PART II. Structural Change in the tourism sector
I. The Industrial Structure
The “techno-industrial” space
Raw materials
Final clients
TechnologicalDimension(vertical)
Marketdimension(horizontal)
The concept of « filière »
The vertical or technological dimension :
A “filière” describes a chain of activities transforming raw material to a final product.
Give examples
Representation of a « filière »
Raw materials
Transformation
transportation
distribution
Addedvalue
Exercice
Represents a tourism « filière »
The tourism « filière »
The specificities ?
Comment on every stage.
Tourist(the consumer)
Transportation
Transformation
Thedestination
The tourism “attractiveness” : an added value
The role of economic actor (private and public) in the “filière” : Create attractiveness tourism (output) with a specific destination (input).
The attractiveness is not given, is not “natural” : it is an economic output.
The creation of tourism value
Tour-operators
Travel Agencies
tourists
The structural change (I) : the direct distribution
Tour-operators
Travel Agencies
tourists
Retailing biggie(mass-distribution)
Consumers(as potential
tourists)
Question : What is the strategic objective of tour-operators ?
Observation : tours-operators are developing their own mass-distribution network.
Direct distribution of French T.O. (1997)
Tours operators
Market share (%)
Agencies number
Asia 18 4
Cit Evasion 18.5 13
Fram 22 67
Kuoni 24 12
Look-voyages 25 56
Pacha Tours 8 8
Rev’Vacances 2.5 4
E-tourism: the “virtual” agency
Tour-operators
Travel Agencies
touristsThe new consumer:« Potential tourists »
internet
Travel sales with internet in USA
0
2
4
6
8
10
12
14
16
1998 1999 2000 2001 2002 2003
billions $
PART II. Structural Change in the tourism sector
I. The Tourism firm
The production function
TechnicalCapital
(K)
HumanCapital
(L)
Fixed
Variable
standard
qualified
The firm Final product
Question : apply to a tourism firm.
INPUT OUTPUTcombination
The firm constraint and objective
OBJECTIVETo create wealth (Profit target) : output
value > input value
CONSTRAINTThe “optimal” payment of each input:
Labor (wage given by labor market) Capital (interest & dividend fixed by financial
market) Public factors (taxes fixed by government) Entrepreneur (profit as a residual income)
The Market Structure
Perfect competition : firm take the price.
Monopoly: firm make the price Imperfect competition (oligopoly):
firm influence the price. Oligopoly is between pure competition and monopoly.
Firm strategies
Strategic objective: to move on industrial space with Externalization Integration
(vertical, horizontal)
Agreement & alliances
Question: Find examples in tourism sector
Types of integration in travel & tourism
Concentration (absorption & fusion) in hospitality / tour-operating industries
Alliances in air-companies sector
Illustration 1
Illustration 2
Illustration 3
References
Evan N. and Stabler M.(1995) « A future for the package tour operator in the 21st century ? » Tourism Economics Vol. 1 Part 3, 245-263.
Gratton C. and Richards G. (1997) « Structural Change in the European package tour industry: UK/German comparisons » Tourism Economics, Vol. 3, Part 3, 213-226.
Sheldon P.J. (1986) « The tour operator industry analysis », Annals of Tourism Research, vol 13, 349-365.
Paper study:
B. Davies and P. Downward (Staffordshire University)
Competition and contestability in the UK Package Tour Industry: some empirical observations
Working Paper 98.3.
Exercice:
Production, cost and profit.