tourism is a fragmented product

Understanding travel industry fragmentation

Your guide to our changing industry.

‘Fragmentation’ – Is it just another business buzzword…

Or is it something that we in the travel industry should be paying attention to? At Tourwriter we wanted to explore this concept further to better understand what Fragmentation is, how it is affecting the travel industry, and provide you with some ways you can prepare your business for the industry’s changing landscape.

What Actually Is ‘Fragmentation’?

Investopedia describes Fragmentation as “ the use of different suppliers and component manufacturers in the production of a good.” Typically, fragmentation begins to occur in an industry when businesses become more global; accepting investment funds from offshore and expanding into multiple international territories. As globalization takes hold of our industry we’re seeing more and more businesses and consumers seek more cost-effective options.

One big way travel businesses can get more ‘bang for their buck’ is to switch to offshore suppliers instead of producing their goods or services entirely in-house. From a travel industry perspective, this is where we begin to see travelers opting to shop around for the best price, even if that means sourcing their trip from multiple suppliers.

How Fragmentation Is Affecting Travel

But wait…all is not lost

It all sounds a little bit scary, right? After being in the travel industry for over 14 years, we at Tourwriter have seen some exceptional tour operator businesses provide their customers with experiences and service that’s second to none. The last thing we want to see is that aspect of our dynamic industry disappear!

The rise in the DIY traveler phenomenon has a silver lining (we promise!) Long story short, tourism is booming! 2016 recorded a 3.9% growth in international travelers (which equates to a whopping 46 million more people exploring new destinations) and this steady growth is not expected to stop in the foreseeable future. With all that growth, there’s still a huge market available for your business to service.

People are traveling younger, and according to the Guardian , it’s these younger travelers that are making up the large proportion of the DIY traveler segment. The other big chunk of travelers are baby boomers and Generation Xers, who still value the service that travel agents and tour operators provide.

According to the US Travel Association , the largest demographic group of travelers is still Baby boomers, with 37% of all US travelers in 2016 identified as 53 or older. This trend won’t be slowing down anytime soon, with the UN estimating that the aging population is expected to grow internationally by over 50% by 2030.

Many baby boomers are trending towards traveling with their grandchildren, with over 70% of these multi-generational travelers stating that they trust and value travel agent recommendations, according to Senior Living magazine.

So, while the industry is certainly changing, it’s not over for tour operators and travel agents. Your expertise, service, and attention to detail is still in hot demand; better yet, it’s demanded by the largest growing segment of our international population!

How You Can Prepare for Travel Fragmentation

Awareness is key.

Understanding that there is a now a new subset of travelers that seek a different, more hands-on way of traveling is liberating! Travel agents and tour operators can now retarget their focus towards other segments of the market that will ultimately find more value in tailor-made itineraries and the expertise that comes from working with a specialist trip designer.

Maximise your profitability

Utilising enhances in technology can help tour operator businesses counteract the effects of fragmentation. Tour operator software designed to turn the time intensive job of creating tailor-made itineraries into something that takes minutes is one way that technology is being used to enhance the profitability of the travel industry.

Technology advancements open new avenues for you to broaden your offering. Online itineraries and mobile apps are excellent opportunities for you to bring new revenue streams into your travel business.

Get creative

Focus your messaging on what makes you special. Expertise and attention to detail set you apart, and the peace of mind and genuine care you give your customers is something that they aren’t going to get elsewhere. You should be proud of that because we sure are!

Further Reading

• Learn how Your Safari shaved hours off the time it takes to create their tailor-made photographic Safari itineraries
• Thinking of investing in travel software? Here’s our guide to deciding how much you should spend
• How to utilise travel software reports to keep track of trends in your business

How does the travel industry actually work?

Who are the key players in the industry, where do they all fit together and how does the industry actually work?! There’s no doubt that the travel industry is a confusing space to wrap your head around so we’ve broken it down for you in this easy new resource.

Travel designers- meet the influencers you should work with.

Understand the role travel influencers play in the industry and why tour operators should be following, interacting and collaborating with them. Explore eight global travel influencers who are inspiring travellers daily.

Tourism news websites you can trust

In the tourism industry it can be hard to differentiate the reliable travel news sources from the not-so-trustworthy ones. In this blog we summarise the top travel news websites that tour operators, travel agencies and DMC’s should pay attention to.

