Republic of the Philippines

ISABELA STATE UNIVERSITY

HM 111 Macro Perspective of Tourism and Hospitality

MODULE 1: THE MEANING AND IMPORTANCE OF TOURISM AND HOSPITALITY

Introduction:

Tourism and hospitality have been one of the largest and fastest—growing industries in the world. It
contributes greatly to global economic development. Countries that are leading in tourism and hospitality
revenues are the United States, France, Germany, the United Kingdom, Mexico, and Japan.

Learning Objectives

At the end of this chapter, the students should be able to:

1. Explain the relationship of tourism and hospitality,

2. Discuss the components of the tourism and hospitality industry;
3. Define tourism and hospitality;
4. Differentiate tourists from excursionists;
5. Understand the various elements of travel used as criteria for defining travelers and/or tourists;
6. Explain the nature of tour;
7. Describe the characteristics of a tourist product and a tourist destination;
8. Compare tourism and hospitality with other industries; and
9. Appreciate the importance of tourism and hospitality.

Learning Content

 The Relationship of Tourism and Hospitality

 The Food and Beverage Component
 The Lodging Component
 Recreation and Entertainment Component
 Travel and Tourism Component
 Transportation
 Travel Agencies and Tour Operators
 Definition of Tourism
 Definition of Hospitality
 Meaning of Tourist
 Elements of Travel
 The Nature of a Tour
 The Tourist Product
 The Tourist Destination
  Tourist Services
 Characteristics of Tourism and Hospitality
 Importance of Tourism and Hospitality

Teaching and Learning Activities

The Relationship of Tourism and Hospitality

The tourism and hospitality industries strongly affect one another. Several associations and
industry leaders consider the combined industries and tourism and hospitality as one large industry- the
tourism and hospitality industry. The components of this large include:

(1) food and beverage services,

(2) lodging services,
(3) recreation services, and
(4) travel—related (tourism) services.

These components constitute the tourism and hospitality network. “Network” means a complicated
interconnection of parts or components. See figure 1 for an overview of the tourism and hospitality network.
 The components of the tourism and hospitality network may be independent and competitive
businesses; yet, they are interrelated and interdependent. The interdependence among the components is
strong especially in those countries which rely on tourism and hospitality for their economic development.
Although the components of the tourism and hospitality network are constantly changing in connection with
labor, opportunity, and growth, the network will continue to dominate as a global industry.

The Food and Beverage Component

The public looks for food and beverage service everywhere—in hotels, motels, airlines, airports,
cruise ships, trains, and shopping malls. There must be food service available to them for breakfast, lunch,
dinner, and snacks. There are commercial restaurants that provide food and beverage services such as
fast service restaurants, ethnic restaurants, and specialty restaurants. Aside from restaurants, taverns,
bars, kiosks, vending machines, supermarkets, food stalls, food carts, and food trucks now offer food and
beverage services.

Food service establishments are found in theme parks, in schools and colleges, in hospitals and
homes for senior citizens, in prisons and halfway houses, and in shelters for the homeless.

The Lodging Component

Lodging involves providing overnight or even long-term services to guests. For many people,
lodging is a place to sleep. For others, lodging facilities not only provides beds but also entertainment and
recreational facilities. Hence, the lodging industry component has began to accommodate several customer
preferences—from budget motels to luxury hotels and expensive resorts.

Lodging facilities such as inns, motor hotels, lodges, or motor inns are hotels and motels that use
different names. There are lodging establishments that use different terms such as bed and breakfast,
resort hotel, resort condominium, conference center, and time-sharing. There are lodging establishments
that offer special facilities such as the ski lodges in Colorado and casino hotels in Las Vegas and Atlantic
City.

Campgrounds, transient trailer parks, school and college dormitories, summer camps, and health
spas also attend to the lodging needs of those who are away from home.

In other countries, there are lodging establishments such as the parador—an old Spanish
monastery or castle that was converted to a hotel; pension or pensione—a French or Italian home in which
guests are provided with a room and board; chateau—a French castle or elegant country home used as a
hotel; ryokan—a Japanese inn which traditional customs are observed, and hostel—a lodging facility in
which inexpensive accommodations are provided to students and guests on a nonprofit basis.

Recreation and Entertainment Component

Entertainment originated from the traditional duties of a host to entertain his or her guests, whether
they are neighbors or travelers from other places. The host has always felt an obligation to attend to the
needs of his or her guests not only for food and beverages and lodging, but also for entertainment.
 Many centuries ago, innkeepers, tavern-keepers, and their descendants have attended to their
guests’ needs for entertainment by talking to their guests. Others told stories. Some provided games such
as darts, draughts, backgammon, or chess. Others employed jugglers and traveling minstrels.

Nowadays, the concept of entertaining guests is broader. Guests are offered different kinds of
entertainment and recreational activities such as golf, tennis, hiking, boating, swimming, handball, casino
gambling, and concerts.

Travel and Tourism Component

Travel and tourism are used together as an umbrella term to refer to those businesses that provide
primary services to travelers. These include not only food and beverage services, lodging services,
recreation and entertainment services, but also transportation services, and the services of travel agencies
and tour operators.

Transportation

The main purpose of transportation is to make it possible for people to go from one place to
another. There are many ways to do this, from the primitive and simple to the modern and complex. The
common means of transportation are automobiles, recreational vehicles (RVs), buses, trains, ships, and
airplanes.

Travel Agencies and Tour Operators

Travel agencies and tour operators are modern additions to the travel and tourism world. Both
have become important in the survival of many businesses in the tourism and hospitality industry.

A travel agent is one who sells travel services in a travel agency. He or she sells travel services
that are assembled by others into “packages.” In the travel business, a package is a bundle of related travel
services offered to a buyer at a single price.

Tour operators are wholesalers who make the necessary contacts with hotels, airlines, and other
providers of travel services and device packages which will appeal to retail buyers. They are volume
purchasers who are able to negotiate lower prices because of their high-volume purchases. They are able
to sell tour packages at a cheaper price than the individual consumer.

Definition of Tourism

The task of defining tourism is not easy as it may appear. Since tourism is a multidimensional
phenomenon, it is difficult to describe. Attempts have been made in the past to formulate a standard
definition of tourism and tourist among countries throughout the world.

One of the first attempts to define tourism was that of Professors Hunziker and Krapf of Berne
University, Switzerland. They defined tourism as the “sum of the phenomena and relationships arising from
the travel and stay of nonresidents, insofar as they do not lead to permanent residence and are not
connected to any earning activity.” This definition distinguishes tourism from migration, which involves
taking up permanent residence. Since it necessarily includes both travel and stay; it excludes day tours.
 The definition of the Tourism Society in Britain was: “Tourism is the temporary short-term
movement of people to destinations outside the places where they normally live and work and their
activities during their stay at these destinations.”

This definition was reformulated by the Tourism Society in Cardiff: “Tourism may be defined in
terms of particular activities selected by choice and undertaken outside the home environment.”

Burkat and Medlik (1997) cited five main characteristics of tourism: - enumeration

1.Because of its complexity, tourism is a combination of phenomena and relationships;

2. It has two essential elements: the dynamic element or the journey and the static element or the stay;
3.The journey and the stay are to-and-fro destinations outside the place of residence and work;
4.The movement to destinations is temporary and short-term, with the intention to return within a few days,
weeks, or months; and
5. Destinations are visited for purposes not connected with paid work, that is, not to be employed and not
for business or vocational reasons.

Tourism in the pure sense is essentially a pleasure activity in which money earned in one’s abode
is spent in places visited. In this sense, tourism represents a particular form of leisure and a particular for of
recreation, but does not include all uses of leisure and all forms of recreation. It includes much travel, but
not all forms of travel. Tourism therefore, is distinguished from the concepts of leisure and recreation on
one hand, and from travel and migration on the other hand.

Definition of Hospitality

The word “hospitality” is derived from the Latin word hospitare, which means “to receive as a
guest.” This phrase implies that a host is prepared to meet a guest’s basic requirements while the guest is
away from home. The requirements of a guest in these circumstances are food, beverages, lodging, or
shelter.

Several related words come from the same Latin root, including hospital, hospice, and hostel. In
each of these words, the principal meaning is a host who receives, welcomes, and caters to the needs of
people who are temporarily away from their homes.

