Corporate changes and re-alignments take place continually within the tourism industry and illustrate a process known as integration. Horizontal integration occurs when firms attain a higher level of consolidation or control within their own sector. This can be achieved through mergers and alliances with competitors, out- right takeovers or through the acquisition of shares in other companies within the sector. Wyndham Worldwide, the fourth largest hotel chain as of 2011 (see table 5.3) illustrates this phenomenon, incorporating (among others) the Wyndham, Ramada, Super 8, Wingate Inn, and Days Inn brands. Horizontal integration also results from
the independent establishment of subsidiaries, which diversify the firm’s basic product line and thereby cushion the impact of any shifts in consumer demand, for example from first-class to budget accommodation preferences. Figure 5.5 illustrates these options in the context of a hypothetical tour operator.
In contrast, vertical integration occurs when a firm obtains greater control over elements of the product chain outside its own sector. If this integration moves further away from the actual consumer (e.g. a large tour operator gains control over a com- pany that manufactures small tour buses), then vertical ‘backward’ integration is evi- dent. If this integration moves closer to the consumer (e.g. the tour operator acquires a chain of travel agents), then vertical ‘forward’ integration is occurring. Both forms of integration imply that a firm is gaining control over more components of the tourism system as a way of becoming more competitive and ultimately maximising its profits.
An excellent example is the Germany-based corporation TUI (www.tui-group.com/
en/), which branched out from its core outbound tour operations to acquire or estab- lish various subsidiary airlines, travel agencies, hotel chains and cruise lines. In 2012, this transnational industry giant boasted approximately 74 000 employees.
VERTICAL BACKWARD INTEGRATION
Tour operation
Gain control over chain of travel agents
VERTICAL FORWARD INTEGRATION HORIZONTAL
INTEGRATION Establish adventure tourism
tour operator subsidiary
HORIZONTAL INTEGRATION
Acquire controlling interest in another
tour operator Gain control over company that manufactures
tour buses
FIgURe 5.5 Horizontal and vertical integration
Vertical and horizontal integration are common and longstanding phenomena within the business world, as evidenced by the flurry of acquisitions and mergers that occurred in the car industry during the first half of the twentieth century. What distinguishes integration since the 1980s, however, is its global character. As the world moves towards a single global capitalist system (a process aided by advances in communications technology), firms are less constrained than ever by the presence of national boundaries and regulations in their attempt to maximise profit. This trend is commonly regarded as indicative of globalisation, although no precise definition actually exists for the term. The original five freedoms of the air are an early example of globalisation, while the formation of airline alliances is a more recent example.
Within the context of globalisation, we can imagine that the hypothetical tour operation in figure 5.5 will expand from its Sydney base to acquire a rival in Auckland, and then set up its specialised subsidiaries in North America and western Europe, while negotiating to acquire a chain of Japanese travel agencies. The re-aligned tour oper- ator, under the imperatives of globalisation, thereby emerges as a powerful, globally integrated force rather than one that is only nationally influential, and benefits from an increasingly deregulated, privatised global business environment. The private sector tourism manager of the future is a highly mobile individual who expects to reside in several countries during their working career. Such descriptions, however, apply to large tourism corporations, and it should be emphasised that the overwhelming majority of tourism businesses in most countries have only a few employees. These small enterprises are notorious for their high rate of failure, but timely adoption of facilitating technologies is one way in which they can be competitive in an uncertain and continuously changing operational environment (see Technology and tourism:
Making big decisions in small businesses).
MAKINg bIg DeCISIONS IN SMAll bUSINeSSeS
To remain competitive, business decision makers must be able to assess and, if appropriate, adopt new innovations in a timely manner. This is particularly important for owners of small businesses
with limited resources and margins whose survival may depend on a single correct decision. Research into the technological adoptions of small travel agencies in Jamaica revealed a paradox where simple organisational structures allow decisions to be made quickly, but fears about family or friends losing their jobs give rise to innate caution among decision makers (Spencer, Buhalis & Moital 2012). Whether decisions to adopt new internet technologies were subsequently made or not depended largely upon the type of leadership exhibited in the firm. First, owners with university experience — especially in generic business and management-related subjects — had a higher level of comfort with the internet and other facilitating technologies.