How to set your team up for success when introducing new software

Making changes happen is hard. Especially when it is something that will create a significant impact on the way you work, like new software. We discover what change management is and how it can assist you, your leaders and your team in creating new processes that will make you more successful in the long run. Is it time for a change?

The growth paradox: can tourism ever be sustainable?

'Travellers tend to arrive in increasing numbers and flock to the same locations' Image:  REUTERS/Stringer

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Stay up to date:, travel and tourism.

Tourism creates jobs - lots of them. In fact, one person in every 10 is employed in tourism-related jobs. When it is well managed, tourism provides an incredible economic boost to host communities. For these reasons, almost every country in the world wishes to expand its tourism sector and increase the number of tourism arrivals.

An increasing number of travellers are significantly more likely to visit destinations and make purchases from travel companies based on their sustainable practices . Many destinations have strategies and plans in place to use tourism to help alleviate poverty and conserve their natural and cultural heritage, for example, through the creation and management of National Parks and monuments. Yet nearly 50% of World Heritage sites, which are recognized by UNESCO for their outstanding universal value, do not have tourism management plans in place to prevent the negative impacts of tourism .

If expanding tourism results in more jobs and greater economic opportunity, why are an increasing number of destinations around the world proposing or implementing measures to limit or restrict it? Destinations like Cinque Terre, Zion National Park and Machu Picchu are limiting the annual number of visitors. Amsterdam, Barcelona and the Seychelles are curtailing large-scale development. Bhutan and Venice charge visitor taxes and fees, while places like Koh Tachai in the Similan National Park are prohibiting visitation altogether.

Why aren’t more destinations focusing on yield per visitor rather than the number of international arrivals? Why aren’t more businesses that are dependent on tourism investing in the destinations they serve and the assets upon which their businesses depend? And why isn’t the industry at large actively addressing these issues?

Global tourism is expected to continue to grow as a larger number of aspiring travellers become more prosperous and their disposable income increases. It is anticipated that the sector will outperform the global economy in the course of the next decade, increasing by an estimated 4% on average annually in the next 10 years.

It’s not surprising that most destinations want a bigger piece of this pie and have strategies in place to attract more visitors and visitor expenditures. Taxpayers’ money is spent on attracting visitors and emphasis is placed on volume rather than the value each visitor represents to the local economy.

The net result is that the places served by ministries of tourism, destination marketing organizations and convention and visitors bureau are often victims of their own success. Travellers tend to arrive in increasing numbers and flock to the same locations, resulting in issues such as overcrowding, increased stress on public services and infrastructure, cultural homogenization and growing dissatisfaction from local residents.

Ad hoc development, local capacity constraints and leakage are issues as well. The latter is the most frequently cited issue: although tourism can be a great form of wealth distribution, often as little as 5-10% of the money tourists spend remains in the destinations they visit. These issues must be addressed to fully realize the benefits of tourism through an inclusive approach and collaboration between the public and private sectors and host communities.

The travel industry and governments need to acknowledge that the narrow focus on increasing numbers is a problem and creates issues and negative effects that diminish the quality (and value) of the experience for travellers and visitors alike.

One could argue that tourism cannot be sustainable, that sustainability is impossible. Negative effects on the environment are inherent to the industry, such as the emission of greenhouse gases and waste generation, that are currently difficult, if not impossible, to avoid. Tourism can also contribute to water and energy shortages, degradation of water supplies and ecosystem degradation, owing to ad hoc development and weak or poorly enforced environmental regulations.

From clear cutting and destruction of mangroves to excavations and construction, land use changes associated with tourism result in the creation of artificial landscapes and infrastructure. This visually degrades the scenic value of natural landscapes and results in a change in the environment, because of factors like erosion, pollution and artificial boundaries. This, in turn, can result in more erosion and increased flooding and storm damage, as well as a negative impact on wildlife migration and breeding patterns.

The tourism sector attracts increased investment in airports, airlines, railways, ports, hotels and tourist attractions, particularly to metropolitan areas, cultural and natural heritage sites, and other attractive locations and landscapes. This can be good for short-term economic development, but bad for residents when tourism development is poorly executed. Historically, local and indigenous people are displaced or forced to relocate when new national parks or heritage sites are established. Prime real estate is sold to developers and local access can be restricted or lost altogether. Though jobs are created for local people, they are usually entry level and low paying with limited opportunities for upward mobility.