Meaning of Tourist

In 1937, the League of nations defined “tourist” as follows: “A tourist is a person who visits a
country other than in which he or she usually resides for a period of at least 24 hours.” This was held to
include persons travelling for pleasure, domestic reasons or health, persons traveling to meetings or on
business, and persons visiting a country on a cruise vessel even if for less than 24 hours.

In 1963, a United Nations Conference on International Travel and Tourism recommended a new
definition of a “visitor” as “any person visiting a country other than that of earning money.” This definition
covers two classes of visitors:

1. Tourists. Temporary visitors staying at least 24 hours, whose purpose could be classified as:
 a. Leisure, such as recreation, holiday, health, study, religion, or sport;
b. Business;
c. Family;
d. Mission; and
e. Meeting;

2. Excursionists. Temporary visitors staying less than 24 hours in the destination visited and not making an
overnight stay, including cruise travelers, but excluding travelers in transit.

At present, most countries of the world accept the definitions of visitor, tourist, and excursionist that
evolved out of the UN Conference on International Travel and Tourism held in Rome in 1963.

Elements of Travel - enumeration

Four basic elements have been used as criteria for defining travelers and/or tourists. These are:
distance, length of stay at the destination, residence of the traveler, and purpose of travel.

A. Distance

What must be considered under distance is the difference between local travel or traveling within a
person’s home community and non-local travel or traveling away from home. It excludes commuting to and
from work and change in residence.

B. Length of Stay at the Destination

The second basic element of travel used as a criteria for defining travelers is the length of stay at a
destination. The definition of tourists and excursionists as proposed by the WTO is largely based on length
of stay. Tourists are temporary visitors who make at least one overnight stay, while excursionists are
temporary visitors who do not stay overnight in the country that they visit.

C. Residence of the Traveler

The residence or origin of the traveler is the third basic element of travel. For business and
research purposes, it is important to know where people live.

D. Purpose of Travel

The fourth basic element is the purpose of travel. It can be divided into seven:

1.Visiting friends and relatives;

2.Conventions, seminars, and meetings;
3.Business;
4.Outdoor recreation – hunting, fishing, boating, and camping;
5.Entertainment – sightseeing, theater, and sports;
6.Personal – family, medical, funeral, wedding; and
7.Others.
The Nature of a Tour

To analyze the nature of a tour systematically, it will be helpful to understand the difference
between domestic and international tourism, as well as independent and package tour. Domestic tourism
refers to travel taken exclusively within the national boundaries of the traveler’s country. People find it easy
to do so because there are no language, currency, nor documentation barriers. International tourism
involves the movement of people across international boundaries. It is more difficult to travel outside one’s
country because the country visited has a different language, currency, and documentation requirements,
such as passports, visas, and other conditions of entry to be met by tourists.

A package tour, sometimes called inclusive tour, is an arrangement in which transport and
accommodation is bought by the tourist at an all-inclusive price and the price of the individual elements
cannot be determined by the tourist. The tour operator who organizes the package tour purchases transport
and hotel accommodation in advance, usually obtaining these at a lower price because he or she is buying
them in bulk. He or she then sells the tours individually to tourists direct or through travel agents. On the
other hand, and independent tour is an arrangement in which the tourist buys these facilities separately,
either making reservations in advance through a travel agent or en route during his or her tour.

Tourists purchasing package tours may do so on the basis of either individual or group travel. An
independent inclusive tour is one in which the tourist travels to his or her destination individually, while in
the group inclusive tour, he or she travels in the company of other tourists. The abbreviations IIT and GIT
are used for individual inclusive tour and group inclusive tour respectively.

The Tourist Product

In a narrow sense, the tourist product consists of what the tourist buys. In a wider sense, the tourist
product is a combination of what the tourist does at the destination and the services he/she uses during
his/her stay.

The first characteristic of a tourist product is that it is a service. It is an intangible item It cannot be
inspected by prospective purchasers before they buy as they can with a washing machine, a stereo, or
other consumer goods. The purchase of a package tour involves a high degree of trust on the part of the
buyer.

The second characteristic is that the tourist product is largely psychological in its attraction. It is a
more than a collection of services such as an aircraft seat and a hotel room. It is the temporary use of a
strange environment plus the culture and heritage of the region and other intangible benefits such as
atmosphere and hospitality.

Another characteristic is that the product tends to vary in standard and quality over time unlike the
production of a television set. A package tour is not consistently of equal standard. A bumpy flight can
change an enjoyable experience into a nightmare; a good room in a hotel may be spoiled by poor food; and
a holiday at the seaside can be destroyed by a prolonged rainy spell.

Still another characteristic is that the supply of product is fixed. The number of hotel rooms
available at a particular resort cannot be changed to meet the changing demand of the tourists during a
particular season. The unsold hotel room or aircraft seat cannot be stored for another sale as is the case
with tangible products. Thus, great efforts are made to fill hotel rooms and aircrafts by discounting the
prices of these products at the last time.

The Tourist Destination

The tourist destination is a geographical unit where the tourist visits and stay. It may be a village, a
town, a city, a district, a region, an island, a country, or a continent. The success of a tourist destination
depends upon the interrelationship of three basic factors: attractions, amenities or facilities, and
accessibility.

Attractions may be site and event attractions. A site attraction is one in which the destination itself
has appeal, while an event attraction in one in which tourists are drawn to the destination solely because of
what is taking place there. A site attraction may be a country, a geographical region such as the Alps, a
city, or a resort such as Boracay. Event attractions include congresses, exhibitions, festivals such as Ati-
Atihan Festival, and sports events such as Olympic Games.

Attractions may also be natural or man-made. Natural attractions include mountains, beaches, and
climatic features such as sunshine and pure air. Man-made attractions include buildings of historical or
architectural interest such as Fort Santiago, holiday camps, or theme parks such as Disneyland in Los
Angeles, USA.

Amenities or facilities include accommodation, food, local transport, communications, and

entertainment at the site. However attractive a destination, it’s potential for tourism will be limited unless the
basic amenities which a tourist requires are provided. Amenities will differ according to the attraction of the
site. Sometimes, the amenity is itself the principal attraction as in the case when a resort hotel is built to
offer different kinds of entertainment in a previously undeveloped region.

Accessibility means having regular and convenience of transport in terms of time/distance to the
destination from the originating country a reasonable price. If private transport is to the means of access,
tourism flow will depend upon adequate roads, gasoline stations, and the like. Good railways and coach
services, airports, and seaports are designed to facilitate accessibility.

Tourist Services

The travel and stay of tourists give rise to a wide range of services in the course of a holiday. The
principal tourist services are supplied by passenger transport, which provides the means to reach the
destination, as well as the movement at the destination. Distinctions in transport are between public and
private, domestic and international, and among the various modes—land, sea, and air.

Accommodation, food and beverage, and entertainment constitute the second group of tourist
services. Hotels are of vital concern to a large proportion of tourists. However, many stay with friends and
relatives, and in other private accommodations; others provide their own accommodation in the form of
caravans and tents. At present, food and beverage operations cut across all sectors of the travel industry
since eating is a necessity, as well as a pleasure for travelers. Entertainment, combined with amusement
and recreation, is the primary reason why millions of people travel.
 The third group of tourist services consists of those provided by the travel agent and by the tour
operator. The travel agent is the distributor for the product, while the tour operator is the manufacturer of
the product. The travel agent provides an intermediary function between the tourist and the providers of
transport and accommodation, while the tour operator combined the individual components of a holiday into
a product, which is then sold directly to the public through travel agents.

Other tourist services include currency, documentation, information, sightseeing, and shopping.

Characteristics of Tourism and Hospitality

Tourism and hospitality, has special characteristics which make it different from other industries.

1.In tourism and hospitality, the product is not brought to the consumer; rather, the consumer has
to travel and go to the product to purchase it . In other industries, an item manufactured in a factory is
brought to the wholesaler, and retailer and untimely to the consumer.
2.The products of tourism and hospitality are not used up; thus, they do not exhaust the country’s natural
resources. The products of other industries have a limited life and at the end of it are either junked or
replaced with new ones.

3. Tourism and hospitality, is a labor-intensive industry. It requires more manpower than other industries.

4. Tourism and hospitality, is people-oriented. It is primarily concerned with people. One of the most
important motivations of tourists is to meet other people and see how other people live.

5.Tourism and hospitality, is a multidimensional phenomenon. It is dependent on many and varied activities
which are separate but interdependent.

