Week 2 2.0 The Tourism Product-Factors Governing Demand

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WEEK 2

2.0 The Tourism Product- Factors Governing Demand.

Because of the unique nature of the nature of tourism product- it being an


amalgam of the characteristics of a destination and the infrastructural as well as
managerial efforts of the promoter, the determinants of tourists demand emanate
from both individual tourist motivations and the economic, social, technological
factors. Some of these are:

• Income Levels

In the last 30 years, disposable incomes around the world have shown upward
trends, thus allowing more money for activities like leisure travel. Smaller families
have meant higher allocations per person in the family. More and more women are
entering the workforce and in real terms the cost of travel has fallen. The dramatic
rise of tourism in the last 50 years can be attributed in a large measure to the
combined effect of more leisure time and rise in both real and disposable incomes.

• More Leisure time:

Increasing unionization of labour right from 1930 onwards has reduced the
number of working hours per week. Changing managerial orientations towards
human resources have increased the levels of pay and paid vacation time in most
developed countries. Now people have longer periods of leisure, which could be
allocated to travel.

• Mobility

Better transportation and communication services have made the world a smaller
place, and have brought both exposure and awareness of distant lands to larger
sections of potential tourists across the world. Faster modes of transport have cut
down on travel time, making it easier for people to economically plan and execute
trips abroad.

• Growth in Government Security Programs and Employment

Benefits:

The growth in government security programs and well entrenched policies of


employee benefits mean that quite a large number of families may have long
term financial security and may be more willing to spend money for
vacations.

2.0.1 Tourism Product Development

Tourism product development means bringing new and innovative products,


experiences, and services to the market for tourists to buy. Product development
can take many forms. For example, you have identified a gap in the current
marketplace and decide to develop a product or experience to meet the demand.
Product development could mean developing a product or experience that is
already being offered in the area but is new to your business. Or, if you are already
a tourism operator, you may be looking to expand your existing tourism offerings
to include additional services, experiences, or tangible products such as souvenirs.

There are many stages of product development, but they all begin with identifying
a need in the marketplace. Once you have identified the need for a particular
product, you will want to come up with a concept or idea. You will then want to
create a plan for how you will bring your idea to life. Developing products that are
tailored to visitors’ needs will improve the profitability of your tourism business.
Making more products available to tourists will increase the length of time that
they stay in the NWT, increase the amount of money they spend.

Smith defined product development as A bundle of activities, services, and


benefits that constitute the entire tourism experience. This bundle consist of five
components: destination attractions, destination facilities, accessibility, images,
and price.
Smith himself proposed a model of the tourism product, which consists of:

1. The physical plant- core of any tourism product; which can be a site natural
resource or facility such as waterfall, wildlife, or resort. It may be fixed
property such as hotel, or mobile equipment such as a cruise ship. Also refers
to conditions of the physical environment such as weather, water quality, and
tourism infrastructure.
2. Service- the technical performance of specific task required to meet the needs
of tourist, such as hotel engaged in management, front desk operation,
housekeeping, maintenance and beverage provisions.
3. Hospitality- “enhance service “ or “something extra”, the attitude or style in
which the task is performed (e.g., sensitivity to the pressure on a business
traveler, encouragement to play for pleasure travelers. Hospitality is an
expression of welcome by local residents to tourist arriving in their
community.
4. Freedom of choice – acceptable range of options in order for the experience to
be satisfactory ; varies with the traveler’s budget , previous experience ,
knowledge , and reliance on a travel agent or pre- package tours.
5. Involvement- participation of consumers in some degree , in the delivery of
service ( physical, intellectual, and /or emotional involvement ); a sence of
engagement , of focusing on the activity –whether for pleasure or business.

The word “experience ‘‘always comes to mind when “tourism product” is


mentioned. Experience represents things that we can do, see, eat, buy, have, and learn at
the destination.

This experience can be interpreted as the totality of the travel experience from the
time of preparation to the time the traveler has returned home. Or it can simply mean
what actually happens at the destination.