Sustainable tourism is on track to go mainstream because it can combat the negative effects of tourism and improve lives, protect places and provide visitors with authentic experiences. But the sustainable tourism movement is as fragmented as the industry itself.

Today’s pursuit of sustainable tourism is replete with small organizations and individual consultants, often battling for small-scale and underfunded projects, and scraps of success. Most players in the space have just one or two staff on payroll and the largest NGOs have fewer than 25 staff. Emphasis in the public and private sector is placed on planning and reporting rather than changing organizational or operational practices, and follow-through on sustainability initiatives is limited because of “resource constraints”. This results in a great deal of competition for the limited resources available and little meaningful collaboration. No single organization is achieving success at scale and, despite good intentions, the cumulative impact is significantly smaller than what is necessary and achievable.

The term sustainable tourism means different things to different people in the industry. But like ecotourism, sustainable tourism has become virtually meaningless as it is often tied to cursory efforts, which are very limited, rather than organization-wide commitments, strategies, and actions.

This is surprising given that the business case for sustainability and corporate responsibility in tourism is growing stronger year-on-year. In fact, the UN declared 2017 the International Year of Sustainable Tourism for Development. Tourism is featured in three of the UN Sustainable Development Goals and all 17 goals can be advanced through sustainable tourism development.

This has resulted in an increased adoption of practices that improve environmental performance and social well-being. These practices lead to significant savings, goodwill among employees and customers, improved employee motivation and retention, and enhanced brand reputation. Businesses engaging in these practices also benefit from attracting customers who care about front-page issues like climate change, biodiversity loss, and economic inequality, who increasingly align their spending with personal values when price, quality and convenience are perceived to be comparable.

Still, few tourism-related companies and destinations have integrated sustainability into their operational DNA. Even fewer are investing in protection of the well-spring that their business depends upon — the destinations in which they conduct their business.

Overall, the tourism sector’s commitment to sustainable development is decidedly weak. It’s understandable when considering tourism, which is, like most other industries, growth-oriented and profit-driven with a relatively short-sighted approach to planning and development. The primary focus is generating a return on investment to increase shareholder value as quickly as possible, or, similar to many politicians, to appease constituents to foster the probability of reelection.

The implications of this current economic and operational model is that nobody really wins. Saturation in destinations and over-capacity results in physical stress on the infrastructure and on natural, cultural, and heritage assets. Commoditization of tourism products and services results in lower margins for tourism businesses. Busy, crowded attractions and sites diminish the quality of the experience for visitors. Highly concentrated versus diversified revenues, congestion and saturation increase negative perceptions of tourism.

Large-scale tourism is beginning to attract public opposition and tensions between residents and visitors are growing in many over-loved destinations, where either or both the quality of life and the quality of the visitor experience have substantively deteriorated. The problems posed by tourism are seemingly growing so fast that we can’t address them. This is a social, environmental, and business challenge.

Have you read?

Healthy coral reefs are good for tourism – and tourism can be good for reefs, reaping the benefits of tourism, the african story, are we moving toward sustainable travelism.

Companies, destinations, and travellers need to be more aware of and held accountable for their impact. They all have an important role to play to ensure that tourism lives up to its promise to improve people’s livelihoods and protect the environments they depend upon.

Each player seems to be missing an opportunity to use tourism as a vehicle for social, environmental, and economic advancement. Since there is no single stakeholder group that is solely responsible for generating economic outcomes or preserving a destination’s natural and cultural heritage, collaboration between sectors is required to catalyse the change needed to keep tourism destinations healthy. Truly innovative thinking is needed from destination authorities and business leaders working together to determine how to manage growing visitor numbers, address changing traveller expectations and shape and improve both visitor and host experiences.

There is a substantial opportunity for businesses, visitors, host communities and residents to derive greater benefit from tourism. The strategic use of private, public and community partnerships, for example, supports destination-level tourism strategies, empowers host communities to protect their tourism assets and creates opportunities for private sector enterprises and NGOs throughout the tourism value chain. Residents’ well-being and the visitor experience are improved in the process.

