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Tour operators and destination sustainability
Tourism Management, Vol. 18, No. 7, pp. 425-431, 1997
)
© 1997 Elsevier Science Ltd All rights reserved. Printed in Great Britain I)261-5177/97 $17.00+0.00
Pergamon
Pll: s026 t -5177(97 )00044-7
Tour operators and destination sustainability Sandra Carey and Y Gountas University of Hertfordshire, Hertford Campus, Mangrove Road, Hertford, Herts SG13 8QF, UK
D Gilbert Surrey University, School of Management Studies, Guildford, Surrey GU2 5XH, UK The objective of this study is to examine the tour operators' influence on the long term sustainability of destinations. The tour operators' activities are considered in detail in order to verify the hypothesis that the tour operator is one of the major influences for the nature of tourism demand. It is suggested that they are also instrumental in determining market trends and may affect the demand levels for the destinations. To verify the degree of influence by the mass and specialist tour operator, of varying sizes, their marketing strategies and operational tactics need to be examined critically in order to determine their hypothetical level of influencing the snstainability of a tourism destination. Tourism destinations in a long term successful sustainable tourism industry depend on the maintenance and sustenance of the 'right' level of demand. The tourism supply is mutually affected by demand characteristics. Sustainable tourism is dependent on the effective co-operation of all the stakeholders in the industry, for example, suppliers, intermediaries, public sector and consumers. This article reviews the trends of the U K tour operators; it examines the literature on sustainable tourism, reports the field research findings and discusses the relationship and effects of tour operators upon the sustainability of tourism destinations. © 1997 Elsevier Science Ltd Keywords: tour operators, sustainable, destination, impact
interviews were conducted in the tour operators' premises over a period of 2 months in Autum/ Winter 1995/96. A semi structured questionnaire was used to standardize all the responses. The findings were processed and analysed under two separate headings: the mass and the specialist tour operator. The panel of participants included chief executives, MDs, product/marketing managers, contract managers and principal partners of the firms. All participants have a large degree of influence in the decision making process for destination selection, holiday specifications and size of operations. Due to the competitive nature of the tour operator industry, confidentiality was guaranteed to protect trade secrets. However, all participants consented to the reporting of the research findings.
Methodology
This study is primarily an industrial marketing research. During the exploratory research the multistage judgmental sample was tested and refined. The total sample frame was all the top thirty UK tour operators, offering a variety of short and long haul destination products, all around the world. To ensure validity and reliability of responses nine tour operators were selected. From the top four mass operators, First Choice and Cosmos, from medium sized Unijet, Manos and Sunworld and from the small and specialist category Simply Travel, Greek Islands Club, Argo and Sunvil. Although Argo specialises mainly in Greece, all the other tour operators include Greece as well as a wide range of destination products in various parts of the world. In addition an advertising/consulting agency with many years experience in dealing with destination promotion was also included in the survey. The reason for using the judgmental sampling methods was to guarantee the approximate representation of all types and sizes of tour opertor. The
The UK tour operations
background
Over the past decade, the tour operating market has experienced intense competition between the major operators. Many operators have been subsumed in 425
Tour operators and destination sustainabifi~: SCarev et al
Table 1 Top 30 UK tour operators' performance Year Turnover Actual Net % Turnover/ No. of ($m) capacity profits profit ATOL carried (£m) holders (millions)
1990 1991 1992 1993 1994 1995
2731 2743 3621 3826 4434 5073
12.74 11.13 11.02 13.56 15.06 17.05
40.3 1.5 104.8 3.8 100.6 2.8 99.1 2.6 85.6 1.9 (9.9) (0.2)
650 874 1071 1329
Source: CAA-" horizontal integration initiated by the larger operators in a bid to increase their market share and reduce competition. This has resulted in price wars which has led and continues to lead to reduced profitability (see Table 1). The situation has been compounded by the predominantly price motivated British holidaymaker fuelling the 'boom and bust' scenario and the early 1990s in the UK travel and tourism industry.' Since the early 1990s, a small number of tour operators have steadily dominated the majority of the air inclusive tour (AIT) market. Until 1995, the 'top five' comprising Thomsons, Airtours, First Choice, Cosmos and lberotravel (Sunworld) held ca 65% of sales. This has decreased slightly to a total of 61.5%, by 1995. 2 During the 1990-1995 period, despite an average increase in turnover of 14% for the total AIT market (including some scat bookings), and average annual volume (actual return tourists) increase by 6%, the overall profitability for the top 30 tour operators increased only by an average of 2% on turnover (see Table 1). The distribution of AITs is achieved mainly through travel agents, for example, the vertical integration of large operators with agents means that some of the multiple agencies have 'preferred' operators with whom they work, for example, Thomsons and Lunn Poly. The UK tour operators' marketing strategies aim to be mainly effective in gaining the maximum level of sales in the face of fierce competition. Normally, the general promotion of a particular destination is left to the National Tourist Office (NTO). The more specific promotional campaigns for the actual holiday products (mass, specialist/tailor made etc.) has been carried out by the individual tour operators. 3 Tour operators do not demonstrate allegiance to any destination, they simply decide on which market segments to focus their products and then how to balance the marketing mix in order to achieve their own company objectives. Tour operators' marketing activities, in general, mostly focus on promotional activities. In depth market research is normally seen as cost prohibitive 426
