Firm's Economy All Lessons

LECTURE 1
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LECTURER: KHUMAR KHANIM
DADASHOVA
1. OBJECT AND BASICS OF ECONOMICS IN TOURISM COURSE

 Specify the commonly understood definitions of tourism and tourist
 Define hospitality
 Gain knowledge about the origins of the tourism industry
What Is Tourism?
There are a number of ways tourism can be defined, and for this reason,
the United Nations World Tourism Organization (UNWTO) embarked on a
project from 2005 to 2007 to create a common glossary of terms for tourism.
It defines tourism as follows:
Tourism is a social, cultural and economic phenomenon which entails the
movement of people to countries or places outside their usual environment for
personal or business/professional purposes. These people are called visitors
(which may be either tourists or excursionists; residents or non-residents) and
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tourism has to do with their activities, some of which imply tourism
expenditure (United Nations World Tourism Organization, 2008).
Using this definition, we can see that tourism is the movement of people
for a number of purposes (whether business or pleasure).
Building on the definition of tourism, a commonly accepted description of
a tourist is “someone who travels at least 80 km from his or her home for at
least 24 hours, for business or leisure or other reasons” (LinkBC, 2008, p.8).
The United Nations World Tourism Organization (1995) helps us break down
this definition further by stating tourists can be:
1. Domestic (residents of a given country travelling only within that country)
2. Inbound (non-residents travelling in a given country)
3. Outbound (residents of one country travelling in another country)
1. Accommodation
2. Food and beverage services (commonly known as “F & B”)
3. Recreation and entertainment
4. Transportation
5. Travel services
These industry groups are based on the similarity of the “labor processes
and inputs” used for each . For instance, the types of employees and resources
required to run an accommodation business — whether it be a hotel, motel, or
even a campground — are quite similar. All these businesses need staff to
check in guests, provide housekeeping, employ maintenance workers, and
provide a place for people to sleep. As such, they can be grouped together
under the heading of accommodation. The same is true of the other four
groupings, and the rest of this text explores these industry groups, and other
aspects of tourism, in more detail.
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When looking at tourism it’s important to consider the term hospitality. Some
define hospitality as “the business of helping people to feel welcome and
relaxed and to enjoy themselves”.
Simply put, the hospitality industry is the combination of the
accommodation and food and beverage groupings, collectively making up the
largest segment of the industry.
Tourism is one of the world’s most important activities, involving millions
of people, vast sums of money and generating employment in developing
and industrialized countries. Yet many aspects of tourism have been ignored.
This section makes a key contribution from an economic standpoint to the
understanding of tourism.
Objectives of tourism economics are not limited to the aspects of
entertainment only, although this constitutes one of the important aims. The
new concept of tourism, which is led by the government, considers tourism as
a sector of multiple benefits, including economic, cultural, social, heritage and
environmental benefits as related to different segments of the society. Hence, it
is evident that, this sector has a set of nested dimensions and aspirations that
are in the service of the individual and the society.
The Economics of Tourism presents new insights into the intricacies of

tourism
demand, firms and markets, their global interrelations and the fundamental
contribution of the environment to tourism activities, to offer an accessible,
analysis of the interwoven fields of tourism and economics.
 Tourism economics is making an important contribution to tourism
policy, planning and business practices.
 The tourist industry generates substantial economic benefits to both host
countries and tourist home countries.
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Tourism economics has the following components:
Leisure – time remaining after work, commuting, house chores , sleeping etc
Recreation- activities during leisure time
-reading a book
-Sports
-Tourism
Tourism-visiting for at least one night for leisure and holiday
-Visiting a place outside the normal home and work environment
Tourist organizations- produce goods and services used in leisure time
Scope of economics:
Fundamentally
 Measurement and understanding of decisions about the use and
allocation of scarce resources
 Scarce resources : resources for which potential uses are greater than
supply
 Macro: functioning of large scale economic systems such as labor
markets, the effects of inflation and governmental economic policies
 Micro : valuation, pricing and decision making by individuals, families
and businesses
Tourism economics impact measures the amount of travel and its economic
consequences, direct and induced.Tourism has dimensions other than
economic, among them the complex of interactions their consequences that
occur before during and after a tourist trip. Include
 Psychological
 Sociological
 Ecological
 Political impact
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Tourism, too, is a controversial activity, not just in terms of climate
change, but also in that there are other consequences of tourism for, say,
indigenous peoples. Again, it is important to provide a balanced view, taking
into account the evidence and the literature. It is important, too, to recognize
that as tourism matures as a subject area there are new approaches to studying
and analyzing tourism to complement the more traditional ways of thinking. In
this first chapter, for example, we examine one such approach – ‘the critical
turn in tourism studies’. But, above all, tourism is an exciting subject for study
– after all, most of us have experienced tourism and can relate the material in
this book to our own experiences.
Tourism has now become a major economic sector in its own right, and
we use this chapter to demonstrate the scale and significance of tourism.
At the same time, we identify some of the issues that are inherent both in the
subject area and in the study of tourism.
Economic impact:
Measures the changes in an economy as tourism increases or decreases
Three basic types
1.Direct-magnitude of visitors spending
2.Indirect:magnitude of tourism businesses purchasing supplies and services
from other businesses
Induced: impact of employee spending in community
Employment impact: jobs created by tourism
Other measures:
 Employment impact: job creation driven by tourism
 Employment income : wages and salaries provided by tourism
 Tourism value-added: the value of tourism goods and services produced
in a community, minus the wages, salaries and benefits paid by the
employer
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 Wealth
 Wages and salaries provided by tourism (increase in property values)
(Investment Income generated through tourism)
 Multipliers
 Measure of overall increase in wealth arising from visitor expenditures;
associated with economic impact
 Several types, each must be used and interpreted with caution
 Other measures
 Government revenues
 Sales taxes or value added taxes
 Excise taxes
 Property taxes
 Income taxes
 Business licensing fees
 Fees for visas and passports
 Admission fees from government tourist attractions such as museums
and parks
In a world of change, one constant since 1950 has been the sustained
growth and resilience of tourism both as an activity and an economic sector.
This has been demonstrated despite the ‘shocks’ of ‘9/11’, the dual bombings
in Bali, the threat of bird flu, the second Iraq war, bombings of both the
London and Madrid railway systems, the 2004 Boxing Day Tsunami, the
financial crisis of 2008/2009 and the Iceland volcano eruption. Despite more
recent crises, it was the events of ‘9/11’ that triggered changes in consumer
behavior; changes which impacted on travel patterns and operations around the
world. Yet, even with these challenges, in 2010 the World Travel and Tourism
Council (WTTC)
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demonstrated the tremendous scale of the world’s tourism sector (WTTC,
2010):
- The travel and tourism industry’s percentage of world gross
domestic product was 9.4%.
- The world travel and tourism industry accounts for 9.2% of total
investment in the world.
- The world travel and tourism industry supported 235 million jobs
(8.1% of total world employment). It is clear that tourism is an
activity of global importance and significance and a major force in
the economy of the world. It is also a sector of contrasts. It has the
capacity to impact negatively upon host environments and
cultures – the raw materials of many tourism products – but it can
also promote peace and help alleviate poverty.
Azerbaijan’s tourism statistics:
2.691.998 foreign citizens visited Azerbaijan, which is 449,215 or 20% more
than in 2016 the Ministry of Culture and Tourism informed today
Most of the tourist were from Russia 853.082;
The others are citizens of Georgia- 537.710, Iran-362.597, Turkey- 301.553,
United Arab Emirates- 102.360, Iraq- 62.454 Ukraine-57.756, Saudi Arabia-
33.273. The rest are 381.213 citizens of other countries
Tourism in Developing Countries:
Tourism has recently became a major factor in places like
 CHINA
 INDIA
 SOUTH AMERICA
 SOUTHEAST ASIA
World Travel and Tourism Council (WTTC) demonstrated scale of the
world’s tourism sector:
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 The travel and tourism industry’s percentage of world gross domestic
product was 9.4%

 The world travel and tourism industry accounts for 9.2% of total
investment in the world
 The world travel and tourism industry supported 235 million jobs(8.1%
of total world employment)
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LECTURE 2

