WEEK 1- ENTREPRENEURSHIP IN TOURISM AND HOSPITALITY

Entrepreneurship is the innovatory process involved in the creation of an economic enterprise

based on a new product or service which differs significantly from products or services in the way
its production is organized, or in its marketing.
It is the Process of initiating a business venture, organizing the necessary resources, Assuming
the Associated Financial, Psychological and Social Risks & Rewards. Having the Characteristics
of an Entrepreneur, e.g. • Brave, innovative, independent, and achievement oriented.
There is no universally accepted definition of entrepreneurship. Attempts have traditionally
been made to describe it relative to:
 an economic function
 ownership structure
 degrees of entrepreneurship
 size and life-cycle of firm
 resource base

What is an Entrepreneur?
One who creates a new business in the face of risk & uncertainty for the purpose of achieving
profit & growth by identifying opportunities and assembling the necessary resources to capitalize
them.
Persons who start and/or operate a business. Individuals who discover market needs and
develop new ideas to meet those needs. Risk takers who provide an impetus for change,
innovation, and progress. All active owner-managers (founders and/or managers of small
businesses).
Varieties of Entrepreneurs
 Founder (“Pure” Entrepreneur) - A person who brings a new firm into existence.
 Administrative Entrepreneur- An entrepreneur who oversees the operations of an ongoing
business
 Franchisee- An entrepreneur whose power is limited by the contractual relationship with a
franchising organization.
 Entrepreneurial Team - Two or more people who work together as entrepreneurs.