The tourism product is a combination of tangible components. Tangibles include


the natural environment, hotels, restaurants, resorts, food, support facilities like airports,
aircraft, roads, destination, festival, etc. Intangibles include image, hospitality, courtesy,
friendliness, helpfulness, ambiance, security, etc.

2.0.2 Tourism Product Development- by UNWTO

Tourism product development is defined by the UNWTO and the European Travel
Commission (2011) as a “process whereby the assets of a particular destination are
molded to meet the needs of national and international customer.

The UNWTO –ETC frames tourism product development is defined by the


UNWTO and the European Travel Commission (2011) as a process whereby the assets of
a particular destination are molded to meet the needs of national and international
customers.

The UNWTO-ETC frames tourism product development as an element of


marketing, which in turn forms part of tourism policy along with planning, infrastructure
development, legal framework, facilities and amenities. In a more defined sense, it
“comprises only those attractions and activities, and facilities and amenities. In a more
defined sense, it comprises only those attractions, activities, and facilities that are
specifically provided for the visitor.

2.1 PREREQUISITES TO TOURISM PRODUCT DEVELOPMENT

Successful tourism development is premised on the following conditions (UNWTO-


ETC):

1. Accessibility – the presence of adequate transport infrastructure and independence


from foreign operators. factors include trip frequencies, seat capacities, and
transportation connectivity in the destination.
2. Resources/existing products- the range and quality products the range and quality
of tourism resources, supply and quality of human capital. The potential for
success of a given tourism resources, supply and quality of human capital. The
potential for success of a given tourism resources may be evaluated in terms of
quality, authenticity, uniqueness, and composition.
3. Demand –the scale and trends of current market demand, forecast growth rate,
ability of destination to offer products matching the taste and characteristics of the
market. etc. The choice on what to develop hinges on the existence of sufficient
demand for the product.
4. Policy and Government- stability, openness to tourism, priority given to tourism
development form of government which indicates level of participation allowed in
decision making policy on tourism investment, etc.
5. Tourism in relation to destination’s overall economy – share of tourism to gross
Domestic Product( GDP), percentage of jobs created by tourism, destination stage
in the TALC, level an duality of entrepreurship, innovation and education.
6. Acceptability to tourism stakeholders. In addition, tourism destinations and
establishments should adhere to nationally accepted standards. There are
established criteria for the different classes of accommodation status from the
department of tourism.

Accreditation is defined by the DOT as” a certification issued by the Department to a


tourism enterprise that officially recognizes it as having complied with the minimum
standards for the operation of tourism facilities and services.

A manual of the accreditation standards can be downloaded from DOT website:


tourism.gov.ph.

For hotels, the DOT has adopted the star rating system for hotels. Resorts, and apartment
hotels, where one star is the lowest and five star –the highest. This is different from the
previous standards where there were only four classes of hotels (economy, standard, first
class, de luxe).
Besides being more detailed, the new accreditation standards also incorporate
environmental aspects and barrier –free access for PWDs. The Certificate of
Accreditation is valid only for two (2) years, and maybe revoked or the classification may
be downgraded in case of non-compliance or misrepresentation or when the
establishment allows itself to be used for prostitution.

According to the DOT, the star bands are as follows:

1. Five Star: 85-100% achievement (851 to 1,000 points). These properties reflect the
characteristics of luxury and sophistication. The facilities are world class in every
manner and the meticulous service exceeds all guest expectation.
2. Four star: 70-85% achievement (701 to 850 points). These properties offer a very
all areas. Accommodation. There are more spacious public areas, higher quality
facilities and a greater range of services.
3. Three Star: 55-7% achievement (551 to 700 points) These properties offer a very
good level of accommodation. there are more spacious public areas, higher quality
facilities and greater range of services.
4. Two Star: 40-55% achievement (401 to 550 points). These properties appeal to the
tourists seeking more than basic accommodation. They offer expanded facilities
and a higher quality facilities and higher level of comfort.
5. One star: 25-40% achievement 251 to 400 points). These properties appeal to
budget-minded travelers. There is a limited range of facilities and services.