6.The tourism and hospitality industry, is seasonal. During vacation seasons, millions of tourists travel,
which result in increased revenues for several tourism agencies; but when vacations are over, these
companies experience a big decline in dollars earned.

7.The industry is dynamic. It is characterized by the changing ideas and attitudes of its customers and
therefore must be always prepared and willing to adjust to these changes.
Importance of Tourism and Hospitality

Tourism and hospitality, has become one of the world’s major industries. Both developing and
highly developed nations are now taking a closer look at the following potential benefits from tourism and
hospitality:

1.Contribution to the balance of payments. Tourism and hospitality can help correct the balance of
payments and deficits of many countries by earning the much-needed foreign currency in international
trade. Examples of countries in which the tourism and hospitality industry has helped reduce the deficits
are: Spain, Mexico, Philippines, Thailand, Hong Kong, and Singapore.

2. Dispersion of development. International tourism and hospitality is the best means to spread
wealth among countries; thus, bridging the economic gap between the rich and the poor nations.
3. Effect on general economic development. Expenditures by tourists can have beneficial effects on all
economic sectors can lead to a development of different industries and other economic activities.

4.Employment opportunities. Tourism and Hospitality is a source of employment. It is a service industry,

which could have a significant effect on those countries with surplus labor such as the Philippines. For
countries where there is a high rate of unemployment and underemployment, tourism and hospitality can
provide a ready solution.

5.Social benefits. Social exchange takes place when tourists come in contact with the inhabitants of the
places they visit. Their social background and their presence affect the social structure and way of life of
the local residents. In the same way, tourists are also affected by the experience so that they often carry
with them new habits and a new outlook on life when they return home.

6.Cultural enrichment. Tourism and hospitality, emphasizes a sharing and appreciation of cultures rather
than the lack of trust brought about by isolation. Through tourism and hospitality, we can appreciate the rich
human and cultural diversity that the world offers and evolve a mutual trust and respect for one another and
the dignity of life on earth. Likewise, tourism and hospitality, contributes to the preservation and
development of the world’s cultural heritage. It encourages governments to preserve historical sites and
monuments and motivates indigenous groups to preserve their heritage in the form of dance, music, and
artifacts.

7.Educational significance. Tourism and hospitality, enhances one’s education. International conferences,
seminars, and study trip held each year enable people of all nations to exchange ideas, propose solutions
to problems, and share their concerns. They provide up- to-date information for enhancing the knowledge
and skills required for the development of the tourism and hospitality industry.

8.A vital force for peace. A properly designed and developed tourism and hospitality can help bridge the
psychological and cultural distances that separate people of different races, colors, religions, and stages of
social and economic development. In facilitating more genuine social relationships among individuals,
tourism and hospitality can help overcome prejudices and foster international brotherhood and world
understanding. Thus, tourism and hospitality can become a real force for world peace.

MODULE 2: THE HISTORY OF TOURISM AND HOSPITALITY

Introduction:

In order to truly appreciate the tourism and hospitality industry, it is important to understand its historical
origin. A person cannot project the future without understanding the past. Philosophers say it another way:
“Knowledge is telling the past. Wisdom is predicting the future.” In line with this philosophy, this chapter will
explore the history of this marvelous industry called tourism and hospitality.

Learning Objectives
At the end of this chapter, you should be able to:
1. Describe the history of the tourism and hospitality industry;
2. Explain the origin of tourism and hospitality in the Philippines;
3. Identify the international travel patterns; and
4. Describe the factors that favor the growth of tourism and hospitality.

Learning Content

 History of Tourism Industry

 History of the Hospitality Industry
 Pioneers in the Tourism and Hospitality Industry
 Origins of Tourism and Hospitality in the Philippines
 International Travel Patterns
 Factors that Favor the Growth of Tourism and Hospitality

Teaching and Learning Activities

History of the Tourism Industry Early Tourism

Travel and exploration are basic to human nature. Man has traveled since the earliest times
although the term tourism was used only in the 19th century. “Tourism” is derived from the Hebrew word
torah which means studying, learning, or searching.

Tourism can trace its ancestry in the Old Testament. Noah with his Ark must have been the first
large- scale operator even though his passengers were mostly animals. There are numerous references to
caravans and traders in the Old Testament. Chapters 26 and 27 of the Book of Ezekiel describe trade and
commerce in ancient Tyre and recount the travels abroad made by merchants.

Early tourism has two forms: travel for business such as trading and religious travel. Throughout
history, merchants have traveled extensively in order to trade with other nations and tribes. The invention of
money, writing and wheel by the Sumerians facilitated travel and exchange of goods. The early
Phoenicians toured the Mediterranean as traders. Both the Greeks and the Romans were well-known
traders and as their respective empires increased, travel became necessary. At this time, there was also
travel for private purposes. Examples are the Olympic Games held in 776 BC by the Greeks as well as the
travel by rich Romans for enjoyment and to visit friends and relatives. The Roman traveler was largely
aided by improvement in communications, first-class roads, and inns (forerunners of modern hotels). By
employing relay of horses, Distances of 100 miles or more could be covered in one day. In between
distances of six miles were mutations or stables where horses could be changed. They are the equivalent
of the present gasoline stations.

Travel for religious reasons took the form of pilgrimages to places of worship such as Chaucer’s
tale of pilgrimage to Canterbury. Pilgrimages were made to fulfill a vow as in case of illness or of great
danger or as penance for sins. Besides Rome and Jerusalem, St. James of Galicia was the foremost
destination of English pilgrims in the 14 th century. Beginning in 1388, English pilgrims were required to
obtain and carry permits, the forerunner for the modern passport.

Tourism in the Medieval Period

During the Medieval Period, travel declined. Travel, derived from the word travail, became
burdensome, dangerous, and demanding during this time. After the decline of the Roman Empire in the 5 th
century, roads were not maintained and they became unsafe. Thieves inflicted harm on those who dared to
travel. No one during this time traveled for pleasure. Crusaders and pilgrims were the only ones who
traveled.

Tourism During the Renaissance and Elizabeth Eras

With the Renaissance, a few renowned universities developed so that travel for education was
introduced largely by British. Travel for education became popular in the 16 th century. Under Elizabeth I,
young men seeking positions in court were encouraged to travel to the continent to widen their education.
This practice was gradually adopted by others in the lower social scale. In time, it became recognized that
the education of a gentleman should be completed by a “grand Tour” of the cultural centers of the continent
which lasted for three years.

The term was used as early as 1670. While apparently educational, the appeal became social.
Pleasure- seeking young men of leisure traveled predominantly through France and Italy to enjoy the
cultures and social life in Europe, with Venice, Florence, and Paris as the key attractions. By the end of the
18th century, the practice had become institutionalized for the upper class of society.

As young men sought intellectual improvement in the continent, the sick sought a remedy for their
illnesses in “spas” or medicinal baths. The term “spa” is derived from the Walloon word espa meaning
“fountain.” Turnbridge Wells in Kent (near London) became famous as a spa in the 1660s. Travelers
immersed themselves in the healing waters. Soon, entertainment was added and dozens of watering
places became resort hotels. Bath in England, Baden-baden in Germany, Baden in Austria, Bainesles-
basin in France, Lucca in Italy, and Karslbad and Marienbad in Bohemia became fashionable in the 18 th
and 19th centuries.

Tourism During the Industrial Revolution

The Industrial Revolution brought about major changes in the scale and type of tourism
development. It brought about not only technological changes, but also essential social changes that made
travel desirable as a recreational activity. The increase in productivity, regular employment, and growing
urbanization gave more people the motivation and opportunity to go on a holiday. The emerging middle
class combined higher incomes and growing education into annual holidays. To escape from their
responsibilities and the crowded city environment, they traveled to the countryside or seashore for their
holidays. This led to the creation of working-class resorts near major industrial centers.

Modern Tourism

Tourism in the 19th Century

 Two technological developments in the early part of the 19 th century had a great effect on the
growth of tourism. These were the introduction of the railway and the development of the steam power. The
railroads created not only more business by providing reliable and cheap transportation, but also more
competition as various private companies invested heavily in hotels, resorts, and entertainment facilities.
Thus, tourism was transformed from a small business catering to the elite into the start of a mass market,
that is, travel by a large number of individuals.

