Tourism Industry : Structure

UNIT 7 TOURISM INDUSTRY- STRUCTURE and Components

AND COMPONENTS
Structure
7.0 Objectives
7.1 Introduction
7.2 Structure and Components of Tourism Industry
7.3 Accommodation
7.4 Transportation
7.5 Destination and Attractions
7.6 Travel Intermediaries and DMOs
7.7 Linkages and Integrations in the Tourism Industry
7.8 Let Us Sum Up
7.9 Key Words
7.10 Answers to Check Your Progress
7.11 Terminal Questions

7.0 OBJECTIVES
After studying this unit, you should be able to:
understand the concept of industry in general and tourism industry in
specific;
understand the structure and components of tourism industry;
understand the role of accommodation, transportation and various tourism
intermediaries in functioning of tourism industry;
describe the Destination Management Organisations; and
describe various linkages and integrations of tourism Industry.

7.1 INTRODUCTION
In the previous unit we have studied the tourism system The present unit will
deal with another important aspect i.e. tourism industry. Before, we move on to
explaining tourism industry, let us try to understand the term industry. What
does an industry means? How you define an industry? In layman terms, an industry
is the group of business organisations producing same/similar products or services.
For example, group of business organisations producing leather items i.e. foot
wear, leather apparels etc. will be called leather industry. Group of organisations
producing various kinds of automobile like Maruti, Tata Motors, Ashok Leyland
etc.represent automobile industry. Tourism product is not a single item rather it’s
an amalgam of various services which then makes the final tourism product.
Hence, group of organisations which deals with various components of tourism
product constitutes tourism industry. Over the years tourism industry has arisen
as an important driver of growth among the service sector in the world by

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Concept and Impacts of providing lot of benefits in terms of improved infrastructure, employment, per
Tourism
capita income, better standard of living, foreign exchange earnings etc. As per
World Travel and Tourism Council economic impacts report for the year 2019,
tourism industry accounted for 10.3% of global GDP and 330 million or 1 in
every 10 jobs globally.

7.2 STRUCTURE AND COMPONENTS OF

TOURISM INDUSTRY
As we are aware that tourism product is an amalgam of various services, which
collectively offers the final product to the end user i.e. tourist. Before we move
further, let us have a quick recap of various components of tourism product,
which will help us in conceptualising the tourism industry. In case of tourism
product, various components (attraction, accessibility accommodation, amenities,
activities, local residents, tourist etc.) work closely together to give desired results.
But, these components also require the backing of infrastructure, superstructure,
sound information and good governance to manage the tourism successfully.
The six main components of tourism product are:
1) Attraction
2) Accessibility
3) Accommodation
4) Activities
5) Amenities
6) Available package
1) Attraction : are the main pull factors which draw tourists to travel to the
destination. They may be natural or man-made and add to cultural or social
aspects of a destination.

2) Accessibility : comprises the modes of transportation (land, air or water)

and facilities present at the tourism destination.

3) Accommodation : provides the lodging, food and other services to the

tourist. They may comprise the hotel property or other supplementary types
of accommodation.

4) Activities : cover a range of actions a tourist can get involved in a tourism

destination such as mountaineering, trekking, rock climbing, caving,
camping, fishing, bungee jumping, mountain biking etc. These activities
in tourism have reached great levels owing to enhanced awareness in health
and fitness.

5) Amenities : are the various services and facilities a visitor needs at a tourism
destination. It is vital for the tourism and include very basic to advance
facilities such as convenience facilities, signage, emergency facilities, postal
services, shopping, theatre, parking etc. It at sometimes is also referred to
as “pleasantness” of a destination.

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6) Available package : comprise the sum total of tourist services arranged Tourism Industry : Structure
and Components
individually or in combination by the travel agent or tour operator.
Depending upon the various types of tourism the packages also can be of
different types and variably priced depending on the tourist services
included.

This complexity of tourism product gives rise to an industry which is equally

complex in structure and encompasses a wide array of organisations. A schematic
representation of tourism industry can be portrayed as per below diagram.

Fig. 7.1: Structure of Tourism Industry, Bhatia (2006)

Let us have a look at each component of tourism Industry.

1) Private Sector Support Services : This includes the guiding and escorting
services, travel insurance and foreign currency services, travel trade press
and tourism marketing service, travel trade publications etc. These are the
services which though not the part and parcel of final tourism product in
every case but these are essential for the execution and operation of tour
package effectively. This aspect of tourism industry is primarily dominated
by the private organisations.