2.2 The Tourism Product development Process

Masip (2006) outlines the process in the tourism product creation. The foundation for the
creation process is the existence of(1) a motivation to travel and (2) resources/attractions
in the destination. The creation process itself consist of developing the specific activities
or experiences. The combined resources, activities, and experiences will now comprise
the tourism supply of the destination. Further steps involve communicating the functional
and emotional benefits of the tourism supply to markets and target audiences through
branding and correct positioning. The end result should be the consumption of the
tourism products.

The process requires the existence of a destination management organization that should
lead, coordinate, structure, develop, and implement the process, taking into account the
triple bottom-line.

2.3 Steps in Tourism Product Development


Tourism product development goes through the following steps;

1. Identify all tourism assets or resources in your destination. Through research, such
as by site visits and stakeholder consultation, categorize the assets into various
portfolios (e.g., beach, nature, heritage, agri-tourism, ecotourism, sorts, events,
special interest, rural, urban, etc. There are various ways of categorizing tourism
assets.
2. Match the assets with potential markets. One way to select what tourism resource
to prioritize is by listing down potential markets per tourism asset and to see what
resource attracts the most number potential market groups. Another is to evaluate
them by using the VRIO framework where the asset if evaluated according to each
value, rarity, inimitability, and organization (whether or not it is already being
marketed).
3. Make the product more inviting by providing or upgrading the infrastructure
accommodation facilities, and other services.
4. Develop activities around the tourism assets to be marketed. In Ilocos, they
introduced sand boarding and 4x4rides to exploit the opportunities presented by
the sand dunes as an attraction. In beach areas, water sports may be introduced.
Zip lines are another popularity.
5. Develop tour packages focusing on the tourism assets. Tour packages may focus
on one major tourism assets and supplemented by minor assets. The package
maybe made of tourism asset revolving around one theme (e.g., tours to various
places offering gastronomic delights or places with surfing opportunities) or a
variety of assets that complement each other and provide varied experience (e.g.,
in Ilocos, churches, sand dunes, beaches, scenic spots, windmills).
6. Communicate the functional and emotional benefits of the tourism product to the
target markets.
7. Develop a destination marketing organization(DMO). To consolidate all tourism
marketing activities in the destination, a DMO may have to be created. It can be
based on the existing tourism office, made up of both government and private
sector representatives, or composed of the tourism stakeholders in an area.

Two types of tourism product development:

1. Existing product improvement


2. New product development

2.4 PRINCIPLES OF TOURISM PRODUCT DEVEOPMENT


The UNWTO and the ETC (2011) in their Handbook on Tourism Product Development
identify the principles of product development. These cover infrastructure, attractions,
activities, amenities, accommodation, and facilities that are connected to satisfying the
needs of visitors.

Relevance
Tourism product development should be done in the context of overall tourism
development strategic planning.

Sustainability
Tourism product development should follow the principles of sustainable tourism
development.

Circuits and Routes


Circuit and routs is an approach for organizing attractions, transportation,
accommodation, food, activities, etc. by geographic location or by themes.

Market Knowledge

To know what kind of tourism products one must develop, there should be a keen
understanding of profile, characteristics, task, and trends of various market segmentation.
In tourism, the following market segments are very important and they require
products and services which are unique to the segment.
a. Leisure tourist
b. Business travelers
c. Conferences attendees
d. Golfers
e. Single women
f. LGBT(lesbian, gay, bisexual, transgender)market
g. Student travelers
h. Backpackers
i. Surfers
j. Families
k. Honeymooners
l. People with disabilities, etc.

Note: If your targeting business travelers, the room must have cable TV, Wi-Fi, Internet,
Telephone( one in the bathroom), laptop etc. If your primary target is leisure tourist, the
room does not have to be that big, for as long as there is shower. Filipino budget leisure
travelers spend whole day sightseeing and shopping. They get a room just to have a
place to stay for the night, do their biological routines, and store everything they
shopped.
Product Knowledge

You must know the full range of tourist resources that your place has to offer.
Take advantage of what you have. Develop activities around the natural assets of your
destination.