DADASHOVA
2. TOURISM PRODUCTS
1) Scope of Tourism Products
Tourism products are various. They include air passenger transport, rail transport,
ferry transport, accommodation services, catering services, meeting and tourist
attraction activities, etc. Tourism products are a kind of service, and tourism
consumers differentiate between tourism products provided by different providers
on the basis of their own feelings about service quality when making their
purchasing decisions. Therefore, tourism providers must pay attention to
consumers’ views on tourism services and improve clients’ level of satisfaction.
2) The Characteristics of Tourism Products
Tourism products are intangible, are produced and consumed at the same time, can
be differentiated from each other, are non-storable, are mutually complementary,
and the ownership rights in them are non-transferable, etc. Each characteristic will
influence consumer behaviour.
Intangible Nature
Tourists can never see, hear, taste or touch tourism products before they buy them.
This is because what they purchase are the experiences travel gives them, including
taking the plane, staying in hotels, visiting museums, enjoying drama
performances, taking tourist boat trips, seeing famous mountains and great rivers,
having fun, and relaxing in clubs, etc. After enjoying such services, tourists can
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only retain these experiences in their memory, and have no way of acquiring
physical ownership. Even where tourism products require the use of tangible
purchases to complete the service process, such as for food and beverages, they do
not in any sense represent the ultimate goal of tourists who buy tourism products.
Tourists hope to achieve intangible goals such as happiness, excitement, relaxation,
etc., through their travel experiences.
The Inseparability of Production and Consumption
When organizations in the tourism industry provide services to tourists, this is the
exact moment that tourists consume such services, and the two cannot be separated
in terms of time. For example, when an airplane is in flight, the passengers are
consuming flight services at the same time; when a hotel sells a hotel room to a
guest for the night, the guest utilizes the hotel’s room service at the same time
Perishability
Tourism products cannot be stored like physical products and prepared for sale in
the future. Unoccupied hotel rooms or unsold airline tickets have forever lost their
chances to be sold. For example, airline companies have no way of storing up
spare seats on night time flights to be used to cope with crowded morning or
afternoon flights.
Complementarity
Tourism is made up of activities such as eating, accommodation, travel,
entertainment and touring. Generally speaking, every trip requires the purchase of
tourism services provided by various tourism organizations. For example, business
travellers, in addition to buying air ickets, also have to pay for taxi transport
services, meals and refreshments, and accommodation services provided by hotels.
Because of this, one tourism product will always be affected by the elements of
other tourism products. For example, when a famous hot springs tourist attraction
becomes less popular, the number of tourists who go to restaurants and shops near
the hot springs will also fall, and business on flights to the hot springs tourist
attraction will also be affected. Although these products are not from the same
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organization, they are nevertheless closely linked with each other, and this type of
relationship is called complementarity
Immobility of Ownership
This refers to the fact that it is only when services are purchased that activities can
be enjoyed or equipment can be used. Tourists will only acquire an experience, but
not the ownership of the product. For example, after flying on a plane, a traveller is
transported from one place to another, after which he or she acquires nothing other
than an air ticket.
Product Life Cycle (PLC) and Its Applications in Tourism
The concept of PLC is rooted in the theories of population ecology. It was
originally used to describe the lifetime of manufactured products and has been
increasingly applied in service and tourism as an explanatory tool. A standard PLC
includes four different stages with their characteristics as shown in
(i) Introduction
(ii) Growths
(iii) Maturity
(iv) Decline
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Structure
Meaning and definition of tourism products A tourism product can be defined as
the sum of the physical and psychological satisfaction it provides to tourists during
their travelling en route to the destination. The tourist product focuses on facilities
and services designed to meet the needs of the tourist. It can be seen as a composite
product, as the sum total of a country’s tourist attractions, transport, and
accommodation and of entertainment which result in customer satisfaction. Each of
the componentsof a tourist product is supplied by individual providers of services
like hotel companies, airlines, travel agencies, etc. The tourist product can be
analysed in terms of its attraction, accessibility and accommodation.
Attractions
Of the three basic components of a tourist product, attractions are very important.
Unless there is an attraction, the tourist will not be motivated to go to a particular
place. Attractions are those elements in a product which determine the choice made
by particular tourist to visit one particular destination rather than another. The
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attractions could be cultural, like sites and areas of archaeological interest,
historical buildings and monuments, flora and fauna, beach resorts, mountains,
national parks or events like trade fairs, exhibitions, arts and music festivals,
games, etc. Tourist demands are also very much susceptible to changes in fashion.
Fashion is an important factor in the demand for various tourist attractions and
amenities. The tourist who visits a particular place for its natural beauty may
decide to visit some other attractions due to a change in fashion. Peter has drawn
up an inventory of the various attractions which are of significance in tourism.
However, the attractions of tourism are, to a very large extent, geographical in
character. Location and accessibility (whether a place has a coastal or inland
position and the ease with which a given place can be reached) are important.
Physical space may be thought of as a component for those who seek the
wilderness and solitude. Scenery or landscape is a compound of landforms; water
and the vegetation and has an aesthetic and recreative value. Climate conditions,
especially in relation to the amount of sunshine, temperature and precipitation
(snow as well as rain), are of special significance. Animal life may be an important
attraction, firstly in relation to, bird watching or viewing game in their natural
habitat and secondly, for sports purposes, eg. fishing and hunting. Man’s impact on
the natural landscape in the form of his settlements, historical monuments and
archaeological remains is also a major attraction. Finally, a variety of cultural
features-ways of life, folklore, artistic expressions, etc. provide valuable attractions
to many.
Accessibility
It is a means by which a tourist can reach the area where attractions are located.
Tourist attractions of whatever type would be of little importance if their locations
are inaccessible by the normal means of transport. A Tourist in order to get to his
destination needs some mode of transport. This mode may be a motor car, a coach,
an aeroplane, a ship or a train which enables him to reach his predetermined
destination. If tourist destinations are located at places where no transport can
reach or where there are inadequate transport facilities, they become of little value.
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The tourist attractions, which are located near the tourist generating markets and
are linked by a network of efficient means of transport, receive the maximum
number of tourists. The distance factor also plays an important role in determining
a tourist’s choice of a destination. Longer distances cost much more in the way of
expenses on travel as compared to short distances. An example can be that of
India. About two and a half million tourist arrivals for a country of the size of India
may look rather unimpressive. However if one looks at certain factors like the
country’s distance from the affluent tourist markets of the world such as the United
States, Europe, Canada, Japan and Australia, one may conclude that the long
distance is one of the factors responsible for low arrivals. It costs a visitor from
these countries, quite a substantial amount, to visit India for a holiday. It has been
stated earlier that Europe and North America continue to be the main generating
and receiving areas for international tourism, accounting for as much as 70% and
20% respectively, of international tourist arrivals. Easy accessibility, thus is a key
factor for the growth and development of tourist movements.
Accommodation
The accommodation and other facilities complement the attractions.
Accommodation plays a central role and is very basic to tourist destinations. World
Tourism Organization in its definition of a tourist has stated that he must spend at
least one night in the destination visited, to qualify as a tourist. This presupposes
availability of some kind of accommodation. The demand for accommodation
away from one’s home is met by a variety of facilities. The range and type of
accommodation is quite varied and has undergone considerable change since the
last half century. There has been a decline in the use of boarding houses and small
private hotels. Larger hotels are increasing their share of holiday trade, especially
in big metropolitan areas and popular spots. In more traditional holiday and sea-
side resorts in Europe and elsewhere, big hotels are keeping their share of holiday
resorts. In recent years, some changes have been reflected in the type of
accommodation. There has been an increasing demand for more non- traditional
and informal types of accommodation. The latest trends in accommodation are
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holiday villages. In recent years there has been an increase in the popularity of
such accommodation. Accommodation may in itself be an important tourist
attraction. In fact, a large number of tourists visit a particular destination or town
simply because there is a first class luxury hotel or resort which provides excellent
services and facilities. Some countries like Switzerland, Holland, France, Austria,
and Belgium have gained a reputation for providing excellent accommodation with
good cuisine. Many hotel establishments elsewhere in various countries, especially
the resort hotels, have gained a reputation for their excellent cuisine, services and
facilities. The French government for instance, paved the way for tourist
development of Corsica by launching a big hotel development programme.
Amenities
Facilities are a necessary aid to the tourist centre. For a sea-side resort, facilities
like swimming, boating, yachting, surf-riding, and other facilities like dancing,
recreation and other amusements are important for every tourist centre. Amenities
can be of two types; natural, eg. beaches, sea-bathing, possibilities of fishing,
opportunities for climbing, trekking, viewing, etc. and man-made, eg. various types
of entertainment and facilities which cater to the special needs of the tourists.
Excellent sandy beaches, sheltered from sunshine with palm and coconut trees and
offering good bathing conditions form very good tourist attractions. Certain other
natural amenities such as spacious waters for the purpose of sailing, or the
opportunities for fishing and hunting are also very important.
Characteristics of tourism products
Toursim products are mainly service products or services which have several
characteristics. For example in the business tourism, conference planning and
management is a service offered by large hotels and convention centres. Fairs and
festivals are events which are offered for enjoyment only at a particular time of the
year and these are perishable and variable. In India, cultural attractions in the forms
of dances and music can be seen and enjoyed. Other products which tourists
consume like wildlife, and flora and fauna are natural products. Some of the
characteristics are:
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1. Intangible Unlike a tangible product, say, a motor car or refrigerator, no transfer
of ownership of goods is involved in tourism. The product here cannot be seen or
inspected before its purchase. Instead, certain facilities, installations, items of
equipment are made available for a specified time and for a specified use. For
example, a seat in an aeroplane is provided only for a specified time.
2. Psychological A large component of tourism product is the satisfaction the
consumer derives from its use. A tourist acquires experiences while interacting
with the new environment and his experiences help to attract and motivate
potential customers.
3. Highly Perishable A travel agent or tour operator who sells a tourism product
cannot store it. Production can only take place if the customer is actually present.
And once consumption begins, it cannot be stopped, interrupted or modified. If the
product remains unused, the chances are lost i.e. if tourists do not visit a particular
place, the opportunity at that time is lost. It is due to this reason that heavy
discount is offered by hotels and transport generating organisations during off
season.
4. Composite Product The tourist product cannot be provided by a single
enterprise unlike a manufactured product. The tourist product covers the complete
experience of a visit to a particular place. And many providers contribute to this
experience. For instance, airline supplies seats, a hotel provides rooms and
restaurants, travel agents make bookings for stay and sightseeing, etc.
5. Unstable Demand Tourism demand is influenced by seasonal, economic
political and others such factors. There are certain times of the year which see a
greater demand than others. At these times there is a greater strain on services like
hotel bookings, employment, the transport system, etc.
6. Fixed supply in the short run The tourism product unlike a manufactured
product cannot be brought to the consumer; the consumer must go to the product.
This requires an in-depth study of users’ behaviour, taste preferences, likes and
dislikes so that expectations and realities coincide for the maximum satisfaction of
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the consumer. The supply of a tourism product is fixed in the short run and can
only be increased in the long run following increased demand patterns.
7. Absence of ownership When you buy a car, the ownership of the car is
transferred to you, but when you hire a taxi you buy the right to be transported to a
predetermined destination at a predetermined price (fare). You neither own the
automobile nor the driver of the vehicle. Similarly, hotel rooms, airline tickets, etc.
can be used but not owned. These services can be bought for consumption but
ownership remains with the provider of the service. So, a dance can be enjoyed by
viewing it, but the dancer cannot be owned.
8. Heterogeneous Tourism is not a homogeneous product since it tends to vary in
standard and quality over time, unlike a T.V set or any other manufactured
product. A package tour or even a flight on an aircraft can’t be consistent at all
times. The reason is that this product is a service and services are people based.
Due to this, there is variability in this product. All individuals vary and even the
same individual may not perform the same every time. For instance, all air
hostessescannot provide the same quality of service and even the same air hostess
may not perform uniformly in the morning and evening. Thus, services cannot be
standardised.
9. Risky The risk involved in the use of a tourism product is heightened since it has
to be purchased before its consumption. An element of chance is always present in
its consumption. Like, a show might not be as entertaining as it promises to be or a
beach holiday might be disappointing due to heavy rain.
10. Marketable Tourism product is marketed at two levels. At the first level,
national and regional organisations engage in persuading potential tourists to visit
the country or a certain region. These official tourist organisations first create
knowledge of its country in tourist –generating markets and persuade visitors in
these markets to visit the country. At the second level, the various individual firms
providing tourist services, market their own components of the total tourist product
to persuade potential tourists to visit that region. Tourism, basically, is an
infrastructure based service product. The nature of the service here is highly
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intangible and perishable offering a limited scope for creating and maintaining the
distinctive competitive edge. The effective marketing of tourism needs constant
gearing up of infrastructure to international standards and presupposes in its
coordination with the tourism suppliers. In strategic terms, it calls for the action of
an integrated approach to management and marketing. In operational terms, it
means the implementation of a better defined, better targeted market-driven
strategy for realizing the defined objectives. The important point to note here is
that marketing is applied to situations where the choice can be limited to a
relatively small number of brands giving the consumer a reasonable choice. The
process of selection thus becomes easier. In the field of tourism this process is
taking place by the increased use of ‘package tours’. A package tour is a travel
plan which includes most elements of vacation, such as transportation,
accommodation, sight-seeing and entertainment. The tourist product is a composite
product, whether it is sold as a package or assembled by the individual himself or
his travel agent. There are many tourism products that are available to the
consumer today. In modern times these products, whether traditional in nature like
culture and pilgrimage, or modern like adventure, conventions and conferences,
health, medical, etc. are being packaged, promoted and priced appropriately to woo
as many tourists as possible. Tourism products can be classified as under for a
better understanding of each of their peculiar characteristics, so that they can be
marketed and positioned appropriately
Differerent Types of Tourism Products The tourism product which is a
combination of tangible and intangible products can be a thing, an event, or a place
which motivates the tourists towards it. There are different ways in which the
tourist products can be classified.
Natural Tourism Products
These include natural resources such as areas, climate and its setting,
landscape and natural environment. Natural resources are frequently the key
elements in a destination’s attraction. Let us look at some examples: 1.
Countryside 2. Climate- temperature, rains, snowfall, days of sunshine 3. Natural
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Beauty- landforms, hills, rocks, gorges, terrain 4. Water- lakes, ponds, rivers,
waterfalls, springs 5. Flora and Fauna 6. Wildlife 7. Beaches 8. Islands 9. Spas 10.
Scenic Attractions The climate of a tourist destination is often an important
attraction. Good weather plays an important role in making a holiday. Millions of
tourists from countries with extreme climates visit beaches in search of fine
weather and sunshine. The sunshine and clear sea breeze at the beaches have
attracted many people for a very long time. In fact, development of spas and
resorts along the sea coasts in many countries were a result of the travelers. urge to
enjoy good weather and sunshine. In Europe, countries like France, Italy, Spain
and Greece have developed beautiful beach resorts. North Europeans visit the
Mediterranean coast searching for older resorts like Monte Carlo, Nice and Cannes
on the Riviera and new resorts in Spain and Italy. Beautiful beaches of India, Sri
Lanka, and Thailand, Indonesia and Australia and some other new destinations are
more examples of how good weather can attract tourists. All these areas capitalise
on good weather. Destinations with attractive winter climates, winter warmth and
sunshine are also important centres of tourist attraction. Many areas have become
important winter holiday resorts attracting a large number of tourists. Around these
winter resorts, winter sport facilities have been installed to cater to the increasing
needs of tourists. People from warm climates travel especially to see snowfall and
enjoy the cold climate. In countries with tropical climates, many upland cool areas
have been developed as ‘hill stations’. Hence climate is of great significance as a
tourism product. The scenery and natural beauty of places has always attracted
tourists. Tourists enjoy nature in all its various forms. There are land forms like
mountains, canyons, coral reefs, cliffs, etc. One of the great all time favourite
tourist destination is the Grand Canyon, Arizona. Mountain ranges like the
Himalayas, Kilimanjaro, and Swiss Alps, etc. There are water forms like rivers,
lakes waterfalls, geysers, glaciers, etc. The Niagara Falls shared by Canada and the
United States is an example of how scenic waterfalls attract tourists. Lake Tahoe in
California and the, deserts of Egypt are other examples of great tourist products.
Other great natural wonders that attract tourists are the Giants Causeway of
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Northern Ireland, the Geysers of Iceland, the glaciers of the Alps, the forests of
Africa etc. Vegetation like forests, grasslands, moors deserts, etc. has all been
developed as tourist products. Flora and Fauna attract many a tourist. Tourists like
to know the various types of plants and trees that they see and which trees are seen
in which seasons. There are many plants which are specific to certain regions and
many times students and travellers visit those areas especially to see those varieties
of plants. Thick forest covers, attract tourists who enjoy trekking and hunting
activities. Fauna attracts tourists who like to watch birds, wild mammals, reptiles
and other exotic and rare animals. Countries in South East Asia have crocodile
gardens, bird sanctuaries, and other tourist products that display the fauna of their
region. Spas are gaining popularity as modern tourism products all over the world.
While most parts of the world have their own therapies and treatments that are
effective in restoring the wellness and beauty of people. New kinds of health tours
that are gaining popularity are spa tours. Spas offer the unique advantages of
taking the best from the West and the East, combining them with the indigenous
system and offering best of the two worlds. For example Swedish massages work
well with the Javanese Mandy, lulur, aromatherapy, reflexology and traditional
procedures. Now various spa products are being combined with yoga, meditation,
and pranayama, giving a holistic experience to tourists. Spa treatments are now
combined with other medical treatments to treat blood pressure, insomnia,
depression, paralysis and some other diseases. People are now travelling to spas
and clinics for curative baths and medical treatment. In some countries like Italy,
Austria and Germany, great importance is given to spa treatments. In Russia along
the Black Sea coast and in the foothills of the Caucasus Mountains, there are many
world famous sanatoria where millions of Russians and international tourists
throng every year. Beach tourism is very popular among the tourists today.
Tourists of all age groups, backgrounds, cultures and countries enjoy this tourism
product. Besides attraction and sale ability, beach holidaying has lead to overall
development of tourism in many parts of the world. The basic importance of
beaches is that they provide aesthetic and environmental value of the beach such as
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beautiful natural scenery with golden sands, lush green vegetation and bright blue
sky. The water should be clear, free of currents and underwater rocks. Beach
tourism activities include water and land resource use. The water usage involves
swimming, surfing, sailing, wind surfing, water scootering, Parasailing, motorboat
rides, etc. The land use has multifacets like sunbathing, recreational areas for
tourists (parks, playgrounds, clubs, theatre, amusement parks, casinos, cultural
museums, etc.), accommodation facilities (hotels, cottages, villas, camping sites,
etc.), car and bus parking areas, entertainment and shopping complexes, access
roads and transportation network. Due to its multidimensional requirements the
beach product needs special care. A beach resort needs to be developed as an
integrated complex to function as a self-contained community. Environmental
management should also ensure the availability of necessary infrastructure in the
immediate hinterland to the coastal region in support of the development on the
coast to maintain its ecosystem. Islands abound with natural beauty, with the rare
flora and fauna and tribes. This makes islands an ideal place for adventure, nature
and culture lovers to visit. This tourist product has great scope as these islands are
being developed as tourist paradises. For example, Hawaii, Maldives, Mauritius,
Tahiti, Andaman and Nicobar Islands, etc. has developed with tourism activity
over the past few decades. The topography is generally undulating and they offer
natural scenic beauty with exotic flora and fauna. Most of these islands have places
of worship like churches, temples, etc. As an added attraction some of these islands
have developed as tax havens thereby encouraging commercial development of
these economies. They offer social and cultural attractions as tourists can
experience the local lifestyle, local food, fairs and festivals, etc.
Man Made Tourism Products
Man- made tourism products are created by man for pleasure, leisure or
business. Man- made tourism products include: (a) Culture • Sites and areas of
archaeological interest • Historical buildings and monuments • Places of historical
significance • Museums and art galleries • Political and educational institutions •
Religious institutions Cultural tourism is based on the mosaic of places, traditions,
13
art forms, celebrations and experiences that portray the nation and its people,
reflecting the diversity and character of a country. Garrison Keillor, in an address
to the 1995 White House Conference on Travel & Tourism, best described cultural
tourism by saying, “We need to think about cultural tourism because really there is
no other kind of tourism. It’s what tourism is...People don’t come to America for
our airports, people don’t come to America for our hotels, or the recreation
facilities....They come for our culture: high culture, low culture, middle culture,
right, left, real or imagined — they come here to see America.” Two significant
travel trends will dominate the tourism market in the next decade.
• Mass marketing is giving way to one-to-one marketing with travel being tailored
to the interests of the individual consumer.
• A growing number of visitors are becoming special interest travellers who rank
the arts, heritage and/or other cultural activities as one of the top five reasons for
travelling. The combination of these two trends is being fuelled by technology,
through the proliferation of online services and tools, making it easier for the
traveller to choose destinations and customize their itineraries based on their
interests.
(b) Traditions
• Pilgrimages
• Fairs and festivals
• Arts and handicrafts
• Dance
• Music
• Folklore
• Native life and customs
A pilgrimage is a term primarily used for a journey or a search of great moral
significance. Sometimes, it is a journey to a sacred place or shrine of importance to
a person’s beliefs and faith. Members of every religion participate in pilgrimages.
A person who makes such a journey is called a pilgrim. A large number of people
have been making pilgrimages to sacred religious places or holy places. This
14
practice is widespread in many parts of the world. In the Christian world, for
instance, a visit to Jerusalem or the Vatican is considered auspicious. Among
Muslims, a pilgrimage to Mecca is considered a great act of faith. In India there are
many pilgrimage centres and holy places belonging to all major religions of the
world. India is among the richest countries in the world as far as the field of art and
craft is concerned. Tourists like to visit and see the creative and artistic treasures of
various countries. Every country has certain traditional arts like soap sculptures
and batik of Thailand; gems and jewellery, tie and dye works, wood and marble
carving in Indonesia; ivory, glasswork, hand block printing, sandalwood, inlay
work; are some of the examples of traditional art that attract tourists.
(c) Entertainment
• Amusement and recreation parks
• Sporting events
• Zoos and oceanariums
• Cinemas and theatre
• Night life
• Cuisine
Tourist products that have entertainment as their main characteristic are many. Just
to name a few there are amusement and recreational parks like Disneyworld in
United States, Hong Kong, Paris, Singapore and theme parks in various countries
and cities like Appu Ghar and Fun and Food Village in Delhi, Essel World in
Mumbai and so on .
Tourists may come to attend sports events and it is also an opportunity to explore
the country. The fundamental concept is that all tourist activities have an influence
on providing economic benefits and have a powerful influence in some definite
locality, like the Olympics in London (2012) has given immense benefit to all in
tourism business in London in particular and United Kingdom in general.
(d) Business
• Conventions
• Conferences
15
People who travel in relation to their work come under the category of business
tourism. However such travel for business purposes is also linked with tourist
activity like visiting places of tourist attraction at the destination, sight seeing and
excursion trips. Business travel is also related to what is termed today as
convention business, which is a rapidly growing industry in hospitality and
tourism. A business traveller is important to the tourism industry as it involves the
usage of all the components of tourism. He travels because of different business
reasons- attending conventions and conferences, meetings, workshops etc.
Participants have a lot of leisure time at their disposal. The conference organisers
make this leisure time very rewarding for participants by organising many
activities for their pleasure and relaxation. The spouses and families accompanying
the participants are also well looked after by the organisers. The organisers plan
sight seeing tours and shopping tours for the participants and their families. In
India, cooking classes for learning Indian food cooking from the various states,
visits to the craft bazaars where tourists see how artisans make clay pots and other
handicrafts, they visit tie and dye units to see Indian printing eg. Batik printing etc.
Women tourists enjoy henna demonstrations.
Symbiotic Tourism Products Some tourism products do not fall into the above
categories. Wildlife sanctuary, Marine parks, Aero products and Water sports,
Flower festivals are the example of tourism products which are a blending of
nature and man. Nature has provided the resource and man has converted them into
a tourism product by managing them. National parks for example, are left in their
natural state of beauty as far as possible, but still need to be managed, through
provision of access, parking facilities, limited accommodation, litter bins etc.
Yet the core attraction is still nature in this category of product. These products are
symbiosis of nature and man. In case of adventure sports tourists can be
participants. The basic element of adventure is the satisfaction of having complete
command over one’s body, a sense of risk in the process, an awareness of beauty
and the exploration of the unknown. Adventure tourism can be classified into
16
aerial, water based and land based. Aerial adventure sports include the following
activities-
(a) Parachuting
(b) Sky Diving
(c) Hang Gliding
(d) Para Gliding
(e) Para Sailing
(f) Bungee Jumping
(g) Ballooning Water based adventure sports include the following-
(a) White water rafting
(b) Canoeing and Kayaking
(c) Adventure sports in the waters of the sea like wind surfing, scuba diving,
snorkeling, yachting, water skiing, etc. also offer thrilling activities to the tourists.
Land based adventure tourist products include the following-
(a) Rock climbing
(b) Mountaineering
(c) Trekking
(d) Skiing
(e) Heli skiing
(f) Motor Rally
(g) Safaris
Event Based Tourism Products Where an event is an attraction, it as an event
based tourist product. Events attract tourists as spectators and also as participants
in the events, sometimes for both. The Ocktoberfest organised in Germany, Dubai
and Singapore shopping festivals, the camel polo at Jaisalmer, Kite flying in
Ahmedabad attracts tourists, both as spectators and participants. Whereas in case
of the Snake Boat race of Kerala can be enjoyed witnessing it. Event attractions are
temporary, and are often mounted in order to increase the number of tourists to a
particular destination. Some events have a short time scale, such as the Republic
Day Parade, others may last for many days, for example Khajuraho Dance Festival
17
or even months like the Kumbh Mela. A destination which may have little to
commend it to the tourist can nevertheless succeed in drawing tourists by mounting
an event such as an unusual exhibition.

