Management Issues in Relation to International Travel and Tourism - Report Example

XYZ No. 12345 TOURISM MANAGEMENT ISSUES IN RELATION TO INTERNATIONAL TRAVEL AND TOURISM XYZ of XYZ Department of XYZ 18 December, 2011 Table of Contents Contents Page No 1. Executive Summary 03 2. Introduction 03 3. Objectives 04 4. Discussions and Analysis 04 4.1 Product Distribution Management 04 4.2 Reservation and Room Management System 05 4.3 Communication Management 05 4.4 Food Management 06 4.5 Management of Tour Operators 07 4.6 Human Resource Management 07 5. Sustainability Management in Tourism 08 5.1 Depletion of Natural Resources 09 5.2 Emission of Greenhouse Gases 09 5.3 Damaging Ecosystem 09 5.4 How to Develop Sustainability? 10 6. Human Resource Management in TUI 11 6.1 Training 12 6.2 Staffing 14 7. Conclusion 15 Bibliography 17 1. Executive Summary Tourism is probably one of the fastest growing industries with an operational network over the entire globe. Many parts of the world have observed positive effects from tourism because it contains an idea of incessant development and modernism. The industry observed almost over 940 million tourists across the world during 2010 with 4.7% increasing financial receipt, ending by US$919 billion (World Tourism Organization, 2011). Depending upon specific area and region, the international travel and tourism industry has substantial effects on cultural and social aspects of a society. By nature, the industry deals with numbers of management issues and in modern scenario the role of these management issues are increasing day by day. In several perspectives, the industry has also close association with global hospitality industry. This report primarily deals with those key management issues which are frequently related to this industry and tourists. On the basis of data collected through various online and offline resources, the report not only highlights the key management issues but it also describes the sustainable tourism and the recommendations to improve it. The last part of the report is regarding HRM policies of TUI in the perspective of global hospitality. 2. Introduction Since by nature, international travel and tourism industry has a vast horizon of operations, therefore behavior of industry also changes with certain changes in any of its associated field. International travel and tourism involves several key management issues and a close coordination between these management issues is the key to success for the companies. The key management issues include product and service management, lodging, food and beverages control, communication, guest accounting, energy management, safety and security management, and tourism sustainability management. Besides these, industry also observes conventional management issues like human resource, financial, political, and marketing management issues. 3. Objectives The main objectives of the report are to highlight the areas where international travel and tourism industry faces management issues and challenges along with the role of gastronomic tourism in context of global hospitality industry. Sustainability tourism is one of the hot issues of tourism management. The study has the objective to have an overview of it and provide recommendations for its improvement. 4. Discussions and Analysis 4.1 Product Distribution Management Product distribution is the most important aspect in the field of international travel and tourism. Its horizon is very much broad as in terms of product and services, it includes the marketing, advertising, sales, and reservations etc. in modern scenario; information technology has revolutionized the product distribution of tourism. Leading tourism companies like TUI, Hilton International etc offer online reservations system to the tourists. Online websites, broachers, and yellow pages are used for the advertising of the product or services. The scope of travel and tourism is very vast because numbers of other activities like pick and drop from air ports; ATM facility, internet, gymnasium and entertaining are the services which are being arranged at state of the art level. Ultimately all theses operations produce valuable revenue to the companies. Several facets work together and general to specific issues arises in routine operations. The company management does not restrict its operations up to online medium because it cannot guarantee the sale of night reservations. The top level management has to seek close coordination and liaison with international distribution networks and marketing. 4.2 Reservation and Room Management System Each tourist has to stay in some hotel at nights. Reservation is a critical area of tourism because it is a key to the sale of hotel bed-nights. Reservation management highly depends upon software and computer technology because at one time it deals with information, room availability, cancellations, check-in and check-out. It also forecasts about the expected arrival of tourists, their estimated strength, departure and booking of rooms. International companies having strong strategic assets in different parts of the world like TUI etc create and maintain mailing lists, client profiles, and their preferences. Reservation management system enforces the hotels and tourism companies to evaluate travel agencies and tour operators to distinguish which are more cost effective for the organization. Room-management system is different in its area of operations from reservation management system. It provides updated information regarding the specification and occupancy of rooms, preferences, room service facilities etc. 4.3 Communication Management Global travel and tourism industry is highly dependent on hotel industry while hotels are highly dependent on communication modes between management staff and the tourists. Communication management assists the authorities internally to stay in touch with guests, tourists, and for inter-departmental discussions as well as it helps to improve the external management with travel agents, suppliers, reservation system, and data networks. The use of computers