2) Public Sector organisations : It consists of national or regional tourism

organisations (NTO’s or RTO’s) that primarily decides the broader
objectives, strategy and play a leadership role in the overall growth of
tourism. These organisations, primarily work for providing basic
infrastructure, general guiding principles and broader level marketing and
image making services for a destination. For example, Ministry of Tourism,
Govt. of India runs Incredible India marketing campaign, similarly each
state have its own State Tourism Development Corporation which runs
and operates state specific marketing and promotional campaigns.

3) Carrier& Transport Organizations : Movement of people from place of

origin to destination is the basic perquisite for tourism phenomenon. Carrier
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Concept and Impacts of and transport organisations are the ones which deal with movement of
Tourism
people. There can be varied mode of transport like Road, Rail, Air and
Water etc. Transport organisations can be private as well as government
organisations. The modes of transport to a destination depend on the
geographic location of the destination.

4) Accommodation Establishments: Once a person is out of his usual place

of residence for more than 24 hours, most important thing he requires is a
place to stay i.e. the boarding and lodging arrangements. Accommodation
establishments like hotels, motels, resorts, B&B establishments etc. are
the one which caters to boarding and lodging arrangements of tourists and
without which the tourism product cannot be formed. This segment is
primarily dominated by private organisations and a miniscule of
organisations belongs to public sector as well.

5) The Intermediaries (Travel Agents & Tour Operators):This is one of

the most important parts of tourism industry. It is these intermediary
organisations like travel agencies and tour operators which actually combine
various ingredients of tourism product and offer it to the end use i.e. the
tourists. It is these organisations which ensure the execution and
performance of tourism product. This segment is primarily dominated with
private organisations and that too with small and medium size enterprises.
Though, the stakeholders such as the local community and tourists are
also the important components in the modern terminology of tourism. The
success of any tourism destination depends on the footfall and demand of
the tourists. Further, we shall have a detailed view of some important
components of tourism industry i.e. Accommodation, Transportation,
Attraction, travel intermediaries and DMOs (Destination Management
Organisations). But before that, let us have a small quiz on what we have
learnt so far.

Check Your Progress A

1) What are various components of tourism product?

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2) What are private sector support services in tourism industry?

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3) Classify following activities in the various components of tourism. Tourism Industry : Structure
and Components
Activity Component of Tourism
a) Hotels ………………………
b) Kayaking ……………………….
c) Water transport ……………………….
d) Postal services ………………………
e) Rural tours ……………………….
f) Youth hostel ………………………..
g) Zip-lining …………………………
h) Telecommunications …………………………

7.3 ACCOMMODATION
Accommodation is an essential component of the tourism industry. It is very
important and fundamental of all the attributes of the tourism supply. It plays an
important function both in the context of urban and rural tourism by providing
lodging and dining opportunity for the visitors. The two broad categories of
accommodation are the hotel proper and the supplementary type of
accommodation. Hotel proper comprise of hotels, guest houses, downtown hotels,
airport hotels, boutique hotels, condominiums etc.On the other hand
supplementary types of accommodation consists of camping sites, caravans,
motels, bed and breakfast establishment, tourist holiday villages etc.

In Early times, the guest room were part of main private dwellings and travellers
were just treated as part of the family (Goeldner and Ritchie, 2007). Though,
hospitality is nearly as old as humanity. In ancient times, when man lived in
caves, then also members of other tribes were accommodated, the classical
example is of Lascaux cave in France as early as 15,000 BCE. In ancient as well
as middle ages, you will find numerous examples of establishments offering
hospitality to the travellers such as hospitals, spa, rest houses in Persia and Greco-
Roman civilizations; thermal baths in England, Switzerland and Middle east;
caravanserais along middle eastern routes; Ryokans in Japan; religious orders
offering accommodation for travellers at monasteries and abbeys; staging posts
for visitors and stations for couriers or message carriers in China and Mongolia
and inns opened in Europe (Kendall College, 2018).