and operators base their product development decisions largely on historic performances, and the competition's activities in following the market leaders. It is evident that the tour operators' objectives will often differ from that of individual destinations which frequently take a very low key approach to their own promotion. Tour operators are primarily concerned with their own survival and possible growth. Ashworth and Goodall? suggest that the tour operators' marketing stragegies have contributed to the development of 'identikit destinations' in most of the Mediterranean countries. Therefore, it is apparent that tour operators have some degree of influence on the type of tourism developed. As destinations move into a mass tourism industry, receiving the majority of their tourists through the tour operator, major fluctuations and decreases in demand affect directly all the supply sectors of the destination. The degree of dependence on the tour operator varies from one destination to another. The major mass tourism receiving countries are more likely to depend on the tour operator in order to sell the existing capacity of the tourism facilities, for example, Spain, Greece, Turkey etc. However, tour operators are dependent on the customers' needs because the customers decide where to go. The ever increasing choice of tourist destinations provides the tour operators with more choice of products to sell and therefore being less dependent on any one destination. The tour operators, like any other distributor, operate in a dynamic and price competitive market, selling a non-essential product, they try to cater to their potential clients' needs and not those of the destinations. The tour operators aim is to create a customer loyalty to themselves rather than to any of the products (destinations) they are selling. However, destinations are able to sell their products to many distributors (tour operators), and therefore they are not compelled to be loyal to any tour operator either. The salient question is, to what extent do tour operators influence the sustainability of the tourism industry of a mass market tourism destination? Issues of sustainable
tourism
The tourism industry embraces a wide range of sectors and services mostly working discretly and pursuing their own personal interests and agendas. These interests are often conflicting and incompatible. According to KrippendorP 'everybody wants more business, a larger share of the market. They will move heaven and earth and use well contrived methods to reach their goal.' It must be remembered that tour operators' first priority is to stay in business. Krippendorf believes that it is clear that the holiday producers 'are not charitable institutions but commercial undertakings'. The reason for
Tour operators and destination sustainability: S Carey et al
embarking on a particular holiday is of no consequence to the operator, what matters is that it is undertaken. This view seems to result in the tour opertor concentrating on 'the short term growth of their business and not the long term development of a well balanced tourist trade'? If the tour operators are not particularly interested in the long term development of a well balanced tourist trade which optimizes the benefits of all stakeholders, it is imperative to consider alternative approaches in order to achieve the optimum results for all tourism stakeholders. Since mass tour operators do not have strong loyalty to, nor an interest in, the long term balanced tourism development of destinations, alternative methods of development and distribution need to be examined. Alternative tourism is difficult to define because it has a different meaning to different people in different parts of the world. There are many different forms of tourism and any type of tourism can be considered as alternative to the other types? The variables used to describe alternative tourism are numerous: context; nature of facilities; location; ownership/development; development process; and marketing approaches. Some examples of alternative tourism are, small scale types of development with a high level of involvement and control by the local people. In this situation they are normally dealing with tourists who are considerate towards the host's culture and environment. Alternative tourism aims to be inter-related to a number of factors, for example, economic, physical inputs, rate of development, degree of planning and the operational process involved along with the objectives of the resort management. According to Krippendorf" 'green' tourism or 'soft' tourism is preferable to mass or 'hard' tourism. A number of writers equate alternative tourism with green and sustainable tourism. However, alternative tourism should not be considered as a panacea but as an aid to realistic developments ameliorating the problems of conventional tourism. TM A balanced approach is suggested between alternative tourism and conventional in order to achieve long term benefits for all stakeholders in the tourism industry, v-''' Butler is rather sceptical about alternative tourism being sustainable" because developments have the capacity to enhance enjoyment, economic return and the environment, if the type, scale and timing are correct. It also has the power to degrade, corrupt, bankrupt and despoil if any, or all of the elements are wrong. Claiming that one form of tourism is all things for all areas is not only pompous and naive, it is unfair, unrealistic and unwise! The issue of irreversibility of tourism development '2 can be considered in terms of developing 'options value, bequest value, existence value'
