Module 2 1

Module 2- Tourism as an industry

Tourism As An industry
Tourism system
Tourism impacts
Demand Led system
OBJECTIVES
 After reading this Unit you will be able to :
 Link the historical changes in tourism concepts as well as touristic activity through
the identification of Demand-Supply determinants and constraints,
 Identify the role of the linkages and system of Demand-Supply in terms of the tourist
and the destination in the process of consumption of goods and services, and
 Understand the concept of tourism impacts.

Tourism system

INTRODUCTION
By Tourism System we mean that conceptual approach which helps to identify the dynamic
elements of tourism. The boundaries of tourism are extremely flexible and can be confused
with leisure and recreation activities.
CONCEPTS
Tourism is being systematically viewed as a framework in which the theory and practice link
up with each other to address the satisfaction of all those concerned with the functioning of
the system.
The dynamic element of the Tourism System is its historical potential for development and
resulting benefits. However, the system operates within a global economic environment
along with national priorities. These are often not understood in a common perspective. The
different perceptions can act as constraints on the developmental potential of a destination.
Today, the tourism debate centres on the dynamic of the Tourism Phenomenon where
perceptions of the receivers are somewhat different to that of the tourists. The consumers
are not always sensitive to the host, nor are they of major importance to the host. Often we
have seen people in our bazaars or other public places say "the foreigner is nobody's
friend", or that "they are very free with our hospitality but very careful with their dollars".
Similarly, many a times tourists abuse symbols of local pride and standards of local services.
Tourists generally assume that they are being cheated because they know that bazaars run
on bargaining .
How far does the phenomenon of tourism balance between the expectations of the tourist
and the resident population depends on the :
• interaction between the support system of the resident and the tourist, and
• perceptions of both groups regarding their right to have access to tourist oriented
products as well as resident oriented products.
This means that the Tourism System must estimate the carrying capacity so that slogans to
promote destinations will not have to exclaim "Get there before it disappears".
The system therefore has to be "managed" so that everybody's expectations are capable of
being realised. How the system is managed will indicate the nature of the impacts of
tourism on the industry, the host population and the tourist. The broader goals will be the
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economic, social and cultural changes that the managers of tourism (the state and the
private sector) have envisaged along with the expectations of the residents of the area
where tourism is actually located.

DEMAND-LED SYSTEM
Because demand for tourism can be postponed or can often remain at the level of wish
fulfillment, the needs and objectives of the tourists are often given exclusive importance by
policy makers. One can say that product behaviour and use of resources, technology, labour
and capital on the supply side are often utilised poorly. When the environment for the
Tourism System is Demand led, tourism tends to be outward oriented, looking more to the
satisfaction of the tourist rather than the resident. For example, Indian tourism has, by and
large, ignored the 62.3 million domestic tourists. This is because in the global framework of
tourism success what counts is the share of the world tourist market. With Europe as our
historical priority, in a demand led situation, we are concerned, for example, that Belgian
tourists find it expensive to visit India because they have to fly via Paris. The absence of
direct flights to India is a constraint. Hence the system demands that if tourism demand is to
be satisfied, then India must follow an "open skies" policy.
The Indian tourist product, though rightly famed for its richness and remarkability, is found
wanting in terms of infrastructural strength and diversity. Since Third World destinations are
seen as destinations only, the standards of the infrastructure and superstructure are
evaluated in European terms. Third World Governments also see Domestic Tourism as a
subsidy oriented development and the growth of out bound tourism as an activity which
must be kept in check. The fact that in 1992, we had more outbound than inbound tourists
is seen as a failure of our tourism policy. In fact, all countries tend to see only the
international perspective in tourism because of the foreign exchange component and
marginalise all other aspects. Factors that shape demand for tourism are therefore
examined in the international context like:
1) Leisure time- holidays, vacations. retirement age, shrinking work, weekend.
2) Life Cycle Stage- time and money available to finance tourism.
3) Increased mobility-- cost and accessibility to air and automobile transport.
4) Work patterns-- flexibility of time.
5) Affluence- increased real incomes
6) Women in the work force
7) Attitudes to marriage
8) Increased amenities to simplify home chores.
9) Trend towards smaller families, higher education and higher life expectancy.
10) Increasing urbanisation and migration.