In India, the hotels were constructed before the World War II at various locations
which were very frequently visited by British and Indian aristocracy. Very few
companies and Indian entrepreneur were involved in the hotel business such as
East India hotels of Oberoi group owned by Rai Bahadur M.S. Oberoi and The
Taj group owned by J.R.D Tata (Devendra 2001, Sufi, 2015).Some of the well-
known hotels during British period in India were (Devendra, 2001):
The Rugby Matheran (1876)
The Taj Mahal Hotel Mumbai (1900)
The Grand Kolkata (1930)
The Cecil hotels Shimla and Muree (1935)
The Savoy Mussoorie (1936)
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Concept and Impacts of In order to promote the tourism and hospitality sector, the Indian Tourism
Tourism
development corporation (ITDC) was set up in 1966 and ministry of Tourism
and civil aviation was created in 1967, after separating it from the ministry of
transport and shipping. In 1975, ITDC started its hospitality business by
purchasing a hotel in Chennai and naming it as Hotel Chola. Subsequently,
between 1975 and 1977, the Welcome Group of Hotel constructed 3 hotels. Then,
after seeing the success in hotel business many individuals became entrepreneurs
leading to construction of hotels in secondary cities and deserts in 1970’s.
Government also granted licences to large hotels in 1982 owing to Asian games.
Further, the government realised the importance of tourism and in 1986,
established independent ministry of Tourism and also got the industry status. In
1998, the tourism got the “export house” status. This all subsequently led to the
growth of the tourism and hospitality sector and enhanced investment trends in
the sector.

7.4 TRANSPORTATION
Transportation is also an important component of tourism product. It involves
movement of individual from one place to another and makes the tourist
destination accessible to the tourist. The transportation can be done by air, sea
and surface. Transportation not only facilitates movement of tourist but also
enhance the overall experience of the visitors.The various factors taken into
account before selecting any mode of transportation is time available for travel,
distance to be covered, status of the tourist, comfort, geographical position, benefit,
competition, status, security and price involved. Each mode of transport has its
own advantages and disadvantages.