etc. '3''4 The values, objectives and attitudes of all stakeholders within the public and private sector makes the implementation process of alternative tourism more complex but not impossible to bridge the gap between the ideal and reality. '3 Sustainable approaches are pursued whereby 'the composite destination resources (natural, social, cultural etc.) are conserved for continuous use in the future while still bringing benefits to the present society'. '' Tourism developments that do not undermine the totality of the receiving country's system (eco, social, economic etc.) and are integrated fully within the local economy, supported by all participants are likely to result in a longer term sustainable tourism productY' The development of 'quality' tourism with a wider interpretation and not simply based on the relationship of product and price, is the way forward in the highly international competitive tourism markets. '~ The strategies of achieving sustainable tourism are varied. Williams and Gill '7 and Getz TM have developed frameworks which broadly deal with the carrying capacity of recreation facilities. Manning'" put forward a 'challenge' statement outlining some of the factors relevant to sustainable development of tourism which are: policy legislation and regulation; technology and research, economics and finance; communication and outreach. '~ However, there is almost no specific reference to the role and influence of the intermediaries, that is, tour operators, travel agents etc. towards the achievement of sustainable tourism. Issues of sustainability focus primarily on the supply side and neglect the influence of the demand side. The tour operators have had considerable influence on the way tourism has developed over the past 30 years in many destinations.
Discussion of the survey findings The mass tour operators' marketing mix is geared towards large numbers, low prices and getting the maximum return from every operation (Table 2). The particular country, per se, does not seem to matter as long as the destination has a favourable climate, the required facilities and is competitively priced to attract the customers, in comparison to other popular short haul, destinations. 2~ Whether the tourists travel to Greece, Spain, Turkey or any other popular destination, is not of concern to the mass operator as there is very little difference between the almost identical sun, sea and sand commodities. Of course, there are language differences and some variance in culture but the core tourist product is virtually the same. This type of product offering is widely available and the supply not only exceeds demand, but is continually increasing. 427
Tour operators and destination sustainability: S Carey et al
Table 2 A comparison of mass and specialist/alternative operators Objectives and activities
Mass tour operators
Specialist/alternative tour operators
Product
Standardized product, undifferentiated, focus on relative quality: price value for money, accommodation type, resort facilities and climate. Accommodation supply mostly on (80%) commitment contract. Highly packaged offering with many resort activities pre-arranged
Offer 'unique' locations with a high standard of accommodation. May specialize in activities which offer experience of the local culture and resort facilities. Lower level of commitment contract. More independent holiday activities offered on an individual basis in the resort
Price
Low to medium price range based on high level of sales. Frequent use of sales promotions. Pricing is sensitive to consumers' ASP, cost basis, profit targets and the competition. Tactics are usually cost plus and what the market will bear
Higher prices (may be double), pricing tactics usually cost plus, what the market will bear with an emphasis on the required profitability
Promotion
Use of brochure to appeal to the target market. Mainly company brand and actual holiday product promotion. Information is tightly organized, uniform throughout brochure for all destinations and features the essential components of the holiday offering
Use of brochure to promote the company product, the country and differentiating aspects of a unique image. Much more general resort information
ASP
Average package cost £300-450. Resort spending £200-300 (based on a 2 week holday)
Average package cost £500-700. Resort spending £500-600 (based on a 2 week holiday)
Target market
C1, C2, possibly B
A, B, CI
Overseas resort operations
Remuneration based on salary and commission aiming to make a profit or to break-even. Excursion sales targets set. Representatives average age 25-30 years, possibly some knowledge of languages, often with little previous experience of the country or industry. Responsible for ensuring client safety and comfort in accordance with current legislation. Clients are offered some local area information but excursion, car hire etc. are mainly promoted. Average cost to the tour operator for the overseas operations per client is £1-5
Remuneration mostly based on salary and bonus for good customer service record. Usually no excursion sales target. Representatives aged between 25-60 years with an average age of around 35 years, mostly with good language skills, excellent knowledge of the country/resort area, plus previous experience in the industry. Clients are offfered a high level of local information. Responsible for client comfort and safety in accordance with legislation. Cost of the operation per client varies from £15 to £30 for land based holidays
Structuring of the product
Strong influence on the nature of information offered before and during the holiday by the reservations, transportation and the overseas staff. Up to 80% of holiday activity is organized by the operator. Minimal exposure to local culture. Generally less experienced clients with less exploration/adventure needs. Normally psychocentric to mid-centric in character