Site Based Tourism Products When an attraction is a place or site then it is
called a site based touristproduct. Site attractions are permanent by nature, for
example Taj Mahal, The Great Wall of China, The Grand Canyon in Arizona,
Eiffel Tower, Statue of Liberty, Temples of Khajuraho, etc. A site destination can
extend its season by mounting an off season event or festival. A large number of
tourists are attracted every year by the great drawing power of Stratford on Avon
in England because of its association with Shakespeare, the city of Agra in India
with its famous Taj Mahal, Pisa in Italy for its famous Leaning Tower. Some new
features have been added to the same product to keep the tourist interest alive in
the products. For example now visitors can see Taj by night, music 30 shows have
been organised with Taj as the backdrop so that there are repeat tourists.
18
LECTURE 3

DADASHOVA
3. The Economics of Tourism Demand
Tourism demand- the total number of persons who travel, or wish to

travel, to use tourists facilities and services at places away from their places of
work or residence.
Demand-side definitions have evolved first, by attempting to
encapsulate the idea of tourism into ‘conceptual’ definitions and second,
through the development of ‘technical’ definitions for measurement and legal
purposes. From a conceptual point of view, we can think of tourism as: ‘The
activities of persons
travelling to and staying in places outside their usual environment for not
more than one consecutive year for leisure, business and other purposes’
(WTO and UNSTAT, 1994). While this is not a strict technical definition, it
does convey the essential nature of tourism, i.e.:
_ Tourism arises out of a movement of people to, and their stay in, various
places or destinations.
_ There are two elements in tourism – the journey to the destination and the
stay (including activities) at the destination.
1
_ The journey and stay take place outside the usual environment or normal
place of residence and work so that tourism gives rise to activities that are
distinct from the resident and working populations of the places through
which tourists travel and stay.
_ The movement to destinations is temporary and short term in character – the
intention is to return within a few days, weeks or months.
_ Destinations are visited for purposes other than taking up permanent
residence or employment in the places visited.
However, these ‘conceptual’ approaches do not allow precision for
measurement or legislative purposes. As a result, ‘technical’ definitions were
developed by the UNWTO in an attempt to isolate tourism trips from other
forms of travel for statistical purposes. These ‘technical’ definitions demand
that an activity has to pass certain ‘tests’ before it counts as tourism. Such
tests include the following:
_ Minimum length of stay – one night (visitors who do not stay overnight are
termed same day visitors or excursionists).
_ Maximum length of stay – one year, which is easy to control through
immigration and also, as a consequence of being in a destination for more than
one year, the behaviour of a ‘visitor’ may change to reflect that of locals.
_ Strict purpose of visit categories, including leisure, business and
common interest.
- Approaches to study tourism demand
• Economists- Demand measured in monetary returns gained within a
period of time. Price, elasticity, quality, revenue and expenditure.
• Psychologists- Demand related to motivation, behavior, personality and
environment.
Geographers- Demand based on geographic boundaries, demographics
TYPES OF DEMAND
2
• Effective or Actual Demand- People actually traveling at a point of
time.
• Potential Demand- People who could travel if motivated.
• Deferred/Postponed Demand- People who wish to travel, but are not
traveling presently due to temporary reasons, of self or supply end.
• Suppressed Demand – People not interested in travel.
Factors determining tourism demand
1. Individual
2. Economic
3. Geographic
4. Destination
5. Political
Individual factors
• Education and Awareness
• Mobility
• Age, Gender, Religion
• Income and employment, disposable income, household income,
DINKS
• Paid holiday
• Family Influence
• Nature of Family-joint, nuclear
• Stage of Family Life Cycle
• Gap Year Opportunities
Economic factors
 Cost of Travel
 Cost of Products
 Competitive Prices
 Exchange Rate
3
Geographic factors
 Seasonality
 Accessibility, location and distance
 Attractions Available
 Urban or Rural population or Economy
DESTINATION FACTORS
 Image – organic and induced
 Promotion: travel channels, awareness, deals
 Technology and development
 CRS technology
 Development Level
 Credibility
 Safety and Security
 Attraction and Events
 Quality of Product
 Travel Formalities
Both people’s preferences and their expenditure budgets are key
determinants of the demand for tourism. A person who is considering whether
to spend a holiday away from home has an amount of money, or budget,
which is available for expenditure on tourism and other goods and services.
The size of the budget depends upon the number of hours that he or she
spends in paid work per time period (labor supply), on the income per hour
and on the rate of taxation on income which yields the disposable income
available for purchasing goods and services.
People trade-off paid work against unpaid time; some people prefer
more income, resulting from more paid work, while others prefer to have
more unpaid time for leisure or household activities and therefore spend less
4
time in paid work. If they undertake more paid work and have less unpaid
time, their level of income rises but leisure and household work are foregone;

conversely, taking more leisure reduces income.
There is, however, a tension as income is often required to undertake
leisure
pursuits so that the latter have an imputed ‘price’ or opportunity cost. Each
combination of paid work and unpaid time provides a different amount of
earnings, or budget, which may be spent on goods and services.
The demand for tourism depends upon the total budget which is
available for spending (resulting from the person’s labor supply or
unemployment benefits, as discussed above) and on preferences for tourism
relative to other goods and services. At one extreme, the person could allocate
all of his/her budget to tourism and, at the other, none of it to tourism and all
of it to other goods.
People have to decide not only on their preferred combination of
tourism relative to other goods, but also on their preferred combination of
different types of tourism. For example, a tourist could spend all of his/her
tourism budget on visits to friends and relatives or all of it on holidays in new
locations abroad, or could choose some combination of the two. The optimal
position again depends upon the person’s budget and preferences and it is
again assumed that the budget is allocated between different types of tourism
so as to maximize satisfaction.
5
LECTURE 4

DADASHOVA
4. Tourism Supply
Tourism supply is a composite product involving transport,

accommodation, catering, natural resources, entertainment, and other
facilities and services, such as shops and banks, travel agents and tour
operators.
Suppliers are connected to tourists through tourism marketing

channels consisting mainly of intermediaries (tour operators, retail trade,
meeting and convention planners, etc.) and facilitators, who assist in the
efficient functioning of the tourism system (e.g. flow of information,
marketing, money, knowledge). Other bridging elements include the
different transportation modes. The third component of the tourism system is
the customer. There is competition to serve customer needs, and it is that
competition that governs the actions of the travel trade. As discussed
previously, tourists are not a homogeneous group of individual travellers.
There is a great variety of tourism motivations, and the range of tourism
segments has exploded over the last two decades.
Supply Components First, let us consider some supply elements more

in detail. Without attractions there is no tourism. They are the key element of
the tourism system, with the ability to attract people to destinations. The
attractions can be of a very varied nature and are classified into three major
groups: 1. Primary natural attractions 2. Primary man-made attractions 3.
Purpose-built attractions.
1
Natural attractions include:
● Climate
● Beaches
● Landscape
● Fauna and flora
● Waterfalls
● Lakes
● Mountains.
Primary man-made attractions were not built or conceived for tourism

purposes, but they have the capability to attract travellers. They can be sub-
divided into three groups:
1. Built attractions:
● architecture (historic and modern buildings)
● cathedrals, churches, mosques
● monuments
● castles
● promenades
● archaeological sites
● natural parks
● indoor resorts
● gardens and parks
● leisure centres
● shopping malls
● sports stadia.
2
2. Cultural attractions:
● museums
● theatres and sports
● art and crafts
● religion
● history
● folklore
● carnivals and other entertainment
● festivals.
3. Social attractions:
● way of life of the destination’s population
● ethnic groups
● language.
Purpose-built attractions were constructed or conceived especially for

tourism purposes, and include:
● Theme parks
● Ski tracks
● Marinas
● Festivals
● Events
● Spas
According to the scope, a distinction is made between three main

groups. The first group consists of the ‘longer-stay focused attractions’,
3
which have the ability to attract people to a destination for several days or
more beach destinations are a typical example. These attractions should
have sufficient appeal or variety of attractive components to satisfy tourists
for some time. The second group consists of the ‘touring circuit attractions’,
consisting of a combination of several attractions not necessarily of the
same kind in different locations. Typical examples include Classical Greece,
historical Egypt, Italian art cities, the cherry-blossom tour in Japan, the
Canadian Rockies, cruise tours and many others. The third group consists of
stopover destinations, which are interesting places to visit on the way to
primary destinations. A typical example is a visit to Beaune on the way to
destinations in the south of France.
The next component of tourism supply is tourism services/facilities,

also referred to as the ‘superstructure’. While attractions draw visitors away
from home. They support the tourism development rather than induce it.
The main component of tourism facilities is the accommodation

sector. For successful tourism, accommodations must be available in
sufficient quantity and quality to match the demand of travellers who arrive
at the destination. Given access, accommodations should precede any other
type of development. Accommodations can be sub-divided into commercial
(hotels, motels, hostels, boarding houses, bedand-breakfasts, cruise ships,
shelters, lodges, farm-based facilities, and self-catering facilities such as
camping, rented apartments/cottages/houses and holiday villages) and non-
commercial services (second residences, mobile homes, visits to relatives
and friends, and house exchange schemes). Many further services are
required by the traveller. There is a wide variety of other facilities, including
shops, health services, pharmacies, banks, hairdressers, theatres, casinos,
4
cinemas, garages, sport and leisure services, etc., that serve the tourist as
well as the resident population.

