MODULE 4: TOURISM ENTREPRENEURSHIP

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Learning Objectives:

By the end of this module, students will be able to:

 Identify who are tourism entrepreneurs
 Understand tourism entrepreneurship
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What Must Be Learned:

There is a voluminous body of literature on general entrepreneurship, which according to Russel and
Faulkner (2004) dates back to the 19th century when economists were investigating the role of
entrepreneurs in local and national growth. Before Schumpeter (1934), 1950) undertook his theory of
economic development, in which he suggests entrepreneurship is a process of “creative destruction,” the
characteristics of entrepreneur have been linked to playing an important role in economic progress and
innovation.
Tourism entrepreneurship is believed to flourish in an environment where the social, economic and
political conditions serve as a motivational force, but such activity needs to be supported by the community
and governing bodies. In undertaking a historical analysis of Gold Coast destination and applying chaos
theory, Russel and Faulkner found that tourism entrepreneurs have a role to play in the development of
destinations when conditions are ‘chaotic’ and ‘unregulated’. However, as can be observed on the Gold
Coast, the role of the individual entrepreneur changes with the scale and complexity of the industry.
Individual entrepreneurs in Gold Coast were gap fillers who did not display significant process or product
innovation to remain competitive in the long run.
In adapting Michael Porters’ view to tourism, health, vitality and competitiveness of destinations is
linked essentially to the competitiveness of individual firms, one would have to question the health of much
of the tourism industry. In a major study analyzing international destination competitiveness, the lack of
barriers and flow on effects was cited as key impediment to competitiveness.
What encourages the proliferation of small firms?
1. Low entry barriers
2. Few skills required
3. Few restrictions or regulations imposed
Small firm displays:
1. Lack of appreciation of the importance of staff training
2. Owner managers make bad investment decisions
3. Many have little understanding of how to fiancé their business decisions.
4. Many fail to recognize their dependency on the competitiveness of the destination as a whole.
Wanhill (1999) noted the dual, though contradictory role the small business entrepreneur is expected to play
in mature and developing economies, as sources of entrepreneurship and a reservoir of hidden
unemployment.
Characteristics of micro tourism operators include:
1. Differences in motivators in business start-up. Tourism operators often consciously reject
opportunities for economic and business growth in favor of lifestyle choice and perceptions of
independence.
2. Micro and small tourism enterprises have been described as “gap fillers’ or constrained
entrepreneurs which do not display evidence of significant process or product innovation due to
extreme seasonality of visitor flow and the uncompetitive nature of the industry in general.
3. Entrepreneurship as define by operators is generally confined to marketing applications:
achievement by effective communication or training power by taking risks or having good luck.

Business Failure- Unique to the Tourism Entrepreneur?

New business entrants in general were found to have failed or under-performed because of
1. Poor or non-existent management skills,
2. Inability to manage adverse external impacts occurring in the business environment such as rising
inflation and internal rates
3. Insufficient capital
4. Resistance to accepting the advice of others.
In tourism industry similar trends can be noted which as such, does not set the tourism entrepreneur apart
from any other entrepreneur. New tourism entrants were found to have:
1. No formal business skills
2. No management backgrounds
3. Insufficient capital and
4. No prior industry experience
In concluding a literature review in their research, McKercher & Robbins (1998) identify “lack of skills” as a
major impediment for tourism entrepreneurs.
Many of the writers emphasize particular issues as: “the key to small business success or failures lies with
the quality of management skills and knowledge of the owner/operator.
It is apparent that small business will not be successful simply because “the owner/operator is good at the
core activity…small business needs to be much more sophisticated in the way they managed.

Tourism Enterprise, Entrepreneur and Entrepreneurship

Tourism enterprise refer to the different forms of tourist related business ventures permitted within the
National Constitution. Like any other enterprise, tourism enterprises are also business ventures having
similar preparative principles, but working on a very wide scale.
Sinclair and Stabler (1997) defined tourism enterprise as “a composition of products involving transport,
accommodation, catering, natural resources, entertainment and other facilities and services, such as shops
and banks and other tour operators”

A “tourism entrepreneur” may be defined as a person or a group of persons producing and managing
tourism products. In this process the entrepreneur must have the commonly prescribed entrepreneurial traits
along with service sector specialties.

