Economics for Hospitality, Tourism and Leisure - Essay Example

Economics for Hospitality, Tourism and Leisure Table of Contents Economics for Hospitality, Tourism and Leisure Table of Contents 2 Case Study Japanese tourism demand to Guam 3 1.1 Introduction 3 1.2 Marketing Decisions 3 1.3 Supply Decisions 4 1.4 Operational Decisions 4 1.5 Conclusion 4 Case study 2 - Tourism as a development strategy: Is it the right way to progress? 6 2.1 Introduction 6 2.2Is Tourism important for Alleviation of Poverty? 6 2.3 Conclusion 7 References 8 Bibliography 9 Case Study 1 - Japanese tourism demand to Guam 1.1 Introduction Guam’s proximity to Japan has often been cited as one of the reasons behind the remarkable number of Japanese visitors in the former. Precisely, Guam receives around 80 to 85 percent tourists from Japan alone, at any point of time in the year. Tourism is viewed as one of the most important sources of income by the Guamanian economy apart from its parent US government’s spending on Guam’s defense and construction segments. A major fragment of its tourism revenues are brought by Japanese tourists which is the reason why Guam remains so attentive about the scenarios of Japan. The popularity of Guam as a tourist spot among Japanese could be attributed to the former’s location as well as alignment to East Asian culture. However, recently the set of Japanese tourists has been changed from the traditional set of middle-aged tourists; Guam is recently being viewed as a favorite weekend spot by the Japanese youth (Dougan, 2007). Given the tourism revenues which come from Japan, Guam thus needs to devise new strategies of attracting and retaining the new set of tourists. 1.2 Marketing Decisions Marketing decisions are important in the tourism sector which is featured by a high degree of competition (Dasgupta, 2011). In the present case, marketing decisions are necessary to adopt by the Guamanian government to ensure that the Japanese prefer no other destination as a vacation spot. One important strategy they might adopt is to frame new tourism packages for the new set of tourists. In the era of globalization, youth generally are fonder of a culture inclined more towards the West, unlike the middle-aged population. Hence, Guam could pay greater attention to features which are more Western than Asian in order to retain their new set of visitors. It can easily gain the assistance of USA – of which Guam is a territory, in this regard. Simultaneously, they may not neglect their older features as well since such a step might bar the middle-aged population. Guam is more popular as a weekend spot which is why they might not need to hold back upon their traditional culture, as a method to attract the historical tourist. 1.3 Supply Decisions In addition to marketing decisions, the national administration needs to stay alert about the supply side factors as well in order to attract tourists. Supply decisions primarily include the method in which tour operators cater to the needs of visitors to the nation (Shaw & Williams, 2004). In this regard, the national administration could induce tour operators to enter into pacts with hotels so as to make the rates more affordable for tourists who have hired the services of particular tour operators. During crises, people prefer to spend their vacations at nearby spots rather than bearing the expense of holidaying at distant places. The Guamanian government employs this very aspect to draw tourists at difficult times. They take the help of airlines companies to assist them additionally through lowering the price of seats. The companies need not bear the brunt of such a measure because the number of seats is highly flexible and so is the variable cost content of providing service. 1.4 Operational Decisions It is necessary to frame operational decisions simultaneously in order to ensure that the marketing and supply strategies are met well. The national administration must be aware of the channels through which funds should enter the economy for facilitating the implementation of these strategies. In other words, they need to have a robust budget for the plans they are likely to adopt (OECD, 2009). The Japanese tourists tend to be highly attracted to the luxury commodities sold in Guam. Although these items are sold at a high profit margin, the rates are still cheaper compared to the ones prevailing in Japan, which plays a significant role for attracting tourists from Japan. The Guamanian government could aim at extracting its budget needs to boost the tourism sector infrastructure, through taxing the sellers of luxury goods. 1.5 Conclusion The Guamanian government needs to modify and revise its tourism strategies over time owing to the changing sets of tourists in the economy. Although majority of its tourists are from Japan, maximum visitors recently are found to belong to a younger age group in contrast to the situation a few years ago. In an urgency to devise plans for retaining this younger set of tourists, the national government might adopt certain marketing, supply and operational decisions such as developing affordable tour packages embedded with Western features or popularizing the sale of luxury items in the economy. Such steps can not only ensure the economy towards retaining their pack of tourists but also insure the tourism revenue it earns during periods of economic crisis. Case study 2 - Tourism as a development strategy: Is it the right way to progress? 