The Development of Tourism Industry


Tourism destinations worldwide attract millions of tourism a year. Since the middle of the 20th century, the tourism industry has changed towards a greater variety of services and better equipment, more paces of destination and health resorts. Anything can symbolize the main features in new tourism. It relates to what is a niche product and the issue of value addition. There is an infinity of niche product one can launch to spur growth in tourism (Powers and Barrows 2002). Needless to say, the concepts would be generally valid for many niche products, not just in tourism. For practical reasons one can adopt the idea that a niche product is a relatively small volume product with a high margin.

Discussion Section

Today, recreation and business are closely connected so many tourism agencies try to join business and leisure activities. The problem is that the lack of any large or well-organized management services catering to a recreation tourism market is additional evidence that the majority of travelers are not there for pleasure travel purposes (Marcussen, 1999). What no precise data exists indicates that almost two of the guests are traveling alone, the core is repeat travelers, and very few use local tour operators. These data support the opinion that most travel is for business purposes and should not be classified as purely pleasure travel. Without exceptional food management services the hotel and tourism chains will not be capable of achieving the overall objectives (Buhalis and Laws, 2001).

To improve success and service quality, tourist agencies, service operators and hotel chains create special business management departments in order to meet diverse customers’ needs and preferences. In destination management time and speed are the main factors of success. Scheduling is concerned with the timing (Powers and Barrows, 2002). Tourism service management is concerned with the specification in advance of the timing of occurrences within the hotel chain, arrivals to and departures from the hotel including arrivals to and departures from other hotels within the chain (Marcussen, 1999). The planning of activities has a direct impact on resources and the level of food management and lodging service. The purpose of destination management is the planning task, and the change of capacity is the key problem field. Destination management decisions have a direct impact on agencies performance and customer service proposed by these agencies.

The main factors identified by quality management services in lodging involve: high accommodation standards, food hygiene, maintenance of facilities and the environment; professional staff. The purpose of a hotel chain is to get and keep a guest. As hotel chains are dynamically evolving organizations operating within a dynamically changing environment, some means of assessment of the way in which the two interact has to be found to enable them to be better matched. Travel agencies and tour operators pay special attention to lodging providers and service quality proposed by foreign partners (Powers and Barrows, 2002). To date, growth in the lodging sub-sector has been accelerated by the presence of fiscal incentives. Many hotel chains are not able to realize their potential due to lack of financial assistance or expertise related to quality food management. Inadequate channels of financing available to potential and existing investors in the sub-sector have also repressed its growth. For instance, in Sri Lanka, due to historical problems, the tourism industry has forgotten the ‘high margin’ element. So, many companies organize their conferences in this region in order to join practical and leisure purposes (Buhalis and Laws, 2001).

In tourism, it is the experience that one is selling. However, many are surprised what can actually make this experience. This will vary with product to product, yet in nature based tourism, the most significant element of tourism is knowledge. This factor also applies to other areas of tourism such as Adventure Tourism and Ayurveda. It is the expertise which will elevate the product to a level where one can command a higher premium than the competition. By investing in grooming knowledge merchants, travel companies can sell a specialist product for three times the price of a mainstream product (Marcussen, 1999). This is despite the obvious components such as the transport and accommodation being similar. Knowledge is difficult to be priced; perhaps it could charge even more in years to come. The nature of niche products in tourism is that the volume is low, yet they are very time intensive. The staff time per client is very much higher. Consequently, it is imperative that the margins are very much higher. Otherwise one cannot maintain the levels of service or be profitable enough to re-invest and up the level further (Powers and Barrows, 2002).

As a loose guideline, specialists in ski tourism in Austria or Switzerland, for example, should look at a 100 per cent mark or more up on the tour component costs, when pricing their product. This is not high when one compares with what happens overseas. The mark up may seem staggeringly high to mainstream tour operators. At the same time, specialist tourism has other costs which are not reflected in the room rates or transport rates (Marcussen, 1999). Advertising in specialist publications, attending specialist trade fairs etc are other overheads which come to mind. An essential overhead is the need to recruit specialist staff, not just those in contact with clients but even those in the corporate office. Specialist staff comes at a higher price. With nature based tourism, there is another important element which may be missed in the pricing equation. Every Tourism Department has the development of key niche markets as a high priority and works with the states and industry in order to focus effort on high yield segments (Buhalis and Laws, 2001).