Clients are given a much higher level of information concerning the country and resort. The tourists are encouraged to participate and experience local life. Only around 20% of resort activities are organized by the operator thus encouraging maximum possible exposure to local life. Clients are reasonably experienced with developed exploration needs. Tend towards the near allocentric character
428
Tour operators and destination sustainability: S Carey et al
Table 2 contd. Objectives and activities
Mass tour opertors
Specialist/alternative tour operators
Future strategies
To adjust capacity, where necessary making significant reductions and moving to destinations which offer better quality and value for money at the same time yielding higher profit levels (global market). Generally preferring to avoid destinations where it proves difficult to conduct business. Operators follow market trends which are based on price sensitivity and good value for money
To reduce capacity in difficult or unprofitable destinations. To seek new destinations in order to spread the product portfolio risk. They generally seek to avoid destinations where the public and/or the private sector has an uncooperative attitude and ineffective development plans
Sustainable tourism strategies
Mass tour operators do not assume responsibility for environmental issues, but react to the needs of the market. There is no real interest in the long term welfare of the destination. Declining infrastructure and poor quality of service is the responsibility of the destination. The way forward is for the public and private sector to support and work co-operatively with mass tourism in order to raise standards of product/service quality competitively. The destination needs to develop effective communication strategies for both the consumers and the trade. The greater understanding of the consumers' needs will enable the destination strategists to develop effective plans for sustainable tourism
The specialists are interested more in the protection of the environment. They tend to take an active part in campaigns aiming to reduce pollution. They encourage destination policy makers to develop long term viable and sustainable'tourism strategies. They seek to improve and increase the diversity of the destination's assets, for example, sell or focus on activities, culture, manmade and natural attractions and any other form of alternative tourism. They perceive service delivery as a key to long term sustainability. However, they consider that regulations at all levels of planning and development need to be enforced at all times. Continuous improvement of training and education for all tourism employees is imperative for sustainability
Conversely, the specialists differentiate the product according to the destination's unique appeal. For the specialist operator every country's marketing mix will vary according to the target market's characteristics. Prices will reflect the cost of the range and quality of the services offered. ' U p market' clients require more information about the destination and look for experiences within the local culture and environment. The overall economic benefits by the mass tour operator are higher than those of the alternative tour operator, but the total benefits and positive impacts of the alternative tourism are far greater than the costs to the destination. However, the specialists market share is considerably smaller, in comparison to the mass tour operators, and impossible to sustain the whole tourism industry. On the other hand, mature tourist destinations cannot afford to reject mass tour opera-
tors because of the massive economic dislocation it would cause to the local and national economy. One point in favour of larger scale development is the ability to control licensed accommodation standards and recoup tax revenues, which is often difficult with small and fragmented tourism developments. For overseas operations, the primary objectives of all tour operators are to enhance and extend their services to the clients. The mass market tour operators' main objective to break-even and possibly make a small profit, results in reducing the economic and socio-cultural benefits for the destination. The mass tour operators have more influence and power based on their superior knowledge of the market, than the destination suppliers. They are able to drive prices down to compete at home and, thus, reducing the revenues of the destination suppliers considerably. Decisions to reduce capacity 429
Tour operators and destination sustainability: S Carey et al
are made by the tour operators only and not by the destination. Tour operators also contribute directly and indirectly towards the negative environmental and socio-cultural impacts due to their short term objectives towards the destinations and the overriding concern for financial success. The alternative tour operators' strategies lead to more positive economic, socio-cultural and environmental impacts for the destination. The low number of local employees working as tour operators' destination staff decreases the knowledge of and 'local' influence on the tourists. This lack of understanding leads to a diminished span of control on their transactions with the tour operators. This situation may deteriorate further for some of the European destinations given the changes in EU regulations which make it possible for tour operators to open and staff their own ground handling agencies. Tourism development, at destination level, is led primarily by the tour operator. The image of the product is primarily influenced by the tour operators' promotional activities at home. The tour operators' control over the whole tourism experience due to their volume planning, image creation, destintion contracting, the type of excursions offered, nationality of overseas staff and pricing policy puts them firmly in control of the demand. This is unlikely to lead to sustainable tourism. The tour operator will move to another destination as soon as their financial interests can be served better. As mentioned, the supply of