Many problems can be addressed through:

• The utilization of complex collaboration and collective impact methodologies;
• The principles of circular economy;
• Evidence-based policies and planning;
• Regulatory simplification;
• Strategies, like the sharing economy, market-driven enterprise and product development;
• Economic, environmental and social impact measurement;
• Monitoring and reporting across relevant spatial scales.

Cumulatively these efforts will support science-based decision-making and help to mitigate tourism’s negative effects. Furthermore, they can reduce commoditization of the beautiful and historic places on which the tourism industry depends, while providing more opportunities for travellers and tourism businesses. When travel and tourism activities are planned and executed with the impact on communities and commerce in mind, tourism as an industry can live up to its potential as a great catalyst for economic, social and environmental prosperity.

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Tourism is a fragmented industry and policy area: Myth or Reality?

This paper discusses two questions: is tourism a fragmented industry and is tourism a fragmented policy area. The discussion in this paper is based on results of recent research by the author into the organization of tourism destination stakeholders and of government tourism policy development. It will be argued that fragmentation in tourism may be true but that does not have to be true. The conclusion is that tourism can be a (more or less) fragmented industry but that a number of mechanisms are available to address (in part) this fragmentation. Also tourism can be a fragmented policy area but again a number of tourism ministries in countries are proactively seeking to address this fragmentation. Tourism fragmentation is not inevitable and instead can be addressed by effective organization at both destination and national government levels. While fragmentation in tourism is a partial reality and not a myth, further organizational research and innovation may reverse this in the future.

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Abstract This paper is an attempt to investigate and analyze the nature, structure and compulsions of the organizational set-up of the tourism sector in the UAE. UAE is a federal state comprising of seven Emirates. The Emirate of Dubai took the pioneering step of diversifying away from the ‘Oil Economy’ into tourism in the seventies. Other Emirates took the cue and started developing their own models of tourism industry. In the year 2006 U.A.E. attracted 6.44 million tourists. It has the highest tourism growth rate in the region and one of the highest growth rates in the world, but interestingly is not a member of the UN World Tourism Organization. Not much research is available on the role of Destination Management Organizations especially in the Middle East region which despite its troubled environment has proved to be a great attractor of visitors. The political and economic system in a particular country largely influences its official tourism organization. With wide review of existing literature, and in depth case analysis this paper tries to find out the role of tourism organizations in development and growth of tourism destinations, comparative analysis of various organizational models practiced in selective countries, examination of existing structural framework of tourism sector in the UAE, and suggesting a suitable organizational structure for further growth of UAE tourism. The paper moves on the premise that ‘tourism achieves its perceived success in a country within a framework of a defined organization at the highest level for taking meaningful policy decisions’ and ‘the tourism industry structure in the UAE, despite having several organizations at the industry and individual Emirate level, does not have a coordinating authority at the federal level which is an impediment in the growth of tourism in the long run’. The paper also suggests a suitable model of a tourism organizational structure for the U.A.E.

Tourism institutions and agencies. The Sage Handbook of Tourism Management

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Tourism plays a relevant role in the economy of countries, as it provides economic movement, income, revenue and is capable of promoting cultural diversity. However, nowadays, due to advances in technology and globalization, society is experiencing complex sequential transitions. These transformations have repercussions in all areas, such as economic, social, political, cultural, legal. Despite the recognition of tourism as an extremely relevant activity for all countries and their respective societies, there are many adversities to be aligned today. Problems such as safety, roads without structure, lack of infrastructure at tourist points, adequate information for tourists, lack of organization by the Government to receive tourists, among others. In this sense, the present work intends to analyze the dynamics and challenges for major tourist destinations, considering the current scenario of world society. It can be deduced that there is a lack of analysis and research that enable the implementation of policies and actions in the tourism sector, in order to make it possible to overcome the challenges and enjoy the benefits brought about by tourism. In addition, adequate investments are required so that the tourism sector is able to overcome the challenges that arise in the contemporary context, resulting from new dynamics and social demands.

