Economics for Tourism, Hospitality and Leisure - Case Study Example

?Economics for Tourism, Hospitality and leisure Table of Contents Japanese tourism demand to Guam 3 Marketing Decisions 3 Supply Decisions 3 Operational Decisions 4 Conclusion 4 Tourism as a development strategy: Is it the right way to progress? 6 Tourism as a potential remedy to widespread poverty 6 Impact of Tourism in Philippines 7 References 8 Bibliography 9 Japanese tourism demand to Guam Guam is a small island on West Pacific and draws most of its income from tourism and US government spending on its defence and construction sectors. On account of its vicinity to Japan in terms of distance as well as cultural aspects, Guam receives around 80-85 percent tourists from the former. However, the tourism industry of the economy had suffered for quite some time now on account of a variety of factors which have adversely affected the economy of Japan through downfall in their GDP figures, per capita income and employment rates. Due to Guam’s close association with the economy of Japan, misfortunes in the latter have seriously affected the economic situation in Guam. Nonetheless, the scenario has improved in Guam eventually although the trend of tourists has changed significantly (Dougan, 2007). A deep investigation into the behavioural pattern of the new generation of Japanese tourists has yielded a sharp contrast to the older lot of travellers. Hence, the policymakers need to frame new marketing, supply and operational decisions for boosting their tourism sector to be at par with its past glory. Marketing Decisions An empirical study shows that Japanese tourists prefer Guam over other tourist destinations owing to the proximity between the two and the picturesque beauty of the place. The Japanese are found to be mostly concerned about their security while touring and thus, the Guamanian policymakers need to market their increased concern towards security of their tourists and beautifying the spot. In addition, the high demand for luxury items might also be employed by the policymakers for marketing tourism in Guam. A weak dollar against Japanese Yen has reduced the relative price of many branded items in Guam than they are in Japan which could be used as a ploy by policymakers to attract tourists (Moutinho, Curry, & Rita, 1996). Supply Decisions Supply decisions which boost tourism in Guam are those which help in drawing more and more tourists within the nation. Supply decisions are essentially those which take a note of the demand situation and then frame supply schedules so as to maximise profits (Walker & Walker, 2011). In the present instance, the demand decisions of Japanese tourists are found to be dependent more on their per capita income rather than the prices of commodities. Moreover, they incline more towards luxury items available in Guam. To meet their needs of regular items, the Japanese tourists recently have turned their attention towards discounted commodity stores. Hence, the policymakers should choose to enhance the supply of luxury items in Guam as increase in sale of discounted commodity items do not assist in boosting the level of income in a nation. In addition, the Guamanian policymakers could also employ those tools which give them an edge over other tourism destinations in terms of opportunity costs. For instance, the hotel room rates in Guam are far cheaper than those in other tourist destinations with the downward trend especially noted post the Asian financial crisis, on account of high dependence of Guamanian tourism on the economy of Japan. The policymakers can also choose to instruct all Guamanian hotels towards keeping their prices low as well especially at times when the Japanese economy is experiencing a low. Moreover, at times when the demand is low, the policymakers can choose to adjust the availability of airline seats so as to keep the prices constant and reduce chances of loss. Operational Decisions The operational decisions that the policymakers should adopt to boost the Guamanian tourism sector would tend to improve the financial flow within the economy (Knowles, Diamantis, & El-Mourhabi, 2004). As empirical study shows that demand by Japanese tourists are highly affected due to the income effect. They are found to increase their demand for luxury items when there is an increase in their per capita income. In fact, the increase in demand for luxury items is found to be much more than those for other commodities, which suggests that policymakers should increase the availability of luxury items for tourists especially at a time when the Japanese economy is improving. Conclusion Basically, the decisions being taken by the Guamanian policymakers highly depend upon the economic situation of Japan which leaves little space for the former to improve the prevailing situation in Guam, at any point of time. One of the most important factors that the Guamanian policymakers must emphasise upon anyhow is, to adjust the availability of luxury items within the nation since that draws a huge section of Japanese tourists, especially during good times. However, the basic success depends upon the accuracy with which the policymakers can forecast the arrival of tourists within the nation. Tourism as a development strategy: Is it the right way to progress? Tourism has often been adopted as a development strategy by many developing economies of the world although the policy is often being criticised on grounds of being able to successfully eradicate poverty from the society or not. Theoretically, tourism sector is found to contribute towards an inflow of foreign funds within an economy which builds up the reserves of the nation in question. These funds are again utilised for investment purposes which help in creating employment opportunities within the nation in question. Tourism sector helps in creating employment directly as well, especially in case when the tourism industry is regarded as a pillaring one in the concerned economy. Philippines too is one such nation where tourism industry is regarded very highly though success of the industry in abolishing poverty, is highly questionable. Tourism as a potential remedy to widespread poverty Tourism being a part of the service sector is often viewed highly by the developing economies of the world, nearly one-third of which are considered to be dependent on tourism as a channel to generate revenue. Research shows that direct involvement in the tourism sector helped in the creation of numerous employment opportunities in developing economies and each such employment helped in the creation of 1.5 employment opportunity in a tourism related segment (Bolwell & Weinz, 2008). Tourism is often treated with high regard by the developing economies as it involves negligible start-up costs and additionally generates quick returns (Spenceley, 2008). Ordinarily, tourism invites foreign resources within the economy which the recipient economy can employ in order to boost its investment potentials. Third world economies are found to be highly pinning upon tourism to provide a respite from the widespread poverty in their respective nations. One possible way that they adopt is through popularising their respective cultural and social heritages as has been the way to develop tourism in the poverty laden Saharan Africa (UNESCO: Bureau of Public Information, 2005). Another method in which tourism can help in enhancing development and eradicating poverty from the heart of a nation is through boosting demand in a nation. Higher the inflow of tourists in a nation, greater will be the demand in the economy which automatically boosts the aggregate production level (Verdugo, 2008). Moreover, when foreign tourists buy goods and services within the host country, it could be treated in a way equivalent to that of exports so that the current account of the economy is assisted and the BOP position of the nation is enhanced (Bolwell & Weinz, 2008). On the other hand there are certain challenges as well which hinder the development of tourism in the developing or poverty laden regions of the world. The developing economies aiming at correcting poverty through encouraging tourism are barely equipped with the infrastructure necessary to accomplish their targets which compels them to invite foreign entities or operators to handle the tasks. Moreover, lack of bargaining power often acts as a hindrance with the foreign nations taking an advantage of the former’s position through seeking undue favours. Finally, the foreign tourists who are habituated in a relatively luxurious lifestyle might as well complain about the lowly ambiance of poor nations thus invoking the need to build luxurious hotels. These luxurious hotels are often maintained by the relatively richer section of the recipient nation so that ultimately, the benefits of tourism do not reach the poorer sections of the society (Page & Connell, 2006). Impact of Tourism in Philippines Philippines could not draw many benefits out of encouraging tourism within the nation due to its high dependence on trans-national corporations for boosting the domestic tourism sector. The situation is such that in most of the cases, it is the TNCs which extract the lion’s share of the profit margin depriving the actual needy lot. Moreover, the social adversities might not be neglected given that the drive has forced many Filipino women and children towards prostitution, with the popularity of sex tourism on a rise. Hence, it is found that many middlemen are reaping advantages out of the destitution of the Filipino society thus divesting the poor, for whom the resources are actually needed. In addition, the economy derives a meagre 1 percent of its gross income out of tourism revenues while its prime source of income remains agriculture. Hence the importance of tourism to boost the economy of Philippines is rather nominal (Lumang, 2008). References Bolwell, D., & Weinz, W. (2008, October). Reducing poverty through tourism. Retrieved August 17, 2011, from SECTORAL ACTIVITIES PROGRAMME, WP 266: http://www.ilo.org/public/english/dialogue/sector/papers/tourism/wp266.pdf Dougan, J. W. (2007). Analysis of Japanese Tourist Demand to Guam. Asia Paci?c Journal of Tourism Research , 12 (2), 79-88. Knowles, T., Diamantis, D., & El-Mourhabi, J. B. (2004). The globalization of tourism and hospitality: a strategic perspective (2nd ed.). London, UK: Thomson. Lumang, J. (2008). Tourism as a development strategy: Is it the right way to progress? Contours, 18 (4), 8-11. Moutinho, L., Curry, B., & Rita, P. (1996). Expert systems in tourism marketing. New York, USA: Routledge. Page, S., & Connell, J. (2006). Tourism: a modern synthesis (2nd ed.). New York, USA: Cengage Learning. Spenceley, A. (2008). Responsible tourism: critical issues for conservation and development. London, UK: Earthscan Publications. UNESCO: Bureau of Public Information. (2005). Eradicating Poverty. Retrieved August 17, 2011, from http://www.unesco.org/bpi/pdf/memobpi07_poverty_en.pdf Verdugo, D. (2008). Tourism and development aid: an international organisation’s perspective in East & Southern Africa. Retrieved August 17, 2011, from http://www.tasamafrika.org/pdf/yayinlar/Verdugo-EN.pdf Walker, J. R., & Walker, J. T. (2011). Tourism Concepts and Practices. New Delhi, India: Dorling Kindersley. Bibliography Hall, C. M. (2007). Pro-poor tourism: who benefits? : Perspectives on tourism and poverty reduction. New York, USA: Channel View Publications. Holden, A. (2008). Environment and tourism. London, UK: Taylor & Francis. Ivanhovic, M. (2009). Cultural Tourism. Cape Town, South Africa: Juta Publications. Mowforth, M. & Munt, I. (2008). Tourism and sustainability: development, globalisation and new tourism in the Third World. London, UK: Taylor & Francis. Read More