and intercom integrate the front office, back office, and food supply operations. The external communication systems between the specific outlets, resorts, or hotels and head offices, or the national environment are vital in successful tourism (Cooper et al., 1999). TUI, Hilton International Hotel, and other competitive companies use diversified management tools for communications and reservations like digital telephone systems, online messaging, teleconferencing, various communication networks, and satellite broadcasting systems (Lockwood & Medlik, 2001). Electronic Data interchange (EDI) is another cooperative communication tool which can be used in communication management to implement the integration of various entities. The integration of communication technologies supports the tourism and travel agencies to maintain their command and control systems with respect to internal and external operations from a single integrated management system (Allen & Fjermestad, 2001, Kandampully & Duddy, 1999). 4.4 Food Management Restaurants and hotels are the hub of tourism which involves various operations like food management, cooking, culture, gastronomic skills of people, and high quality products. Although tourism industry is criticized for being its dependency on food, drink, and gastronomy, but there is no doubt that these three factors are given a lot credit for the success or failure of this industry as well. Gastronomy is even more powerful element which attracts the visitors to visit a certain location. On one hand, it promotes the outlets for traditional and non-traditional foods on global scale while on the other side it also motivates the tourists to get a gastronomic experience of a particular region. One of the important activities of food management is to facilitate the multilateral business deals and financial agreements between multinational companies. Like other fields, the food management in international tourism is also facing the challenges of globalization especially in respect of tourism gastronomy and it is not less than a challenge to respond to globalization and constant change of demand (Richards & Hjalager 2001). 4.5 Management of Tour Operators Tour operators also manage several activities like they arrange special packages in consultation with accommodation providers such as hotels, restaurants, self-catering venues, picnic huts etc and transporters e.g. airlines and coach companies. They further do research about the market trends and prepare travel programs or packages for tourists. They communicate these packages either through online medium or directly through the travel agencies. 4.6 Human Resource Management No industry can win the appraisal and conviction from its target markets without highly professional human resource. Similarly the success of international travel and tourism is significantly dependent on human resource management which must be harmonious with its business strategies as well as with its formal and informal structure. Starting from the recruitment and training of the employees to their staffing and welfare are the facets of HRM which provides assistance for developing and promoting a particular business culture. In international tourism, an ethnocentric management concentrates on appointing all key staff positions from parent-country citizens. In terms of polycentric staffing policy, parent-country nationals hold key positions at company headquarters while host-country citizens manage foreign subsidiaries. This style of management can curtail the risks of cultural myopia. Regardless of nationality, geocentric staffing management emphasizes to employee the best, skilled and proficient staff for key positions throughout the organization. This management is good for both national and international tourism as it has a constant contribution to produce an informal management network and strong unifying culture in the organizations. 5. Sustainability Management in Tourism The human environmental concerns increased during the 1980s which led the governments, NGOs, and other environmental agencies to conduct comprehensive research in terms of sustainable tourism in the 1990s (Pigram, 1997). By its default nature, tourism industry has significant impacts on financial, social, and environmental aspects of society, it “contains the seeds of its own destruction. Tourism can kill tourism, destroying the very environmental attractions which visitors come to a location to experience” (Plog, 1974). Sustainable tourism is a form of tourism which corresponds to a lesser amount of impact on local cultures and ecosystems. Primarily it supports the ecosystems in maintaining their balance within the environment. Fresh, pleasant and hygienic environment, in both natural and man-made forms, is one of the prerequisite of the tourism industry. However, there is composite correlation between tourism and the environment because the tourism industry revolves around such activities that have significant adverse effects on the environment. Numbers of factors have direct impact on general atmosphere such as: Airports Roads Restaurants Hotels Resorts Shopping malls Golf courses etc Thus growing tourism industry also results in negative impacts on environment. In current scenario, there are number of the adverse effects of tourism industry, however, it can be summarized in 03 broad categories. 5.1 Depletion of Natural Resources The first negative effect is the depletion of natural resources. One of the most critical natural resources is water which is overused by the tourism industry in restaurants, hotels, parks, swimming pools and personally by the tourists. Ultimately it results in the scarcity of water as well as proliferation of the greater volume of waste water. “An eighteen-hole golf course can consume more than 2.3 million liters a day. An average golf course in a tropical country such as Thailand needs 1500kg of chemical fertilizers, pesticides and herbicides per year and uses as much water as 60,000 rural villagers” (UNESCO, 2006). Tourism also put extra pressure on local resources like cuisine, energy, and other raw materials that could be already in dearth. Moreover, increasing trends of construction and entertaining facilities of tourism industry have caused the reduction of land resources like fossil fuels, raw materials, forests, wetlands, fertile soil and wildlife. Forests suffer more severe consequences by tourism in the form of deforestation caused by land clearing and fuel wood collection. 