commodity destinations is greater than the potential demand. This results in destinations being vulnerable and initiates a dependency culture upon the tour operators. The concept of designing a 'culture bubble' or product/holiday experience control, is an essential part of the mass tour operators competitive advantage strategy. Tour operators are keen to establish their own brand identities through their brochures and reinforce that with their overseas resort activities. However, tour operators lack of loyalty to any one destination means that reservations staff are being trained to be more aggressive in their switch selling techniques. The overall income of the tour operators increases from excursion and ancillary service sales. Tourists are strongly encouraged to place more trust in tour opertors arrangements than those offered by local suppliers. This approach often creates an adversarial position between the tour operators and the destinations. The alternative tourism demand is relatively small in volume and high on profitability but less established and more expensive for the consumer. According to Morgan, 2° Gilbert -'',zz and Witt e t a l . z3 the growth of alternative tourism (independent, cultural, activities, rural etc.) is likely to lead to a decrease in mass package holidays. Indeed, even Charles Newbold of Thomson Holidays in an article 24 wondered if 'the package holiday as we 430
know it is going out of fashion'. This opens the debate on the future sustainability of mass tourism. Other types of alternative tourism as viable options for mature destinations need to be explored and evaluated in order to achieve sustainable tourism. This could allow for the development of small and medium sized enterprises which have government support to exploit business opportunities in harmony with all stakeholders' interests. They offer the benefit of customized products, powerful cultural character which is of benefit to the tourist as well as country, personalized services and commitment by the labour force. The EU is keen to support such initiatives but there is a need for training, marketing, associations or consortia style arrangements to gain economies of scale as well as help with financial matters for such enterprises. The competition between destinations, globally, is becoming more intense. Therefore, issues of product quality 2-',2~ and value for money has to be one of the main objectives of the destination's strategy. 23 The NTOs need to consider alternative strategies, for example, market intelligence, segmentation, education etc. in order to improve the suppliers' understanding of the consumer and their intermediaries. To achieve incremental and sustainable benefits (economic, socio-cultural and environmental) for the hosts and the guests, a greater level of participation is required by the supply and demand side. Encouragement towards a gradual increase of the alternative tourism, from a very low base to significant level as well as a controlled reduction/divestment of mass tourism in the medium to long term would result in a wider product/destination portfolio, higher levels of control and involvement, and a sustainable tourism industry based on quality and a mixture of 'unique' and familiar products. The supply side needs to take responsibility for the planning, organization and implementation of a coherent, sustainable tourism policy which integrates the public and private sectors.
Conclusions The differences between the mass and alternative tourism effects on the destination are significant. Sustainable tourism depends, to a varying degree, on the strategies of the tour operators as well as those of the destination. The level of influence on the demand is far greater from the mass tour operators than from the destination's own marketing. The higher degree of control on the product/tourism experience ('culture bubble') by the mass tour operator is far greater than that of the alternative/ specialist tour operators. The level of a tourism product commoditization and the 'culture bubble' has corresponding effects on the sustainability of tourism. The increased global competition requires
Tour operators and destination sustainability: S Carey et al
more effective, integrated long term strategic planning, higher investments, stronger alliances, accurate customer knowledge, better standards of education, higher quality of 'unique' products/ services and overall better value for money than the competitors. A balanced, Societal Marketing approach towards a broader spectrum of other tourism types is more likely to achieve a sustainable tourism rather than the equivalent of a single, dominant type of tourism. As such much more emphasis has to be placed on the role of intermediaries in acheiving sustainable goals.
References 1. Josephides, N., Managing tourism in a recession. Tourism Management 1993, 14, 162-166; Kotler, P. Bowen, J. and Makens, J., Marketing for Ho~witality and Tourism. Prentice Hall, 1996 New Jersey. 2. Civil Aviation Authority, ATOL Business. Civil Aviation Authority, Cheltenham, 1996. 3. Ashworth, G. and Goodall, B., Marketing in the Tourism Industry: The Promotions of Destinations & Regions. Routledge, London, 1988. 4. Krippendorf, 5. The Holidaymakers. Butterworth-Heinemann, London, 1987. 5. Pearce, D., Tourist Development, 2nd edn., Longman, Harlow, 1989. 6. Lane, B., Rural tourism, Countryside Recreation Conference, Countryside Commission, Cheltenham, 1988. 7. Butler, R., In The thin end of the wedge. In Tourism Alternatives, ed. V. L. Smith and W. R. Eadington. UPP, PA, USA, 1992. 8. CohenE. Tourism Recreation Research 1989, 12, In Alternative tourism--a critique (2), 13-18. 9. Holder, J. S., The pattern and impact of tourism on the environment in the Caribbean. Environmentally Sound Tourism Development of the Caribbean. 1988. Tourism management 9(2), 119-127. 10. Cazes, G. H., Alternative tourism: reflection on an ambiguous concept. In Towards Appropriate Tourism, ed. Singh T. V. et aL, Peter Lang, Frankfurt, 1989, pp. 117-126.