Infrastructure is the third pillar of tourism supply. Traditionally, a
distinction is made between transport infrastructure at the destination, and
the public utilities. The major elements of the first group are roads, railways,
transport services for sightseeing tours, airports, cruise terminals, harbours,
local transport network, taxis and parking facilities. It is also impossible for
a destination to function without the necessary public utilities electricity,
water supply, health care, communication networks, sewage, waste disposal,
water treatment, etc.
Three of them differ from the classical approach: human resources,

image and price. From a destination point of view they are important. A
unique character or image is crucial in attracting visitors to the destination. It
is not sufficient to have a good range of attractions and amenities if potential
visitors are not aware of this. The image of the destination includes
uniqueness, sights, scenes, environmental quality, safety, service levels and
friendliness of people. Price is another supply component. That is the reason
why we, in the first edition, dealt with pricing in the supply chapter. Pricing
is an important aspect of the destination’s competition with other
destinations. Price factors relate to the cost of transport to and from the
destination as well as the cost on the ground of accommodation, attractions,
food and tour services. Last but not least human resources are important.
5
LECTURE 5

DADASHOVA
5. TRAVEL MOTIVATIONS AND BARRIERS TO

INTERNATIONAL TOURIST TRAVEL
Tourists can travel for many reasons in addition to recreation and

leisure. Both the person who travels to a nearby city for medical treatment
and the business traveller in a foreign country are tourists. They may take
part in activities characteristic of tourism during their visit. They will need
accommodation and food. They may visit places of interest or sample local
culture. Any of these activities may be described as tourist behaviour,
though the reasons for the trip may be quite different.
We travel to meet certain needs and desires – which may be personal,
cultural, social, professional, or environmental. A personal need to reduce
the stress of daily responsibilities at home, work, or school can translate
into a motivation to travel. Theses motivators also determine our choice of
travel destinations, since we will select locations to meet our particular
needs.
The motivators apply equally in developed and developing world
societies. Participating in scientific expeditions and business conventions,
for example, may be important motivators for travel in both developed and
1
developing regions. Some trips in a developing region may involve fewer
kilometers and the technology of travel may be less sophisticated, but the
motivation may be no different and no less important.
Factors that Influence Travel Motivations and Actions
By referring to Figure 3.2, factors that influence one’s travel motivations
and decisions can be categorized into two different aspects: internal factors
and external factors.
(i) Internal Factors (Individual Factors)
- Economic Capacity
Economic capacity is the basis on which all needs are formed.
Because travel is a kind of consumer behaviour, the ability to pay the
various types of charges involved is of course necessary. When a person’s
economic income can only support his or her basic living needs, he or she
will not form a motivation to go travelling. As an economy develops, in
countries and regions where citizens’ income increases, the tourism industry
becomes more developed, and the
number of people who go travelling climbs, or drops when the opposite
applies.
- Spare Time
Spare time refers to the time that people can freely allocate to taking
part in pastimes and entertainment or anything else they enjoy participating
in after their daily work, study, living and other compulsory time
commitments. Travel necessarily takes up a certain amount of time, and if a
person cannot get away from official business or family matters and has no
spare time to freely allocate and set aside for his or her own pastimes, he or
she cannot go travelling. Therefore, spare time is an important condition for
the realization of travel activities. In developed countries, labour protection
2
laws are relatively strong and workers have statutory holidays, both of
which ensure that people can form travel motivations.
- Age and Physical Condition
Compared with females, males are psychologically more proactive,
risk-tolerant and willing to seek novelty, which spurs them to form the
desire to go travelling more easily than females. Young people’s need to
explore nature and society is stronger than that of adults and older people,
and they have curious minds and a psychological need to outdo others, as
well as a great ability to accept new things. Therefore, when compared with
other people, their travel motivations are less affected or limited by reality.
Physical condition is an important factor that influences travel psychology.
For example, older people are limited by factors such as health and lack of
strength. They will generally have a relatively large number of requirements
relating to the travel destination, travel resources and the travel
environment.
- Psychological Factors
Travel motivations are a form of individual psychological activity,
and are inevitably influenced by various aspects such as individual interests,
hobbies, profession, attitude to life, understanding of the surrounding
environment, level of education, and family.
(ii) External Factors (External Environmental Conditions)
- Overall Development of the Tourism Industry
It is only when the economy of a country or region is developed that it
will have enough resources to improve and construct travel facilities,
develop tourist attractions and promote transport development. Road
transport facilities, accommodation, catering, and service standards at a
destination are important factors in the tourists’ choice of destination, and
3
also affect their formation of travel motivations to a large degree, especially
for tourists with relatively high
hospitality expectations.
- Group, Family and Social Atmosphere
Group or social pressure can also influence people’s travel
motivations. For example, travel activities organized by enterprises, or
travel awards, etc. encourage people to form their own travel motivations
involuntarily, and travel activities subsequently take place. Social
surroundings can also influence people’s travel motivations. Colleagues’,
friends’ and relatives’ travel behaviour and travel experiences can always
influence others, or lead to the formation of a comparative psychology,
making people form identical travel motivations, and
leading to the formation of a kind of imitative travel behaviour.
Tourist barriers-Obviously immigration laws and visa requirements,
language barriers, currency exchange rates and infrastructure (roads, power
etc in less developed nations) . And not least customs and cultures, think
of women in Islamic countries.
Wealthy countries obviously want tourism but have to consider the fact
that some tourists could be immigrants in disguise. That's why most
countries require a certain amount of currency to enter the country. And
also why they have time limitations on visas that vary depending on the
"risk" of the country of origin.
Language barriers can be overcome for airports, hotels and conferences
but not for the entire country. Foreign languages are one thing, but
unfamiliar alphabets often put travelers at an disadvantage (Latin, Russian,
Chinese, Japanese, Thai, Hebrew etc).
Currency exchange rates can vary wildly and expose hotels and
travelers alike to sudden changes in costs . Wealthy tourists will always be
4
able to afford it, but the masses might not be that lucky.
Without adequate infrastructure there is little hope of mass tourism.

Some African countries have a lot to offer but also need to be able to
effectively handle both travelers and their needs (food, services and
equipment). Infrastructure is very costly to create and maintain, but if
there's a return on their investment it can be done.
In choosing a destination, a traveller must overcome a number of

obstacles. If the motivation to travel is strong enough, the obstacles will be
overcome but they may still affect the choice of destination. Time and cost,
for example, are the obstacles that most immediately come to mind. We
must plan trips around our vacation time and our budgets. If both are
limited, we may choose a destination close to home. Some of the major
travel barriers include the following:
dgets. Travel competes with other financial
commitments.
limit the time available for travel.

h young children may limit travel because of
cost and inconvenience or may be restricted in their choice of travel
destination.
out travel.
may deter travellers.
5
LECTURE 6

DADASHOVA
6. Benefits and Costs of Tourism
Tourism benefits- Tourism involves many players including tourists,

businesses, tourism managers, host communities and society. All players need
to derive benefits from tourism for tourism to be truly successful. However,
the aspirations of these players are at least partially competing. Tourists seek
to maximise ‘consumer surplus’, ie. get the best experience possible for the
least cost, while businesses seek to maximise (shortterm) profits and host
communities are interested in long-term income and employment as well as
net benefits. Tourism success is predominantly measured in tourist numbers.
This measure is useful when assessing tourism at a national scale since
economic activity generated can be assumed to be linear to tourist numbers.
Thus, from a national – or even state perspective – it is useful to pursue an
increase in tourist numbers, both international as well as inter- and intra-state.
Costs Benefits
Social Costs Social Benefits
1
 May attract visitors whose  Brings in outside dollars to support
lifestyles and ideas conflict community facilities and services
with the community's. An that otherwise might not be
example may be the visitors' developed.
use of drugs and alcohol.  Encourages civic involvement and
 May change individual pride.
behaviour and family  Provides cultural exchange
relationships. between hosts and guests.
 May lead to an increase in  Encourages the preservation and
sexually transmitted celebration of local festivals and
diseases. cultural events.
 Loss of traditional values  Facilities and infrastructure
and culture through developed for tourism can also
imitation of visitor benefit residents.
behaviour or cultural  Encourages the learning of new
diffusion resulting from languages and skills.
normal, everyday  Tourism related funds have
interaction. contributed towards schools being
 May create crowding and built in some areas.
congestion.
 May compete with residents
for available services,
facilities, and existing
recreation opportunities.
 May result in harassment of
visitors perceived to be
wealthy and an increase in
2
crime.
 Can involve violations of
human rights. People have
been displaced from their
land and beaches have been
reserved for hotel guests
while access is barred to
local people.
Environmental Benefits Environmental Costs
 Fosters conservation and  May threaten specific natural

preservation of natural, resources such as beaches and
cultural and historical coral reefs or historical sites.
resources.  May increase litter, noise, and
 Encourages community pollution.
beautification and  Brings increased competition for
revitalization. limited resources such as water
 Could be considered a clean and land, resulting in land
industry. degradation, loss of wildlife
habitats and deterioration of
scenery. Tourism seasonality
 Directly contributes to sewage and
solid waste pollution.
 Emissions generated by forms of
transport are one of the main
environmental problems of
3
tourism.
Economic Benefits Economic Costs
 Helps diversify and stabilize  Tourism development of

the local economy. infrastructure (airports, roads, etc.)
 Provides governments with can cost the local government a
extra tax revenues great deal of money.
each year through  May inflate property values and
accommodation and prices of goods and services.
restaurant taxes, airport  Leakages:
taxes, sales taxes, o If outside interests own the
park entrance fees, tourism development, most
employee income tax etc.. of the economic benefits
 Creates local jobs and will leave the community.
business opportunities. o Considerable amount of
These include those jobs foreign exchange revenues
directly related to tourism leaks back out of the
(hotel and tour services) and destination countries for
those that indirectly support tourism-related imports.
tourism (such as food Tourist multiplier effect
production and housing  Employment tends to be seasonal.
construction). Workers may be laid off in the
 The multiplier effect: winter season.
o Brings new money Tourism seasonality
into the economy.  Many jobs in the tourism industry
Tourist money is are poorly paid. This is a particular
4
returned to the local problem in LEDCs where the local
economy as it is spent workforce lack the skills to fill the

over and over again. better paid management positions.
o Helps attract  Tourist numbers can be adversely
additional businesses affected by events beyond the
and services to control of the destination e.g.
support the tourist terrorism, economic recession.
industry. This is a big problem in LEDC
Tourist multiplier countries dependent on tourism.
effect Tourism dependency
 Is labour-intensive.  Tourism follows a "product life
 Earns valuable foreign cycle", with a final stage of
exchange. decline, where the destination no
longer offers new attractions for
the tourist, and the quality has
diminished with the rise of
competition and tourist saturation.
5
LECTURE 7

LECTURER: KHUMAR KHANIM DADASHOVA
7. Taxing Tourism
A good investment climate for tourism, underpinned by a sound tax

regime, can play a central role in a government’s growth and development
strategy. Yet in many countries, tax systems for the tourism sector are
characterized by exemption schemes and instruments that generate little
revenue and burden business. This note focuses on the three main issues
facing policymakers dealing with tourism taxation in developing countries:
fiscal incentives, sector-specific levies, and value-added tax (VAT). It
discusses different policy options to encourage tourism investments while
ensuring sustainable revenue collection.
Tourism is a complex industry of numerous subsectors. It is

challenging to define exactly what constitutes a tourism product and how to
tax it; tourism is not a single commodity, but rather a collection of many
different goods and services provided by a wide range of suppliers. The
tourism value chain encompasses a variety of different actors, including
hotels, air carriers and transport companies, tour operators, travel agents,
rental agencies, and countless suppliers from other sectors.
Tourism and aviation taxes are counterproductive. In many cases, the

revenue raised from such taxes is far outweighed by the economic benefits
that are foregone as a result of reduced demand for air travel. Generally,
governments increase tariffs or taxes on a given product – such as tobacco –
1
when they intend to dissuade its consumption, not promote it. It is paramount
to keep in mind this basic principle when evaluating such tax proposals by
States. IATA POSITION IATA is totally opposed to any form of fee that
does not reinvest the revenue in the aviation industry. Such a fee is in
contradiction of ICAO principles. Any government decision leading to an
increase of the costs of air travel imposes a new barrier to the development of
the aviation and tourism industries. KEY REASONS WHY TOURISM TAX
SHOULD NOT BE LEVIED ICAO principles do not support any taxes on
aviation that do not generate funds that will be put back into aviation related
activities. Increased aviation may result in unprofitable routes and reduced
frequencies for destinations to, from or within a country. Taxes on aviation
will reduce the wider economic benefits available from aviation, resulting in
a negative impact on economic growth and overall government revenue
bases. Taxes on aviation charges will negatively impact tourism, an industry
that is essential to the economy of many countries. Taxes that are only
applied to aviation are discriminatory and have an adverse effect on the air
transport industry, a key engine for economic development.
Tourism Tax The tourism or seasonal tax is an additional tax on certain

lodging and amusement services that is imposed for tourism promotion. The
tourism tax rate is 1.5%. Tourism tax applies to the gross receipts of:
• Hotels and Lodging Establishments
• Campgrounds
• Motor Vehicle Rentals
• Recreational Equipment Rentals
• Recreational Services
2
• Spectator Events
• Visitor Attractions
• Visitor-Intensive Businesses
The tourism tax on lodging establishments, campgrounds, motor vehicle