COMPARING ENTREPRENEURS TO PROFESSIONAL MANAGERS

ENTREPRENEUR PROFESSIONAL MANAGER Founder and organizer Keeper and trainer
Achievement oriented Power oriented Committed to his firm Committed to his profession Moderate
risk taker Avoids taking risks individually Long term strategic thinking Medium term operational
thinking Visionary Rational Centralizing authority Delegating authority Comfortable on his/her chair
Restless about his post Commanding Both commanding and commanded
Why to become an Entrepreneur?
Rewards of Entrepreneurship Profit Independence Personal Fulfillment Freedom from the limits
Freedom from supervision Freedom to achieve a and rules of bureaucratic organizations of
standardized pay for satisfying way of life standardized work Escape from routine Escape from an
oppressive culture and unchallenging work Make Money Be Your Own Boss Enjoy a Satisfying Life
 Rewards of Being an Entrepreneur
High degree of independence-freedom from constraints • Get to use a variety of skills and
talents • Freedom to make decisions • Accountable to only yourself • Opportunity to tackle
challenges • Feeling of achievement and pride • Potential for greater financial rewards
Benefits of Small Business Ownership
The opportunity to: create your own destiny make a difference reach your full potential reap
unlimited profits contribute to society and be recognized for your efforts do what you enjoy and
have fun at it
Challenges of Being an Entrepreneur
Must be comfortable with change and uncertainty • Must make a bewildering number of
decisions • May face tough economic choices • Must be comfortable with taking risks • Need many
different skills and talents • Must be comfortable with the potential for failure
Drawbacks of Small Business Ownership
Uncertainty of income Risk of losing entire investment Long hours and hard work Lower quality
of life until the business gets established High levels of stress Complete responsibility
Discouragement
Personal Qualities of Successful Entrepreneurs
Leadership Risk Taking 12.5% Need for Achievement 16.7% 10.4% Energy 43.8% Personality
10.4% Creativity 6.2% 19
The Tourism Industry a glance at… Means millions of people moving from the countries they
live and work to another country, or countries The Third Largest Industry all over the world after
Petroleum and Electronic, Producing 935 million international visitors (2010), and $ 852 Billion (US)
Revenues (2009), and The largest and fastest growing services industry
On the Demand side Tourists’ motivations and behaviors - traveling people On the Supply side
Sectors that satisfy tourist needs and supplying products -tourism businesses and products
Infrastructure Components that an area’s residents rely on, such as airports, highways, harbors
that serve visitors Superstructure Facilities built to accommodate tourist needs, hotels, restaurants,
theme parks, casinos etc. Tourism Industry
Narrow sense
Consists of what the tourist buys (Mostly goods and services) wider sense Combination of what
the tourist does at the destination and services used (package) Tourism Product
Tourism Product
Tourism products are generally non-tradable services, such as; • a dream, • total experience, •
activity, or • business opportunity.
Characteristics of tourism products; Mostly services, which is intangible (e.g., cannot be
inspected physically) Psychological in attraction Varies in quality and standards Supply fixed (e.g.,
more hotel rooms cannot be instantly created to meet demand) Meet/satisfy social needs, not
necessities The Tourism Product (cont’d.)
Combination of phenomena and relationships
Has 2 important elements; - dynamic (the journey)and - static (the stay/accommodation)
Movement to destinations is temporary Not connected with paid work Tourist goes to the product,
not to the market Characteristics(cont’d.)
Tourism products are not used up
Mostly labor-intensive People–oriented (face to face relationships) Multi-dimensional Seasonal
Dynamic Characteristics (cont’d.)
 Tourism and leisure industry involves a complex set of interrelated businesses Hospitality,
travel and tourism businesses consist of; Retailers Transportation sector (carriers) Recreation or
gaming facilities Hotels and restaurants (Hospitality) Interrelated Business
Accommodation providers (1) Hotels • Most significant and visible subsector. The largest part
of the industry • Major employer in the industry • Dominated by small, family-run operations offering
a variety of accommodation types • Groups or chains of hotels account for about10% of total
accommodation. The major chains continue to grow in terms of number of hotels and number of
rooms
Accommodation providers (2) • Guesthouses, bed and breakfasts, farmhouse
accommodation, inns – provide limited facilities and food and beverage. • Self catering
accommodation, apartments, cottages, sites – comprise accommodation, recreational facilities and
food preparation facilities.
Types of accommodation providers (3)
Time share – very popular in Mediterranean holiday resorts, this provides the opportunity to
own an apartment for a week or two per year.
Youth accommodation – YHA and backpackers’ accommodation. This is very popular in
Australia where backpackers form approximately 10% of all international tourists.
Accommodation providers (4)
Camping and caravan sites – ranging from basic fields with few amenities to sophisticated resorts.
Medical facility accommodation – providing accommodation for the increasingly important medical
tourism industry
The distinctive nature of accommodation. Accommodation is distinct from other industries in
three basic areas: • It comprises both tangible (product) and intangible (service) factors; The
production and consumption of accommodation is inseparable and the guest must be present at
both production and consumption • Accommodation is highly perishable and cannot be stored for
future sale.
Travel Intermediaries
The Nature of Intermediation Benefits • Producers are able to sell in bulk and so transfer risk
to intermediaries • Producers can reduce promotion costs by focusing on the travel trade, rather
than consumer promotion, which is more expensive • Consumers can avoid search and
transactions costs • Consumers can benefit from the specialist knowledge of intermediaries, their
market power and the resulting lower cost of products
Other Industry Segments(1) Lodging Operations • All Suit Hotels • Casino Hotels • Conference
Centers • Full Service Hotels • Limited Service Hotels • Resorts • Retirement Communities
Industry Segments (2) Food Service Operations • Commercial Cafeterias • Education Food
Service • Employee Food Service • Full-Service Restaurants • Health Care Institutions • Lodging
Food Services • Quick Service Restaurants • Recreational Food Services • Social Caterers
Industry Segments (3) Other Operations • Airlines • Campgrounds • City Clubs • Country Clubs
• Cruise ships • National Parks • Event Management Organizations
Travel Related Businesses and Entrepreneurship Opportunities (1) • Marketing
Representative/Agent • Travel Agent • Recreation Specialist • Incentive Travel Specialist • Policy
Analyst • E-tourism Expert/Specialist • Destination Development Specialist • Tourism Investment
Projects Consultant
Travel Related Businesses and Entrepreneurship Opportunities (2) • Tour Wholesaler • Tour
Broker • Travel Counselor • Meeting/Conference Planner • Advertising Agency •
Entertainer/Animator • Health Specialist (Health SPA etc.) • Small Business Owner (Guest House,
Hotel, Restaurant, Souvenir shop etc.)
 Doing Business in Tourism Industry • Tourism and travel Industry has the reputation of being
a relatively clean and pleasant industry in which to invest • requires relatively low startup capital •
Setting up in the industry is often seen as simple and requiring few skills other than the off-claimed
ability to get along with people
Doing Business in Tourism Industry • It is therefore attractive to those leaving from other
jobs and investments or do not enjoy them, to buy into a bar, guest house or travel business for
example. • Provides opportunities for those who would like to use individual skills in a beautiful
environment. i.e., a chef may happily work in pleasant resort and a tour guide/travel agent use
his/her talents in the related field • Provides new business opportunities, such as event
management
Industry’s Future
The Trend of International Tourist Arrivals, 1950–2020and Historical data by region 43
Future Markets Keep in mind that the new tourists are • Knowledgeable, discerning, seeks
quality and participation • Ageing • Motivated by education and curiosity • Sophisticated and flexible
• technologically skilled
Before Starting up, ASK YOURSELF! - 1 • Is Entrepreneurship for You? • There is no way to
eliminate all the risks associated with starting a small business. • However, you can improve your
chances of success with good planning and preparation. • A good starting place is to evaluate your
strengths and weaknesses as the owner and manager of a small business. Carefully consider each
of the following questions. • 1. Can you start alone? • It will be up to you - not someone else telling
you to develop projects, organize your time and follow through on details. 45 45
Before Starting up, ASK YOURSELF! - 2 • How well do you get along with different
personalities? • Business owners need to develop working relationships with a variety of people
including customers, vendors, staff, bankers and professionals such as lawyers, accountants or
consultants. Can you deal with a demanding client, an unreliable vendor or cranky staff person in
the best interest of your business? • How good are you at making decisions? • Small business
owners are required to make decisions constantly, often quickly, under pressure, and
independently. 46 46
Before Starting up, ASK YOURSELF! - 3 • 4.Do you have the physical and emotional stamina
(power) to run a business? • Business ownership can be challenging, fun and exciting. • But it's
also a lot of work. • Can you face 12hour work days 6 or 7 days a week? • 5. How well do you plan
and organize? • Research indicates that many business failures could have been avoided through
better planning. • Good organization of financials, inventory, schedules, and production can help
avoid many pitfalls. 47 47
Before Starting up, ASK YOURSELF! - 4 • 6. Is your drive strong enough to maintain your
motivation? • Running a business can wear you down. • Some business owners feel burned out by
having to carry all the responsibility on their shoulders. • Strong motivation can make the business
succeed and will help you survive slowdowns as well as periods of burnout. 48 48
Before Starting up, ASK YOURSELF! - 5 • 7. How will the business affect your family? • The
first few years of business startup can be hard on family life. • The strain of an unsupportive spouse
may be hard to balance against the demands of starting a business. • There also may be financial
difficulties until the business becomes profitable, which could take months or years. • You may
have to adjust to a lower standard of living or put family assets at risk. 49 49
Before Starting up, motivate YOURSELF! It's true, there are a lot of reasons not to start your
own business. But for the right person, the advantages of business ownership far outweigh the
risks. • You get to be your own boss. • Hard work and long hours directly benefit you, rather than
increasing profits for someone else. • Earning and growth potential are far less limited. • A new
venture is exciting. • Running a business will provide endless variety, challenge and opportunities
to learn.