11. Smith, V. L. and Eadington, W. R., Introduction: the emergence of alternative forms of tourism. In Tourism Alternatives, ed. V. L. and W. R. Eadington. PA, UPP, 1992. 12. Burns, M., Damania, D. and Heathcote, L., The environmental impacts of travel and tourism. Consultancy paper prepared for the Industries Assistance Commission, Flinders University, Adelaide, 1988. 13. Pigram, J. J., Tourism and sustainable resource management. In Tourism Alternatives, ed. V. L. Smith and W. R. Eadington, UPP, 1992; Reese, W. E. and Roseland, M., Planning for Sustainable Development. CHS Research Bulletin. School of Community and Regional Planning, University of British Colombia, 1988. 14. Musgrave, W., The Economics of Sustainable Development. Keynote paper to Conference on Conservation an the Economy, Sydney, September, 1984. 15. WTO, National and Regional Tourism Planning--Methodologies and Case Studies. Routledge, London, 1994. 16. Gunn, C. A., Tourism Planning. Taylor and Francis, Washington, 1994. 17. Williams, P. W. and Gill, A., Tourism carrying capacity management issues. In Global Tourism--The Next Decade. W. Theobald. Butterworth, Heinemann, Oxford, 1994. 18. Getz, O., A rationale and methodology for assessing capacity to absorb tourism. Ontario Geography, 1982, 19, 92-101. 19. Maning, E., Challenges to the tourism sector for the coming decade, based upon presentations. Tourism Stream of the Globe, Conference, 1992. 20. Morgan, M., Homogeneous products: the future of established resorts. In Global Tourism--The Next Decade. ed. W. F. Theobald, Bunerworth-Heinemann, Oxford, 1994. 21. Gilbert, D. C., Strategic marketing--planning for national tourism. Tourist Review 1990, 1, (90), 18-27. 22. Gilbert, D. C., The need for countries to differentiate their product and how to do so, Conference paper, Surrey University, 1984. 23. Witt, S. F., Brooke, M. Z. and Buckley, P. J , The Management of International Tourism, 2nd edn. Routledge, London, 1995. 24. Newbold, C., Travel News, 1989. 25. Gilbert, D. C. and Joshi, 1., Quality management and the tourism and hospitality industry. Progress in Tourism, Recretation and Ho~witality Management, Chapter 12, Vol. 4, Belhaven Press, London, pp. 149-168. Received October 1996 Accepted May 1997
431
)
© 1997 Elsevier Science Ltd All rights reserved. Printed in Great Britain I)261-5177/97 $17.00+0.00
Pergamon
Pll: s026 t -5177(97 )00044-7
Tour operators and destination sustainability Sandra Carey and Y Gountas University of Hertfordshire, Hertford Campus, Mangrove Road, Hertford, Herts SG13 8QF, UK
D Gilbert Surrey University, School of Management Studies, Guildford, Surrey GU2 5XH, UK The objective of this study is to examine the tour operators' influence on the long term sustainability of destinations. The tour operators' activities are considered in detail in order to verify the hypothesis that the tour operator is one of the major influences for the nature of tourism demand. It is suggested that they are also instrumental in determining market trends and may affect the demand levels for the destinations. To verify the degree of influence by the mass and specialist tour operator, of varying sizes, their marketing strategies and operational tactics need to be examined critically in order to determine their hypothetical level of influencing the snstainability of a tourism destination. Tourism destinations in a long term successful sustainable tourism industry depend on the maintenance and sustenance of the 'right' level of demand. The tourism supply is mutually affected by demand characteristics. Sustainable tourism is dependent on the effective co-operation of all the stakeholders in the industry, for example, suppliers, intermediaries, public sector and consumers. This article reviews the trends of the U K tour operators; it examines the literature on sustainable tourism, reports the field research findings and discusses the relationship and effects of tour operators upon the sustainability of tourism destinations. © 1997 Elsevier Science Ltd Keywords: tour operators, sustainable, destination, impact
interviews were conducted in the tour operators' premises over a period of 2 months in Autum/ Winter 1995/96. A semi structured questionnaire was used to standardize all the responses. The findings were processed and analysed under two separate headings: the mass and the specialist tour operator. The panel of participants included chief executives, MDs, product/marketing managers, contract managers and principal partners of the firms. All participants have a large degree of influence in the decision making process for destination selection, holiday specifications and size of operations. Due to the competitive nature of the tour operator industry, confidentiality was guaranteed to protect trade secrets. However, all participants consented to the reporting of the research findings.