Product-market Match

You must be able to identify the tourism products that may satisfy the needs and
wants of the target markets.

Be mindful of what your market are looking for in a tour package. Different
markets will have different sets of expectation that must be meet. As you know,
satisfaction is achieve when such expectations are met by actual delivery of
performance/experience. Adventure tourist from Canada may look for the following
standards:
 Attractively sited cabins/accommodations in a lakeside or other attractive
natural setting
 Full American plan or housekeeping facilities with restaurants available in
the area
 On-site recreational activities, including swimming , boating, hiking
 Well kept property, largely in a natural state, with some natural looking
landscaping and flowers where needed
 Value added- not just price, but overall value for money.

Hubs and Spokes

Identify areas within the destination which are appropriate for specific types of
product development. Develop flagship attractions or hubs. Create the “spokes” around
the hub by bundling a range of attractions and activities, crating tourism routes and
organizing festivals and events.

Variety

Incorporate diverse activities to heighten visitor satisfaction and to make the


destination seem to be new all the time. This can be done through collaboration of several
destinations and by providing maps which show tourists the various attractions along a
particular route.

Tourist Involvement
Tourist are becoming more and more aware of their responsibilities as travelers
and it gives them more satisfaction if they know how they can contribute to the
preservation of a place’s environmental and cultural integrity.

Central Role of Government

Government acts as investor, promoter, and facilitator. Government’s roles include


information dissemination about opportunities, planning using designated tourism
development areas, and facilitating and supporting their realization by the private sector
or communities. The Government may also provide direct financial/investment support in
the form of grants or incentives in undeveloped regions.

Importance of Local Government Units (LGUs)

Local government units play a vital role in bringing TPD(Tourism Product


Development) to fruition and require strong current knowledge of changing tourist
demand. This is because the control and promotion of tourism enterprise have been
delegated to the LGUs from the national government since the passage of the Local
Government Code in 1991.

Dedicated TPD Function

Besides working closely with tourism marketing bodies, destination tourism


authorities must also build capacity to carry out tourism product development activities.
The essence of a tourism product is that it is already a bundle of tourism goods and
services that can be offered to the market for purchase. Thus, destination tourism
authorities should be able to package their tourist attractions for sale through marketing
channels, such as tour operators.

Stakeholder Participation

Consultation, coordination, and collaboration are key to TPD-consultation with all


relevant stakeholders; and collaboration with neighboring tourism administration to
achieve mutual benefit. Ensure the opinions and aspirations of all relevant stakeholders at
all levels factored into the tourism product development plans.

Long-term Planning

Implementation of TPD plans requires long-term vision, mid-term strategy and


planning, and short-term action plans, which lead and support responsibility for each task
identified. Plans should be monitored and adjusted as necessary on a n annual basis.
Zoning

Dividing a destination into separate TPD zones can be effective in (a) expressing
the strength of each region, thereby creating a set of identities within the country and (b)
spreading the socio-economic benefits of tourism around the whole country.

Investment Promotion

Encourage investment by formulating a cohesive and integrated development plan


for all tourism products and disseminating a product investment portfolio. Investment
promotion is essential when the local government unit, for example, does not have
adequate financial resources to support tourism product development. One special
investment mechanism that is being promoted by the Philippine Government is public-
private partnership (PPT) Tourism, along with agriculture/agribusiness and fishery;
creative industries/knowledge-based service; shipbuilding; mass housing; energy;
infrastructure; research and development ; green projects; motor vehicles; and disaster
prevention, mitigation, and recovery projects are entitled to fiscal incentives under the
2011 Investment Priorities Plan (the Philippine PPP program Brochure 2012).

Capacity –building

Facilities implementation by creating vocational training and managerial


educational programs that produce the human capital needed by the planned tourism
product development. This aspect of TPD is getting closer attention, with the impending
implementation of mutual recognition Agreement (MRA),among the Association of
southeast Asian Nations (ASEAN) member countries in 2015. The MRA will require that
educational and training programs in the Philippines meet international standards. This is
to enable Filipino workers in tourism and hospitality sectors to compete on equal footing
with their counterparts in the ASEAN.