As revealed by Shaw and Williams (2002), the service sector specialties involve in two fundamental objects:
“one concerns the commercial structure of the industry, while the second relates to an understanding of the
general organization of economic power structures.”
Another definition of tourism entrepreneurship is the professional application of knowledge, skills and
competencies and/or of monetizing a tourism related new idea, by an individual or a set of people by
launching an enterprise diversifying from an existing one (distinct from seeking self-employment as in a
profession or trade), to pursue growth while generating wealth, employment, and social good.

In other words, tourism entrepreneurship refers to the activities of the major group of stake-holders of this
service sector primarily designed for the effective and profitable interaction of demand for and supply of
tourism products; at the same time assuring competitive professionalism and gainful socio economic status.

In simple words, it embraces all sorts of activities involved in creation and operation of a legal tourism
enterprise. A legal tourism enterprise excludes all forms of tourism or tourism like activities which are
against the generally accepted laws of the land. Example, in India, wildlife hunting, flesh-trading
(prostitution), drug trafficking, are considered illicit and illegal and hence, do not fall within the purview of
tourism enterprises.

Travel and Tourism Entrepreneur

Travelling and tourism can be considered as one of the best businesses in the contemporary world.
The ever increasing need of Tourism and Travelling has made this business low risk and successful
because people from all over the world travel and arrange tours. Moreover, tourism is the most growing
business and high revenue generating source for some countries like Malaysia., Thailand. America and
Australia. Every business is determined feasible or not based on the calculations or the risks in that
particular business. Tourism and travelling have a very low risk factor compared to other business as long
as the individual who initiate the tourism business have appropriate level of information and interest, it can
generate good revenue with minimum resources. The profit margins in travelling and tourism is generally
high and it is the most feasible business for investors.
The history of travelling and tourism is very old. There are hints of ancient travelers who travelled
across the world. Though the resources during that time were not sufficient. However, during the present
day world, with the assistance of traveling medium, tourism facilities ad technology, the risk factors are
minimized. The individual interested in the business can get good profit just by organizing and managing a
trip plan.

Qualities in the Travel and Tourism Entrepreneur

Travel and tourism entrepreneurship are based on certain influencing factors. These factors can be
called the qualities which should be present in a good entrepreneur. Among them are:
1. Knowledge
2. Leadership and management skills
3. Awareness of new technology
4. Information about the most appealing tourism and travelling package and business sense to
compete with the market.
Traveling and tourism business is not only about investment and revenue. It is more related to
interest and creativity. Interest gives us an opportunity to peep inside the industry and creativity gives us
an edge to prepare schedules and travelling packages for the clients. A good entrepreneur will always look
for the needs and demands of the customer. Moreover, he will ever try to adjust his offer accordingly. A
good entrepreneur is a multi-skilled individual with the best command on business tactics and the need of
the customer.
Best tourism entrepreneur must:
1. Have the required information about the launched packages in the market
2. Know what the competitors are doing and how his/her company can compete the deals that are
already present in the market
Travelling and tourism company has to be:
 1. very vigilant
2. cooperative and
3. linked under the supervision of a skilled entrepreneur

Development of Entrepreneurial Enterprise and Significant Influential Factors

In order to develop an entrepreneurial enterprise certain initial steps are highly important. Among
them area;
1. global trend of tourism business
2. local market saturation levels
3. targeted business domain
4. appropriate modes of marketing
5. social contacts
6. awareness about the global changes in the business of Travelling and Tourism
7. creativity levels while organizing the business and
8. appealing promotional deals.

Global Trend of Tourism Business

The foremost step in developing an enterprise entrepreneur should have observed global trends of
tourism.
1. Which country do people prefer to go, and at what rates or packages?
2. Reorient himself/herself about the different event/festivals celebrated all over the world
3. Notice the general orientation of traffic
a. where people want to go on Christmas and New Year
b. within the country, know the most probable sights which can be targeted for tourism and
traveling.
Traveling and tourism is a whole year business. There is no particular time of decline in business.

Local Market Saturation Levels

The local market saturation is one of the important elements, which can minimize the business.
Saturation of business can be categorized into levels:
If you are functioning in a place with companies dealing in travel and tourism, you should go for a
targeted domain for a better outcome.
It is wrong to target the most famous companies in the initial levels. The company should try to focus
on the detailed study. After the detailed study, we can have an idea of what other companies lack and what
are their strong points. Based on the survey, we can establish a work plan focusing on the flaws which we
found in the market. The quality standards and meeting deadlines and arrangement requirements also
enhances the repute of any particular company in case of saturation.