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The production of knowledge in tourism research has reached a point of maturity over last decades, but serious concerns around its future have arisen. An ever-rising number of scholars believe that the current state of fragmentation not only prevents the formation of a shared-epistemology, but leads to a much broader misunderstanding. This essay review does not represent an attack to any scholar in particular, but a criticism that helps thinking in a new alternative fresh view of tourism-led research. As positivism, researchers are prone to use quantitative methods in their respective fieldwork, precluding that people’s voice exhibits a source of evidence. The problem is that sometimes interviewees lie or simply are not cognizant of their own behaviour. This is the reason why some other methods are necessary. The lack of a clear epistemology paves the ways for tourism not to be considered a serious academic discipline.

Tourism Management

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Tourism demand in Romania fluctuated in the last 28 years: it dropped to almost one third in the first half of that period, as a result of complex economic, social and political changes; it recovered slowly until 2014; it increased significantly over the past three years, as the result of tourism reforms and reorientation of tourist flows from traditional destinations, that were perceived unsafer. The national tourism development strategy should be considered a milestone in Romania's tourism policy, a long-term integration of research and collaboration between the tourism industry and the Government, in order to maximize the economic potential of the tourism industry. It is about creating a policy framework, infrastructure and consumer protection regulations, to support the development of the tourism industry with instruments capable to ensure its competitiveness in the global economy. This requires consistency, continuity and coherence, in other words, a strategic and efficient...

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ABSTRACT Transformation theory attempts to understand the long-run process of structural shifts that occur in an industry and economy as a result of institutional change. While transformation theory is being advanced and tools have emerged to measure institutions, these innovations are yet to be applied to consider institutional change across the development spectrum. This is critical for developing institutional theory to underpin the tourism transformation process. Consequently, this paper aims to: 1) assess the institutions of the tourism industry in three regions at different stages of transformation, and 2) compare tourism to other industries within the regions. The results indicate that as the tourism industry matures it becomes smarter, more adaptable, and takes its own trajectory by departing from the institutional norms of non-tourism organizations in the region. The tourism management implications are that learning, research capabilities, adaptability and collaborative marketing plans should be fostered in the early stages of transformation. Keywords: Transformation, Businesses, Institutions, Learning, Agility, Adaptability

Production in Tourism

• First Online: 01 January 2012

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With this chapter we begin to study the supply side of the tourism sector by focusing on the economic rationale of firms supplying goods and services that are included in the matrix of the tourism product (see Sect. 2.5). By recalling that tourism can be classified and defined according to the dimensions of plurality and heterogeneity, also tourism firms are many and diverse: they range from travel agencies to tour operators, from hotels to campgrounds, from transport companies to amusement parks, to museums, etc.

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In addition to those listed in this section, we also recall the “New-Marxist” interpretation, which argues that a firm exists to pursue the objective of capturing surplus value by exploiting workers through a hierarchical structure, as well as the “New-Hobbesian” interpretation, which claims that a firm is created in order to compensate and control for the human tendency ”to do evil.”

Recalling Sect. 4.3.1 , the holiday can be considered as a “permission” to stay granted by each firm offering the goods and services needed in order to stay overnight in the destination. We already demonstrated that a coordination activity can be successfully used to solve the failure in the supply of services when it involves too many property rights in the destination.

We refer to Sect. 11.1 for a definition of complete and incomplete contracts.

See Sect. 11.6 for a more in-depth discussion of this issue, with reference to the relationship between tour operators and tourism firms.

There are different statistical techniques that can be used to analyze seasonality, and the approach we follow is the “mainstream” model. However, other more sophisticated methods can be used, see for example Bar-On, 1989 and the special issue (n.1, 2007) of Economia dei Servizi .

For comparative studies on seasonality indices, see Wanhill ( 1980 ) and Baum and Lundtrop ( 2001 ). Works that use different indicators and seasonality methods are Marcoullier ( 1996 ), Wilton and Wirjanto ( 1998 ), Dillon ( 2000 ), Rosselló Nadal et al. ( 2004 ), and De Cantis et al. ( 2011 ).

Moreover, also destinations are affected by climate changes (like the global warming), having the opportunity to lengthen, or being forced to shorten the tourism season, respectively in the case of beach-oriented and ski-oriented tourism (Agnew and Viner 2001 ) .

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A recent report on the role of technology in tourism and its growing importance is in UNWTO ( 2011b ).

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Guido Candela & Paolo Figini

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Candela, G., Figini, P. (2012). Production in Tourism. In: The Economics of Tourism Destinations. Springer Texts in Business and Economics. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-20874-4_7

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