rentals, recreational equipment rentals, recreational services, spectator events
and visitor attractions applies year-round. The tourism tax on visitor-
intensive businesses applies during the months of June, July, August, and
September. If a business or transaction is exempt from the state sales tax, it is
also exempt from the tourism tax. For example, admissions to fairs are
exempt from the state sales tax, so they are also exempt from the tourism tax.
However, admissions to rodeos, concessions, and rides at a fair are subject to
sales tax, and therefore, the tourism tax.
Tax policy in Tourism (in the UK)- Before one can understand tax
implications for the tourism industry, one must understand the sensitivity of
tourism demand. The results suggest that tourism demand in the UK is very
price sensitive and that measures which result in increasing tourism prices
will have a significant negative impact on tourist arrivals. It is believed that a
reduction in the VAT rate could boost UK’s tourism sector, depending on the
extent to which a decrease in taxation is passed on in the form of price
reductions. The results also suggest that arrivals from neighboring countries
are 98% higher than from distant origins; however, expenditure per capita of
the former is 52% lower than the latter, also found that common language
between the origin and the destination increases arrivals 7% more than non-
native English-speaking origins.
3
Tourism is one of the most flourishing sectors in the world; worldwide
international tourism receipts have grown by 12% over the last ten years.
Many countries are setting targets in attempts to gain the additional income,
foreign currency, employment, and tax revenue that the sector can provide.
However, the success of any given country in attracting tourists depends
upon its ability to remain competitive. Competitiveness depends on a range
of variables, for example hotel prices, exchange rates, transportation costs,
which, in turn, are affected by movements in oil prices. It is argued, in
particular, that effective prices that tourists pay, relative to those in
competing destinations is a significant and important factor influencing
tourism demand. Effective prices are determined by destinations’ own prices,
prices in competing destinations, and exchange rate movements. However,
government policies can have a significant impact on the effective price. A
notable example of such policies is the imposition of taxation on tourism
which, ceteris paribus, tends to raise prices in the destination relative to its
competitors. Tourism taxes have both advantages and disadvantages. On the
one hand, tourism is a relatively easy target for governments that need to
raise additional revenue, some of which may be used to provide the
infrastructure and other facilities on which tourism depends. Increased
revenue can be raised both by raising the rate of taxation and by increasing
the number of taxes that are levied on tourism, as has occurred in recent
years. On the other hand, taxes may have distortionary effects upon the
economy and may even result in a lower level of revenue. The latter depends
upon the extent to which the taxes are passed on in the form of higher prices
and on the price elasticity of demand for tourism in the destination under
consideration.
4
The case of the UK is particularly apposite as the UK government has been
considering the case for changing taxation on tourism, and detailed
knowledge of the sensitivity of demand to changes in tourism prices is a
necessary underpinning for decision making. Moreover, while cross-country
studies providing price and income elasticities of tourism demand are
common. Tourism makes a major contribution to the UK economy. It
accounts for 5% of national GDP and 7% of employment, employing 1.78
million people in 125,000 businesses.
Changes in pricing policies, such as taxes, charges, and exchange rates, can
have significant effects on the tourism sector. Exchange rate is yet another
variable in consumers’ decisions to choose particular destinations. The
consumer knows how much his/her currency is worth in terms of the visiting
country’s currency. Despite the fact that there has been an increase in the
number of visitors to the UK in recent years, some declines also occurred, for
example from France, Germany, and Belgium. There has been a noticeable
decline in tourism expenditure over recent years from all countries except for
the USA and Australia. In fact the decline in tourism expenditure is much
more pronounced than the decline in the number of arrivals. The recent fall in
these figures could be the result of a combination of high VAT rates and the
high external value of sterling, to which tourism expenditure and visits
appear sensitive. Although tourism is regarded as an export, it differs from
goods exports in the sense that its consumption takes place at the point of
production. Taxes, which act as barriers to trade, are perhaps necessary to
support and service the tourism industry. Generally, among the taxes in
vogue, two categories can be identified: (1) general taxes, for instance import
duties, profit and sales tax, and (2) special taxes mainly on tourist activities
such as hotel and restaurant tax, tax on gambling, airport tax, and entry and
5
exit taxes. It is also claimed that high UK VAT rates place tourism businesses
at a disadvantage in relation to their European competitors. On the demand
side, consumers of tourism services in the UK and from overseas indicated
that they regard price as an important variable when choosing a holiday
destination and that they perceive the UK as either very expensive or quite
expensive as a holiday destination. These findings indicate the importance of
knowledge about how tourists respond to changes in prices, taxes, and
exchange rates. Elasticity estimates for international tourism demand in the
UK will be derived and will provide an important measure of the sensitivity
of demand to changes in the relative competitiveness of the UK. The
reliability of these estimates depends, among other criteria, on the validity of
the model and the adequacy of the estimation technique. Tourism demand has
been measured by a host of variables including the total number of visits,
arrivals, or tourists, visit per head of the origin’s population, total real
expenditure or receipts, and per capita real expenditure. The price indices
which are used to reflect the relative trade resistance is referred to as
“multilateral resistance”.
Tourism is regarded as one of the foremost sources of income, employment,

foreign exchange earnings, and tax revenue in many countries. Taxes on
tourism increase government revenue but at the same time reduce the
destination’s competitiveness. A range of taxes is levied and their impact can
be measured through their effect on prices. Taxes have the effect of
increasing the prices of goods and services but do not guarantee an increase
in total revenue. The amount of extra fiscal revenue from the introduction of
a new tax or increase of an existing tax will depend on the tourists’ response
to the price effects of the taxes, which is important to assess for policy
purposes. The potential for deriving fiscal revenue from tourism is enormous,
6
especially when the scope for levying taxes on residents is limited. From a
political point of view, taxing tourism is seen as the least disruptive means of

securing government revenue. This is because tourists are seldom voters in
the place that they visit. Tourists are almost certain that they will be taxed in
one way or the other in any destination, but the level of taxation can influence
tourism flows and expenditure. Prices and income, which are important
determinants of tourism demand, are present in the model, the former
reflecting “multilateral resistance” effects. In the tourism context, the model
enables a destination to assess its competitive position at the macro level, and
can also measure gains/losses from trading with countries where free trade
agreements exist, with countries using a common currency, with countries
speaking the same native language, and so on. The results for the UK suggest
that international tourism demand in the UK is price elastic and sensitive to
price (tax) changes. This would imply that any percentage increase in tourism
price will result in a more than proportionate fall in tourist arrivals, also in
total real expenditure and real expenditure per capita as well. The model used
is indeed very attractive to model inbound tourism demand for regions as
well for individual destinations.
7
LECTURE 8

DADASHOVA
8. TOURISM GROWTH AND NATIONAL ECONOMIES
Top policy priorities - While overall growth trends in this dynamic sector are
positive, governments are increasingly developing policies that seek to maximise the
economic, environmental and social benefits that tourism can bring, while reducing
the pressures that arise when this growth is unplanned and unmanaged. Policy
measures to address these concerns have become a priority. For example, efforts
have been made to deal effectively with overcrowding at popular destinations,
spread the economic and other benefits to areas that attract fewer visitors, develop
new products to expand the season, and encourage increased productivity, better
resource use, and more stable employment. To ensure these policies are actually
having the desired impact, countries are strengthening co-ordination and
implementation mechanisms, reforming destination management practices,
modernising regulations, adopting digital solutions, strengthening dialogue with
civil society and engaging the private sector in policy making.
Governments are currently facing two critical issues in terms of managing the
tourism sector: leveraging the benefits of the digital transformation and ensuring that
sustainable tourism policies are implemented. Technology continues to advance at a
1
fast pace and is a game-changer for tourism businesses and policy makers alike. The
rapid developments in the sharing economy, mobile payment systems, virtual and
augmented reality applications, technologies and artificial intelligence are likely to
influence tourism products, business models, services, and visitor choices. These
potentially demand policy reflections, new regulations and intervention to maximise
opportunities and protect consumers. Governments have an important role to play in
creating the right conditions for all businesses to engage in the digital transformation
of tourism. Governments are actively fostering tourism development that brings
clear economic benefits, while also providing a wider set of advantages for places,
local communities, businesses, employees, and visitors. Tourism success can no
longer simply be measured in terms of arrivals, jobs and income. Ensuring that local
communities can more equally benefit from tourism is a prevailing policy trend and
progress has been made.
Key policy messages - Championing integrated, forward-looking tourism
policies  Develop coherent, forward-looking approaches to the design of tourism
policies and programmes, supported by long term strategies and flexible action
plans.  Strengthen co-ordination mechanisms and delivery structures to ensure that
policies agreed at national level are consistently delivered at subnational level, and
engage communities and businesses to ensure local destinations can fully share the
benefits of a dynamic tourism economy.
Preparing tourism businesses for the digital future  Actively champion
the digital transformation of tourism, by promoting a digital mindset, modernising
regulatory frameworks.  Encourage uptake and investment in new technologies,
skills and innovation and support existing tourism to take advantage of the benefits
of the digital transformation, and promote the development of smart tourism
destinations.  Foster digitally-enhanced tourism business models, value chains and
2
ecosystems, through the adoption of data analytics and other enabling technologies,
optimisation of business practices, and the expansion of accessible digital
infrastructure, tools and solutions.
Rethinking tourism success for sustainable growth  Place a greater focus
on the environmental and socio-cultural pillars of sustainability, to deliver net
benefits to local communities.  Ensure that efforts to grow tourism are pursued
within the wider context of city, regional, and national economic development
strategies, and in close co-operation with industry and civil society.  Take additional
steps to mainstream sustainability in tourism policies and industry practices, to better
support the transition to a green, low-emissions and climate-resilient tourism
economy.  Ensure access to comparable and timely data to inform decision-making
and better plan for the type and scale of tourism growth appropriate for individual
destinations.
Recent Trends - Tourism is an important part of OECD member and partner
economies, and a key sector within a growing services economy. On average tourism
directly contributes 4.4% of GDP, 6.9% of employment and 21.5% of service related
exports to OECD countries. Global tourism has steadily expanded for over six
decades. Driven by strong global economic growth and new volume outbound
markets, particularly from the Asia Pacific region, international tourist arrivals
worldwide grew to over 1.4 billion in 2018, an increase of 5.6% on 2017. With
international tourism arrivals growing ahead of the long term growth forecast, the
threshold of 1.8 billion is now likely to be exceeded in advance of 2030.
Provisional data indicates that destinations worldwide registered around 1.5
billion international tourist arrivals in 2019, an increase of 3.8% year-on-year. This
was the tenth consecutive year of sustained growth, but the more muted growth trend
in 2019 reflects weakening economic growth, concerns about international trade and
3
reducing consumer confidence. France, Spain, United States, China and Italy remain
the world’s top five tourism destinations, receiving more than a quarter (27%) of
worldwide arrivals in 2018. China, the United States, Germany, the United Kingdom
and France remain the top spenders as far as outbound tourism is concerned,
responsible for 43% of global tourism expenditure (UNWTO, 2020). OECD member
countries continue to play a prominent role in the international tourism economy,
accounting for more than half (56.9%) of total global arrivals in 2018. The average
growth in international arrivals for OECD members was 5.0% in 2018, compared to
7.4% in 2017. While the OECD rolling four year average annual growth rate of 5.5%
continues to exceeds the global average, following strong growth in recent years, the
longer-term trend is of a slowdown in arrivals to the OECD relative to tourism
worldwide. Six OECD countries recorded double digit annual growth of inbound
arrivals in 2018 – Finland, Israel, Korea, Lithuania, Slovenia, and Turkey – while a
number of other countries reported record numbers, including Australia, Canada,
Greece, Hungary, Ireland, Poland and the Slovak Republic. In contrast, Chile,
Estonia, Latvia, Luxembourg, Norway, and the United Kingdom experienced
reductions in international tourism arrivals.
Globally, international travel receipts reached USD 1 462 billion in 2018, up
from USD 1 352 billion in 2017. This equates to growth of 4.8%, and follows the
overall trend in international tourist arrivals. Global expenditures on travel have
more than tripled since the turn of the century, rising to USD 1.5 trillion in 2018 and
accounting for 7% of global exports in goods and services (UNWTO, 2019, 2020).
According to recent World Trade Organisation estimates, tourism is the fifth largest
traded services sector (WTO, 2019). OECD countries accounted for 61.1% of global
travel receipts (exports) and 50.5% of global travel expenditures (imports) in 2018,
similar to 2017. Twenty three OECD countries recorded a positive travel balance in
2018.
4
Tourism exports are economically important, as they generate value added in
the economy, directly and indirectly. Analysing tourism from a trade in value added
approach shows that tourism expenditures (using non-resident expenditure as a
proxy) generate bigger impacts on the domestic economy than overall exports, and
have significant impacts in upstream industries and in other countries. Latest
estimates from the OECD Trade in Value Added (TiVA) framework indicate that
89% of tourism exports generate domestic value added in OECD countries,
compared with 81% for overall exports; the remaining share results in value created
in other countries (imports). More than a third of the tourism value added generated
in the domestic economy comes from indirect impacts, reflecting the breadth and
depth to linkages between tourism and other sectors (OECD, 2019). In other words,
of the 89 cents of domestic value added generated by every USD 1 of tourism
exports, 56 cents is directly generated while 34 cents comes from indirect impacts.
Or, for every USD 1 of value added directly generated by tourism exports, a further
61 cents of value added is indirectly generated in upstream industries.
On average, domestic and inbound tourism account for 75% and 25% of
internal tourism consumption respectively. When combined, passenger transport
(21%), accommodation (19%), and food and beverage (16%) account for well over
half of total consumption. The importance of domestic tourism varies considerably
at country level. Domestic tourism is particularly significant in Australia, Canada,
Germany, Japan, Mexico, Norway, the United Kingdom and the United States,
where it represents over 70% of internal tourism consumption. In other countries
such as Austria, the proportion of domestic and inbound expenditure is broadly
equal. In contrast, inbound tourism, as a proportion of internal tourism consumption
is more important in Estonia, Iceland, Poland, Portugal, and Slovenia where over
60% of all consumption is inbound related.
5
Global tourism arrivals have grown by almost 50% since 2010, an average
annual growth of over 5%. The benefits of foreign exchange and the higher spending
of international visitors has focused many governments towards increasing inbound
arrivals, while demand has been supported by favourable economic conditions,
decreasing travel prices, continued globalisation, liberalised and more
comprehensive air transport services, and growth of digitally-enabled business
models and platforms that allow consumers easier access to travel products and
many new destinations (UNWTO 2019; IATA 2019). While tourism growth is
projected to continue, changing demographics, improved connectivity,
technological innovations, and increased recognition of the need for this growth to
be more sustainable and inclusive are likely to dramatically transform the face of
tourism by 2040, representing a range of opportunities and challenges for
destinations (OECD, 2018).
While unemployment is at record lows in many OECD economies, the
productivity puzzle and low wage growth is hampering economic growth across
many sectors. There is pressure for governments to ensure that all citizens have the
choices and opportunities open to those in the top decile but policies need to catch
up to support this objective. Tourism is a leading job creator, and can help provide
a wide range of diverse jobs for people of all ages and skill levels not only in major
cities, but also in remote, rural, coastal and other often economically fragile locations
where alternative opportunities may be limited. Employment in hotels and
restaurants grew by 45% from 1995 to 2015, some 30% higher than average growth
across the economy, and second only to real estate renting and business activities
(OECD, 2019). While the short-term picture is one of uncertainty, over the long term
tourism is likely to continue to grow and become an increasingly important element
in all OECD economies. However, the tourism landscape will be impacted by large-
scale social, economic, political, environmental and technological trends, bringing
6
new and often unseen challenges, threats and opportunities. Exploring the
multidimensional implications of these trends is important to inform policy and
shape the future of tourism. The digital revolution is a prime example of key driver
of tourism growth that is having a profound effect on the sector, changing the way
people travel, and how services are delivered.
Continued growth in visitor numbers raises important questions about how to
best manage this growth, to benefit people, places and businesses. The over-riding
priority for governments and increasingly society is to better look after the assets on
which tourism depends. This is relevant to all destinations, but is a Domestic and
inbound tourism Tourism consumption by product Domestic tourism consumption
75% Inbound tourism consumption 25% Accommodation 19% Food and beverage
16% Passenger transport 21% Travel agencies and other services 4% Culture, sports
and recreation 7% Other services 33% particularly pressing issue in destinations
experiencing overtourism. Rethinking tourism success for sustainable growth
provides detailed insight into the steps being taken by countries and industry to more
fully understand the impacts that tourism has in destinations, better manage
increased tourism numbers, and promote more sustainable and inclusive tourism
development. Addressing these and other challenges faced by the tourism sector
requires an integrated, forward-looking approach to policy formulation and
implementation. Governments need new analysis, data and approaches that are
calibrated to the fast-changing tourism sector. Tourism policy frameworks will need
to be adapted to take account of and respond to these developments. At national
level, co-ordination measures are well developed and long term strategies are in
place in many countries to optimise tourism’s economic and social benefits, while
minimising its negative environmental impacts. The next challenge for many
governments is to ensure that the policies and measures agreed at a national level
can be consistently delivered at sub-national level, ensuring that local communities
7
and the regions in which they are located can fully share the benefits of well-planned
and managed tourism, and flourish in the longer term.
8
LECTURE 9