Targeted Business Domain

The company should focus on the target domain. Targeted business domain should be:
1. easily coverable
2. flawless
If you cannot try to win the market dealing in Europe for instance, you should focus on some other
areas which that company lacks
and with flawless management and attractive packages one can win the trust of the client to make him/her
to be your regular customer. This is important to state that the targeted business domain can act as a vital
source of marketing

Modes of Marketing
 When you are going to target your primary services the selection of appropriate marketing technique can
boost the business. For instance, selecting the medium of marketing, based on resources is important.
Either you select the printing medium or electronic medium, the decision should be taken according to the
resources.

Social Contacts
The contacts with the business community and clients can act like an effective marketing tool. It can also
assist in generating several resources regarding the promotion of business.

Awareness about the global changes in the business of Travelling and Tourism
Some regional accidents or terrorist attacks sometimes, influence the travelling business. The extent of
business decrease within no time and the tourism industry may collapse. However, the alteration in targeted
sites can be helpful to sustain the business. For instance, after the attacks of 9/11, any tourism company
should re-orientate its services to some other sites like national tourism or to the sites which are safe for
travelers and tourists.

Appealing Promotional Package

The promotional packages either for tourism if remain successful to grab the attention of the client age, can
boost the business. The attractive travelling packages along with the best facilities can be a vital tool for an
entrepreneur to run the business even in hard conditions. Therefore, it is very important to organize the
tourism packages based on the requirements of the tourists. It is the duty of the successful entrepreneur to
assure the best quality to the clients.

Business Start-Up Plan

There are significant steps involved in starting a business. The foremost step prior to establish any business
is the feasibility report for this project.

Market Reconnaissance and Feasibility Analysis

These steps are taken before the establishment of the business and are considered the most significant
elements of an effective business plan. These steps involved the following:
1. name of the traveling agency
2. selection of places
3. distance from the main hub
4. products and services other companies are giving
5. drawbacks in the enterprises we will be dealing with

Financial Analysis and Capital Calculation

Every business needs initial capital to start up business. The size of the business should be determined
earlier and all that will be dealt with. It is preferable to initiate the business with less or no financial support
which is interested based. Investment should be welcomed and investors are guaranteed success.
Moreover, they should be satisfied that investing in their company is the best investment opportunity.

Agenda of the Company

The agenda of the company is the main element which boosts the business. The agenda in an accumulation
of aims and objectives along with the success targets. The agenda should be very clear and appealing for
investors who want to invest in the company. Agenda is the backbone of any business. In case of tourism
and traveling agency, the importance of agenda cannot be ignored. The agenda should not be altered in the
later stages of the business.
Objectives of the Business
The objectives are determined as per agenda of the company. On the very basic level, they can be either
long term or short term. Both the objectives are equally important and assist business to sustain a good
profile in the market.
Short Term Objectives
Short term objectives are generally much more target based compared to the long term objectives. They are
in general include the efficient and potential degrees of business at the coming time. The time span is
always calculated, it can be a year or six months. The short term objectives are mainly used as a technique
to attract investors. These objectives can be oriented to cut down the loans and other financial liabilities
required by the company on marketing and establishing the workplace in the early stages of the business.
Long Term Objectives
Long term objectives mainly deal with spreading the business and turning into a high profile company.
These objectives are plans of five or ten years. This may include additional features in the business.
Moreover, they may be dealing with spreading business nationwide or even internationally.

Appropriate Targeted Marketing Techniques.

Appropriate marketing techniques can be applied on the targeted client. These can be either physical or
virtual. The virtual can either be cyber advertisements and use of internet for floating the advertisements all
over the internet. The physical marketing technique are frequently in the form of print based advertisement.
These techniques are highly, effective to grab the attention for the national tourism and traveling enterprise.
Services and quality assurance services and quality assurance techniques also have a major role in the
company’s rise. The company dealing in several fields differs from company who is an expert in couple of
fields.

Learning Activity:
1. Enumerate five (5) travel and tourism entrepreneur.
2. Know the history or background of these entrepreneur?
3. What motivates them to become an entrepreneur?

Essay
1. What factors encourages the proliferation of small firms in the tourism industry?
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2. Discuss the global trends of the tourism business.

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3. Explain what is a tourism enterprise. Give examples.
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Assessment: (Quiz through google classroom)