Examples of Successful Travel and Business Tourism

I’d like to outline some of these segments and the way they are being developed in the case of Australia, a world leader in the tourism and business sector. For instance, the wine tourism niche in Australia is expanding, in line with growing international reputation as a wine producer. During 2004, there were over 4.0 million domestic and 579,000 international visitors to Australian wineries. This was down 5% on the previous year. Domestic and international visitors who visited at least one winery spent a total of $4.6 billion on their trip in Australia in 2003. In 2003-04 the restaurant and catering industry accounted for 0.5% of GDP and had a total turnover of $10,129.6 million. Culinary visitors to Australia tend to travel for longer, have a higher level of expenditure and have greater dispersal into regional Australia than other visitors. In addition, educational tourism represents a growing part of the Australian tourism industry with more than 322,700 international student enrolments in Australia on a student visa. In 2004, there were 278 500 international visitors to Australia aged 15 and over who stated education as their main reason for visiting Australia. Although these visitors accounted for only six per cent of all international visitors to Australia in 2004, they accounted for 27% of visitor nights and 28% of total visitor expenditure in Australia (Marcussen, 1999). Education visitors are high yield visitors who spend over $3.3 billion every year with their visiting friends and family contributing a further $280 million (Buhalis and Laws, 2001).

The caravan industry is one of the fastest growing tourism sectors, with sales almost trebling in the past 10 years in Australia. The market accounts for a major proportion of total visitor numbers outside metropolitan areas by both international and domestic visitors alike. 2004 witnessed 28.3 million domestic visitor nights spent in a caravan park or commercial camping ground. During the same period, international visitors to Australia spent 3.7 million nights in caravan parks or commercial camping grounds. Long term prospects for the industry also look promising, with demand from seniors growing (Powers and Barrows 2002).

Moreover, the Australian Government is developing a National Road Tourism Strategy. This Strategy will look at ways to sustainably expand the road tourism market. It will examine issues surrounding themed routes, safety and infrastructure, and the provision of sewage pump-out facilities amongst other issues. In Australia, business tourism is referred to as one of the highest yielding inbound tourism segments because of the high per-delegate spend (Marcussen, 1999). According to the Sustainable Tourism Cooperative Research Centre (STCRC), this sector contributes around $11 billion to the Australian economy every year. According to Overseas Arrivals Data, approximately 12% (645,600) of all trips to Australia were business, conference and convention related in 2003. Business tourism is projected to provide increasing opportunities for the Australian tourism industry over the next ten years, with strong appeal across all key markets (Powers and Barrows, 2002).

The cruise shipping industry in Australia is mainly represented by foreign-owned vessels based in Australia for all or part of the year, that offer round the world or regional cruises to international visitors. As a market, Australia is generally viewed as a single destination within a global or continental itinerary. The cruise shipping industry in Australia, while only small in a global context, has the potential for significant market growth over the next few years. In 2005-06, Australia hosted 28 cruise vessels with a capacity of approximately 25,830 berths (Marcussen, 1999). This brought about a total of 395,698 passenger days spent at Australian ports, during which cruise ship passengers spent an estimated $158.4 million and cruise ship crews spent close to $26.3 million. The number of port calls is set to increase in 2006-07 contributing to further growth in the industry. The total expenditure generated by the cruise shipping industry in Australia was approximately $437.8 million in 2005-06 (Buhalis and Laws, 2001).