The use of steam power provided the increased mobility needed by the tourism business.
Steamers on the major rivers provided reliable and inexpensive transportation that led to the popular day-
trip cruises and the growth of coastal resorts near large industrial towns. As tourism became organized in
the later years of the 19th century, the organization of travel became an established institution. Travel
organizers emerged. The first and most famous of these was Thomas Cook. His first excursion train trip
was between Leicester and Loughborough in 1841 with 570 passengers at a round-trip fare of one shilling.
The success of this venture encouraged him to arrange similar excursions using chartered trains. In 1866,
he organized his first American tour. In 1874, he introduced “circular notes” which were accepted by banks,
hotels, shops,and restaurants. These were in effect the first travelers’ checks.

Other tour companies which appeared in Britain at this time were Dean and Dawson in 1871, the
Polytechnic Touring Association in 1872, and Frames in 1881. In the United States, American Express was
founded by Henry Wells and William Fargo.

As the 19th century drew to a close, photography and guide books became popular. A huge variety
of guide books which dealt with both local and overseas travel were sold to tourists. The most popular of
these was Baedecker, first published in 1839, which became the leading guide for European countries at
the end of the century.

Tourism in the 20th Century

At the beginning of the 20th century, pleasure travel continued to expand, encouraged by the
increasing wealth, curiosity, and outgoing attitudes of the people as well as the increasing ease of such
movement.

World War I brought about many changes, which influenced the volume of tourism. Early post-war
prosperity, coupled with large-scale migration, boosted the demand for international travel. Interest in
foreign travel was further enhanced by the first-hand experience of foreign countries. New forms of mass
communication stimulated curiosity about other countries. In addition to the influence of posters and the
press, the cinema, radio, and television widened knowledge and interest in travel.

After World War I, form of travel began to change radically. The railways as a means of travel
declined with the introduction of the motor car. Motorized public road transport and improved road
conditions led the popularity of seaside tours.

World War II also led to increased interest in travel. The war had introduced combatants not only to
new countries, but also to new continents, generating new friendships and in interest in different cultures.
Another outcome of war was the progress in aircraft technology. Air travel had become more comfortable,
safer, faster, and cheaper in comparison with other forms of transport. With the introduction of the Boeing
707 jets in 1958, the age for air travel for the masses arrived, hastening the decline of sea travel.
Improvements in air transport not only encouraged greater transcontinental travel, but were also
instrumental in the growth of international travel in the 1960s and 1970s. The earth literally shrank for the
tourist, bringing distant toxic islands closer and replacing week- long sea voyages with a few hours of air
travel.

After the post-war recovery years, there was an increase in private car ownership. Travelers
switched to the use of private cars and this change affected both coach and rail services. The private car
provided flexible transportation which freed people from the schedules and fixed routes of public transport.
It encouraged the growth of excursions and short-stay holidays. Resorts near major centers of population
benefited considerably. Road improvements brought more distant resorts closer to the major cities.
Resourceful tour operators devised flexible packages aimed at the private motorist at home and abroad.
Hotels also devised their own programs of a short- stay holidays for the private motorist. The demand for
hired cars on holidays overseas also increased substantially.

The post-war economic recovery provided an increase in discretionary income and leisure time,
which many people converted in increased recreation and travel. Due to labor negotiations and social
legislation, the length of official and paid holidays increased. Governments have created more vacation
time by incorporating isolated public holidays into the familiar “long weekends” throughout the year. By the
1970s, two vacations a year were a common occurrence. The annual overseas holiday had become a
necessity rather than a luxury.

As business and trade prospered in the developed countries, business travel also flourished,
leading to the demand not only for individual travel, but also for conference and incentive travel on a
worldwide scale. The 1970s have also seen the emergence of new patterns in tourism. As economic power
has shifted between countries, new tourism-generating countries such as the oil-rich Arab countries and
Japan arose. Europe, as well as the developing tourist-based economies of Asia, have benefited from this
influx. The Philippines, Thailand, Singapore, Malaysia, and Indonesia have strengthened their tourist
attractions to appeal to new markets.

Prospects for the continued growth of world tourism in the 20 th century appear to be the most
promising. Societal trends are favorable to the continued growth of the demand. Governments of many
nations are encouraging the growth of both domestic and international tourism as a means of job creation,
economic diversification, and source of foreign exchange. Beyond its economic significance, there is a
growing realization of the role of international travel in promoting world peace and prosperity.

History of the Hospitality Industry Ancient Period : The Sumerians

The recorded history of the hospitality industry began with the Sumerians, a group of people who
lived in Mesopotamia near the Persian Gulf at about 4000 BC. Since much of this area was fertile, several
Sumerians became prosperous, as well as skilled farmers and cattle breeder. The Sumerian farmers were
able to produce such abundant harvests that they were able to sell their surplus grain to people in other
parts of the region. The Sumerians invented money and writing as a means to record and settle their
business transactions. The Sumerians were the first to develop trade in modern sense of the word. In
addition to growing and trading grain, the Sumerians converted it to alcoholic beverages or beers which
became the most common consumed beverages In Sumerian society. The Sumerian beverages were safer
to drink than their water.
 Politically, the Sumerians organized themselves into city-states. Since the Stated covered a large
geographic area, Sumerian traders required the services of travelers, namely, food, drinks, and shelter.
Hence, local Sumerian tavern were established, making them the first hospitality business. It is most likely
that the hospitality industry began with the Sumerians 5,000 years ago in 3000 BC.

These taverns served beers to the local residents. Some of these taverns attracted criminals and
others who meet at the taverns to plot crimes. They were commonly tolerated. Sometimes, local or national
governments attempted to regulate them. The first recorded effort was made by Hammurabi, the king of
Babylon, who ascended the throne in 1792 BC. He made a set of laws, carved in stone, known as the Code
of Hammurabi. The code required tavern owners to report customers who planned crimes in these taverns.
The penalty of failure to do so was death. The death penalty was also imposed on those who diluted drinks
with water.

Early Traders

In 2000 BC, a considerable amount of trade had developed among the people of the Middle East.
Many became traders of exotic goods. They needed hospitality services for their long journeys. Some
enterprising individuals set up the caravanserai which provided food and shelter to travelers. These were
the early examples of inns. Their reputation was similar to that of the taverns of the same period. They
were often dirty and infected with bugs that travelers tried to avoid whenever possible

Empires: 3200 BC to 476 AD

From 3200 BC to 476 AD, three significant empires flourished-the Egyptian, Greek, and Roman.
This period is known to historians as the Empire Era. Each of these empires developed hospitality services
for increasing numbers of travelers.

Egyptian Empire

The Egyptian Empire developed slowly over several thousand year. By 3200 BC, various groups
had been united under one government ruled by a “pharaoh,” the Egyptian term for king.

The famous pyramids or tombs for the pharaohs became tourist attractions that many people
traveled long distances to see. In additions to traveling to see the pyramids, people traveled to attend
religious festivals.

Greek Empire

Ancient Greek civilization began to develop about 1100 BC. It evolved in the form of independent
city- states. These city-states were united by Philip of Macedonia in the middle of the third century BC. His
son, Alexander the Great, built an empire that surrounded the Mediterranean and extended as far east as
India.

The Greeks civilization began to develop about 1100 BC. It evolved in the form of independent city-
states. These city-states were united by Philip of Macedonia in the middle of the third century BC. His son,
Alexander the Great, built an empire that surrounded the Mediterranean and extended as far east as India.
 The Greeks were dedicated travelers. Their land and sea travels made them dominant in the
Mediterranean region. Because of increased travel, some form of overnight accommodation became a
necessity. Hence, inns and taverns became common in ancient Greece. As in the Middle East, they had a
bad reputation. The owners adulterated drinks with water and engaged in criminal activities. They were
looked down upon by rich and powerful citizens.

In contrast to inns and taverns, restaurants in ancient Greece were often respected and served fine
food.

Roman Empire

In 146 BC, after many years of conflict, Greece became a Roman protectorate. Roman efforts at
territorial expansion continued. By the time Rome had conquered most of Western Europe and the Middle
East, inns and taverns were established throughout the empire. The Romans constructed elaborate inns
along the main roads for officials and couriers of the Roman government. Marco Polo described these inns
as “fit for a king”. Some rich landowners built their inn in their estates and were managed by household
slaves. Near the cities, inns and taverns were constructed for less wealthy citizens and were run by
freemen or by retired gladiators who wanted to invest their money in the restaurant business.