Second, those who had prior experience outside the travel and tourism sector were also open to change, perhaps because sectors such as real estate and banking had to adapt earlier than the tourism industry to the technological revolution. Third, personal use of the internet, and having younger children at home, were strong predictors of adaptability, although heavy users were also more likely to admit to being overwhelmed by the amount of information available and the rate of change in areas such as social media. Finally, a contagion effect was identified wherein managers who were open to change created an atmosphere where employees felt comfortable to make suggestions and experiment with new ideas. This was characterised as an ‘intellectual stimulation’
effect. In sum, those with high levels of education in generic business subjects, personal and family exposure to the internet, and prior work experience in fields such as real estate and banking, were most likely to be ‘converters’ open to innovations such as e-commerce and social media marketing, and inspire their employees to follow suit (Spencer, Buhalis & Moital 2012).
C H A P T e R R e V I e W
Tourist attractions are a central element of the tourism product that may or may not be part of the tourism industry, depending on their level of commercialisation and other factors. For organisation and discussion purposes, attractions (excepting VFR and business-related ‘attractions’) can be categorised into natural sites, natural events, cul- tural sites and cultural events, recognising that the distinctions between these categories are often blurred, and hybrid attractions are common. The potential range of attrac- tions is extremely diverse, and destinations benefit from having a broad array, since this increases potential market draw. However, destinations are limited in how much they can influence their attraction inventory — there is considerable flexibility in estab- lishing museums, theme parks and cultural events, for example, but little or no scope for changing a location’s history, topography or climate. Whatever a destination’s inven- tory of attractions, it is important to assess and monitor their critical attributes in order to make informed planning and management decisions that will maximise the positive impacts of tourism for operators as well as residents. These attributes include owner- ship structure, spatial configuration, authenticity, scarcity, carrying capacity, accessibility, market and context. Some variables, such as carrying capacity and image, are difficult to measure and monitor, while others, such as context, are difficult to change or control.
The tourism product also includes the broader tourism industry, which, in addition to some attractions, can be divided into travel agencies, transportation, accommo- dation, tour operators and merchandise retailers. The available consumer options within all these sectors are becoming more specialised and diverse, but the industry itself, ironically, is growing ever more consolidated and concentrated within the hands of a few horizontally and vertically integrated mega-corporations. Because of global- isation, this integration is occurring as an increasingly deregulated and transnational phenomenon, suggesting that large global corporations are gaining more control over international tourism systems.
S U M M A RY O F K e Y T e R M S
Accommodation within the context of the tourism industry, commercial facilities primarily intended to host stayover tourists for overnight stays
Attraction attributes characteristics of an attraction that are relevant to the management of an area as a tourist destination and thus should be periodically measured and monitored; includes ownership, orientation, spatial configuration, authenticity, scarcity, status, carrying capacity, accessibility, market and image Attraction inventory a systematic list of the tourist attractions found in a particular
destination
Contemporary heritage structures and other sites from the latter half of the twentieth century that are deemed to be important as heritage sites; especially relevant to tourism cities that lack connections with a deeper history
Culinary tourism tourism that involves the consumption of usually locally produced food and drink
Cultural events attractions that occur over a fixed period of time in one or more locations, and are more constructed than natural; these include historical commemorations and re-creations, world fairs, sporting events and festivals Cultural sites geographically fixed attractions that are more constructed than
natural; these can be classified into prehistorical, historical, contemporary, economic, specialised recreational and retail subcategories
Dark tourism tourism involving sites or events associated with death or suffering, including battlefields and sites of mass killings or assassinations
Decommissioning the process whereby vendors of travel products (e.g. airlines, cruise lines) no longer provide a monetary or other commission to an
intermediary such as a travel agency in exchange for the sale of their products to consumers
Disintermediation the removal of intermediaries such as travel agents from the product/consumer connection
Ecolodges typically upscale and environmentally-friendly accommodations which cater to ecotourists wanting convenient access to nearby national parks or other protected areas
Ephemeral attraction an attraction, such as a wildflower display or rarely filled lakebed, that occurs over a brief period of time or on rare occasions only
Freedoms of the air eight privileges, put in place through bilateral agreements, that govern the global airline industry
Functional adaptation the use of a structure for a purpose other than its original intent, represented in tourism by canals used by pleasure boaters and old homes converted into bed and breakfasts
Globalisation the process whereby the operation of businesses and the movement of capital is increasingly less impeded by national boundaries, and is reflected in a general trend towards industry consolidation, deregulation and privatisation Golfscapes cultural landscapes that are dominated by golf courses and affiliated