Development of a sustainable and efficient cruise shipping industry can have a considerable economic impact, particularly in regional Australia. In 2005-06, the estimated employment influence of the cruise shipping industry was equivalent to 2,845 full time positions. It is important to bear in mind that this does not represent additional positions rather equivalent levels of employment (Marcussen, 1999). International adventure visitors are defined as those who went bushwalking, fishing, scuba diving, snorkelling, surfing, sailing, windsurfing, kayaking or participated in other outdoor activities while on their trip to Australia. In particular, approximately 1.8 million international adventure visitors traveled to Australia for the year ending December 2005, accounting for over 71 million nights. Of these visitors, 29% visited Victoria during this period. Approximately 530,000 international adventure visitors travelled to Victoria in the year ending December 2005, accounting for almost 11.9 million nights. Adventure visitors stand for 39% of all international visitors to the State. Average length of stay for international adventure visitors to Australia was 38.6 nights, compared to an average length of stay of 22.4 nights for adventure visitors to Victoria. Furthermore, there was an increase in international adventure visitors to Victoria of 30.8% from 2004 to 2005, and of 25.5% in international nights spent in Victoria over the same period. There was also an increase in international adventure visitors (+23.5%) and visitor nights (+18.1%) to Australia over this period. The average annual growth for international visitors was 23.4% in Victoria from 1999 to 2005, compared to 20.6% for international visitors to Australia for the same period (Powers and Barrows 2002).

Conferences, exhibitions and business travel in reasonably free (although not perfectly competitive) markets reflect economic conditions, the needs of consumers, and society’s preferences in goods and services. This whole situation stems from a market-driven economy. A market-driven economy, in time, determines the nature, size, and characteristics of the prevailing business population. However, despite the fact that the economy is driven by the market, particularly starting in the early 1980s, business became extremely finance-driven (Horner and Swarbrooke 2001). This orientation reflected itself by being concerned with bottom lines up front. Unlike tourist attractions, hotel chains often achieve competitive advantage by effective management of both leisure and business service provision. In particular, small to medium-sized tourist agencies find it difficult to take advantage of the new leisure and business demands because they cannot achieve sufficient cost-control based on price. Longing and hotel agencies use and manage quality development strategies to differentiate themselves from competitors. Destination management aims to map and make easy the provision of effective food management service. It is important to note that the impact of new technologies is crucial because if technological changes affect one area of tourism there is an urgent need to improve the other areas. Thus, tourists seek more varied, personal and authentic experiences, while a wide range of new, imaginative, tourism products will be demanded (Horner and Swarbrooke 2001). Tourist resorts, though, are much less worried about food demands and preferences of potential guests. The visitor, nevertheless, wants to be released from the negative aspects of food management. The landscape in all its diversity is the essential part, the main element, the material of seeing the sights (Powers and Barrows 2002).


An increasing number of modern customers demand, amongst other things, high levels of service quality, value for money, and holidays which are customized to their individual preferences. Today leisure and business management are related to green tourism which can influence the assortment of activities and services consumed during the holiday (Horner and Swarbrooke 2001). As a result, a growing number of customers are attracted to natural areas and food service in hotel chains has emerged as one of the more significant elements of change in the tourism industry. The role of food management is to meet and anticipate customers’ needs and wants while maintaining strong relations with their suppliers (Buhalis and Laws 2001). Travel and business segments are interlinked because their aim is to meet diverse customers needs within one industry. Some of this has been stimulated by new economic opportunities provided by the development of national and international tourism. In turn, each segment of the industry has stimulated the search for and construction of new services and products. In destination agencies such as hotels and restaurants, the expectations and perceptions of guests and travelers are important because they are involved in the performance of the restaurant service.


  1. Buhalis, D. & Laws, E. 2001, Tourism Distribution Channels: patterns, practices and challanges, Continuum, London.
  2. Horner, S. and Swarbrooke, J. 2001, Business Travel and Tourism, Elsevier Butterworth-Heinemann, Oxford.
  3. Marcussen, C. H. 1999, Internet Distribution of European Travel and Tourism Services – The Market, Transportation, Accommodation and Package Tours‘, Denmark: Research Centre, Bornholm
  4. Powers T., Barrows C.W. 2002, Introduction to the Hospitality Industry. Wiley.
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