1) Land Transport: It is also known as ground or surface transport and it

insures the movement of people, goods and various types of cargo from
one location to another over surface. It may involve pathways, roadways,
tramways or railways. A pathway mainly involves a path, way or a route in
remote rural areas which are forested or mountainous where a human being
or animals can only travel. It is known as Head loads (or human transport)
or Pack animals (or animal transport like horse, mule, donkey, yak etc.).
These are used in tourism to explore treks, passes or even to explore
mountain peaks and ranges. Roadways involve roads for transportation of
goods and people (including tourists). These may be metalled (paved) or
non-metalled (unpaved). These roadways in India are also classified into
national, state, district or village roads. Road transport may also be known
as vehicular transport (involving bus, truck, auto rickshaw, bicycles etc) or
non-vehicular transport(involving humans who acts as Porter’s or carry
passengers on palanquins, rickshaw or animals such as horse, mule, donkey,
camel, elephants etc. to carry loads or pull carriages, Tanga or carts).
Roadways are important means of transport in mountainous regions and
rural areas. The advantages of Road transport are that they are suitable for
short distances, ensure service at door, allow flexibility of service,
ownership of motor vehicles allows travel at time of need and even they
act as feeder to other modes of transport. But even there are some
disadvantages associated with it such as it is less organised, not good for
long distance transportation, less safe and more dependent on the adversaries
of nature.
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 Tramways are tracks which ensure running of rail like vehicle without Tourism Industry : Structure
and Components
locomotives and also known as the lightly laid railways or electric street
railways. They ensure fast and rapid transport of people in Urban or
suburban areas and mostly use electric power. In olden days, Trams were
also pulled by animals mainly horses or even had a small steam locomotive
or Diesel or even run by gas, naphtha gas or coal gas. Some of world’s
popular trams located in Lyon (France), Paris (France), Dijon (France),
Zurich(Switzerland), Vienna (Austria), New York (USA), London
(England), Petersburg (Russia), Melbourne (Australia), Prague (Czech
republic) and Tours (France). They act not only as means of transport but
also as tourist attractions. Railways also known as train or rail transport is
a means of transport to transfer people and goods on wheeled vehicles
which run on steel rail tracks. The railway system in Great Britain is the
oldest railway a in the world built by George Stephenson and his son Robert.
Also, the world’s first Inter-city railway line was built by George Stephenson
between Liverpool and Manchester in 1830.
The main advantages of rail transport system is that it is fast, comfortable,
safe, most energy efficient transport, suitable for long distance travel and
whose carrying capacity can be increased or decreased to a certain limit by
adding or reducing boggies. However, it has also some disadvantages such
as it provides less service in the rural areas, its routes and timing are fixed
and it is inappropriate for short distances.The Amtrak (2,50,000km);China’s
rail network (1,00,000km);Russia (85,500 km); India (65000 km); Canada
(48,000 km); Germany (41,000 km); Australia (40,000 km); Argentina
(36,000 km); France (29,000 km) and Brazil (28,000 km) are some of the
largest rail networks in the world. And, all of them are an extravaganza for
the tourists visiting these countries. Also, some of these rail networks run
tourist trains such as Golden Eagle in Russia, Venice Simplon-Orient
Express (between Paris and Istanbul), Golden Eagle Danube Express
(Budapest, Vienna, Prague and Sarajevo), Ravos Rail (luxury train of South
Africa), Royal Scotsman luxury train (UK), Chepe train of Mexicoand
Ghan luxury train of Australia (Adelaide, Alice Springs, Darwin).
Indian railway network is also the world’s fourth largest railway network
in the world with the route length of 68155 kilometers. India’s first passenger
train ran between Mumbai and Thane for a distance of 34 km carrying 400
people in 14 carriages on the broad gauge track. In order to promote tourism
in India, Indian Railway run special tourist and luxury Tourism trains in
India which covers not only religious, but leisure destinations across the
country. Some of the popular trains are Bharat Darshan tourist train, Steam
Express, Buddhist Circuit Tourist train, Gangtok Darjeeling Holiday special
train, Palace on Wheels (Rajasthan), Golden Chariot(Karnataka), The Royal
Orient (Gujarat and Rajasthan), Fairy Queen (New Delhi and Alwar),
Deccan Odyssey (Maharashtra)etc. Maharaja Express is run by Indian
Railway Catering and Tourism Corporation (IRCTC) on five circuits of
Rajasthan and is the most high-priced luxury train in the world. Also, in
the present context, the Indian railways have taken several initiatives to
upgrade its infrastructure and improve its quality of service through
research, Design and standardisation.
2) Water Transport: Water transport or waterways is an important mode of
transportation for both passenger and cargo. It requires watercraft such as
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Concept and Impacts of boat, ship or barge which moves over the water body such as River, Lake,
Tourism
Canal, Sea or Ocean. It is one of the oldest and cheapest modes of transport
which requires water and do not requires use of capital investment for
construction and maintenance of tracks like railways. The operational cost
of water transport is very less and it is very suitable for transporting heavy
cargo over long distances. The majority of the world cargo is transported
through water transport and it has the largest carrying capacity in the world.
It is commonly subdivided into inland waterways or water transport (Rivers,
Canals and Lakes) and ocean transport (sea, ocean).The benefit of water
transport is that it is cheap, requires no construction and maintenance of
tracks, very beneficial for heavy goods and also is very useful when
transporting materials in the time of natural calamities like flood. The main
disadvantage of water transport is that it is comparatively slower than air
and rail. Also, certain amount of risk is involved in transporting goods as
there is always danger of sinking of ships or large boats in water.

3) Air Transport: Air transportation is fastest means of transportation from

one place to another. It is an important enabler and facilitator at global
level to achieve economic growth and development. It provides vital
connectivity on national, regional and international level and helps to
generate trade, promote tourism and create employment opportunities. Air
travel is facilitated by public and private sector airlines which may have
scheduled or non-scheduled operations. Advent of jet planes and jumbo
jets has greatly revolutionised the international tourism scenario over the
years. Air travel has the inherent advantages of being the fastest mode of
travel, though it lacks the flexibility unless significantly high amount is
invested in charter flights. In India, the air transport was dominated by
government sector airlines i.e. Indian Airlines for domestic routes and Air
India for international routes, however after the economic reforms of 1990-
91, the airlines business was opened for private players. Emergence of low
cost air lines like Air Deccan transformed the air transport sector in India.
Recognising the potential of air transport in growth and development of
tourism, Govt. of India has upgraded many airports to international
standards as well as started the Udaan scheme to start flight operation on
routes which are not profitable initially or less profitable. Under this scheme,
private airlines are invited to operate flights on the routes not yet fully
commercialised and government gives the subsidy to promote them.
Khajuraho and Varansai have witnessed a significant improvement in
international tourism to these destinations, after improvements in air
connectivity. At present, some airlines offer their own tour packages by
combining their commercial flights with hotel stays and other destination
amenities.
Check Your Progress B
1) Explain:

a) Ground transport
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 b) Head loads Tourism Industry : Structure
and Components
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c) Roadways
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d) Tramways
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e) Railways
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f) Inland waterways
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g) Ocean waterways
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Concept and Impacts of .......................................................................................................................
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2) Match the following Tourist trains with country:
a) Golden Eagle Between Paris and Istanbul
b) Venice Simplon-Orient Express Russia
c) Golden Eagle Danube Express Australia
d) Ravos Rail UK
e) Royal Scotsman luxury train South Africa
f) Ghan Luxury train of Mexico

7.5 DESTINATIONS AND ATTRACTIONS

The attractions of a destination play an important role in pulling tourists. More is
the diversity in attractions, more is choice available for tourists and more is the
variety of tourism activity available. According to UNWTO (1992), “Destination
is a geographical area consisting of all the services and infrastructure necessary
for the stay of a specific tourist or tourism segment. Destinations are the
competitive units of incoming tourism. Destinations are therefore an important
part of a tourism product.”Burkart and Medlik (1974)defined destination as the
geographical unit which can be a city or a town or a village or an island or a
nation or a region or a continent. This geographical unit can be known as a
tourist destination which would help in convenient focus for the understanding
of tourist, tourism, stakeholders involved and the impact of tourism on the local
community. However, the potential of a tourism destination can be judged by
three main factors such as attractions, accessibility and amenities. These factors
may also be termed as the tourist qualities of a destination.

Mill and Morrison (1992) defined tourism destination as a part of tourism system
where a mix of interdependent elements produce an experience. But, in order to
have a memorable and long lasting experience, all elements should be present
and interact with each other positively. These interdependent elements are
attractions, facilities, infrastructure, transportation and hospitality.

We can sum up all the above aspects to form a universal definition of tourism
destination as “a geographical unit or physical space where a tourist stays for at
least one night and where a mix of interdependent elements such as attractions,
facilities, infrastructure, transportation and hospitality interact to give a memorable
experience to the tourists.” In tourism destination, there are boundaries which
are physical or administrative, so that its various aspects such as management,
images, and perceptions can be defined which also lead to market competitiveness.
Local tourism destinations can be on a massive or smaller scale such as a continent
(Asia), or a continent region (South Asia), or a country (India) or a region (south
India), or a state (Himachal Pradesh) or an island (Lakshadweep) or a city (Shimla)
or a town (Dharamshala) or a village (Pragpur) or a self-contained unit (water
park).Tourism destination comprises numerous elements such as Attractions,
Amenities, Accessibility, Accommodation, Activities, Package price, Image &
character and Human resources. Attractions are the main motivating forces which
pull tourists. The attraction is any entity (object), someone (person), place, or
conception (concept) which attracts visitors either geographically or else through
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remote electronic means to enable them tourism experience. Generally, attractions Tourism Industry : Structure
and Components
are divided into two broad categories such as cultural and natural, but according
to the world heritage centre, they can be divided into Geophysical-landscape-
aesthetic (mountains, rivers, gorges, caves etc.), Ecological-biological
(organisms, communities, ecological events such as migration, predation etc.),
Cultural-historical (archaeological remains, human construction, human
practices, human evolution etc.) and Recreational (include man-made attractions
such as theme parks, museums, theatre’s, botanical garden etc.).Also, these
attractions are noticeable at a variety of scales which again are dependent on
market observation. Some attractions draw local crowds (a statue), domestic
tourists (religious event) or international tourists (Mt. Everest).