developments
Grey nomads older adults who spend a substantial portion of their time during their retirement travelling in caravans to various recreational destinations Horizontal integration occurs when firms attain a higher level of consolidation or
control within their own sector
Hotels the most conventional type of tourist accommodation; can be subcategorised into city, convention, airport, resort and apartment hotels, and motels
Iconic attraction an attraction that is well-known and closely associated with a particular destination, such as Mt Fuji (Japan) or the Statue of Liberty (United States) Inbound tour operators tour operators that coordinate and manage the component
of the package tour within the destination, in cooperation with a partner outbound tour operator
Low-cost carriers airlines that compete with traditional carriers by offering substantially lower fares but also a ‘bare bones’ selection of services; usually associated with short-haul routes and internet bookings
Natural events attractions that occur over a fixed period of time in one or more locations, and are more natural than constructed
Natural sites geographically fixed attractions that are more natural than constructed;
these can be subdivided into topography (physical features), climate, hydrology (water resources), wildlife, vegetation and location
Outbound tour operators tour operators based in origin regions that organise and market volume-driven package tours that include transportation, accommodation, visits to attractions and other items of interest to tourists
Sense of place the combination of natural and cultural characteristics that makes a destination unique in comparison to any other destination, and thus potentially provides it with a competitive advantage
Site hardening increasing the visitor carrying capacity of a site through structural and other changes that allow more visitors to be accommodated
Snowbirds individuals, usually from cooler climates, who spend a substantial portion of the winter in warmer climate destinations, often forming enclaves with other people from the same country or region
Soft power the projection of influence and power through subtle means such as foreign aid and cultural exports, in contrast to hard power such as military bases Timesharing an accommodation option in which a user purchases one or more
intervals (or weeks) per year in a resort, usually over a long period of time Tour operators businesses providing a package of tourism-related services for
the consumer, including some combination of accommodation, transportation, restaurants and attraction visits
Tourism industry the sum of the industrial and commercial activities that produce goods and services wholly or mainly for tourist consumption
Tourism product consists of tourist attractions and the tourism industry
Tourism resources features of a destination that are valued as attractions by tourists at some particular point in time; a feature that was a tourism resource 100 years ago may not be perceived as such now
Tourist attractions specific and generic features of a destination that attract tourists;
some, but not all, attractions are part of the tourism industry
Transportation businesses involved in conveying tourists by air, road, rail or water Travel agencies businesses providing retail travel services to customers for
commission on behalf of other tourism industry sectors
Ubiquitous attractions attractions that can be established almost anywhere and are usually specialised recreational facilities (e.g. golf courses, theme parks)
Vertical integration occurs when a corporation obtains greater control over elements of the product chain outside its own sector
Winescapes a cultural landscape significantly influenced by the presence of vineyards, wineries and other features associated with viticulture and wine production; an essential element of wine-focused culinary tourism
Q U e S T I O N S
1 How has the image of mountains changed since the early 1800s? What have been the implications of these changes for the evolution of alpine tourism?
2 What is the effect of climate on 3S and urban tourism respectively?
3 Why are linear attractions often more difficult to manage than those which are compact?
4 (a) What is meant by ‘functional adaptation’ with respect to tourist attractions?
(b) What are some examples of functional adaptation?
5 How do cultural sites differ from cultural events in terms of their management implications?
6 How can the manager of an attraction deal with the attribute of ‘context’
(see figure 5.3), which is difficult to control because it involves the external environment?
7 How can events such as the Gympie Music Muster capitalise on and reinforce local cultural, economic and social capital?
8 What are the implications of low-cost airlines for the competitiveness of traditional full-service airlines?
9 (a) What effect does horizontal and vertical integration have on the structure of tourism systems?
(b) How is this effect influenced by globalisation?
e X e R C I S e S
1 (a) Identify how each of the 20 activities by inbound tourists to New Zealand, listed in table 5.1, fits into the attraction inventory provided in figure 5.1.
(b) Prepare a 500-word report that describes how the New Zealand tourism industry, based on these 20 activities, fits overall into the attraction inventory, and the management implications of these patterns.
2 (a) Using table 5.3, calculate the average number of rooms per hotel for the 25 largest hotel chains.
(b) Rearrange these hotel rankings from the largest to lowest average size.
(c) Prepare a 500-word report in which you describe the differences in average size and the reasons for these variations.
F U R T H e R R e A D I N g
Hall, C. M. & Gossling, S. (Eds) 2012. Sustainable Culinary Systems: Local Foods, Innovation, Tourism and Hospitality. London: Routledge. Contributions in this book adopt a common theme of culinary sustainability, thereby affiliating one of the fastest growing forms of tourism with an emerging societal mega-theme that implicates the future of tourism.
