosing among some predetermined prices RM is increasingly based on **dynamic pricing** **Revenue management (RM)** Thanks to new technologies such as Big data, it is possible to make precise forecasts about tourism demand Such forecasts allow firms to set the best possible price to offer to a specific target marketing in a specific period **Aim:** [setting the highest possible price that meets the customer willingness to pay] In dynamic pricing strategy, prices are adjusted according to several variables such as: - - - - - - Seasonality → Price changes depending on the period of the year  Clients segmentation → Price changes depending on the target's characteristics Consumption behaviours → Price changes depending on previous customer behaviours "Price-conscious", "smart", "needs proof", "persuadable", "risk-averse" , "I'll get it later" Fluctuation of the demand → Price changes depending on specific demand trends Competition → Price change depending on the competitors' behaviours Occupancy (and other KPIs)\ → Price changes depending on performance Innovation in tourism and hospitality ===================================== What is innovation? (OECD definitions) Product innovation - Process innovation - Marketing innovation - Social innovation - Organizational innovation - Business model innovation - Drivers:\ Today's tourist is no longer satisfied with simply moving from one place to another, but **needs to live experiences that immerse him in local realities**. Furthermore, the new ways of travelling of millennials and Gen Z - which represent about two thirds of the world population - increasingly push market operators to change more traditional business models, adapting them to the new needs of digital natives. New technologies are radically changing the use of tourism along the entire supply chain, from the moment of imagining the trip, to the booking, to the actual realisation of the experience and, finally, to the feedback about the holiday. All these elements have profoundly influenced the accommodation offer, which has seen a change in the relationship with **suppliers**, with **distribution**, with the **end customer**. The main innovative tourism operators that have changed the industry: - - Consumers increasingly access information on tourism destinations and products and make bookings on internet Most large tourism operators such as hotels, car rentals and tour operators distribute their products through their websites and improve communication to the consumers The development of e-commerce provides new opportunities to sell tourism related products Internet can empower even small tourism organizations Innovation in the tourism sector includes aspects that go beyond the mere concept of technological innovation, including the ability of operators to innovate in the context of business models and the environmental and social sustainability of their activities Tourism can, and must, move towards **sustainability,** trying to meet the needs of tourists, the tourism industry and host populations, without compromising the environmental and cultural heritage of a destination. It is a fact a sector highly dependent on natural resources, which uses different energy sources, with a high consumption of water and which, in many cases, can have a strong impact on biodiversity. From this point of view, new technologies could provide effective tools for controlling and improving the environmental impact of tourism activities, allowing the sector to face the challenges of sustainability. Innovative activities may be oriented towards: - - - - - - - - - - - - **Innovation in the lodging industry** Technological innovation, characterised by several areas which are becoming central to hotel management, and which will be decisive in the future: - - - - - - - Technological innovations are grouped into the efficiency and user experience categories, in consideration of their dual function. On the one hand, in fact, they can make structures more efficient from an organizational, energy and cost point of view; on the other hand, they can enrich the experience of tourists **Business models innovation**: Through the innovations of business models, accommodation facilities can expand the range of services offered, and therefore increase the quality of the product, or modify some organizational and marketing aspects, making their organization more functional and effective. Week 6: Destination management ============================== What is a destination? Destinations have been defined in many different ways from geographical, marketing, customer, and cultural perspectives and there is a lack of a shared definition. Different definitions: A destination can be conceived with a framework of ideographic, organizational and tourist cognition-based features (Lew, 1987). **Ideographic:** material characteristics (natural and man-made environment) **Organizational:** the image of tourist attraction, their role in time and space **Cognition-based:** tourists perceptions and feelings about the destination Destinations are multicultural and globalized markets where various actors produce, maintain, negotiate, and transform meanings while creating destination cultures (Moisander & Valtoten, 2006) A destination is a system of components such as place, people, infrastructures, attractions, accommodations, transports, and other services relevant to tourists. For customers, a destination is perceived as a combination of products and services that they want to use in a given geographical area. What is a destination? (This course's definition) - - - - - What is a destination?