7.6 TRAVEL INTERMEDIARIES AND

DESTINATION MANAGEMENT
ORGANISATIONS (DMOS)
Intermediaries are the organisations which makes a link between the producers
of goods/services and end users/buyers. There can be multiple layers of
intermediary organisations depending on the nature of goods/services and nature
of industry. In case of tourism industry following travel intermediaries are there:
Tour Operators
WholeSale Travel Agencies
Retail Travel Agencies
Specialised Agencies
Destination Management Organisations
Ground Operators/Ground Handling Agents.
Personal Selling Agents / General Selling Agent (PSA/GSA)
Tour operator is basically an organisation or firm which buys independent travel
components separately from their suppliers like air tickets from airlines, rooms
nights from hotels etc., combines these components to form a tour package which
is sold with their own price tag either directly to the public or through other
intermediaries like wholesale travel agencies or retail travel agencies or other
specialised sales channels like GSA/PSA. Based on their area of operations tour
operators can be further classified into inbound tour operators (catering to
incoming tourists), outbound tour operators (catering to outgoing tourists),
domestic tour operators(catering to domestic tourists) or ground
operators(providing ground arrangements services on the destination).
Wholesale travel agencies purchase the packages from tour operators or may
make its own packages by purchasing various components from suppliers.
Wholesale travel agencies further sell the tour packages either through the network
of retail travel agencies or directly to the clients. Retail travel agencies on the
other hand sell tourism products directly to the public on behalf of product
suppliers and get the commission in return. In case of some destinations there
are specialised travel agencies selling specific kind of tourism products only.
For example a travel agency at some wild life destination selling tourism services
like game drives etc specific to that destination only. There we may have GSA/
PSA which are travel organisations authorised by specific suppliers to sell their
products on their behalf in the areas where they don’t have their own presence. 107
Concept and Impacts of For example, Thomas Cook can appoint some local travel agency in a city like
Tourism
Karnal or Kurukshetra as their PSA to sell their packages in return of commission.
Apart from above, we have the Destination Management Organisation(DMOs)
which manages the tourism activity at destination level. The role of these
destination management organisations is to provide leadership for the management
of tourism at destination level and to co-ordinate various activities under a rational
strategy (Bornhost, Ritchie & Sheehan, 2010 in Chand, 2018). According to
Inksonand Kolb (1998), DMO are “formal entities in which a complex interaction
of people, materials and money are used for the creation and distribution of
goods and services”. Hence, these DMO cover a wide array of issues big or
small related to external and internal environments such as governance, leadership,
management ethics innovation human resource Management communication
networks outsourcing and organisation learning (Kaurav, Prakash and Singh 2017
in Chand, 2018).
DMOs may have many functions depending on the nature of the destination but
five main areas of activity are:
1) Coordination of sub sectors of tourism.
2) Help local community understand the importance of travel and tourism
industry.
3) Helping development of tourism facilities and image of a tourism
destination.
4) Assisting tourists through visitor service centres.
5) To establish liaison role in order to boost external organisations such as
tour operators, travel agents, event planners, hoteliers, resorts etc.
These DMO function at various levels and can be categorised into three types:
1) NTO or NTA: known as national tourism organisation or national tourism
authority. This is the highest level of DMO or at country level. For example,
Ministry of Tourism, Govt. of India, ITDC etc.
2) RTO or STO: Known as regional tourism organisation or state Tourism
organisation which operates at Regional or State level. For example,
MPSTDC(Madhya Pradesh State Tourism Development Corporation
Limited), HPTDC (Himachal Pradesh Tourism Corporation).
3) LTA/ LTO: Known as local tourism association or local tourism organisation
functioning at local, city or town level. For Example, Kurukshetra
Development Board (KDB), GMC (Gwalior Municipal Corporation),
MCGM (Municipal Corporation of Greater Mumbai).

7.7 LINKAGES AND INTEGRATIONS IN

TOURISM INDUSTRY
As we have seen that tourism industry has a complex structure which is owing to
the peculiar nature of tourism product. In order to perform its functions effectively
travel organisations like travel agency or tour operators need to work in closely
with many other organisations. Below figure shows various linkages that exist
in tourism industry. As we can see the travel agency need to have close ties with
not only the accommodation and transportation establishments but also with
government organisations like Ministry of Tourism, Ministry of External Affairs,
Banking & Insurance Companies etc.
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 Tourism Industry : Structure
and Components
Transport
Lodging Co. Cruise Co. Road Rail
Airlines Hotels
Domestic & Models
International Resorts
Others
Tour Wholesalers

Tourism
Associations Insurance Co.
Travel Agency

Cultural and Foreign Travel

Ministry of
Entertrainment Co.
External Affiars
Organisations

Educational Banking
Govt. DOT Institutions Companies

Fig. 7.2: Travel trade linkages, Travel Agency Management (2000)

Now, before discussing the integration in tourism industry, it is necessary to

have an idea of supply chain in general and tourism supply chain in specific.
Supply chain in general is the movement of goods or services from the producers
to the end users. In case of tourism, since there is no tangible product, rather it is
the amalgam of various services, in view of new age distribution channels, tourism
supply chain can be depicted as per below diagram.