Kotler, N., Kotler, P. & Kotler, W. 2008. Museum Marketing and Strategy:
Designing Missions, Building Audiences, Generating Revenue and Resources.
Second Edition. San Francisco: Jossey-Bass. Museums are examined from a strategic marketing perspective in this text, which considers issues of core strategies, market segments, branding and tactical marketing.
Lovelock, B. (Ed.) 2008. Tourism and the Consumption of Wildlife: Hunting, Shooting and Sport Fishing. London: Routledge. This first edited volume on the phenomenon of consumptive wildlife tourism features historical perspectives, impacts, and current issues and trends, including ethical implications of such activity.
Staiff, R., Bushell, R. & Watson, S. (Eds) 2012. Heritage and Tourism: Place, Encounter, Engagement. London: Routledge. ‘Heritage’ is explored in this book as a contested and subjective construct with diverse marketing and product promotion dimensions as well as visitor motivations and experiences.
Tisdell, C. & Wilson, C. (Eds) 2012. Nature-based Tourism and Conservation:
New Economic Insights and Case Studies. Cheltenham: Edward Elgar. Examples of nature-based tourism that contributes to the conservation of biodiversity in protected areas are highlighted in this collection of contributions from various countries.
CONTeMPORARY TOURISM HeRITAge AS HeRITAge TOURISM: eVIDeNCe FROM THe gOlD COAST AND lAS VegAS
‘Heritage’ is traditionally seen as involving ‘old’ buildings and other historic sites which are interpreted by experts who provide visitors with a one-way educational experience. A ‘heritage tourist’, accordingly, was anyone visiting a designated heritage site, regardless of their motive. In recent years, this traditional approach has been challenged by a new perspective which regards heritage as subjective, negotiable and contestable. Visitors may have very different opinions as to what
constitutes ‘heritage’, and it is up to the interpreter to co-create ‘storyscapes’ that satisfy the diverse and complex motivations which visitors bring to heritage sites.
The standard dry lecture of the past, therefore, is being replaced by audience- focused and emotion-filled storytelling (Chronis 2005).
As part of this new perspective, it is possible to go beyond centuries-old buildings and think about contemporary heritage, or
‘heritage of the recent past’ (Walton 2009).
In the United States, for example, the first McDonald’s restaurant, opened outside of Chicago in 1955, is now regarded as a very important heritage site. This concept of contemporary heritage is especially important for the many tourism cities (see chapter 4) that emerged in the pleasure periphery during the mid-twentieth century to meet
the recreational demands of the post–World War II consumer society. Such places often lack the traditional historical sites that were emphasised in the past, but still contain sites and artefacts from the latter half of the twentieth century that reflect their development as major sites of tourism activity.
The Australian beach resort of the Gold Coast and the US gambling haven of Las Vegas are two prominent tourism cities where we might expect to find evidence of post-1945 or contemporary tourism heritage. Weaver (2011b) has identified four distinct types based on these two case studies, and also considered the extent to which this heritage has been commercialised as heritage tourism:
1 In situ representations consist of on-site plaques, statues or other objects that commemorate a tourism facility or phenomenon of recent historical importance. An example is a bronze relief in front of the Mirage Resort in Las Vegas depicting the entertainers Siegfried and Roy, who were legendary in the 1990s and early 2000s for their many thousands of performances with white tigers at that casino. Another example is the surf lifesaver statue that was erected at a prominent seaside location on the Gold Coast. The number of visitors who interact with such sites is unknown, but another type of in situ representation, the commemorative festival, clearly illustrates the importance of contemporary tourism heritage as a heritage tourism attraction. Cooly Rocks On (formerly Wintersun), an annual festival in the Gold Coast suburb of Coolangatta, celebrates the nostalgia of 1950s and 1960s tourism with period entertainment and cars. In 2012, it attracted more than 80 000 visitors and injected $18 million into the Gold Coast economy (Houghton 2012).
2 Ex situ original artefacts refer to the removal of artefacts from their original locations and their relocation in off-site (i.e. ex situ) museums. A former Las Vegas example was the Liberace Museum, which honoured the long-time iconic pianist Liberace.
Because he was popular from the 1950s to the 1970s, attendance at the Museum declined from 250 000 a year to only 50 000 in the year prior to its closure in 2010.
Younger visitors were not as aware of or as interested in this performer. The Bone Yard (a collection of old casino neon signs) and Mob Museum (commemorating the role of organised crime in the tourism industry) are two other recently opened Las Vegas examples. The GoldCoast does not have as many examples, but a facility called Surf World was opened in 2008 to honour Australia’s surfing heritage.