To encourage the full potential of these factors it is expected that destinations should:
• have increased accessibility by scheduled, charter and domestic air services,
• promote market exchange rate (devaluation) and control inflation,
• re-orient the business cycle,
• relax visa controls, encourage tourism education and language skills,
• use technology (like airconditioning) to counter climate,
• ensure safe health conditions and control pollution (international standards of
hygiene), and
• resolve political disputes to ensure stability so that tourists feel secure.
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Measuring Demand
Demand is strongly affected and limited by the supply. If the supply aspects are not taken
into consideration when using demand figures, planners might be led into the false
assumption that in a particular area, the supply should be increased to meet the demand
when, in actuality, the increased supply may be needed much more elsewhere. There are
several measures of actual demand
1. Visitor Arrivals
2. Visitor-days visitor nights
3. Amount spent
1. Visitor Arrivals
Simply counting the number of people who arrive at a destination is a measure of demand,
although not a particularly adequate one. However, when visitors arrive by ship or aircraft,
for example, to an island, quite accurate data are obtainable. Those who are en route to
some other place should not be included in the arrival data. Visitor Arrivals are the easiest
type of data to obtain, especially if public transportation is the principal mode used. Regular
reporting of visitor arrivals is of value in measuring broad changes in demand. Variation in
the number of arrivals month by month is quite significant because it indicates the rise and
fall of demand during the course of a year.
2. Visitor-Days or Visitor –Nights
Data on visitor-days and visitor-nights are much more valuable to tourism planners than are
data on the number of arrivals. To calculate the former, the number of visitors is multiplied
by their average length of stay. Public park planners and beach managers are interested in
visitor-day figures. Hotel and other accommodations people want data on visitor nights.
When such data are obtained, it is not difficult to make an estimate of the likely
expenditures made by per visitor per night or day. Data on visitor days and visitor nights are
of great benefit to planners who work on public facilities for tourists, such as utility systems,
parking, and recreation areas. Similarly, private developers planning new hotels or other
accommodations or services want and need visitor-night information. Thus visitor-days and
visitor-nights are the most practical data to obtain and are useful to tourism people.
D= No. of visitors X average no. of days or nights at destination
3. Amount Spent
Amount spent is the most meaningful measure of demand if determined accurately.
However, it is the most difficult measure to obtain. Statistics of this type tend to be hidden
or partially forgotten by the visitor. Thus, they are not accurate as desired. However, to
members of legislatures and the public, total tourist expenditures are the most easily
understood and the most impressive.
The most common method of estimating tourist expenditures is to multiply visitor-days or
visitor-nights by the average per-day or per-night expenditure.

Tourism Supply
Market – Supply Match
In the case of manufacturing industry, the best product to manufacture is the one preferred by
market. This holds true for a service industry like tourism also. No doubt there can be
exceptions in this regard when a unique tourism product is made and a demand is created. But
this also happens as the service provider knows that the tourist is looking for something
different. Let us look at the factors that are important for the demand-supply match.
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Matching Supply with the Market / Demand

In order to satisfy the market demand, a nation, region, or community must be able to
provide a variety of attractions and services on the supply side. The planning function for
tourism should strive for a balance between demand (market) and supply (development). This
requires an understanding of market characteristics and trends as well as the process of
planning development to meet market needs. Over supply can create huge losses where as
under supply leads to under utilisation of resources. Hence, the need for matching supply with
demand. .
All sectors involved in the development of the supply side of tourism should strive
towards meeting the desires and needs of the travel market. Whenever demand and supply are
out of balance, planning and development should be directed towards improving the supply
demand match. Only through analysis of both demand and supply can a region, destination or a
site know how to plan. All supply side components — attractions, transportations, services,
information and promotion — must be planned and developed to meet the need of the
markets.
Supply side development is not exclusively under the control of business sector. All five
major components of supply, i.e., attractions, transportation, services, information and
promotion are created and managed by governments and non-profit organisations as well as
business. This means that for tourism to function properly, planning should integrate policies
and actions by all the three sectors..
.
External Factors
The functioning of the core components from the supply side is greatly influenced by many
external factors. These factors may include organisation, leadership, finance, labour,
entrepreneurship, community, competition, governmental policies, natural and cultural
resources, etc. Planning should not be concerned solely with the core components only,
because they may be subject to outside influences than those inside their own control. The
external factors listed above influence the nature of tourism development.