Compatibility with destination Branding

Planners must ensure that the tourism product mix elements do not create conflict.
It may not be a wise idea, for example, to allow a casino to operate in a destination that is
well –established as a pilgrimage.

Holistic Approach

Tourism products can only succeed if the other elements of the destination are
taken into account (access, accommodation, community attitudes to tourism, etc.).

Mcnulty(2011) added sustainable principles to the above : He says that TPD should:
1. Be authentic and indigenous and reflects the unique attributes of the destination;
2. Have the support of the host community.
3. Respect the natural and socio-cultural environments by not damaging these in any
way;
4. Be differentiated from competitors, avoid’ me too/copycat’ developments; and
5. Be of sufficient scale to make a significant economic contribution, but not so large
and to create high economic leakage.

2.5 Product Market Matching Process

This steps involve (a ) producing an inventory of tourism resources in a given area and
(b) conducting market research to identify market segments and their respective
characteristics and requirements , and matching the market segments with the resources.
For example, if the city has casino, the obvious match are gamblers. The choice of target
market will also have to into account the impact of the product on the community. As
such, young people may not be allowed to enter the casino. In some countries, casino
complexes are open only to foreigners (example South Korea). A more extensive
product–market matching exercise is to have a grid indicating the resource on the
leftmost column and the list of market segments along the topmost row. After that the
evaluator can check if there is a match between the resource and the market segment.
This is done with all other resources. The resources the most number potential markets
can be prioritized for development.

Chart Sample Product Matching based on the assessment of the product’s potential to the
respective source markets the following are considered good matches (100% to 75%
potential) in the National Tourism Development Plan (NTDP).

Beach Nature – Cultural Shopping Health & MICE Educational


&Sun based Leisure & wellness
Entertain-
ment
Domestic
Japan
S.Korea
USA
China
Australia
Singapore
Malaysia
Canada
India
HK
Taiwan
Russia
UK
Germany

Based on the above product- market matches, the first priority should be on developing
sun and beach, nature –based and cultural tourism, followed by shopping, leisure and
entertainment tourism and, health and wellness. MICE and educational tourism can be
considered as niche products. Special interest target markets include honeymooners,
golfers, birdwatchers, and divers (NTDP).

2.6 Components of Tourism Product Development Plan

A tourism product development plan contains the following components.


 Development Strategy
 Development zone
 Scale and form of development (identification of flagship or banner site (hub)and
clusters and circuits (spoke)
 Policy and intervention initiatives
 Economic analysis (funding ) of new tourism product developments
 Marketing plan
 Action plan

Product diversification strategy considerations

When deciding what new product areas to diversify, the following criteria must be
considered (EGS 2002):
 Quality of tourism resources relative to product requirements
 Suitability of facilities and accommodations for the market segments that would
be attracted
 Anticipated investment required to enter the market
 Expected return on investment and likely per visitor yield
 Compatibility with existing markets you serve
 Your own relevant knowledge –base about the new product area.

Practice Test:
TRUE or FALSE
1. Experience represents things that we can do, see, eat, buy, have, and learn at the
destination.
2. Tourism product development should not be done in the context of overall tourism
development strategic plan.
3. Accreditation is defined by Department of Tourism as a certification issued by
DOT.
4. Accessibility is the presence of adequate transportation, infrastructure and
independent from foreign operators.
5. Freedom of choice is a participation of consumers in some degree, in the delivery
of service.
6. Hospitality is the attitude or style in what the task is perform something extra.
7. Tourism product development means bringing new and innovative products,
experiences and services to the market for tourist to buy.
8. Experience can be interpreted as the totality of travel experience from the time of
preparation only.
9. Tourism Product is a combination of tangible component.
10. One star rate reflect the characteristics of luxury and sophistication of the
properties and world class facilities of the hotel.

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