5.2 Emission of Greenhouse Gases The second bad effect of tourism is the production of polluted air in the Earth‘s atmosphere. It is done by the emission of greenhouse gases, noise, littering, and burning of carbon and chemicals etc. 5.3 Damaging Ecosystem Sandy beaches, streams, waterfalls, lakes, mountain slopes and tops, and riversides etc are the most attractive highlights for tourists. These places are recognized by species-rich ecosystems which affect the dreadful conditions of such ecosystems. The progression in tourism facilities like accommodation, entertaining spots, restaurants and water supplies generate erosion of soil, beaches and sand dunes as well as they produce inclusive pavement. Moreover, increased deforestation, marina development, trampling and marine activities are responsible for current environmental concerns around the world. 5.4 How to Develop Sustainability? Having a background of sustainable business policy, international travel and tourism industry keeps a high strategic priority to the environment quality standards and their effective implementation. The key feature of the sustainable tourism strategy is that it maintains a close liaison with the environmental officers. In present scenario, TUI and other leading tourism companies are taking basic measures for the protection of climate and perseverance of biodiversity. Currently there are three facet strategies to the environmental protection. International travel and tourism needs to orientate its dimensions toward the international standards i.e. GRI (Global Reporting Initiative). It requires putting keen interest to indicator comparability. Tourism sustainability can be improved by the energy consumption. The companies must use relevant changes to flight schedule and fleet portfolio. In recent years several companies took effective steps e.g. TUI Total energy consumption was about 239,914 TJ in 2008 i.e. 9077 TJ less than the previous year’s consumption. Similarly, in 2008, average specific fuel consumption by TUI’s airlines was around 3.01 liters of aircraft fuel per 100 passenger kilometers (pkm) while in 2007, it was 3.06l/100pkm. TUI achieved this explicit consumption by applying relevant changes to flight schedule and fleet portfolio (http://www.tui-grou.com). International tourism companies should perform their positive roles against the global warming and climate change. Emission of CO2 from all entities of tourism is the greatest reason of climate change. International tourism can decrease this emission of CO2 by using renewable energy resources. Further positive steps in terms of biodiversity will also produce promising results. In terms of airline industry, TUI reduced the CO2 emission from 79g per passenger kilometer to 78g per passenger kilometer. Similarly in respect of container shipping, it reduced the CO2 emission from 163g/TEU/sm to 159g/TEU/sm while in hotels and resorts 14.58kg/customer/bednight to 14.09kg/customer/bednight (TUI Annual Report, 2008) 6. Human Resource Management in TUI Touristik Union International abbreviated as TUI, a German based company with headquarters in Hanover, is one of the leading and largest tourism organizations in Europe and the world. The company holds a well reputed record for providing its finest services to customers and training to its employees. Today TUI is the largest and leading tourism and shipping organization of the world, operationally active mainly in Central, Northern and Western Europe while it also has networks across the Europe. TUI as well as its affiliates like Thompson Travels, Portland Direct, Lunn Poly, and Skydeals are accredited as most trusted and professional organizations throughout the Europe. The inventory of TUI is decorated with hotels, restaurants, retail stores, container ships, travel agencies and airlines. TUI AG Airline, having 7 common brand TUIfly airlines, is the largest holiday fleet in Europe. The company approximately consists of 285 hotels with 163,000 beds and 12 hotel brands in 28 countries. It contains 3500 travel agencies, 120 aircraft and 10 cruise liners for tourism, 79 tour operators in 18 countries, and 37 incoming agencies in 31 countries in different parts of the world. During the fiscal year 2008, TUI had revenue about €759 million. On 31 December, 2008 the company had 70,200 employees. Presently, TUI has 43.3% shares in Hapag-Lloyd AG (http://www.tui-gru.com). Modern corporate strategies recognize the Human Resource Management strategy as one of the most crucial parts of an organization. Particularly in a service providing industry, HRM is considered as the most vital aspect of making marketing strategies (Beardwell, Holden & Claydon, 2004). TUI group formulate its HRM policy in such a model where production is directly associated with the motivational policies and the performance of the human resources. Due to this approach each individual shows a great commitment toward the various pay levels designed in terms of difficulty level of jobs and time consumption. It means that in TUI, employee possessing higher education and expertise are considered for high remunerations. HRM contains a broad horizon; therefore, in the following paragraphs training and staffing segments of TUI’s HRM policies are discussed. 