2.1 Introduction Tourism is considered as a highly important development strategy by many developing economies of the world. Developing economies generally try to advertise and market their traditional and cultural aspects in order to draw the attention of tourists from developed nations. Retention of these traditional aspects does not need much expenditure by the national government as these are already built in; instead the only requirement is to take care of the already built facets. Tourism revenue is often treated as FDI that helps in eradicating the economic gap existing between developed and developing nations. In addition, they help in creating employment and generating income which eventually assists in the abolition of poverty from the heart of the nation (Mihalic, 2002). In fact, the importance of tourism was supported by a number of organizations including World Bank, World Trade Organization as well as the United Nations, for eradication of poverty from the heart of developing nations. Statistics found tourism to be contributing almost 83 percent to export revenues of developing economies and primary source of foreign exchange earnings to 38 percent of developing nations around the world (Ivanovic, 2009). 2.2 Is Tourism important for Alleviation of Poverty? A number of factors could be held responsible for promoting tourism to the priority lists of national governments, for economic boost. Tourism being one of the fastest growing sectors of the world, easily finds a place in the priority list of supports for the national governments, to meet their objectives of economic growth. Nations such as Thailand and Vietnam follow such strategies (Elliott, 1997). This is indeed the reason why trends in tourism industry returns are highly correlated with trends in returns from other sectors, since it extracts resources out of all sectors and puts them into one. In addition, in order to boost the tourism industry, it is needed to uplift a number of other segments of the host region as well, which leads to infrastructural development. Hence, money pours in from foreign as well as domestic sources which eradicate poverty by a large extent (Hara, 2008). Thirdly, development of tourism helps to reduce the rural-urban migration that increases competition for the urban poor and unemployed. As new jobs are created uniformly, the pressure on the labor market stays balanced and is considered as a boost to social welfare (United Nations, 2003). Philippines created 3.49 million jobs in 2006, owing to the tourism sector alone (Lumang, 2008). Lastly, a new branch of tourists, called volunteer tourists, have recently evolved, who primarily aim at assisting the underprivileged population dwelling in any specific region through provision of financial aid, provide recognition to any specific community; many-a-times, they also arrive with objectives of raising awareness about some important cause. Regions in Africa, Asia and Latin America are a few places where such tourists visit frequently, thus pacing up the host’s revival from poverty (Telfer & Sharpley, 2008). However, the instance of Philippines is not as bright as being depicted above. Although tourism industry is considered as one of the fastest growing in the world, the anticipated results for 2008 had hinted tourism industry to be contributing just 3.9% to GDP while the financial benefits of new job creation is not expected to exceed 1% of the nation’s GDP. Although financial investment is on its way to boost the industry, the costs of such activities are expected to take a heavy toll upon the poorer section of the economy. Many poor have been displaced for the sake of beautification, including the expulsion of fishermen from their known fishing grounds, which has hampered their livelihood. In addition, there is an increase in the general price level including those of medicine and hospital expenses. People have been compelled to take up odd methods, such as prostitution and selling off their organs to make their both ends meet (Lumang, 2008). 2.3 Conclusion Although tourism is popularly viewed as one of the most effective tools of abolishing poverty, empirical evidence of Philippines of suggestive of a different story. Tourism is a growing sector in the economy, but it is reportedly taking a heavy toll upon the poorer sections of the nation so that its power to eradicate poverty might not be righteously claimed in this instance. References Dasgupta, D. (2011). Tourism Marketing. New Delhi, India: Dorling Kindersley. Dougan, J. W. (2007). Analysis of Japanese Tourist Demand to Guam. Asia Pacific Journal of Tourism Research , 12 (2), 79-88. Elliott, J. (1997). Tourism: politics and public sector management. New York, USA: Routledge. Hara, T. (2008). Quantitative tourism industry analysis: introduction to input-output, social accounting matrix modeling and tourism satellite accounts. Oxford, UK: Butterworth-Heinemann. Ivanovic, M. (2009). Cultural Tourism. Cape Town, South Africa: Juta & Company. Lumang, J. (2008). “Tourism as a development strategy: Is it the right way to progress?” [PDF]. Contours, Vol. 18 (4): 8-11. Mihalic, T. (2002). “Tourism and Economic Development Issues” in Tourism and development: concepts and issues by Sharpley, R. & Telfer, D. J. (eds). New York, USA: Channel View Publications. OECD. (2009). Aid for Trade at a Glance 2009: Maintaining Momentum. USA: OECD Publications. Shaw, G. & Williams, A. M. (2004). Tourism and tourism spaces. London, UK: Sage. Telfer, D. J. & Sharpley, R. (2008). Tourism and development in the developing world. New York, USA: Routledge. United Nations. (2003). Poverty alleviation through sustainable tourism development. USA: United Nations Publications. Bibliography Knowles, T., Diamantis, D., & El-Mourhabi, J. B. (2004). The globalization of tourism and hospitality: a strategic perspective (2nd ed.). London, UK: Thomson. Read More