Tour operator (Producers)

Wholesale tour operator

Wholesale travel agency

Tour consolidator

Specialty Channel

Destination companies

Retail travel agency

Tourist : Individual/group

Fig. 7.3: Tourism Supply Chain, Basic of Tourism (2004)

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Concept and Impacts of As we can see in the above figure the end user i.e. tourist have the option to
Tourism
purchase the tourism product from any member of the supply chain based on the
information and resources available with him. Integration in business parlance
means that one of two members from the supply chain collaborate by means of
mergers, acquisitions or any other in order to have the economic benefits of
reduced number of intermediary and economies of scale and scope. Integration
can be of three types i.e. vertical integration, horizontal integration and diagonal
integration. Whereas the vertical integration can be further classified into two
types bases on the direction of integration i.e. forward vertical integration and
backward vertical integration. Let us have a better look at various types of
integration with special reference to tourism supply chain.
A) Horizontal Integration – This type of integration occurs when the
organisations at the same level of supply chain collaborate with each other
for reaping the economic benefits of scale. So, in tourism supply chain if
two or more wholesale travel agencies or two/more retail travel agencies
or two/more destination companies collaborate with each other by way of
mergers/acquisitions etc in order to have benefits of economies of scale in
their business operations then it is called Horizontal Integration.
B) Vertical Integration – In vertical integration organisations at different
levels of supply chain collaborate with each other in order to have the
economic benefits of economies of scope. For example, a wholesale travel
agency takes over a retail travel agency or an airline or hotel taking over a
retail/whole sale travel agency. The direction of integration if its towards
customer i.e. downwards in the supply chain it is called forward vertical
integration and if the integration is towards producers then it will be called
as backward vertical integration.
C) Diagonal Integration – This is the integration that takes place between
the organisations which are not the part of same supply chain but they
offer products complimentary to each other. For example, a wholesale/
retail travel agency may collaborate with any banking or insurance company
to cater the foreign exchange and insurance needs of its customers, then it
will be the case of diagonal integration. A restaurant chain may collaborate
with petrol marketing companies to open its outlets at selected petrol pumps
and then both can have the benefits of economies of scope by extending
the product line.

7.8 LET US SUM UP

Tourism product has its unique characteristics which further makes tourism
industry a complex one. Main components of tourism industry being private and
public sector support organisations, carrier and transport organizations,
accommodation organisations, travel intermediaries etc. play an important role
in overall performance to tourism product. Accommodation being an essential
component of the tourism industry is very important and fundamental of all the
attributes of the tourism supply. It plays an important function both in the context
of urban and rural tourism by providing lodging and dining opportunity for the
visitors.

Transportation also being an important component of tourism product has its

own relevance in ensuring the movement of individuals/groups from one place
110 to another thus making the tourist destination accessible to the tourist. The
transportation can be done by air, sea and surface. Transportation not only Tourism Industry : Structure
and Components
facilitates movement of tourist but also enhance the overall experience of the
visitors.The various factors taken into account before selecting any mode of
transportation is time available for travel, distance to be covered, status of the
tourist, comfort, geographical position, benefit, competition, status, security and
price involved. Each mode of transport has its own advantages and disadvantages.
Apart from these, we have destination and attractions which are primary pull
factors for tourists. More the diversity of attractions at a destination, more it will
have the appeal for perspective tourists. Travel intermediaries like tour operators,
wholesale travel agencies, retail travel agencies etc. too play their role in bringing
the tourism services closer to end users. The complexity of tourism product,
further makes to have linkages with many other government, non-government
organisations necessary. Also, like other industries, travel organisations go for
various kinds of integrations in order to have the benefits of economies of scale
and scope.

7.9 KEY WORDS

Accessibility: Comprises the modes of transportation (land, air or water) and
facilities present at the tourism destination.

Accommodation: It provides the lodging, food and other services to the tourist.
They may comprise the hotel proper or other supplementary types of
accommodation.

Amenities: Amemities are the various services and facilities a visitor needs at a
tourism destination. It is vital for the tourism and include very basic to advance
facilities such as convenience facilities, signage, emergency facilities, postal
services, shopping, theatre, parking etc. It at sometimes is also referred to as
“pleasantness” of a destination.

Hotel Proper: It is a conventional type of Hotel facilities and provides all facilities
of hotel such as lodging and boarding. Example- All suite hotels, Airport hotels,
Boutique Hotels etc.

Supplementary Type of Accommodation: There are additional categories of

accommodation which are different from conventional hotels. They basically
provide lodging facilities’ for e.g. Dharamsala, youth hostel, Dak bungalow,
sanatoria, youth hostel etc.

Land Transport: It is also known as ground transport and it insures the movement
of people, goods and various types of cargo from one location to another. It may
involve pathways, roadways, tramways or railways.

Water transport: Water transport or waterways is an important mode of

transportation for both passenger and cargo. It requires watercraft such as boat,
ship or barge which moves over the water body such as River, Lake, Canal, Sea
or Ocean. It is one of the oldest and cheapest.

Pathways: It mainly involves a path, way or a route in remote rural areas which
are forested or mountainous where a human being or animals can only travel. It
is known as Head loads (or human transport) or Pack animals (or animal transport
like horse, mule, donkey, yak etc.).
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Concept and Impacts of Inland waterways: It was the main dominant mode of transport before the arrival
Tourism
of railways and development of road transport.

Air Transport: Air transportation is fastest means of transportation through air.

Examples are Helicopters, airplanes, hot air balloons; blimps, gliders, hand gliders,
parachute, and jet aircraft are all vehicles for Air travel.

Tourism destination: A geographical unit or physical space where a tourist stays

for at least one night and where a mix of interdependent elements such as
attractions, facilities, infrastructure, transportation and hospitality interact to give
a memorable experience to the tourists.

Attraction: It is any entity, historic monument, individual, someone (person),

location, or conception (concept) which attracts visitors either geographically or
otherwise to enable them tourism experience.

DMO: DMOs are known as destination management organisations. They are

formal units/bodies in which an intricateinterface of people, materials and money
occurs and which is used for the creation and distribution of tourism services.

NTO or NTA: known as national tourism organisation or national tourism

authority. This is the highest level of DMO or at country level. Example- ministry
of Tourism, ITDC etc.

RTO or STO: Known as regional Tourism organisation or state Tourism

organisation which operates at Regional or State level. Example: MPSTDC
(Madhya Pradesh State Tourism Development Corporation Limited), HPTDC
(Himachal Pradesh Tourism Corporation).

LTA/ LTO: Known as local tourism association or local Tourism organisation

functioning at local, city or town level. Example: GMC (Gwalior Municipal
Corporation); MCGM (Municipal Corporation of greater Mumbai).

Linkages: A linkage industry is in tourism are industries which are associated

with Tourism in such a way that the existence of one is dependent on the other,

Integrations: Involves approach of accomplishing things collectively. It is a

way of merging general or generic talent and resources to yield products or
delivery quality services.

Horizontal Integration: Occurs when one company/business offering the similar

products overtakes the other company/business.

Vertical Integration: It is when one company enhances its business into another
area by overtaking another company. However, it is on a different level of the
chain.

7.10 ANSWER TO CHECK YOUR PROGRESS

Check Your Progress A
1) See Section 7.2
2) This includes the guiding and escorting services, travel insurance and
foreign currency services, tourism marketing service and travel trade
112 publications etc.
3) Activities in the various components of tourism: Tourism Industry : Structure
and Components
Activity Component of Tourism
a) Hotels Accommodation
b) Kayaking Activity
c) Water transport Accessibility
d) Postal services Amenities
e) Rural tours Package Available
f) Youth hostel Accommodation
g) Zip-lining Activity
h) Telecommunications Amenities
Check Your Progress B
1) See Section 7.4

2) Match the following Tourist trains with country:

a) Golden Eagle in Russia,
b) Venice Simplon-Orient Express (between Paris and Istanbul),
c) Golden Eagle Danube Express (Budapest, Vienna, Prague and
Sarajevo),
d) Ravos Rail (luxury train of South Africa),
e) Royal Scotsman luxury train (UK),
f) Chepe train of Mexico and
g) Ghan luxury train of Australia

7.11 TERMINAL QUESTIONS

1) What is the structure of the tourism industry?
2) What are the components of the Tourism Industry?
3) Write a note on Accommodation.
4) What are the various modes of transportation?
5) What is a Tourism destination?
6) What are Intermediaries in Tourism?
7) What are various linkages in tourism industry? Explain with suitable
examples.

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