Chapter 4 Tourism Entrepreneurship
Chapter 4 Tourism Entrepreneurship
Chapter 4 Tourism Entrepreneurship
THC009
Entrepreneurship in Tourism & Hospitality with Franchising
Learning Outcomes
At the end of this chapter, the student will be able to:
• Identify who are tourism entrepreneurs
• Understand tourism entrepreneurship
• Know what is tourism enterprise
TOURISM ENTERPRENEURSHIP
This is not to say that the characteristics of the entrepreneur are clearly defined, In fact, finding
one set of definitions has proven to be difficult, as characteristics appear to differ from discipline
to discipline. In systematically reviewing the disciplines vis-a-vis mall firm entrepreneurship,
Henson (2004)points to entrepreneurial skills and characteristics in the entrepreneurial
literature, inter alia, as motivation, managerial experience, education, age (Storey, 2000),
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THC009
Entrepreneurship in Tourism & Hospitality with Franchising
entrepreneurial vision, social vision and social competence(Baum & Locke, 2004), drive,
independence, task orientation (Hamm, 2002); in the growth barriers literature as skills
shortage, lack of management training, and more intangible aspects such a internal motivation
(Barber, Metcalfe, &Porteous, 1989); in the traditional economics literature as resource-based
(Penrose, 1959), coordinating, arbitrating, innovating and bearing risk (Baumol2003); and in the
strategy literature as contextual and industry structure-conduct-performance related (Porter
1998).It is especially the latter, the make-up of the tourism industry, that appears to be relevant
to the nature of the tourism entrepreneur.
The relatively low entry barriers, few skills required, and few restrictions or regulations imposed
in the tourism industry encourage the proliferation of small firms. Many display lacks of
appreciation of the importance of staff training. Owner managers make bad investment
decisions. Many fail to recognize their dependency on the competitiveness of the destination as
a whole (Australia-Korea Foundation. 2001, np).
Wanhill (1999) and others have 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 (for the self-employed). Tourism, it is
argued can only regenerate regional economies in a sustainable way if individual tourism
enterprises are capable of responding to unexpected, external forces. Without the necessary
skills, however a strategic response is unlikely.
European research in rural tourism entrepreneurship similarly points to skills, local conditions, in
this case local culture, contributing to the success factors of destinations, as the strength of the
local culture opens up possibilities for future innovation and development, while awareness of
the local traditions forms a natural foundation for entrepreneurial innovation (Kajanus, Kangas,
& Kurttila,2004), In this sense the focus is on the human (social) activity and individual
entrepreneurship which brings change and development to destinations. The latter is in the line
with general entrepreneurial literature characteristics such as entrepreneurial vision, social
vision and social competence (Baum & Locke, 2004).
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THC009
Entrepreneurship in Tourism & Hospitality with Franchising
In Considering the atomistic nature of the tourism entrepreneur and there refutation of even
belonging to the industry, what appears unique especially to the micro tourism entrepreneur is
what is known as their lifestyle choice. Studies in Europe and Canada respectively show that
the nature of the tourism entrepreneur differs from profit and growth-oriented entrepreneurs, in
that the tourism entrepreneur tends to be an autonomy seeker who has entered the industry
predominantly as a lifestyle choice in which entrepreneurship is closely linked to family and
environment. Thus, the attitude to lifestyle dominates the way these entrepreneurs run their
business, which often includes the goal to keep their business from growing (Getz & Petersen,
2003). Research in New Zealand similarly shows that once the business is set up, lifestyle
entrepreneurs’ might even consciously reject certain economic and business growth
opportunities (Ateljevic and doorne, 2000).
In the context of the UK tourism industry, the tourism literature also delineates a forementioned
contextual industry issues, in particular the relative ease of entry into the industry as a core
factor of becoming a tourism entrepreneur. Tourism entrepreneurs surveyed in a study (Szivas,
2001) reported there is most important entrepreneurial skills to be people handling, marketing
and accounting. Interestingly, industry knowledge was deemed unimportant; previous
experience was not deemed necessary in entering the industry; both general and industry-
specific skills could be learnt on the job; and there was a high reliance upon personal and family
savings generated from previous non tourism income. These findings support assumptions
about lifestyle motives for tourism entrepreneurs as a deliberate life choice rather than being
influenced by industry-specific circumstances or labour market forces. Entrepreneurs entered
tourism as it appeared to require only rudimentary levels of skills and success was achieved
through risk taking and/or luck rather than deliberate process innovation.
The above literature on the nature of tourism entrepreneurship reveals the difficulties of applying
accepted concepts that relate to small firm entrepreneurship and innovation in general.
Characteristics of micro tourism operators include:
- Differences in motivators in business start-up. Tourism operators often consciously
reject opportunities for economic and business growth in favour of lifestyle choice and
perceptions of independence.
- 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 flows and the uncompetitive nature of the industry
in general
- Entrepreneurship as defined by operators is generally confined to marketing
applications: achievement by effective communication or attaining power by taking risks
or having good luck.
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THC009
Entrepreneurship in Tourism & Hospitality with Franchising
The authors of this paper do not only support the argument that these characteristics of tourism
entrepreneurship derive from the lack of barriers to entry into the industry, accompanied by the
very low skill base of industry entrants. The authors also argue that the nature and extent of
entrepreneurs that enter the tourism industry has considerable impact on the industry status as
a whole and on the number of tourism business failures in particular,
In the tourism industry similar trends can be noted which, as such, does not set the tourism
entrepreneur apart from any other entrepreneur. New tourism entrepreneur entrants were found
to have no formal business skills. No management background, insufficient capital and no prior
industry experience.
In concluding a literature review in their research, McKercher & Robbins (19998) identify lack of
skills as a major impediment for tourism entrepreneurs. While many of these writers emphasize
particular issues the consensus of opinion is that the key to small business success or failure
lies with the quality of management skills and knowledge of the owner/operator. Although there
are clearly factors which lie outside the immediate control of small business managers, well
informed and skilled managers can cope with and anticipate the impact of these factors. It is
apparent that small business will not successful simply because the owner/operator is good at
the core activity…small businesses need to be much more sophisticated in the way they are
managed (McKercher & Robbins, 1998, 28)
What may be different, however, is that the picture for tourism business entry suggests that
tourism entrepreneurs consistently develop their business with minimal strategic planning and
their mediocre performance is believed to be an outcome of lifestyle choice. Leiper & McGibbon
(2001) acknowledge that indicators of failure depend on the aims of the entrepreneur in
question which, as seen earlier, in tourism are not always related to generating a profit.
Although strong lifestyle motivators, such as social interaction with visitors and living in an
aesthetic setting, permeate business performance in tourism start-up, it is necessary to proceed
with a working definition of business failure. Collings, Taylor& Barrile (1994), cut to the chase by
suggesting that failure occurs where the decision to cease trading is not taken willingly by the
operator, but is forced upon them because for whatever reason they have failed to generate a
large enough surplus to meet all their operating costs.
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THC009
Entrepreneurship in Tourism & Hospitality with Franchising
To increase our understanding of the concept of tourism entrepreneurship and related business
behaviour, in particular tourism business failure, the afore review of the tourism literature on
tourism entrepreneurship in a range of foreign and Australian settings was combined with a
series of in-depth interviews (Hollick 2003) conducted with six key stakeholders representing
tourism industry manages and small business advisory and management services in Victoria,
Australia.
Tourism enterprises 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) have defined the 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”.
As revealed by Shaw and Williams (2002), the service sector specialties involve two
fundamental objects: “One concerns the commercial structure of the industry (especially the
dominance of certain activity components and ownership groups), while the second relates to
an underding of the general organization of economic power structures.”
AS regards the definition of tourism entrepreneurship, we believe that the most useful and
convincing way to define tourism entrepreneurship is to establish its congruence with
entrepreneurship it has emanated from.
one (distinct from seeking self-employment as in a profession or trade), thus, to pursue growth
while generating wealth, employment and social good.
In ither 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. For example, in India,
wildlife hunting, flesh-trading (prostitution), drug trafficking, etc. are considered illicit and illegal
and hence, do not fall within the purview of tourism enterprises.
Kindly check the video link below for some ideas about Tourism Enterprise Development
Programme - Innovation and Entrepreneurship
VIDEO GUIDE:
Please check the video guide below of ‘Tourism Enterprise Development
Programme - Innovation and Entrepreneurship’
https://www.youtube.com/watch?v=-LU-G523yaA
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. When we talk about business of
tourism and travelling, very low risk factor is involved. Individual which want to initiate the
tourism business with an appropriate level of information and interest can generate good
revenue with minimum recourses, 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 at times the
recourses were not sufficient. However in the present day world, with the assistance of travelling
medium tourism facilities and technology, the risk factors are minimized. Moreover, the
individuals interested in the business can get good profit just by organizing and managing a trip
plan.
Kindly check the video link below of perspective of Entrepreneurs in T&T Tourism
Industry
VIDEO GUIDE:
Please check the video guide below of ‘Entrepreneurs in T&T Tourism
Industry’
https://www.youtube.com/watch?v=lICnHtg5Axg
information about the most appealing tourism and travelling 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 (Kucherawy,
2002, http://www.gaebler.com/From-Travel-Industry-job-to-TravelEntrepreneur.htm.). Besides
any successful entrepreneur will be good enough at marketing. with his business skills, he can
win the hearts and minds of the client age. In the long run, these clients will come back to him,
resulting in the growth of his business. More precisely, a good entrepreneur is a multi skilled
individual with the best command on business tactics and the need of the customer.
Subsequently, best tourism entrepreneur must have the required information about the
launched packages in the market. What the competitors are doing and how his/her company
can compete with the deals that are already present in the market. It is right to say that a
travelling and tourism company has to be very vigilant, cooperative and linked under the
supervision of a skilled entrepreneur.
Kindly Check out some of the Trends in the Hospitality and Tourism.
VIDEO GUIDE:
Please check the video guide below of ‘TOURISM MATTERS | Episode 7:
Trends on Tourism and Hospitality’
https://www.youtube.com/watch?v=cDmOVa9Iwjg
The local market saturation is one of the important elements, which can minimize the business.
If in your area there are several companies, which are established that it may be hard to
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THC009
Entrepreneurship in Tourism & Hospitality with Franchising
survive. Moreover, to compete with the pre-established company is a difficult task. It becomes
harder if your funds are limited. Saturation of business can be categorized into levels. For
instance, if your funds are limited. Saturation of business can be categorized into levels. For
instance, if you are functioning in a place with companies dealing in travel and tourism, you
should go for a targeted domain for better outcomes. It is wrong to target the most famous
companies in the initial levels. Moreover, the company should try to focus on the detailed study.
What other companies (the real competitors not the highly established ones) lack. After detailed
study, we can have an idea that what other companies lack and what are their strong points.
Based on this survey we can establish a work plan focusing on the areas of weakness in the
market. Moreover, the quality standards and meeting deadlines and arrangement requirements
also enhances the repute of any particular company in case of saturation. If you are initiating a
business in a hub, it is important to consider , that if they do not capture the needs and
confidence of the client next time he/she will be taking assistance of some other company.
Therefore, the best thing that should be done is to satisfy the customer for the propagation of
the business.
Modes of Marketing
The selection of appropriate modes of marketing is very significant factor. In some cases 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
Social contacts also play a vital role in development of a business
The contacts with the business community and clients can act like an effective marketing tool.
Moreover, the social contacts 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,
with 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 tourisms.
requirements of the tourists. Moreover, it is the duty of a successful entrepreneur to assure the
best quality to the clients.
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.
Conclusion
Travelling and tourism, is a growing industry and feasible enough to be taken as a business.
With the appropriate level of knowledge, planning and targeting the client age, it can be a good
source of generating revenue. Moreover, it is less risk oriented compared to other business
forms. If instructions followed in the developmental stage along with the influential elements
listed in initiating the business plan, it can be a permanent source of income. With slight to no
modification, the appealing packages and decent marketing techniques can grasp the interest of
customers and the business can spread with smart marketing tools.
DISCUSSION QUESTIONS:
1. What factors encourage the proliferation of smalls firms in the tourism industry?
2. Discuss the global trends of the tourism business?
3. Explain what is a tourism enterprise. Give examples.
REFERENCE/S:
BOOK SOURCE: Entrepreneurship in Tourism & Hospitality by: Dr. Rene D. Osorno and Dr.
Grayfield T. Bajao