Roman public restaurants served ordinary food to the people. In the ruins of the Pompeii, there are
many small restaurants that are similar to the fast-food restaurants at present. They have a single basic
design, and prepare and sell the same limited menu. They may have been operated by one person, or by a
small group just like a modern small company. It is believed that the Romans were the first to establish the
first restaurant chain.

In ancient Persia large caravans carried elaborate that were used along caravan routes.
Frequently, these caravans stopped at khans, a combination of stables, sleeping accommodations, and
fortresses which provided shelter from sandstorms and enemies who attacked caravans.

Medieval Period

Dark Ages

After the fall of the Roman Empire in 467 AD, inn keeping almost disappeared, except local taverns
and a few inns which were scattered throughout Europe. Throughout this period, the Roman Catholic
Church took over the job of feeding and housing travelers-both religious and lay people. The monasteries
of the church were self- sufficient enterprises. Members of the religious orders planted vegetables and
herbs, raised animals for meat, and grew grapes for wine. The most famous of these monastery-shelters
was the Hospice of St. Bernard located in the Alps, 8,110 feet above sea level. Travelers were not charged
for lodging. Those who were able to pay were expected to give donations.

In Europe, Charlemagne established rest houses for pilgrims. The main purpose was to protect
pilgrims and provide hospitality on their routes. A very good example of a rest house was the Abbey at
Roncesvalles which provided services such as a warm welcome at the door, free bread, cellars full of fruits
and almonds, two hospices with beds for the sick, and even a consecrated burial ground.

Medieval guilds held open houses to receive pilgrims. Accommodations in medieval guilds were
similar to those of the monasteries. A good example is The Steelyard, a residence in London operated by
the Hanseatic League.

Providing hospitality services to travelers became a burden to the religious houses. The Church
found it difficult to accommodate many travelers in a limited space. The monasteries were “overbooked”.
The Church continued to provide hospitality to the poor since Christian charity was an important element

Gradually, some taverns, inns, and wine shops began to give accommodations to middle-class
travelers. Thus, the number of inns increased although the standards of comfort and cleanliness differed
greatly in different countries and regions.

Renaissance: 1350 AD to 1600 AD

During the Renaissance, there were no restaurants or dining establishments. In England, there
were taverns, pubs, and inns. None of these served food. They were generally avoided by the upper
classes who dined and entertained in their homes.

Concern about table manners increased during this period and rules to be observed at the dinner
table developed. People were instructed not to put food on their plate using their fingers because such
behavior is unpleasant and annoying. Burping at the dinner table was considered unacceptable.

Early Modern Period: 1600 AD to 1800 AD

In the sixteenth century, a type of eating place for commoners called an ordinary to appeared in
England. These places were taverns that served a fixed price, fixed menu meal.

During this era, coffee and tea began to influence the culinary habits of Western Europe. Tea
developed slower than coffee as a common beverage. It became widespread in England.

During the next century, coffee houses were built all over Europe. Venice, the famous café Florian
on the Piazza San Marco was constructed. The first English coffee house was in St. Michael’s Alley,
London in 1652. In 1683, Kolschitski opened the first coffee house in Central Europe. It was in this coffee
house that the first cup of coffee sweetened with honey and milk was served. Coffee houses became social
and library centers as well as the forerunners of cafes and coffee shops at present. They also helped
reduce drunkenness in the European continent.

The advent of stagecoach, regular stagecoach routes were established, followed by the building of
the stagecoach or coaching inns. At the coaching inns, tired horses were exchanged with fresh horses and
stagecoach passengers were fed and given the opportunity to rest overnight. Travel was difficult because
the roads were full of potholes and normally soaked in mud.

Other developments of the period included an increase in the quality of inns, the application of
English common law to the hospitality industry, and in France, the reintroduction of restaurants for public
dining.

English common law forms the basis of US law. Many of the principles developed in England in the
seventeenth century are still enforced in the United States at present. Before the application of the common
law to inns in the 1600s, innkeepers ran their inns as they close. Many would refuse to accommodate
travelers, although rooms were available. Some did this because they did not like the appearance of the
traveler. Others did not like to be disturbed while sleeping at night. Other innkeepers connived with guests
who would harm or steal from other unsuspecting guests.

Early common law required innkeepers to receive all travelers, provided that the innkeeper had
available space and that travelers were in fit condition. This meant that they were not sick, drunk,
dishonest, or exhibiting unpleasant behavior. Later, common law established two principles which are now
considered basic in the hospitality industry–the innkeeper should ensure the guests’ property and provide
for the guests’ safety. These principles are still followed in our laws at present.

By the 1700s, the inns in England were much safer and more comfortable. The mails were an
important element in the development of the hospitality industry. Until the late 1700s, the mail in England
was carried on horseback by messengers known as post-boys who were able to ride six miles per hour. A
letter usually took several days to reach 100 miles. Mail-carrying was transferred to stagecoaches which
were supposed to deliver mail within specific amounts of time. They ran at full speed for ten miles and
stopped at a post-house to change horses.

Post-houses were similar to the coaching inns. They were equipped to feed drivers and
passengers and accommodate them overnight. They were located along the coach routes to ensure a
steady supply of customers who arrived by stagecoach.

Until the late 18th century, there were no public restaurants. In England, there were coffee houses
where one could get light snacks. There were taverns that served a daily “ordinary” which is a main meal
with a fixed price. Most people took their meals at home. The rich and their own cooks and entertained in
their own homes. Inns were established for travelers and did not normally serve meals to local residents.

The food service element of the hospitality industry changed dramatically in France in 1765. In that
year, a man named Boulanger operated a small business which sold soups and broths in Paris. These
were known as restaurants, a French word which means “restoratives”. Soups and broths had the ability to
restore energy to people who are tired and weak. Boulanger was one of the many who sold soups and
broths in Paris at that time. For unclear reasons, Boulanger decided to add an item in his product–a dish
made of sheep’s feet with a sauce. The traiteurs, members of caterers’ guild who prepared roasts and
meats for consumption in private homes, objected on the grounds that Boulanger was preparing and selling
a ragout and that only traiteurs were allowed to sell ragouts and similar foods under existing French law.
They filed a case against Boulanger in court.

After a careful study of the traiteurs’ position, the court decided that Boulanger’s selling of the dish
did not violate the French law. The case created much publicity and led to a decree which authorized both
traiteurs and restaurateurs to serve guests within their establishments. This led to the establishment of
public dining rooms where guests are seated and served with the food and drinks of their choice.

Boulanger is recognized as the first to create the first restaurant, an establishment open for the
public with a dining room where a variety of foods could be bought and consumed.

In the late 18th century, the restaurant business flourished. During the French Revolution, the
common people of France revolted against the monarchy who took control of the government and
properties of the aristocrats, many of whom were executed. Cooks and chefs who had been employed by
the aristocrats suddenly lost their jobs. The unemployed cooks and chefs opened food-service
establishments to earn a living. After the French Revolution, the number of restaurants increased in Paris
and other parts of the world.

Another type of food-service establishment which developed in France was the café. Café is the
French word for “coffee”. These cafes were the French equivalent of the English coffee houses. At first,
they only served snacks just as the English did. Later, the owners of these establishments used their highly
developed culinary skills to prepare more elaborate items which delighted their customers.

These developments in France in the late 18th century marked the beginning of the modern
restaurant industry.

The Industrial Era: from 1800

The industrial Revolution, which dates from the mid-1700s, started in England. The development of
railroad networks, first in England, then in other countries, had a greater effect on the hospitality industry
than any other development since the fall of the Roman Empire. The establishments of the railroad stations
became excellent locations for new hospitality businesses in England and other countries that developed
rail networks. Inns, taverns restaurants, and hotels opened near railroad stations. In England, examples
include the Charing Cross Hotel, the St. Pancras Hotel in London, and the Queens Hotel in Birmingham. In
Scotland, there were St. Enoch’s Hotel in Glasgow and the Station Hotel in Perth. In the United States,
Biltmore Hotel and the Commodore Hotel were built in New York City near the Grand Central Station.

Modern Period

19th Century

In the last quarter of the 19th century, public dining was not popular. Many hotels were constructed
without dining facilities. Hotel guests took their meals in their rooms. In 1875, a dining facility was opened in
the Albermarle Hotel in London. By this time, the term restaurant referred to the dining room of a hotel.

In London, more luxurious hotels began to appear. Some were known for their excellent guest
accommodation and superior food. One of the best-known hotels was the Savoy which was opened by
Richard d’Oyly Carte in 1889. In the Savoy, d’Oyly Carte employed two men who became famous
throughout the world– Cesar Ritz and Auguste Escoffier. The General Manager was the renowned Cesar
Ritz and the Chef des Cuisines was Auguste Escoffier. These two men revolutionized the hotel restaurants.
Auguste Escoffier was one of the greatest chefs of all time. He is know for his classic book, Le guide
Culinaire. He also installed the Kitchen Brigade System.

The Americans used their ingenuity to create something for everyone. Delmonico’s was the only
expensive and aristocratic restaurant in the United States. It was famous for its fine food. Delmonico’s
served Swiss-French cuisine and became the center of American gastronomy or the art of good eating. It is
also known for its bilingual menus–Baked Alaska, Chicken a la King, and Lobster Newberg. The Delmonico
Steak is named after the restaurant. Other American cities had their own hotel-palaces such as the Palmer
house in Chicago, St. Clarke in New Orleans, and the Planters Hotel in St. Louis. The Hotel del Coronado
in San Diego became famous because of its unique architectural style.
 Although the modern hotel was an American invention, the Europeans contributed the European
plan which meant that a guest need not to pay for both room and meals in one lump sum, but could pay for
only the room and order the meals separately from an a la carte menu or eat elsewhere.

More innovations in hospitality occurred in the 19th century such as the custom of dining out, better
methods of preserving food through canning and vacuum packing, mas feeding for school children, and the
establishment of ice cream parlors.

20th Century

In 1921, Walter Anderson and Billy Ingraham began the White Castle hamburger chains. The
name White Castle was chosen because white stood for purity and castle for strength.

Marriott’s Hot Shoppe and root beer stands opened in 1927. At about this time, the drive-in and
fast-food restaurants also sprang up in America.

In 1925, Howard Johnson opened his original restaurant in Wollaston, Massachusetts. In 1934, the
Rainbow Room opened. This art deco restaurant supported the reemergence of New York as the center of
power and glamour. In 1937, Trader Vic’s restaurant opened. The social elite was attracted to the
Polynesian-themed restaurant which served exotic drinks including the Mai Tai that Vic invented.

In 1939, a restaurant called Le Pavillion de France opened in New York. By the end of 1930, every
city had a deluxe supper club or night club.

The Four Seasons also opened in 1939. It was the first restaurant to offer seasonal meus
(summer, spring, fall, winter) with its modern architecture and art as a theme.

After World War II, there was a rapid development of hotels and coffee shops. They sprang up in
almost every highway intersection. The 1950s saw the emergence of fast-food restaurants. In the 1960s,
fine dining became popular because businessman liked to eat well. In the 1970s, new establishments were
introduced such as the Taco Bell, TGI Fridays, Houston’s, and Red Lobster in the restaurant industry, and
Days Inn, Super 8 Motels, and Comfort Inns in the Lodging industry. Corporations such as the Four
Seasons, Canadian pacific, Marriott, Hyatt, Sheraton, Hilton, Radisson, Ramada, and other high-class
chains increased in North America and in other countries.

The 1990s started with a recession which began in 1989. The hospitality industry experienced a
downtown due to a Gulf War. Organizations strived for profitability, hence, they downsized and
consolidated.

Since 1993, the economic recovery was very strong. Thus, several mergers and acquisitions have
taken place. Many corporations have expanded overseas. Eastern Europe and China have opened up.

Pioneers in the Tourism and Hospitality Industry

There are several outstanding individuals who have made a significant contribution to the growth
and development of the tourism and hospitality industry. They are Cesar Ritz, Ellsworth Milton Statler,
Conrad Hilton, Thomas Cook, Howard Dearing Johnson, J. Williard Marriott, Ray Kroc, Isadore Sharp, and
Ruth Fertel.
Cesar Ritz

Cesar Ritz became the general manager of the Savor Hotel in London, one of the most famous
and luxurious hotels in the world. He made the hotel a cultural center for high society. The Ritz is
synonymous with refined, elegant hotels and service. At present, the Ritz-Carlton hotels bear his name.

Ellsworth Milton Statler

Ellsworth Milton Statler is considered to be premier hotel-man of all time. He brought a high
standard of comfort and convenience to the middle-class traveler at an affordable price. He was the first to
put telephones and radios in every guest room together with full-length mirrors, built-in closets, and a
special faucet for ice water.

Conrad Hilton

Conrad Hilton was once recognized as “the biggest hotel man in the world”. He was described by
the New York Times as the “master of hotel finance”. He was careful not to over-finance and had a flawless
sense of timing. In 1954, he formed the first major chain of American hotels–a group of hotels which
followed standard operating procedures.

Thomas Cook

Thomas Cook is recognized as the first professional travel agent. He was the founder of the world’s
first travel agency. He is credited for making world travel possible for the middle class. The phrase “Cook’s
tour” is still used at present to refer to a tour that ges to many places and stops briefly at each place.

Howard Dearing Johnson

Howard Dearing Johnson was the pioneer of brand leveraging. He was one of the first to introduce
franchising in the 1930s. At present, Howard Johnson is one of the famous names in the restaurant and
hotel business.

J. Willard Marriott

J. Willard Marriott founded the Marriott Corporation which has continued to be an important asset
to the hospitality industry. Through his strong faith and determination, J. Willard Marriott began with a root
beer stand which was founded by necessity and built it into a multibillion-dollar industry.

Ray Kroc

Ray Kroc has been the most financially successful of all hospitality entrepreneurs. He founded the
McDonald’s Corporation, a multibillion-dollar industry, though his strong dedication, organizational skills,
perseverance, and incredible aptitude for marketing. Kroc developed several operational guidelines such as
Quality Service Cleanliness and Value or QSC&V. Kroc’s motto, “Never be idle a moment” was also
incorporated into the business.

Isadore Sharp
 Isadore Sharp, a first-generation Canadian, was the founder of Four Seasons Regent Hotels, the
world’s largest hotel chain and a multibillion-dollar global hotel empire. The success of the Four Seasons
Regent Hotels is largely due to the drive, determination, and personal taste and style of Isadore Sharp.

Ruth Fertel

Ruth Fertel was the founder of Chris Steak House, the largest upscale restaurant chain in the
United States. It has 59 operations–54 in the US and Puerto Rico and five Internationally. It sells more than
11,000 steaks daily with a gross income of tow hundred million dollars a year. Because of this volume, Ruth
Fertel is the most successful woman restaurateur at present.

Origins of Tourism and Hospitality in the Philippines

Tourism and Hospitality in the Philippines began when the original inhabitants of the country
roamed around in search of food. Inter-tribe travel occurred, although the mode of travel was crude. A more
recognizable form of tourism and hospitality appeared in the Philippines when the country was discovered
by Ferdinand Magellan and when galleons or wooden boats sailed between Mexico and the Philippines
during the galleon trade.

During the American occupation of the Philippines, Americans were able to reach Manila after two
weeks on the board the Pan-American Airways air-clippers. In the 1920s, the steamship and the airline
pioneers, the “China Clipper” and the “Manila Clipper”, brought some passengers to Manila via Hong Kong.

The introduction of more comfortable and faster means of transportation gave the early impetus for
tourism and hospitality in the Philippines. Travelers from the US, China, Japan, and Europe were provided
inland tours by entrepreneurs with their unregistered private cares and coaches called “colorum”. Colorum
means illegal tour handling and the illegal use of private vehicles for public use. It was tolerated by the
government authorities at that time since tourism was not yet developed.

Although there were already visitor arrivals from other countries, there were no tour operators nor
travel agencies which existed formally. There were some offices like the American Express International
which informally arranged land tours for foreign travelers. Steamship offices endorsed tourists to private car
and coach operators (colorum) who rented their vehicles directly to tourists. The drivers of these vehicles
served as tour guides even without any formal training in tour guiding.

There were only a few tourist attractions and destinations in the Philippines. These were Manila,
Pagsanjan Falls, Laguna Lake Tour, Tagaytay and Taal Volcano, Mt. Mayon tour, Legazpi tour, Baguio
City, and Banaue tour. Other popular tours in the South in the 1920s were Cebu City and Zamboanga City.

It was difficult to measure tourist activities before World War II, since there were no statistical
records and data available at this time. In 1947, a more orderly tourism activity started. Steamships and
airlines began to service the Philippines from other countries; thus, giving impetus to tourism and
hospitality.

In 1952, the first tourism and hospitality association in the Philippines was organized. This was the
Philippine Tourist and Travel Association (PTTA), which was organized to put together all existing travel
establishments serving both domestic and international travelers. The PTTA was funded by the government
to promote the country’s tourism and hospitality industry. Later, the government organized the Board of
Travel and Tourist Industry (BTTI) to regulate, supervise, and control the tourist industry and to subsidize
the PTTA as its promotional arm. In the late 1950s, more hotels and restaurants and entertainment facilities
were established.

The Philippines had undergone economic, social, and political crises starting in the 1960s up to the
‘70s, which hindered the development and promotion of tourism and hospitality. Accommodations were
inadequate and airline companies were not given much incentive to promote the Philippines as a visitor
destination. Due to the turbulent conditions in the country, the tourist industry was denied the peace and
order, sanitation, financial support, and other important factors for tourism and hospitality development.

It was only in 1972, after the declaration of martial law, when tourism and hospitality in the
Philippines prospered. This was due to favorable conditions, such as safety of tourism and hospitality,
better services and sanitation facilities, more financial support from the government, and the vigorous
cooperation of the private sector. Thus, the Philippines became a “bargain destination” to foreign visitors.
As several tour groups arrived in the Philippines, more accommodations, food and beverage facilities, and
more airline frequencies were established. A temporary “tourist boom “existed in the Philippines in the early
70s.

Tourism and hospitality, in the Philippines at present is the result of the continuous development
and promotion of tourism and hospitality from 1950 to the present. However, the growth in the tourism and
hospitality industry is not very spectacular compared to our neighboring countries in terms of tourist
arrivals. Records show that the Philippines is still in the tail0end of arrivals compared to other Asian
destinations, such as Hong Kong, Singapore, Thailand, Korea, Taiwan, and Japan.

The National Tourism Organization (NTO) of the Philippines of the Department of Tourism has embarked
on several plans and programs to ensure the pleasant and the hospitable entry, stay, and departure of
tourists, as well as to assure a harmonious, positive, and constructive development of the tourism and
hospitality industry. Among these are:

1.Increase visitor arrivals especially from nearby markets like Japan, Korea, Hong Kong, and Taiwan and
high-spending markets like Germany;
2.Increase tourism and hospitality receipts through longer stays (now set at 11 days) and higher spending
per day (estimated at $110 per day), which can be accomplished by more attractive destinations and tours,
more shopping and dining, and getting not just the budget traveler, but also the upscale markets;
3.Expand domestic tourism and hospitality through more promotions, cheaper tour packages, and new
facilities, especially for the lower income segments;
4.Expand the capacity for tourism and hospitality by promoting more private sector investments;
5.Improve the standards of service through the expansion of training programs for the professionalization of
the tourism and hospitality management and labor force;
6.Program major tourism and hospitality infrastructure projects;
7.Engage in major tourism and hospitality estate and resort development;
8.Classify facilities in tourist sites according to international standards;
9.Strictly enforce the tour facility standards;
10.Promote self-regulation within the different sectors of the tourism and hospitality industry;
11.Complete the national tourism plan and destination tourism plan;
12.Encourage consumer advertising in selected markets;
13.Work closely with the private sector in product development; and
14.Develop and strengthen linkages with the local governments, the private sector, and the general public
through tourism and hospitality councils.

International Travel Patterns

Major travel flows occur between the United States and Western Europe. Secondary regional
patterns exist between South America, the Caribbean, Africa, the Near East, and the Far East. Travel to
Africa is usually one way, originating in Europe.

The heaviest flow of air traffic into Europe is between New York and London. Within Europe, the
major flows are between London and Paris, London and Frankfurt, and Milan and Rome. The cities in
Europe most frequently visited by tourists are London, Paris, Frankfurt, Amsterdam, Brussels, Zurich,
Geneva, Madrid, Copenhagen, Vienna Milan, Rome, and Munich.

The top ten countries generating international travel in rank order are: United States, Germany,
United Kingdom, Canada, Japan, France, Netherlands, Mexico, Switzerland, and Australia. Europe
countries– intracontinental travel–has been very popular. This is one of the reasons for Europe’s large
share of the worldwide travel market.

Factors That Favor the Growth of Tourism and Hospitality

Some of the positive factors that hastened the growth of tourism and hospitality are:

1.Rising disposable income for large sections of the population. In general, more money means more
travel. At present, the two-income family is widespread. Moreover, the world is experiencing a redistribution
of income which encourages more people to travel;

2.Growth in the number of retired persons who have the desire and the energy to travel. Life expectancy is
increasing. There are fewer deaths now than before which is the result of more concern for diet and
exercise;

3. Increase in discretionary time – shorter worksheets and longer vacations. The work week as decreased
considerably from 50 to 60 hours to less than 40 hours. Flextime programs allow a three- or a four-day
workweek. Some European countries grant paid holidays to their workers;

4. Greater mobility of the population. People became more accustomed to travel because of the increase in
travel opportunities and desire to escape from the stress and pressures of modern life;

5. Growth in the number of “singles”. People living alone have more free time than couples;
hence, they want to socialize through travel;

6. Greater credit availability through credit cards and bank loans. “Travel now, pay later”
stimulates travel;

7. Higher educational level. Since millions of students attend colleges and universities, they tend
to become more interested in foreign cultures;
8. The growth of cities. The Industrial Revolution brought about the migration of people from the
rural areas to the urban centers resulting in the growth of urbanization. City residents travel more
than people living in the rural areas to escape from the congested urban environment;

9.Simplification of travel through the package tour. Tour packages–everything planned, arranged, and
included in one piece are more important to the older traveler, the new traveler, and the less sophisticated
traveler;

10.Growth of multinational business. World wide business interests increase both the need and habit of
travel;

11. Modern transportation technology. Technological advances in transportation have made long-distance
travel faster, less expensive, and more comfortable.

12. Shift in values .At present, several people place more value on experience rather than material
possession. They prefer to travel rather than own expensive houses, cars, clothes, and jewelry;

13. Advances in communication. Television and movies enlarge the travel perspective. The world is
brought into the living room through television. A documentary film can create interest in places not
considered as travel destinations in the past; and

14. Smaller families and changing roles. American and European birthrates have declined, giving the adults
freer time to get away from family responsibilities. Sexual equality and shifts in household roles encourage
more travel.

MODULE 3: THE ECONOMICS OF TOURISM AND HOSPITALITY

Introduction:

The tourism and hospitality sector, is, arguably, one of the largest components of the global economy,
with a growth rate in consumption that supersedes that of most other goods and services. As a
consequence, the profile of tourists is changing as consumers become more experienced, more
demanding, and more likely to treat tourism purchases in very much the same way as they do any other
item of consumption. This coupled with the globalization of communications transport and technology are
creating a new environment for tourism professionals.
Learning Objectives

At the end of this chapter, the students should be able to:

1. Explain the role of tourism and hospitality in economic development;

2. Analyze the economic impact of tourism and hospitality on a destination area;
3. Differentiate the direct effects from the secondary effects of tourist expenditures on the economy of the
host area;
4. Elucidate the meaning of tourism multiplier and its effect on the economy of the host country;
5. Describe the undesirable effects of the economic aspects of tourism and hospitality; and
6. Identify the strategies which can maximize the economic effects of tourism and hospitality.

Learning Content

 The Role of Tourism and Hospitality in Economic Development

 Economic Impact
 Direct and Secondary Effects
 Tourism Multiplier
 Cost-Benefit Ratio
 Undesirable Economic Aspects of Tourism
 How to Maximize the Economic Effect of Tourism and Hospitality

Teaching and Learning Activities

The Role of Tourism and Hospitality in Economic Development

Several developing countries have used tourism and hospitality development as an alternative to
help economic growth. The reasons for this are: first, there is a continuous demand for international travel
in developed countries; second, as income in developed countries increases, the demand for tourism and
hospitality also increases at a faster rate; and third, developing countries need foreign exchange to aid their
economic development.

The Organization for Economic Cooperation and Development (OECD) has concluded that tourism
and hospitality, provides a major opportunity for growth to countries that are at the intermediate stage of
economic development and require more foreign exchange earnings.

Tourism and hospitality, is and invisible export which differs from international trade in many ways.

1.In tourism and hospitality, the consumer collects the product from the exporting country, thereby
eliminating the freight costs for the exporter except in cases in which the airline used are those of the
tourist-receiving country.

2.The demand for pleasure travel is largely dependent on non-economic factors, such as local
disturbances, political unrest, and changes in the fashion ability of resorts/countries created mostly by
media coverage. At the same time, international tourism and hospitality, is both price elastic and income
elastic. This means that changes in price and income will also change the demand for pleasure travel.

3.By using special fiscal measures, the exporting of tourist-receiving country can manipulate exchange
rates so that those for tourists are higher or lower (normally the latter is implemented in order to attract
large numbers of tourists) than those in other foreign trade markets. Also, tourists are allowed to buy in
domestic markets at the same prices as the local residents (the exceptions are the duty-free tourist shops
operated in many Caribbean islands and elsewhere).

4.Tourism and hospitality is a multifaceted industry that directly affects several sectors in the economy,
such as hotels, shops, restaurants, local transport firms, entertainment establishments, handicraft
producers, and indirectly affects many others, such as equipment manufacturers and utilities.

5.Tourism and hospitality bring many more non-monetary benefits and costs than other export industries,
such as social, cultural, and environmental benefits and costs.

Economic Impact

When travelers outside the destination area spend on goods and services within the destination,
tourism and hospitality acts as an export industry by bringing in revenues from outside sources. Tourist
expenditures also increase the level of economic activity in the host area directly. Many countries have
utilized tourism and hospitality as a means to increase foreign exchange earnings to produce investment
necessary to finance economic growth.

The tourism and hospitality industry’s economic impact on a destination area can be immense
since it provides a source of income, employment, and foreign exchange.

Direct and Secondary Effects

In order to measure the economic impact of tourism and hospitality on the destination area, it is
important to know the direct and secondary effects of visitor expenditures on the economy of the area.
Tourist expenditures received as income by businesses such as hotels, restaurants, car rentals, tour
operators, and retail shops serving tourists have a direct effect on the economy of the host area. The term
“direct” means that the income is received directly. Indirect or secondary effects mean that the money paid
by tourists to businesses are, in turn, used to pay for supplies, wages, of workers, and other items used in
producing the products or direct services bought by tourists.

Tourism Multiplier

The term “multiplier” is used to describe the total effect, both direct and secondary, of an external
source of income introduced into the economy. The tourism multiplier or multiplier effect is used to estimate
the direct and secondary effects of tourist expenditures on the economy of a country.
 Figure 2 Multiplier Effect

Source: Mill, R.C. and Alastair Morrison. The Tourism System. Dubuque, IA: Kendall/Hunt, 1998.

A tourist makes an initial expenditure into the destination. This expenditure is received as income
by local tour operators, handicrafts store owners, hoteliers, and taxi drivers. In the first round of
transactions, a hotelier may use some of the money received to buy some supplies, pay some wages, and
retain some profits. The income in the second round may be spent or saved, while the employee who has
received payment for services rendered may spend some of it on rent and some on food, and may put
some into savings. The money spent on supplies in the third round of spending goes for such things as
seed, fertilizers, and imported raw materials. Any income spent on imports has leaked out of the local
economy. This process continues until the additional income generated by a new round of spending
essentially becomes zero. Leakage is the value of goods and services that must be imported to service the
needs of tourism and hospitality. To estimate the total economic impact on an area, imports must be
subtracted from the income generated by visitors.

The formula for tourism multiplier is:

Where: K - the multiplier

y = the change in income generated by E

E = the change in expenditure (the initial sum of money spent by the tourist)

The size of the multiplier depends on the extent to which the various sectors of the economy are
linked to one another. When the tourism and hospitality sectors buy heavily from other local economic
sectors for goods and services, there will be a smaller tendency to import and the multiplier will be greater
than if the reverse were true.

A simplified formula for tourism multiplier is:

K= 1-L

1 - (c –cj - tic) (1 – td = b t m)

where:

K = the multiplier
L = the direct first-round leakages
c = the tendency to consume
cj = the proportion of that propensity spent abroad
tic = the indirect tax
td = the value of direct deductions (income tax, national insurance, and so on)
b = the level of government benefits
m = the value of imports

Most developing economies have an income multiplier range between 0.6 and 1.2, while
developed economies have a range between 1.7 and 2.0.

Cost-Benefit Ratio

Those concerned with developing the tourism and hospitality industry, whether a government or a
private individual, would like to know the extent of potential benefits and their costs. Benefits divided by
costs equal the cost-benefit ratio. To arrive at these ratios, the following procedures are used:

1.determine where the tourist dollar is spent;

2.determine what percentage of each expenditure leaves the local economy;
3.derive a “multiplier effect,” a ratio applied to income that reflects multiple spending within an economy;
4.apply the multiplier effect to the tourist expenditures to arrive at the total benefits of tourist expenditures in
dollars;
5.derive a cost-benefit ratio expressed as dollars received/dollars spent; and
6.apply the cost-benefit ratios to tourist expenditures to provide estimates of income and costs of tourist
business to a community, for both the private and public sectors.

Undesirable Economic Aspects of Tourism

Some undesirable economic aspects of tourism and hospitality are higher prices and economic
instability. Because of additional demand and/or increased imports, tourist purchases may result in higher
prices in a destination area. This would mean that local residents would also have to pay more for products
and services.

Since pleasure travel is a discretionary item, it is subject to changes in prices and income. These
fluctuations may result in economic instability.

How to Maximize the Economic Effect of Tourism and Hospitality Growth Theories

Growth Theories

Some economic growth theories have been proposed to maximize the economic effect of tourism
and hospitality within a destination area. These are the theory of balanced growth and the theory of
unbalanced growth.

Proponents of the theory of balanced growth suggest that tourism and hospitality should be viewed
as an important part of a broad-based economy. This theory states that tourism and hospitality need the
support of other industries. Its objective is to integrate tourism and hospitality with other economic activities.
To obtain maximum economic benefit, tourism and hospitality goods and services should be locally
produced.

Supporters of the theory of unbalanced growth see tourism and hospitality as the spark to
economic growth. While the proponents of the theory of balanced growth stress the development of supply,
supporters of the theory of unbalanced growth emphasize the need to expand demand. As demand is
increased through the vigorous development of tourism and hospitality, other industries will move to provide
products and services locally.

Economic Strategies

The key to maximizing the economic effects of tourism and hospitality is to maximize the amount of
revenue and jobs developed within region. To attain this objective, some economic strategies have been
adapted, such as import substitution, incentives, and foreign exchange.

Import Substitution

It imposes quotas or tariffs on the importation of goods which can be developed locally. It also
grants subsidies, grants, or loans to local industries to encourage the use of local materials. Its objective is
to minimize the leakage of money.

Incentives
 The wise use of incentives can encourage the influx of capital, both local and foreign, necessary to
develop tourism and hospitality supply. The most common forms of incentives.

1.Tax exemptions/reductions on imported machinery, materials, and the like;

2.reduction in company taxation by means of favorable depreciation allowances on investment, or special
treatment in relation to excise taxes, sales taxes, income taxes, turnover taxes, profit taxes, property taxes;
3.tax holidays (limited period);
4.guarantee of stabilization of tax conditions (for up to 20 years);
5.grants (for up to 30% of total capital costs);
6.subsides (guaranteeing minimum level of profit, occupancy, etc);
7.loans at low rates of interest;
8.provision of land freehold at nominal or little cost or at low rents;
9.free and unrestricted repatriation of all or part of invested capital profits, dividends, and interest subject to
tax provisions; and
10.guarantee against nationalization or appropriation.

Before implementing an incentive strategy, a destination should:

1.examine the performance of the schemes of other countries in light of their resources and development of
objectives;
2.research the actual needs of investors;
3. design codes of investment concessions related to specific development objectives with precise
requirements of investors; and
4. establish targets of achievements and periodically monitor and assess the level of realization of such
targets.

Foreign Exchange

Many countries have placed restrictions on spending in order to maximize foreign exchange
earnings. They have limited the amount of their own currency that tourists can bring in and take out of the
destination to ensure that foreign currency is used to pay bills in the host region. Tourists may be required
to pay hotel bills in foreign currency. Visitors may be required to show that they have enough money for
their stay before they are permitted to enter the country or they may even require to enter with a specified
amount of foreign currency for the duration of their visit.