Methodology
This study is primarily an industrial marketing research. During the exploratory research the multistage judgmental sample was tested and refined. The total sample frame was all the top thirty UK tour operators, offering a variety of short and long haul destination products, all around the world. To ensure validity and reliability of responses nine tour operators were selected. From the top four mass operators, First Choice and Cosmos, from medium sized Unijet, Manos and Sunworld and from the small and specialist category Simply Travel, Greek Islands Club, Argo and Sunvil. Although Argo specialises mainly in Greece, all the other tour operators include Greece as well as a wide range of destination products in various parts of the world. In addition an advertising/consulting agency with many years experience in dealing with destination promotion was also included in the survey. The reason for using the judgmental sampling methods was to guarantee the approximate representation of all types and sizes of tour opertor. The
The UK tour operations
background
Over the past decade, the tour operating market has experienced intense competition between the major operators. Many operators have been subsumed in 425
Tour operators and destination sustainabifi~: SCarev et al
Table 1 Top 30 UK tour operators' performance Year Turnover Actual Net % Turnover/ No. of ($m) capacity profits profit ATOL carried (£m) holders (millions)
1990 1991 1992 1993 1994 1995
2731 2743 3621 3826 4434 5073
12.74 11.13 11.02 13.56 15.06 17.05
40.3 1.5 104.8 3.8 100.6 2.8 99.1 2.6 85.6 1.9 (9.9) (0.2)
650 874 1071 1329
Source: CAA-" horizontal integration initiated by the larger operators in a bid to increase their market share and reduce competition. This has resulted in price wars which has led and continues to lead to reduced profitability (see Table 1). The situation has been compounded by the predominantly price motivated British holidaymaker fuelling the 'boom and bust' scenario and the early 1990s in the UK travel and tourism industry.' Since the early 1990s, a small number of tour operators have steadily dominated the majority of the air inclusive tour (AIT) market. Until 1995, the 'top five' comprising Thomsons, Airtours, First Choice, Cosmos and lberotravel (Sunworld) held ca 65% of sales. This has decreased slightly to a total of 61.5%, by 1995. 2 During the 1990-1995 period, despite an average increase in turnover of 14% for the total AIT market (including some scat bookings), and average annual volume (actual return tourists) increase by 6%, the overall profitability for the top 30 tour operators increased only by an average of 2% on turnover (see Table 1). The distribution of AITs is achieved mainly through travel agents, for example, the vertical integration of large operators with agents means that some of the multiple agencies have 'preferred' operators with whom they work, for example, Thomsons and Lunn Poly. The UK tour operators' marketing strategies aim to be mainly effective in gaining the maximum level of sales in the face of fierce competition. Normally, the general promotion of a particular destination is left to the National Tourist Office (NTO). The more specific promotional campaigns for the actual holiday products (mass, specialist/tailor made etc.) has been carried out by the individual tour operators. 3 Tour operators do not demonstrate allegiance to any destination, they simply decide on which market segments to focus their products and then how to balance the marketing mix in order to achieve their own company objectives. Tour operators' marketing activities, in general, mostly focus on promotional activities. In depth market research is normally seen as cost prohibitive 426
and operators base their product development decisions largely on historic performances, and the competition's activities in following the market leaders. It is evident that the tour operators' objectives will often differ from that of individual destinations which frequently take a very low key approach to their own promotion. Tour operators are primarily concerned with their own survival and possible growth. Ashworth and Goodall? suggest that the tour operators' marketing stragegies have contributed to the development of 'identikit destinations' in most of the Mediterranean countries. Therefore, it is apparent that tour operators have some degree of influence on the type of tourism developed. As destinations move into a mass tourism industry, receiving the majority of their tourists through the tour operator, major fluctuations and decreases in demand affect directly all the supply sectors of the destination. The degree of dependence on the tour operator varies from one destination to another. The major mass tourism receiving countries are more likely to depend on the tour operator in order to sell the existing capacity of the tourism facilities, for example, Spain, Greece, Turkey etc. However, tour operators are dependent on the customers' needs because the customers decide where to go. The ever increasing choice of tourist destinations provides the tour operators with more choice of products to sell and therefore being less dependent on any one destination. The tour operators, like any other distributor, operate in a dynamic and price competitive market, selling a non-essential product, they try to cater to their potential clients' needs and not those of the destinations. The tour operators aim is to create a customer loyalty to themselves rather than to any of the products (destinations) they are selling. However, destinations are able to sell their products to many distributors (tour operators), and therefore they are not compelled to be loyal to any tour operator either. The salient question is, to what extent do tour operators influence the sustainability of the tourism industry of a mass market tourism destination? Issues of sustainable
