TOURISM AND HOSPITALITY

BUSINESS ENVIRONMENT
CHAPTER 3
LEARNING OBJECTIVES:
At the end of this chapter, you should be able to:
 Understand the detailed quality of business in the tourism and hospitality
sector;
 Describe factors that must be assessed in considering a business in the
tourism and hospitality industry;
 Analyze the decision value chain in the tourism and hospitality areas
 Develop goals and objectives for a new business venture in the travel and
accommodation areas.
 Entrepreneurship in tourism and hospitality refers to the activities of the
major group of the stakeholders of this service sectors primarily designed for
the effective and profitable interaction of demand and supply of tourism and
hospitality products, while at the same time ensuring critical and healthy
competition resulting to an improved economy.
With a greater level of income and a more flexible time, there are more
opportunities for business and personal travel. This has resulted to a
hospitality and tourism sector that has become one of the fastest- growing
industries in any world economy.
 A. THE TOURISM AND HOSPITALITY INDUSTRY

▪ The tourism and hospitality industry was seen as a major force that will drive
economies to a better state before the pandemic happened. As a result of
the health crisis brought about by COVID-19, a lot of countries had closed
their borders causing significant effects to economic worldwide.
▪ During pandemic, tourism is considered as one of the sunset industries for
most business industry.
▪ As airlines, accommodation sector, cruise lines, small and medium businesses have
greatly reduced their operations resulting in employees being laid out of work and
holding on and hoping to survive the situation.
 A. THE TOURISM AND HOSPITALITY INDUSTRY

▪ The industry, despite bearing the brunt of the pandemic is already

making ways to turn back at least some portion of its dynamism
before the pandemic. The Phils. Department of Tourism came up with
activities and programs to encourage people to travel safely.
▪ Recovery is imminent, business will thrive, travelers will arrive, and
establishments will be full again. The players in the industry will just
have to be ready to welcome these all.
 B. TOURISM AND HOSPITALITY INDUSTRY SYSTEM

▪ The industry is expected to be a catalyst in spurring socio-economic

growth, generate employment, and contribute to the conservation of
the environment and advance private-public collaboration.
▪ UWTO- focused on the field of tourism, as it offers support to tourism industry
advancing knowledge and tourism policies worldwide.

▪ Geographically located organizations and councils composed of public

and private representatives from different nations also maintain
collaboration between member countries.
▪ Pacific Asia Travel Association (PATA), Caribbean Travel Organization (CTO), and
European Travel Commission (ETC)- to assist and influence member countries to
pursue developments and agendas advocated by the organizations.
 B. TOURISM AND HOSPITALITY INDUSTRY SYSTEM

▪ Sectoral organizations and advocacy groups also maintain significant presence and real
acceptance in pursuit of the welfare of the stakeholders in the industry.
▪ World Travel and Tourism Council (WTTC), Cruise Lines Industry Associations (CLIA),
International Air Transport Association (IATA), The International Ecotourism Society
(TIES), World Tourism Association for Culture and Heritage (WTACH)
▪ The Philippines’ tourism industry is led by Department of Tourism (DOT)- a government
regulatory body mandated to lead the planning, programming, coordinating, implementing,
in the development and promotion of the tourism industry.
▪ Under the Republic Act 9593 (Tourism Act of 2009)- prescribes that every province, city,
or municipality shall have tourism officers responsible for the development and promotion
of tourism in their area.
▪ Training programs, technical assistance and support shall be provided by the DOT to
enhance the capabilities of the local government units.
 C. TOURISM AND HOSPITALITY INDUSTRY VALUE CHAIN
▪ The tourism industry is composed of several sectors contributing to the creation of
products. The following are the major sectors in the tourism industry:
➢ Travel intermediaries or the travel trade composed of the travel agency and tour
operators.
➢ The transportation sector provides the means of reaching the target destination or
attraction. (Land, water, and air as mode of transportation)
➢ The accommodation sector refer to the facilities and establishment that provide a bed
for sleep and a roof to rest for the visitor.
➢ The food and beverage service sector is composed of restaurants or any food
establishments that provide nourishment to the guests.
➢ Destination or attraction is the main reason why people travel.
➢ The government sector is the one that oversees and regulates the industry.
 D. ENTREPRENEURSHIP AND ENTREPRENEURS IN
TOURISM AND HOSPITALITY INDUSTRY

▪ The tourism industry is composed of a very diverse collection of establishments that

are engaged in business under the tourism industry. (base on types and size of the
business)
▪ Businesses in the tourism and hospitality industry may belong to the smallest form
of businesses, from micro-businesses to big and elaborate as international hotel
chains or as high international airlines.
 E. FEATURES OF TOURISM AND HOSPITALITY-RELATED
BUSINESS

▪ According to UNWTO definition, a tourism product is a combination of tangible

and intangible elements such as natural, cultural, and man-made resources,
attractions, facilities, services and activities.
▪ A tourism product is priced and sold through distribution channels and it has a life
cycle.
▪ The benefits of tourism to the community are varied and for the long-term. Jobs
generated through tourism contributed to economic development, poverty,
alleviation, and environmental sustainability. Often, enterprise development provides
opportunities for a small and medium business engaged in supplying products and
services to the industry.
 F. TRENDS IN TRAVEL AND GASTRO MARKETS

▪ Travel preferences and motivation may have changes if you are to compare the
reasons of tourists before and after the pandemic. As the world waits, on the
possibility of ending the pandemic with the rollout of vaccines, we expect a lot of
changes in the attitude and pattern in travel.
➢ WORK FROM HOME TO WORK FROM HOTEL (holiday)- Hotels guarantee a safe
place, a quiet environment, feels of an office setup, and other services.
➢ RISE OF THE MOBILE WALLETS- Contactless and not just cashless transactions
will be the preferred mode of transaction among guests.
▪ Search for online information will increase, as vloggers and influencers will become
more popular than ever. Access to websites and pages will be easier as compared to
searching and asking information from friends. Since most people are already online,
the sites are just clicked away.
 G. INNOVATIONS IN THE TOURISM AND HOSPITALITY
BUSINESS ENVIRONMENT
1. Industry 4.0
• This means that the digitalization and traditional process were linked together in a network.
The results in an intelligent value chain and product life cycle.
• The concept of the fourth industrial revolution is best represented by the following
products, driverless vehicles, advanced robotics used in industries, and 3-dimensional
printing.
• This concept gave rise to the idea of “smart technology”- the network of tangible or
intangible products supported by digital systems.
2. Business Models in the Tourism and Hospitality Industry

• An emerging business model that is very popular before the pandemic is the sharing or
collaborative economy.
• The concept of the sharing economy is utilizing unused personal resources such as
spare bedrooms and car seats more efficiently.
 G. INNOVATIONS IN THE TOURISM AND HOSPITALITY
BUSINESS ENVIRONMENT

3. Different Types of Innovation

• Advanced software technology and innovative digital services are being used to cater to
guests’ needs. (Repeat customers, VIPS, have prior data in the hotel during check-in)
• Personalized greetings in the cellphones and inside rooms may welcome the guests.
• Personal phones as key cards to the rooms, self check-in using phones, mobile reservations,
self check-in using kiosks, electronic luggage tags, smartphone boarding, tablets as remote
controls.
• ** Some hotels gain competitive advantages by using the technology to enhance customer
relationships.
 G. INNOVATIONS IN THE TOURISM AND HOSPITALITY
BUSINESS ENVIRONMENT

• Innovative Collaboration- a service innovation where brands of different industries are

collaborating to provide complementing service to guests. (Ex: hotel firm partnering with a
known car brand to provide limousine service to guest executives with business meeting)
• Wearable Technology- used in high-end accommodation establishments worldwide. (use of
key cards both employees and guests could collect information such as areas frequented by
guests, virtual reality inside the hotel room)
• Cloud services and other services app- for smaller hotels that can’t afford in-house
technical support is a big help to their operation. (SaaS)
• ** As Hilton Hotel launched new SMART features that allow its guests to unlock their room
using their smartphone app.
• In airports, biometrics, smart gadgets, and AI are used to provide seamless transactions
during flights of passengers and for baggage handling provide friction-less experience for
passengers.