DADASHOVA
9. THE IMPACTS OF TOURISM
A goal of developing the tourism industry in a community is

maximizing selected positive impacts while minimizing potential negative
impacts. First, it is essential to identify the possible impacts. Tourism
researchers have identified a large number of impacts. Grouping the
impacts into categories shows the types of impacts that could result from
developing tourism in a community. The following tables list a range of
important tourism impacts in a concise format. Readers needing additional
information about specific impacts should contact appropriate professionals
or consult tourism texts and research papers. A community will not
experience every impact. Some are dependent on particular natural resource
features (mountains, coral reefs) or development and spatial patterns
(special "tourist zones"). Others relate to the social condition of the c o m m
u n i t y, particularly the ability to culturally or socially connect with
tourists. Still others relate to types and intensity of tourism developments,
i.e., approval or hostility toward tourist activities. The following tables are
extensive but not all-inclusive.
1
Economic impacts- Tourism increases employment opportunities.
Additional jobs, ranging from low-wage entry-level to high-paying
professional positions in management and technical fields, generate income
and raise standards of living. Particularly in rural areas, the diversification
created by tourism helps communities that are possibly dependent on only
one industry. As tourism grows, additional opportunities are created for
investment, development, and infrastructure spending. Tourism often
induces improvements. in public utilities such as water, sewer, sidewalks,
lighting, parking, public restrooms, litter control, and landscaping. Such
improvements benefit tourists and residents alike. Likewise, tourism
encourages improvements in transport infrastructure resulting in upgraded
roads, airports, public transportation, and non-traditional transportation
(e.g., trails). Tourism encourages new elements to join the retail mix,
increasing opportunities for shopping and adding healthy competitiveness.
It often increases a community's tax revenues. Lodging and sales taxes most
notably increase but additional tax revenues include air travel and other
transportation taxes, business taxes, and fuel taxes. New jobs generate more
income tax revenues. When considering the economic impacts of tourism, it
is essential to understand that tourism businesses often include a significant
number of low-paying jobs, often at minimum wage or less. These jobs are
often seasonal, causing under-employment or unemployment during off-
seasons.
Positive economics impacts:
1. Foreign exchange earnings
2. Increases employment opportunities
3. Balance of payment / trade account balance
2
4. Improves investment, development, and infrastructure spending
5. Increases tax revenues
6. Contribution to local economies
Negative economics impacts:
1. Inflation
2. Opportunity costs
3. Increases price of goods and services
4. Increases price of land, housing and living
5. Seasonal tourism creates high-risk under- or unemployment issues
6. Leakage
7. Enclave tourism
Environmental impacts- Areas with high-value natural resources, like

oceans, lakes, waterfalls, mountains, unique flora and fauna, and great
scenic beauty attract tourists and new residents (in-migrants) who seek
emotional and spiritual connections with nature. Because these people value
nature, selected natural environments are preserved, protected, and kept
from further ecological decline. Lands that could be developed can generate
income by accommodating the recreational activities of visitors. Tourist
income often makes it possible to preserve and restore historic buildings
and monuments. Improvements in the area’s appearance through 7 cleanup
3
or repairs and the addition of public art such as murals, water fountains, and
monuments (part of making a community ready for tourism) benefit visitors
and residents alike.
Tourism is generally considered a "clean" industry, one that is based

on hotels, restaurants, shops and attractions, instead of factories. Tourism
can also degrade an environment. Visitors generate waste and pollution (air,
water, solid waste, noise, and visual). Natural resource attractions can be
jeopardized through improper uses or overuse. Providing tourist services
can alter the landscape's appearance. For instance, visual pollution may
occur from billboard proliferation. As tourism develops, demand for land
increases, especially for prime locations like beachfronts, special views, and
mountains. Without forethought, natural landscape and open space can be
lost. The destruction or loss of flora and fauna can happen when desirable
plants and animals are collected for sale or the land is trampled.
Uncontrolled visitation or overuse by visitors can degrade landscapes,
historic sites, and monuments. Where water is scarce, tourists can
overwhelm the available supply. Travelers can also inadvertently introduce
nonindigenous species, as can increases in the trade of animals and plants.
A constant stream of visitors and domestic pets may disrupt wildlife by
disturbing their breeding cycles and altering natural behaviors.
Positive environmental impacts:
 Protection of selected natural environments or prevention of further

ecological decline
 Preservation of historic buildings and monuments
4
 Improvement of the area’s appearance (visual and aesthetic)
 A "clean" industry (no smokestacks)
Negative environmental impacts:
 Pollution (air, water, noise, solid waste, and visual)

 Loss of natural landscape and agricultural lands to tourism
development
 Loss of open space
 Destruction of flora and fauna (including collection of plants,
animals, rocks, coral, or artifacts by or for tourists)
 Degradation of landscape, historic sites, and monuments
 Water shortages
 Introduction of exotic species
 Disruption of wildlife breeding cycles and behaviors
Social and Cultural impacts - The social and cultural impacts of

tourism warrant careful consideration, as impacts can either become assets
or detriments to communities. Influxes of tourists bring diverse values to
the community and influence behaviors and family life. Individuals and the
collective community might try to please tourists or adopt tourist behaviors.
Interactions between residents and tourists can impact creative expression
by providing new opportunities (positive) or by stifling individuality with
new restrictions (negative). Increased tourism can push a community to
adopt a different moral conduct such as improved understanding between
sexes (positive) or increased illicit drug use (negative). Safety and health
facilities and staffing tend to increase at the same time safety problems such
as crime and accidents increase. Traditional ceremonies may be renewed
5
and revived by tourist interest or lost in alternative activities. Community
organizations can be invigorated by facing the opportunities of tourism or
overwhelmed by its associated problems. Calamities such as natural
disasters, energy shortages, terrorism, political upheaval, disease outbreak,
a chemical spill, or even widespread negative publicity could shut down
tourism abruptly but sometimes can attract curious visitors.
Positive social-cultural impacts:
• Preservation and restoration of cultural heritage
• Improves quality of life
• Positive changes in values and customs
• Improves understanding of different communities
• Increases demand for historical and cultural exhibits
• Cross-cultural exchange
Negative social-cultural impacts:
• Loss of cultural character
• Excessive drinking, alcoholism, gambling
• Commercialization of human relationships
• Potential misunderstandings and conflicts between residents and

tourists
• Language and cultural effects
• Unwanted lifestyle changes
• Negative changes in values and customs
6
• Family disruption
• Exclusion of locals from natural resources
7
LECTURE 10

DADASHOVA
10. EMPLOYMENT IN TOURISM
Travel and tourism industry and its’ associated sectors provide various
employment opportunities to people. Besides working in travel agencies,
airlines, tour operators, theme parks, events and hotels, students can also
have other options such as working in government tourism departments,
customs services, airline catering, tourism promotions and sales, etc.
Career opportunities in sectors of tourism and hospitality industry
 Tourism and hospitality is a diverse industry which offers long-term
career opportunities for enthusiastic individuals who want to put their
education and skills to work in various environments.
 People in tourism and hospitality may work indoors or outdoors,
standard hours or on a flexible schedule, seasonal jobs or all-year-
round. It’s one of the most exciting and diverse career paths out there.
It is generally accepted that tourism is a more diverse industry than many

others, in that it comprises a wide variety of suppliers of both, numerous
goods and services. It has also the potential to support in a crucial manner
other economic activities, such as small agricultural production, small scale
1
fishing, handicrafts production and retailing, cultural industries and the like,
which without tourism demand would hardly survive. Through providing
flexible, part time jobs to many rural and urban people, tourism can serve
families to complement other livelihood options. And most importantly,
being labour intensive, tourism provides a wide range of different
employment opportunities, from the highly skilled to the unskilled.5 Data
compiled from the replies to the survey seem to confirm all these
statements.
The following is a list of some entry positions in the local tourism
sector which are available for youngsters to apply.
Tour and Travel Services
- Tour guide
- Tour escort
- Travel consultant
- Incentive travel agent
- Corporate travel agent
- Travel academy instructor
- Meeting planner, etc.
Travel and Transportation
- Airline pilot
- Flight attendant
- Ground service staff
- Air traffic controller
- Cruise crews, etc.
Lodging
- Receptionist
- Concierge
- Housekeeper
2
- Reservation staff
- Recreations instructor
- Bell attendant, etc.
Food and Beverage

- Waiter / waitress
- Banquet server
- Banquet sales manager
- Chef
- Bartender
- Cashier
- Hostess, etc.
Others
- Retailing
- Public relations
- Advertising
- Market research
- Human resources etc.
Employability skills necessary for success in tourism and

hospitality profession:
1. Communication skills.
2. Team work
3. Problem solving
4. Good initiative and enterprising attitude
5. Planning and organizing skills
6. Good self- management
7. Lifelong learning attitude
3
8. the ability to think on your feet
9. good selling skills
10. the ability to create a rapport with people of different ages and different
cultures
11. a sense of humour
12. an outgoing personality
13. a strong customer service ethic and a desire to help people
14. good computer skills
15. good organisational skills
16. good communication and listening skills
The most important qualities are communication, teamwork and

customer service skills. Whatever the location, position or technical skills,
to make it in travel and tourism you need to enjoy challenges and have the
ability to work well with people. It is important to appreciate that people
around the world have different ways of doing things. Working in the travel
and tourism industry, you will come to learn a lot about people.
Youth- It is generally believed that rates of youth employment in

tourism are higher than in other sectors, and that this is related to the
demand for unqualified workers.
Women- In many countries, the high presence of women in tourism is
also linked to the demand for unqualified workers, especially for young
women and those returning to the labour force. However, the apparent high
rate of women in the sector seems also to be related to cultural issues,
especially for employment in housekeeping, laundry, food preparation,
guest services, etc.
4
In a study conducted in 15 Western European Union countries and
published in 2005, the percentage of women working in the hotel and
restaurant sector is often above 50% (i.e. in 11 of the 15 countries): over
60% in UK, Portugal and Austria, and up to 70% in Finland.
- In Bahamas, almost 60% of employed people in Hotels and
Restaurants are female.
- In Canada, women accounted for over 60% of the employee jobs in
the accommodation, food and beverage services and travel services
industries in 2006, and overall, women occupied 55% of employee
jobs in tourism industries.
- In Australia, the tourism sector has a relatively high share of female
employment (55.8% share compared with 45% for all industries).
This proportion seems to be higher when considering part-time jobs and
some sub-sectors:
- in France, travel agencies employed 78% of women in 2007
- In the case of Spain, women represent more than half of the part-time
jobs in the tourism sector as a whole and this trend is continued and
especially noticeable in the restaurant sub-sector.
Tourism creates jobs for women.

The tourism industry is a major employer of women . Compared with
the total non-financial business economy, where 36 % of people employed
are female, the labour force of the tourism industries includes more female
workers (58%) than male workers. The highest proportions are seen in
accommodation (60 %), and in travel agencies and tour operators (64 %).
Even though nearly one in three women working in the tourism industries
5
works part-time (compared with one in seven men), women working full-
time still represent the biggest share of employment (40 %).

The proportion of part-time employment in the tourism industries
(24 %) is significantly higher than in the total non-financial business
economy (17 %) and is comparable to the figure for the services sector as a
whole . Within the three selected tourism industries, the proportion of part-
time employment is highest in the accommodation sector (25 %), closely
followed by travel agencies and tour operators (23 %). In air transport,
18 % of staff work on a part-time basis.
Part-time jobs- Part-time jobs relate in many cases to low weekday
demand versus high demand on weekends for many tourism businesses (e.g.
restaurants, hotels, etc.). Examples
• Canada: 36% of employee jobs in tourism industries in 2006 were part-
time; that is, they involved less than 30 hours of work per week
• Australia: the Accommodation, Cafés and Restaurants sub-sector, with
almost half of the jobs (48.1 per cent) in the industry being part-time,
has the highest proportion for any industry in terms of part-time
employment.
• France: the proportion of part-time employment is 55% in hotel and
restaurant sub-sector and 58% for travel agencies.
• Spain: in the second half of 2008, 17% of the employees in tourism had
part-time jobs.
When it is the choice of workers, part- time jobs can be viewed as
positive; they do provide significant benefits, particularly for people who
are looking to earn money in various ways, for those looking for flexibility
in their work schedules.
6
LECTURE 11

DADASHOVA
11. SUSTAINABLE TOURISM DEVELOPMENT
The term sustainable tourism emerged in the late 1980s and has become
firmly established in both tourism policies and strategies and tourism research.
After more than 25 years of attention it is timely to consider the state of
research and practice in sustainable tourism. Sustainable tourism development
guidelines and management practices are applicable to all forms of tourism in
all types of destinations, including mass tourism and the various niche tourism
segments. Sustainability principles refer to the environmental, economic, and
socio-cultural aspects of tourism development, and a suitable balance must be
established between these three dimensions to guarantee its long-term
sustainability. Sustainable tourism should:
1) Make optimal use of environmental resources that constitute a key
element in tourism development, maintaining essential ecological processes
and helping to conserve natural heritage and biodiversity.
2) Respect the socio-cultural authenticity of host communities, conserve
their built and living cultural heritage and traditional values, and contribute to
inter-cultural understanding and tolerance.
1
3) Ensure viable, long-term economic operations, providing socio-
economic benefits to all stakeholders that are fairly distributed, including stable
employment and income-earning opportunities and social services to host
communities, and contributing to poverty alleviation.
Sustainable tourism development requires the informed participation of all
relevant stakeholders, as well as strong political leadership to ensure wide
participation and consensus building. Achieving sustainable tourism is a
continuous process and it requires constant monitoring of impacts, introducing
the necessary preventive and/or corrective measures whenever necessary.
Sustainable tourism should also maintain a high level of tourist
satisfaction and ensure a meaningful experience to the tourists, raising their
awareness about sustainability issues and promoting sustainable tourism
practices amongst them.
Given the aim of this special issue, it is reasonable to think about what
sustainable tourism research conducted so far has achieved in terms of
encouraging positive change to tourism practice. Recognising the need for
urgent change, it is easy to give way to impatience and expect change to be
more rapid than is the case. To this end, acknowledging where tourism
research has risen from, to today’s position, is a cause for some
encouragement. An increasing volume of research and practice reports show
how sustainability has become an established part of corporate and
governmental agendas, while there are numerous examples from hospitality
and tourism companies and destinations worldwide that have successfully
implemented environmental management systems. For instance, the World
Travel and Tourism Council (WTTC)’s.
Definitions of sustainable tourism typically emphasise the ecological,
social and economic elements of tourism in order to achieve a ‘balanced’ or
‘wise’ use of natural resources. However, defining what exactly constitutes a
2
wise use of resources may depend greatly on the values held by the
stakeholders concerned. Sustainable tourism ought to be seen as an attempt to
reconcile conflicting sets of values with regard to the environment. Sustainable
tourism is more a point of view than a precise operational definition.
Researchers nevertheless go on to define sustainable tourism as tourism that
results in developments capable of sustaining the environmental quality of
destinations, the quality of tourist experiences, and the social and cultural
systems of local people. Another term closely linked to sustainable tourism is
carrying capacity. The concept of carrying capacity recognises that for any
environment or tourism destination there are limits to growth, which, when
exceeded, are likely to cause a range of harmful and sometimes irreversible
changes in the environment.
Attitudes to nature tourism and its development were in general very
positive. Most residents were willing to accept an increase in the number of
tourists both in their immediate area, and in the region in general. This was the
opinion of the majority of respondents, even though negative effects of tourism
on the environment, such as litter and erosion, were also perceived. Opinions
on the negative impacts of nature tourism varied considerably among the
survey areas. Contrasting interests between the needs of local residents and
tourists, and to a lesser extent overuse of infrastructure and public services
were felt as social problems of tourism.
This implies that participation and involvement of actors to regional
development is still a challenging task to both planners and researchers.
Tourism operations should be planned, controlled and integrated with other
economic, social and ecological activities within any community. Successful
implementation of sustainable tourism requires an effective definition of
sustainability, long-term collaborative initiatives between various stakeholders,
and commitment to monitoring the impacts of tourism. If sustainability is not
3
clearly defined and monitored through the use of quantitative and/or qualitative
indicators, communities may easily remain unconcerned about long-term
ecological and social sustainability in their decisions. Besides accurate
assessments of the ‘real‘ impacts of tourism and the level of sustainability
achieved must involve in depth longitudinal research and detailed ecological,
social and economic auditing. It will also involve committing resources to a
research programme and development work related to tourism for a
considerable period of time. Sustainability may not be achieved by an
authoritarian regime (top-down) nor an exclusively community-based approach
(bottom-up). This means that the participation of stakeholders does not
automatically guarantee the sustainable use of natural resources, or sustainable
tourism. One promising option for the resolution of resource-based conflicts
related to the development of tourism is nature co-management. Although in
conflict situations stakeholders by definition hold divergent views, the
fundamental assumption behind co-management is that resource management
will be enhanced by the sharing of authority and decision-making, making it
more responsive to a wider range of needs. Thus the idea of co-management is
to take advantage of the complementary knowledge of different stakeholders
— i.e. local inhabitants may have experiential and holistic ‘views’ about the
area concerned, while officials and decision-makers rely more on rational and
specialised ‘facts’. Participation in the planning process should be based on the
trust, mutual learning, knowledge, insights and capabilities of stakeholders. In
many cases it may be useful to hire experts in order to guarantee that there is
enough knowledge in a planning process. The sharing of ideas among different
stakeholders in a long time period can result in a deeper understanding of the
issues, and should result in more legitimate and sustainable policies. As noted
in this lecture, sustainable tourism is a highly contested issue, involving
differing values and complex power relations within and between stakeholders.
4
It may also be necessary to identify which principles of sustainability will be
achieved through community control, and which will be implemented at higher
levels of government.
Where do tourists interested in sustainable tourism come from? Tourists
who express high interest in sustainability and nature-based travel come
predominantly from these 12 countries: 1. United States 2. United Kingdom 3.
Germany 4. Australia 5. France 6. Sweden 7. Netherlands 8. Denmark 9.
Norway 10. Austria 11. Canada 12. New Zealand
These countries account for roughly one-quarter of all visitors to
mainland Southeast Asia, and this share is increasing. Since 1995, growth from
these countries has outpaced overall growth in visitors to the region. Among
these twelve countries, the United States, United Kingdom, Germany,
Australia, and France represent the largest share of visitors to mainland
Southeast Asia. Thus there is substantial opportunity in Southeast Asia to build
a sustainable nature-based tourism industry. Note also that over 60% of the
tourists from these twelve countries speak English, indicating a growing
demand for guides and tour operators who know English.
Aims of sustainable tourism - The main aim of creating strategy of
sustainable tourism for a given region is defined as an increase of the number
of tourists with the principles of sustainable development. This aim can be
achieved by a number of specific objectives, such as:
1) coordination of all parties interested in developing of tourism in the
region;
2) inventory of area tourism product;
3) consideration of the interests of local communities and the
environment in shaping the tourism product and marketing activities;
4) assessment of marketing and product perception by potential buyers;
5
5) developing a vision, mission and framework marketing plan activities
for the duration of the strategy;
6) developing a common brand of region;
7) developing tools to evaluate progress in implementing the strategy.
As sustainability is considered in 3 contexts: economical, environmental
and socio-cultural it is necessary to divide aims of sustainable tourism also in
those 3 aspects.
Economical aspects of sustainable tourism
a) Economic profitability - Ensuring the viability and competitiveness of
regions and businesses to achieve long-term viability;
b) Local prosperity - Maximizing the economic benefits of tourism to the
local community, including the expenditure of tourists in the area;
c) Quality of employment - Increasing the quantity and quality of jobs
related to tourism in the local community, including wages, work environment
and employment opportunities without discrimination;
d) Social equity - Ensuring fair and equal distribution of social and
economic benefits coming from tourism.
Environmental aspects of sustainable tourism
a) Physical integrity - Maintaining and building quality of the landscape,
in both urban and rural areas and preventing form ecological and visual
pollution;
b) Biological diversity - Promoting and protecting environment, natural
habitats and wildlife, as well as minimizing the impact of tourism on the
environment;
c) Effective waste management - Minimizing of the use of rare and non-
renewable resources in the development of tourism;
d) Clean environment - Minimizing of water, air, soil pollution and
reduction of generating waste by tourists and tourist operators.
6
Socio-cultural aspects of sustainable tourism
a) Welfare of the community - Building welfare of the community

including social infrastructure, access to resources, environmental quality and
avoidance of social corruption and the exploitation of the resources;
b) Cultural wealth - Maintaining and developing cultural heritage, local
culture, customs, and the exceptional nature of the host community;
c) Meeting expectations of visitors - Providing safe and enjoyable tourist
experience, which will meet the needs of tourists and will be available to all?
d) Local control - Authority for planning and decision-making in the
management of tourism by local communities.
Application of sustainability principles is the best way to preserve
tourism destinations from degradation in social, cultural and environmental
way. Tourism, properly planned can also increase income and be source of
wealth of local community. Tour operators are able to attract capital from
banks and investors, therefore tourism may be seen as easy way to access to
capital. Sustainable actions can help lower operating costs by reducing
generation of waste and usage of water and energy. However, more qualified
employees are needed, therefore human capital will also grow. A reputation for
being sustainable adds value to touristic enterprises’ brands and strengthens
their market position, making them less vulnerable to short-term market and
economic changes. In this way introducing principles of sustainable
development, however is an expensive process, it can be profitable in long
term perspective.
7
LECTURE 12
LECTURER: KHUMAR KHANIM DADASHOVA
12. The tourism industry and organizations
OBJECTIVES
Identify and classify different local and international tourism organizations
Discuss each organization's function in the tourism industry
Discuss the relationships of tourism organizations.
Since tourism is a diverse industry made up of many different segments, there is a need to interrelate and share
information. This has led to the establishment of several public and private organizations at the
international, regional national and even local levels
1
Aside from the suppliers of services and facilities to tourists, there are also several tourism organizations that
play significant roles in the tourism industry. These organizations influence and contribute to the smooth
running of the tourism industry.
CLASSIFICATION OF TOURISM ORGANIZATION

National
Regional
International
INTERNATIONAL
UNWTO
ICAO
2
IATA
WTTC
DO
UNWTO or UNITED NATIONS WORLD TOURISM ORGANIZATION
Has 156 member countries and headquarters is located in Madrid, Spain

The Secretariat is led by Secretary-General Taleb Rifai of Jordan
Intergovernmental technical body which deals with all aspects of tourism.
Market research and statistics is its most significant contribution.
Provides an international forum where tourism officials can discuss problems and exchange their
ideas.
Only organization whose activities covers all sectors of tourism on a world-wide basis
3
ICAO or INTERNATIONAL CIVIL AVIATION ORGANIZATION
Adapts international standards and to recommend practices for regulating air navigations.
Encourage the improvement of the art of aircraft design and operation for peaceful purposes.
IATA or INTERNATIONAL AIR TRANSPORT ASSOCIATION
Aims to promote safe, regular and economical air transport, faster air commerce and study problems
connected with the industry.
Involves standardizing of tickets, prices, airline air way bills, baggage checks and other documents
WORLD TRAVEL & TOURISM COUNCIL
The only global forum whose members are the top decision makers in the travel and tourism industry.
The 150 members are the CEO, President or Chairman of - airlines, airports, hotels, cruise lines,
travel agencies, tour operators and travel technology suppliers
The only body representing the private sector in all parts of the industry worldwide.
4
WTTC campaigns on three strategic priorities which it has identified as impeding the successful
development of Travel & Tourism now and in the future – Freedom to Travel; Policies for Growth; and
Tourism for Tomorrow. The WTTC retains a professional staff in its London office, under the leadership of
President & CEO, David Scowsill. This organisation is headed by a board of executive directors, who have
responsibility for guiding the work of the Council in the fulfillment of its mission. The World Travel &
Tourism Council is a not-for-profit organisation, registered as a UK company limited by guarantee.
5
D.O. – Development Organizations

• The World Bank (US)
• OPEC Fund for International Development (Austria)
• Asian Development Bank (Philippines)
• Islamic Development Bank (Saudi Arabia)
REGIONAL
OECD
NPDS
OECD or ORGANIZATION of ECONOMIC COOPERATION and

DEVELOPMENT
Designed to achieve the highest sustainable economic growth and employment
and raise standards of living of member countries
Country Assistance Program Evaluation 26194 June 2008
NPDC OR NATIONAL PARKS DEVELOPMENT COMMITTEE
Undertake development of new parks

Upgrade and maintain park facilities
Facilitate private sector participation in appropriate aspect of parks
development and maintenance
6
LECTURE 13

DADASHOVA
13. MARKETING
We can market goods, services, events, experiences, persons, places,

properties, organizations, information and ideas.
Goods: food, drinks, medicines.
Services: hair dresses, massage
Services can be tangible and intangible. Tangible can be everything that you
are using and touching in tourism. Intangible you can not tough but can see,
fee, and taste. We visit hotel with a lot of money in our pocket and come
back home empty-handed but not empty-headed, with a lot of impressions,
memories and high mood.
Events include championships, song contest, competitions which are
marketed with the help of internet or other sources mass media.
Experiences. In Disneyland there is gambling- house where even children
can try playing gambling and get or gain experience.
Persons include celebrities, presidents, singers, writers, doctors who are
more attractive for the company and for the customers to be used in
promotions.
1
Places and properties. There are a lot of destinations which have rich
resources for the development of tourism but because of weak and lack of
promotions nobody or few tourists know this country or even want to visit
this country.
Organizations. M.A.D.D- Mothers Against Drunk Drivers is the one of the
biggest company and organization in USA which markets different posters,
advertisements about people who drive drunk.
Information. Majority of European and American universities conducting
conduct enrolment process by themselves. In this way there are publishing a
lot of information in different booklets, brochure in order to give information
about its faculties, and about application process.
Ideas include to change people’s opinion or to strengthen their choice.
THERE ARE 3 KIND OF MARKET: marketplace, market space and meta

market
Marketplace- is a physical place where customers do their daily shopping.
Market space- is a digital market where customers can do shopping via high-
tech.
Meta market- is a market where trade happens among many countries such
as trade of share, trade of natural resources.
MARKETING HAS GOT 2 OBJETIVES:
- to keep old customers or loyal customers (Hyatt)
- to attract or gain new customers, clients (Hilton)
THERE ARE 3 MAIN PARTS OF MARKETING: needs, wants, demand
Needs- are divided in to 3 parts by Maslow’s:
Physical needs- include food, shelter, medicine
Social needs- are rests, fan, internet, entertainment
Esteem need- is need for popularity, success, knowledge
2
Wants- are found by way of life, traditions, customs and so on. For exp a
hungry person in USA wants fast foods but he need fresh food and
homemade food.
Demands has got following types:
1. Negative demand- customers dislike this product and they are ready to
pay money to get rid of or to avoid this product.
2. Nonexistent demand- customers may be unaware about existents of this
product.
3. Latent demand- customers want a product that is unusual but it will
satisfy their wants.
4. Declining demand- customers are buying this product not so often and
less that before.
5. Irregular demand- buyers gets the product depending on the time of
the year. For exp coat in winter, sunglasses in summer.
6. Full demand- customers are buying this products because they are
modern, fashionable, compact and speedy.
7. Overfull demand- customers are buying this products every day such as
water, bread, food
8. Unwholesome demand- it is when customer pays money for products
which are harmfull for their health.
FOUR CONCEPS OF TOURISM COMPANY ORIANTATION

1 .Production concept- is very important where not only products but also
the way of serving is very important. For exp, a hotel in SWISS ALPS with a
beautiful view to the lake Geneva lost its customers because of wrongly
managed production. The tourists enjoy beautiful scenery while having
breakfast in the balcony. But the balcony was far from the kitchen and it was
difficult and longtime taking process for waiters to serve customers on time.
When the customer wanted smth, the waiters ether disappeared completely or
3
they made unhappy faced. So they removed the set up from the balconies, so
that visitors could not enjoy their breakfast in a very crowded main buffet. So
the hotel discourage
d visitors to visit this hotel in the future, and a failure in production was a
mistake made by the hotel.
2. Product concept- we customers, choose product for its speed,
performance, functions, accessibility and so on. Hotels, restaurants use
products highly to satisfy their customers. But unfortunately there are still
some companies which focus on poorly satisfying products. For exp,
swimming pool in majority hotel open at 8 o’clock in the morning. But the
businessmen who stay at this hotel can not use this service because of
inappropriate time. They may have meeting at 8 o’clock, in this case the hotel
should open early its swimming pool to the people highly satisfied their
needs.
3. Selling concept-is to get every possible chance to sell your product and
not to worry about the satisfaction of your customers after post purchase.
Some companies care their customers more than their products. For this
purpose this companies make questioners, interviews, use e-mail addresses,
telephone calls, web-sites to know reaction of the customers about their sales.
If the customer is not happy because of the price the company should
consider the ways of cutting prices, offering, free samples and coupons.
4. Marketing concept- is rapidly growing in hospitality industry. Non of the
product can be popular without marketing and promotion. While promoting
your products you should show the products you have but others don’t have.
For exp, you may have special part for smokers customers in your hotel
which is very important for allergic visitors or in your poster if you show you
have got vegetarian food along side with other foods. In this case the
marketing will be very strong by attracting not only ordinary customers but
also vegetarians.
4
OFFERING
Offering consist of customer value and customer satisfaction.
Customer value- is a packet of benefits which is offered by a company. For
exp time is the inseparable part of customer value. Domino Pizza is
delivering pizza while it is hot without making a customer wait for his order.
Shangri LA is the one of the biggest chain of restaurants in Asia. As we
know Asian food is very rich and it is very important for customer to know
ingredients of the food in your language. Shangri LA saves the time of the
customers by providing them with touch screams. With this touch screams
they choose menu they want, table where they want to sit and even pay for
their meal without loosing their time. And when they sit at the table they are
served the meal they ordered before.
Offering- is a packet of different kind of services. If your packet is rich it
means you are stronger than your competitors. For exp Lufthansa and
Singapore Airlines offer their customers massage, bubble bath and
conference halls for meetings.
Customer satisfaction- consist of different criterions such as quality, price,
pocketing are the most important things which create customer satisfaction.
The customers choose products basing on their way of life, customs and
traditions, and psychology. For exp we buy food and pay attraction for its
quality rather than price. But we can buy cheaper clothes without paying
attraction to its quality.
THERE ARE 4 KINDS OF SERVICE CHARACTERISTICS: intangibility,

variability, inseparability, perish ability.
Intangibility-you can’t touch but can see, feel and taste. We visit hotel with a
lot of money in our pocket and come back home empty-handed but not
empty-headed, with a lot of impressions, memories and high mood.
5
Variability- services can be variable but sometimes consistent. In variable
service customer is served variable dishes, gets variable entertainment and
different kinds of tastes. For exp, a person who likes changes like very much
variable service. But a person who is conservative and loyal to his tastes likes
consistency. Sometimes variability can creates problems for loyal customers.
Lets imagine you are always visiting a restaurant which serves good food and
you are highly satisfied. It happens that one day you have guests whom you
want to invite to the restaurant which you trust more. But when you arrive at
the restaurant you see that the services has changed a lot and the food has
changed, too. In this case you will dislike the variability at this restaurant and
maybe even never be back.
Inseparability
Ensuring that customer segments are compatible-all customers should be
compatible basing on their age, nation and so on.
Ensuring operation system is suitable for market demand-if you are using
high-tech you should teach your customers the way of using them.
Adopting appropriate booking policies-if you want to adopt the strategy of
booking online, you must take into consideration how well your customers
can use website.
Organizing effective queuing systems-wrongly organize queuing system can
leave to the loss of customers. Because customers are always in a hurry and
don’t want to waste their time waiting. For this purpose, hotels and
restaurants should use different electronic devices to facilitate their process of
ordering.
Training staff effectively- companies must train their staff to observe but not
to disturb customers, to serve and help them whenever they want.
Perishability- is when yesterday’s room can not be sold today. If a company
is unable to sell its rooms it should try to find the ways of overcoming perish
ability. For exp, Club Med Resort in USA has found the ways of
6
overcoming this problem. It is collecting data about customers anniversaries,
b-days, special events in the life of customers. This information helps the

company to sell its rooms to the customers with huge discounts. Its more
profitable for the company to sell its rooms with discounts rather than
keeping them in a stole.
MARKETING MIX
From the companies point of view there are 4 p-s:
product
price
place
promotion
From the customers point of view there are 4 c-s:
customer solution
customer cost
customer convenience
communication
We launch a product to solve customers problems. For exp a person
having health problem will buy a product- a tour packet to sanatorium.
Price is always set by the customer. The price must be affordable
according to customer pocket. Price is a cost that a customer ready to pay
for.
Place is very important for customer convenience. All products must be
accessible for all customers.
No promotion is possible without communication. With the help of
communication information about the product is given to customers.
7
LECTURE 14

DADASHOVA
14. Types of Tourism

Health Tourism
Holidaying is generally considered as an investment in health, a subject that
presents opportunities of cost- benefit analysis. The medical expertise of
various countries has added a new product to the existing tourism products.
People are travelling to various countries for treatment of various ailments and
medical procedures like Cardio care, Bone Marrow Transplant, Dialysis and
Kidney transplant, Neuro surgery, Joint Replacement Surgery, Urology,
Osteoporosis, and numerous other diseases. Even cosmetic surgery, alternative
medicines like homeopathy, acupressure, ayurvedic medicines and naturopathy
are also becoming tourism products wherein travel companies are offering Yoga
and Rejuvenation packages. Tourists travel for what is illegal in one’s own
country e.g. abortion, euthanasia; for instance, euthanasia for noncitizens is
provided by Dignitas in Switzerland. Tourists travel also for advanced care that
is not available in one’s own country, in the case that there are long waiting lists
in one’s own country or for use of free or cheap health care organisations.
Eco-tourism
1
Tourism that combines local economic development, protection of the quality
of the environment and promotion of the natural advantages and the history of
an area. The combination of all or some of the above mentioned kinds of
tourism could contribute significantly to the development of tourism in any
country. The availability of tourist packages involving gastronomy,
entertainment and information about the cultural wealth of a country should be
regarded as a priority issue for tourist agents, as it will reduce the concentration
of tourist activity in certain areas and will improve and enrich the tourist.
Rural Tourism
Any form of tourism that showcases the rural life, art, culture and heritage at
rural locations, thereby, benefiting the local community economically and
socially as well as enabling interaction between the tourists and the locals for a
more enriching tourism experience an be termed as rural tourism. It is
multifaceted and may entail farm/agricultural tourism, cultural tourism, nature
tourism, adventure tourism, and eco- tourism. The stresses of urban lifestyles
have lead to this counter- urbanisation approach to tourism. There are various
factors that have lead to this changing trend towards rural tourism like
increasing levels of awareness, growing interest in heritage and culture and
improved accessibility and environmental consciousness, Tourists like to visit
villages to experience and live a relaxed and healthy lifestyle.
Ethnic Tourism
Ethnic tourism is travelling for the purpose of observing the cultural
expressions of lifestyles of truly exotic people. Such tourism is exemplified by
travel to Panama to study the San Blas Indians or to India to observe the isolated
hill tribes of Assam. Typical destination activities would include visits to native
homes, attending traditional ceremonies and dances, and possibly participating
in religious rituals.
Senior Citizen
2
Tourism A newly emerging trend in tourism, basically for senior citizens or old
people who live in isolation, especially in the west, because of daily busy
schedules of their children and more importantly the attitudes. The
characteristic feature of this type of tourism is that the senior people are less
demanding in the form of facilities and services, besides leaving minimum
impact on the destination community and their main consideration is on
personalised service.
Spiritual Tourism
Many people when living under conditions of stress turn to spirituality. The
Eastern world is considered to be very spiritual with many of the new age Gurus
and their hermitages. This takes the form of another tourism product, that is,
spiritual tourism. Tourists visit places to attend spiritual discourses and
meditation workshops. For example, The Osho Foundation, Art of Living
Foundation which have centres all over the world, Buddhist Monasteries and
Ashrams.
Golf
Tourism Golf has been enjoyed by many for a long time. Earlier it was enjoyed
as a sport but in recent times it has developed into a hot tourism product. Many
tourist organizations plan promotional packages to woo the golf tourist
especially from Japan where the green fees are very high. These tourists take
exclusive golfing holidays wherein their accommodation is also arranged near
the course and they return after serious golf playing.
Tourism Product is the product of tourism sector which is a necessity for the
tourist during their travel activity. It is not like other product but having unique
feature. It rather can be say as the amalgamation of services of different type.
Example: package tour, accommodation service, transportation service, guiding
and shopping etc. Tourism products are those products which can be salable in
tourism market. It can be anything which is able to meet tourist satisfaction. In
3
the process of satisfying tourists the tourism products haveits own
characteristics and types.
4
LECTURE 15

DADASHOVA
15. Tourism Economical Development in Azerbaijan
Azerbaijan has rich resources for the development of the tourism

industry. All infrastructures – air and sea transport, main roads and transport
routes connecting Europe with the countries of the Caucasus and Central Asia
pass through here. The historical, cultural and natural heritage
of Azerbaijan attracts visitors from all over the world. Untouched nature,
mineral springs, the world's only oil field treatment - naphthalene, a unique
ancient architecture, unique culture, cuisine, and more contribute to the
formation in Azerbaijan of all types of tourism: business, sport, medical,
cognitive, hunting, exotic, beach and even gastronomic. Azerbaijan is a
territory of 9 out of 11 of the world's climatic zones. The climate of the
country enables to organize summer and winter holidays. Very common are
ecological tours to Azerbaijan, which include visits to nature reservations,
trekking and climbing routes. Midday sandy beaches offer opportunities for
diving, and swimming season starts in Azerbaijan in May. Tourism sector in
Azerbaijan is developing day by day, becoming one of the most important
sectors of the economy.
1
The Ministry of Culture and Tourism, carrying out state policy in
Azerbaijan in the field of tourism, implements purposeful works in the sphere
of the recognition of the country’s existing tourism potential in the
international arena, organization of travels of tourists to Azerbaijan, the
development of various kinds of tourism, adoption of legal acts, development
of small and middle entrepreneurship in the field of tourism, creation of
modern tourism infrastructure. Over the past years, lots of international
events were held in the country in the sphere of tourism.
State Programme “On the development of tourism in the Republic of

Azerbaijan in 2002-2005” was approved by President of the Republic of
Azerbaijan. In accordance with the Programme, hotels were built to
international standards in the field of tourism, a number of leading
international investment companies were involved in the country. Tourism
development plan for Lankaran, Tovuz, Gedebey, Oghuz, Masally, Astara
was developed as part of the State Programme “On the socioeconomic
development of regions of the Republic of Azerbaijan for 2004-2008”,
approved by President of the Republic of Azerbaijan, and submitted to the
Cabinet of Ministers. State Programme “On the development of tourism in
the Republic of Azerbaijan in 2008-2016” was developed. In addition, in
accordance with the requirements of the Decree of the President of the
Republic of Azerbaijan, "The exemplary Charter of tourism and recreation
areas" was development.
Every year September 27 is celebrated as "World Tourism Day" in

Azerbaijan. Within the events arranged on that day, "National Domestic
Tourism Conferences” are held. Also during this period, the Domestic
Tourism Exhibition has been held with the participation of tourist companies,
tourist service facilities.
2
Within the framework of "State Programme on Poverty Reduction and
Economic Development in the Republic of Azerbaijan (2003-2005) "
approved by President of the Republic of Azerbaijan, "Tourist Information
Centers" began to function in Sheki, Guba, Shamakhy, Sheki, Lankaran, as
well as in Lahij with financial aid by World Bank in order to deliver
information to tourists. Passage of “Silk Road Bicycle Tour” project, which
started in Istanbul and ended in Beijing, "On traces of the XV century
traveler Afanasi Nikitinin" project, started in Russia and ended in India,
through Azerbaijan is very effective in terms of promoting the tourism
potential of the country in the globe. Within the framework of the measures
taken in country, workshop themed “Experience and perspectives of regional
development, conservation and frontier cooperation" dedicated to the
development of tourism and protected areas in the South Caucasus was
arranged in 2004 by In Went, an international association on training and
development.
For the first time in Azerbaijan, 1st Tourism Films Festival was held
on September 26, 2003. Since 2005, well-known foreign TV channels air
advertising trailers reflecting the tourism potential of the republic. These
trailers were broadcasted by "CNN" for 6 months, in "Euronews" for 3
months. And since 2007, negotiations continued with the representatives of
"National Geographic", "Travel Channel", "CNN", "Euronews" TV channels
for continuous broadcasting of the ads. Also, these trailers were placed
onboard magazines and on screens of aircrafts belonging to "Austrian
Airlines", "British Airways" "AZAL.
The growing demand for tourist services has given rise to a building of
small hotels,chiefly in resort areas, as well as to an increase in the number of
international chainhotels and domestic hotel brands in Baku such as Marriott,
3
Hilton, Four Seasons andQafqaz Hotels. With regard to tourist infrastructure
facilities such as transportation,entertainment centers, aqua parks, there is

clearly not enough of them. One of the mainproblems of attracting foreign
tourists to Azerbaijan is high prices of airline tickets and airport charges. So,
creating conditions for high-quality and accessible vacationsrequires a more
active state tourism policy.

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LECTURE 1

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1. OBJECT AND BASICS OF ECONOMICS IN TOURISM COURSE

The Economics of Tourism presents new insights into the intricacies of

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3. The Economics of Tourism Demand

Tourism demand- the total number of persons who travel, or wish to

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Tourism supply is a composite product involving transport,

Suppliers are connected to tourists through tourism marketing

Supply Components First, let us consider some supply elements more

● Fauna and flora

Primary man-made attractions were not built or conceived for tourism

● architecture (historic and modern buildings)

● cathedrals, churches, mosques

● gardens and parks

● theatres and sports

● art and crafts

● carnivals and other entertainment

● way of life of the destination’s population

Purpose-built attractions were constructed or conceived especially for

According to the scope, a distinction is made between three main

The next component of tourism supply is tourism services/facilities,

The main component of tourism facilities is the accommodation

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Three of them differ from the classical approach: human resources,

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5. TRAVEL MOTIVATIONS AND BARRIERS TO

Tourists can travel for many reasons in addition to recreation and

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In choosing a destination, a traveller must overcome a number of

limit the time available for travel.

may deter travellers.

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6. Benefits and Costs of Tourism

Tourism benefits- Tourism involves many players including tourists,

Social Costs Social Benefits

Environmental Benefits Environmental Costs

 Fosters conservation and  May threaten specific natural

Economic Benefits Economic Costs

 Helps diversify and stabilize  Tourism development of

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A good investment climate for tourism, underpinned by a sound tax

Tourism is a complex industry of numerous subsectors. It is

Tourism and aviation taxes are counterproductive. In many cases, the

Tourism Tax The tourism or seasonal tax is an additional tax on certain

• Hotels and Lodging Establishments

• Motor Vehicle Rentals

• Recreational Equipment Rentals

The tourism tax on lodging establishments, campgrounds, motor vehicle

Tourism is regarded as one of the foremost sources of income, employment,

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8. TOURISM GROWTH AND NATIONAL ECONOMIES

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9. THE IMPACTS OF TOURISM