tourism
The tourism industry embraces a wide range of sectors and services mostly working discretly and pursuing their own personal interests and agendas. These interests are often conflicting and incompatible. According to KrippendorP 'everybody wants more business, a larger share of the market. They will move heaven and earth and use well contrived methods to reach their goal.' It must be remembered that tour operators' first priority is to stay in business. Krippendorf believes that it is clear that the holiday producers 'are not charitable institutions but commercial undertakings'. The reason for
Tour operators and destination sustainability: S Carey et al
embarking on a particular holiday is of no consequence to the operator, what matters is that it is undertaken. This view seems to result in the tour opertor concentrating on 'the short term growth of their business and not the long term development of a well balanced tourist trade'? If the tour operators are not particularly interested in the long term development of a well balanced tourist trade which optimizes the benefits of all stakeholders, it is imperative to consider alternative approaches in order to achieve the optimum results for all tourism stakeholders. Since mass tour operators do not have strong loyalty to, nor an interest in, the long term balanced tourism development of destinations, alternative methods of development and distribution need to be examined. Alternative tourism is difficult to define because it has a different meaning to different people in different parts of the world. There are many different forms of tourism and any type of tourism can be considered as alternative to the other types? The variables used to describe alternative tourism are numerous: context; nature of facilities; location; ownership/development; development process; and marketing approaches. Some examples of alternative tourism are, small scale types of development with a high level of involvement and control by the local people. In this situation they are normally dealing with tourists who are considerate towards the host's culture and environment. Alternative tourism aims to be inter-related to a number of factors, for example, economic, physical inputs, rate of development, degree of planning and the operational process involved along with the objectives of the resort management. According to Krippendorf" 'green' tourism or 'soft' tourism is preferable to mass or 'hard' tourism. A number of writers equate alternative tourism with green and sustainable tourism. However, alternative tourism should not be considered as a panacea but as an aid to realistic developments ameliorating the problems of conventional tourism. TM A balanced approach is suggested between alternative tourism and conventional in order to achieve long term benefits for all stakeholders in the tourism industry, v-''' Butler is rather sceptical about alternative tourism being sustainable" because developments have the capacity to enhance enjoyment, economic return and the environment, if the type, scale and timing are correct. It also has the power to degrade, corrupt, bankrupt and despoil if any, or all of the elements are wrong. Claiming that one form of tourism is all things for all areas is not only pompous and naive, it is unfair, unrealistic and unwise! The issue of irreversibility of tourism development '2 can be considered in terms of developing 'options value, bequest value, existence value'
etc. '3''4 The values, objectives and attitudes of all stakeholders within the public and private sector makes the implementation process of alternative tourism more complex but not impossible to bridge the gap between the ideal and reality. '3 Sustainable approaches are pursued whereby 'the composite destination resources (natural, social, cultural etc.) are conserved for continuous use in the future while still bringing benefits to the present society'. '' Tourism developments that do not undermine the totality of the receiving country's system (eco, social, economic etc.) and are integrated fully within the local economy, supported by all participants are likely to result in a longer term sustainable tourism productY' The development of 'quality' tourism with a wider interpretation and not simply based on the relationship of product and price, is the way forward in the highly international competitive tourism markets. '~ The strategies of achieving sustainable tourism are varied. Williams and Gill '7 and Getz TM have developed frameworks which broadly deal with the carrying capacity of recreation facilities. Manning'" put forward a 'challenge' statement outlining some of the factors relevant to sustainable development of tourism which are: policy legislation and regulation; technology and research, economics and finance; communication and outreach. '~ However, there is almost no specific reference to the role and influence of the intermediaries, that is, tour operators, travel agents etc. towards the achievement of sustainable tourism. Issues of sustainability focus primarily on the supply side and neglect the influence of the demand side. The tour operators have had considerable influence on the way tourism has developed over the past 30 years in many destinations.
Discussion of the survey findings The mass tour operators' marketing mix is geared towards large numbers, low prices and getting the maximum return from every operation (Table 2). The particular country, per se, does not seem to matter as long as the destination has a favourable climate, the required facilities and is competitively priced to attract the customers, in comparison to other popular short haul, destinations. 2~ Whether the tourists travel to Greece, