Business of Tourism

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Essay Question

Analyse and discuss the benefits and drawbacks of a demand-led vs. supply-led understanding of the tourism system.

According to the United Nations World Tourism Organisation, often identified by many as the UNWTO (Lickorish & Jenkins, 1997), define the term ‘Tourism’ as “the activities of persons traveling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes” (Tuberkugurlu, 2012). The term ‘supply and demand’ is often recognised in economics, According to Gans, King and Mankiw (2012) they refer to supply and demand as the difference in individuals behaviour when they interact with another individual in competitive markets, this broad definition can support and help emphasise the factors influenced by supply and demand within the tourism industry. Supply and demand is widely understood as distinctively different concepts, and is often examined separately. However the two terms are always in one form or another strongly connected and is often described as having a complimentary relationship towards the tourism system, as well as other industries throughout the world. The essay will analyse the differences these two concepts pose within the tourism system, with each independent concept being thoroughly evaluated, in relation to the beneficial factors, as well as the drawbacks and disadvantages of the concepts, followed by an in depth investigation covering the strong interconnectivity and relationship the two separate concepts have in conjunction with one another within the tourism system. A detailed analysis of the tourism industry is said start with the basic understanding of three fundamental elements. Within the three components, two are said to influence and interact with the marketplace directly which refer to the terms demand and supply. Consumer conduct, which is related to ‘demand’, focuses on the ‘purchaser(s)’. In regards to the tourism industry it will be considered as the ‘tourist(s)’ and their behaviour on whether they consider consuming or not to consume a particular product or service provided by those who ‘supply’ for them within the tourism industry. Each ‘purchasers’ behaviour will inevitably define their outcomes, for example, in relation to what they purchase and how much they are willing to pay (Beech & Chadwick, 2006). Therefore the thorough knowledge of the various behaviours in which tourist can carry out and the indicators to why they carry out these actions must be understood in order to be successful and to have a competitive edge within this fast growing, high earning global industry. However due to the fact that each tourist has a different behaviour to one another, following a demand-led method within the tourism system is exposed to both benefits and drawbacks.

An example of a benefit for following a demand-led environment within a tourism system is the idea of being relatively easy to track over time. This statement is in relation to a model which was established by Beech and Chadwick (2006), within their model which shows a representation of the demand structure of the tourism market, clearly indicated that all travellers, either an overnight tourist or a day visitor are connected to a specific purpose. There are said to be six categories in which each tourist’s purpose of travel is classified into. World Tourism Organisation’s recommendations suggest one category is in relation to business or professional matters while the remaining five other ‘purposes’ are associated with personal reasons, such as leisure and VFR, visiting friends and relatives. This can be referred to easy to track over time through the use of surveys on a national scale, where vital information is obtained where estimates were established on a monthly, quarterly and yearly basis (Eurostat, 1996). On a much smaller scale, demand led organisations such as hotels, can implement a customer feedback programme which...
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