6.1 Training TUI’s effective HRM policies are closely related to its marketing strategies which really assist it to reduce the cost pressure in its global hospitality segment. Due to terrorist attacks in USA and London in 2001 and 2007 respectively, the customer’s safety and security oriented behavior has put tourism industry to change its marketing strategies. Customers choose those companies which take best security measures to its customers. TUI is always keen to provide best service to its customers. Since the staff performance is the real asset for TUI’s huge annual turnover, therefore, the organization focuses to educate its staff with latest marketing trends and customers’ demand. TUI has a comprehensive apprenticeship program consisting of 02 tiers where Level 2 deals with Travel and Tourism Services while Level 3 deals with Advanced Apprenticeship in Travel and Tourism Services. The key skills and technical certification of these two levels of apprenticeship program are given below. Tier Key Skills Technical Certificate Travel and Tourism Services Apprenticeship Level 2 Application of Number Level 1 Communication level 1 Worldwide Travel and Tourism Destinations Additional Travel and Tourism Services UK Travel and Tourism Destinations Travel and Tourism Services Advanced Apprenticeship Level 3 Application of Number Level 2 Communication Level 2 Worldwide Travel and Tourism Destinations Travel Insurance UK Travel and Tourism Destinations (http://www.tui-grou.com) TUI arranges staff training programs at all junior, senior and executive levels. In 2008, 755 employees took part in training programs out of which 70% of the successful trainees were offered jobs (http://www.tui-grou.com). TUI regularly arranges seminars, refresher courses and lectures for its executive and senior staff. These training modules are designed to train the higher staff for complicated and multi-faceted strategic and marketing projects. “The initiative TUI Spirit of TUI Travel stands for the vision: “We want to create extraordinary experience” and comprises four main values all our employees identify with. The values ‘Customer obsessed – value driven – responsible leadership – playing to win, shape our everyday working life and the interaction between employees, customers, and partners” (http://www.tui-group.com). 6.2 Staffing TUI successfully implements the policies of Human Resource Management which must be harmonious with its business strategies as well as with its formal and informal structure. Staffing policy deals with the selection and appointment of suitable human resource to perform particular jobs. Further it provides assistance for developing and promoting a particular business culture. Since TUI has global area of operation, therefore it uses three different types of staffing policies in business field i.e. ethnocentric staffing policy, polycentric staffing policy, and geocentric staffing policy. In an international business, an ethnocentric staffing policy concentrates on appointing all key staff positions from parent-country citizens. Generally this approach remains congruent with international strategy. TUI use this staffing policy to detail and appoint its top level managers. TUI adopt this staffing policy because aappropriate staff is not always available in parent-country. Additionally it also provides firm command and control over subsidiaries. By adopting this technique, the global hospitality of TUI has got an international icon. If analyzed critically, it is observed that ethnocentric staffing creates cultural myopia in organization and TUI needs to address this aspect of human resource management. In terms of polycentric staffing policy, the parent-country nationals hold key positions at company headquarters while host-country citizens manage foreign subsidiaries. This staffing style can curtail the risks of cultural myopia. For a multi-domestic strategy, this is considered as the best policy and TUI ideally utilizing this strategy for the establishment of its middle level managers. In fact by applying this approach, TUI makes the local personnel responsible to know about local production and avoids relocations from home country. It provides the company a potentially soft and weak control of subsidiaries. Despite of its few advantages, TUI also observes some gaps between home and host-country operations as home country staff manage business operations in foreign countries. Regardless of the nationality, geocentric staffing policy emphasizes to employee the best, skilled and proficient staff for key positions throughout the organization. This staffing policy is good for both national and international business strategies as it has a constant contribution to produce an informal management network and strong unifying culture in the organization. In TUI, the positions below the mid-level managers are filled by applying this approach. This approach produces global managers having high exposure and facilitates them to adjust themselves easily in the perspective of global hospitality environment. Further TUI’s global managers enjoy high salaries. The drawback of TUI’s this policy is that best minds of the company manages overseas operations. Further applications may be restricted by immigration policies of national governments. 7. Conclusion International travel and tourism industry is one of the fastest and growing industries, however despite of its substantial contribution in national economy, there are some areas where the industry has to emphasize and the issues are required to be rectified. Clear elucidation of marketing strategy is required which must include 4 P’s i.e. product, placing, pricing and promotional strategies. It will rectify several management issues including external threats of international terrorism and global recession. Adoption of new immigration, visa, and passport policies will keep the international travel and tourism industry away from any upset. The success of international travel and tourism industry is highly dependent on close coordination with hotel and resort markets as well as with close liaison to global hospitality industry. Tourism is criticized by many environmental and ecosystem concerning agencies for its adverse effects on atmosphere, therefore, it needs to address the environmental issues by improving sustainable tourism. Along with the sustainable tourism, the improvement in HRM also improves the tourism on global scale. Bibliography Allen E. and Fjermestad J. 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