\ It can be a city or region with precise administrative boundaries or a network of smaller destinations\ For instance, the cinque terre is the destination, this is not an actual province (or city/region), but can be how it is perceived, such as cote d'azur as well  It may also overcome regional/national boundaries... Destinations typologies - - - - - The destination - the supply side  Core attractions = core attractions Primary tourist services = hospitality structures, mobility and accessibility, tourist information, other attractions, other tourist services Support services and infrastructures = business supports, norms and regulations, education facilities, material and immaterial infrastructures, marketing and promotions Contextual factors = landscape, socio-cultural context, security systems, first-aid and health services **Tangible and intangible assets** **Culture of a territory** Combination of **values and experiences** that **guide strategic choices** and **behaviours** of the actors involved in the destination development: Government sensitivity to tourism Entrepreneurial dynamism of the sector Attitude towards collaboration and integration between actors at all levels Diffusion of a strong sense of hospitality and sustainability **Image and reputation** The ability of the destination to promote its identity and generate a clear and positive image Identification and promotion of destination's tangible assets Development of a clear identity coherent with local characteristics and tourists expectations Promotion of a touristic offer that respects the specific features of the area **Knowledge** Managerial and entrepreneurial skills, competences and experiences of local actors and stakeholders: - - - - **How to become a destination?** **Communities:** low level of tourism infrastructures and activities, but vibrant communities, with strong history/culture **Localities**: few structures and activities, and socio-cultural environment not particularly authentic. Usually areas created rather recently **Attractors:** places with high-levels of tourism infrastructures and activities offered, but with no connection to a socio-cultural dimension **Stakeholders** Destinations are characterised by the presence of public and private actors. They may be more or less involved in the development of a destination. **Stakeholders involvement - public/private relationships** **Public/private balance model =** perfect balance between firms and institutions in a win-win relationship in which every actor acts in its sphere of competence **Low tourist intensity areas =** without strong identity or tourist facilities. It is very unlikely the development of a tourist offer **Market led model** = firms and entrepreneurs plan, realize andmanage almost the entire tourist supply chain. Local authorities have base responsibilities such as developing transport infrastructures **Supply-oriented model** = based on valuable natural and cultural resources, that should be valued and preserved. **Trade-off** → These areas are typically subject to protection restrictions but should also promote tourist use  **Territorial competitiveness** A territory is competitive when it is capable of **attracting and maintaining** institutions, firms, investments and people (residents and tourists). A territory is attractive for a given actor when it creates the **material and immaterial conditions for that actor to satisfy its needs** *You take delight not in a city's seven or seventy wonders, but in the answer it gives to a question of yours* - Italo Calvino **Destination competitiveness** The aim of a competitive destination is to create welfare and socio-economic prosperity for its residents These conditions are linked to the level of **productivity** of a given destination.  A destination is truly competitive when..... It is able to increase tourism **overall expenditure**... It attracts tourists, while providing them **memorable experiences**... It generates **wealth for the local community** and **preserves natural and cultural capital** for future generations Tourism indicators: - - The competitiveness of a destination is determined of four main components: - - - - **Core resources and attractors** Factors that determine the appeal of a destination. These are the main reasons why a tourist chooses a destination over another (tangible or intangible): - - - - - - - - - **Supporting factors and resources** Factors that provide the foundations for a successful tourism industry - - - - **Destination management** Activities that enhance the first two components and adapt the destination to qualifying determinants: - - - - - **Qualifying determinants** Factors that moderate, modify or mitigate destination competitiveness: - - - - **Destination development plan** A shared statement of intent to manage a destination over a stated period of time, articulating the roles of the different stakeholders and identifying clear actions that they will take and the supply of required resources [[https://www.youtube.com/watch?v=WDAVGdBEd\_Y&t=3s]](https://www.youtube.com/watch?v=WDAVGdBEd_Y&t=3s) The strategic model: 1. 2. 3. 4. 1. 2. 3. 4. Destination competitiveness =========================== XXX