A brief examination of these may help in understanding some complicated issues of

tourism which are critical to plan the proper functioning of the tourism system:
1. Natural Resources
Natural resources can be the single greatest cause of travel to a destination. Topography
(mountains, glaciers, desserts, etc.), vegetation, wild life (nature centres, jungles, etc.) and
climate and weather features of a place greatly influence the planning and development of
tourism. It need not be explained to tourism students as to why there is a vigorous need to
champion for natural resource protection. Tourism sponsors and developers in order for tourism
system to function the best, must incorporate the protection of natural resources in the plans.
2. Cultural Resources
In recent years, several travel market segments have increasingly sought destinations
with abundant cultural resources. This category of resource base, as you have learnt in earlier
units, includes prehistoric sites, historic sites, places of ethnicity, folklore and education, places
for performing arts, museums, and galleries, and sites important for religion and entertainment.
3. Entrepreneurship
Because tourism is dynamic, entrepreneurs are needed who visualise opportunities for
new developments and also creative ways of managing existing supply components. The ability
to see an opportunity, to obtain the needed finances, to obtain the proper location and sites, to
engage designers to create physical settings, and to gather the human resources needed to
manage the infrastructure and services is important for tourism development.
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For industrialised nations, entrepreneurship is an intrinsic phenomenon. But in developing and

undeveloped countries it is a major handicap that increases the difficulty of creating and
expanding tourism.

4. Finance
Capital is the single most important requirement for any development including tourism.
But the ease of obtaining capital for tourism varies greatly. Public and private lenders are often
sceptical and have an image of tourism that is not always positive. Also, the fact is that tourism
takes more capital than is popularly believed. Investors are more likely to support projects that
demonstrate sound feasibility. Planners need to take this into account.
5. Human Resources
The availability of adequately trained workers in an area can have considerable influence
on tourism development. The labour capacity of an area has much to do with tourism
development. The view that untrained can perform all tasks needed in tourism is a
misconception. HRD is vital to tourism planning.
6. Community
A much more important factor influencing tourism development is how the community /
residents perceive tourism in their area. While the business sector may favour growth locals
may oppose it on grounds of increased social or environmental problems and other negative
impacts. Political, environmental, religious, cultural, ethnic and other groups in an area can
make or break the proper functioning of the tourism system. Without doubt, as tourism
development research and experience broadens, more influential factors will be discovered. Any
planning for tourism must take into account the core of the tourism functional system and the
many factors influencing it.

Impact of Tourism.

Tourism can only be sustainable if it is carefully managed. Tourism student, researchers, and
excursionist must have a clear understanding of both the positive and negative impact of
tourism on the quality of life of a nation, a provinces or state, or a community.

Impacts on Economy
Positive Impacts

1. The source of foreign income or exchange.

2. Factor in regional development
3. Initial infrastructural and industrial development.
4. Provides employment for both skilled and unskilled manpower.
Negative Impacts
1. Smuggling of contrabands
2. Inflation
3. Unbalanced of demand and supply
4. Less priority to domestic products.

Impacts on Society
Positive Impacts
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1. Socio-cultural understanding.
2. International relationship development.
3. Education about people and country.

Negative Impacts

Generally, in a younger generation, the practice of the western way of life stay and manner
changes their socio-cultural outlook, which might affect the values and norms of existing
cultural.

Impacts on Environment
Positive Impact
1. Rehabilitation of existing building and historical sites.
2. Transformation of old houses and palaces into new uses of museums hotels and
tourist attractions.
3. The present concept of tourism is to keep the nature at its uniqueness.
Negative Impact
1. Natural habitat and environment were destroyed.
2. Pollution to the environment.

Socio-Cultural Impacts

Society is a community or broad grouping of people living in a certain area that has common
traditions, institutions, activities and interests. In fact, society is a system of relationship of people
who share some sense of common identity. It may be small like a family/ locality or large as whole of
the nation. Culture is the practices of that society which binds people of the society together. It
includes manners, morals, beliefs, behaviour, values and norms. A good manner is socially
acceptable way of relationship. It includes respect, care and consideration for others. Morality is a
set of rules, principles and duties applicable to a group of people or a society which is generally
independent of religion. Belief is the foundation of attitude. Attitude determines the outlook and
thinking process of an individual and the society. Behaviour is the way in which an individual or a
member of the society behaves or acts. It is viewed with reference to phenomena, incident or an
action. It is, therefore, a response of the member. Norms are the formal rules of the society. It
regulates the members of the community, group or society in maintaining harmony. Values are
those ideals that a society holds above all, like honesty, respect, faithfulness. These values are the
building blocks of norms. These are certain basic rules of social interaction and conduct of the
people of the society.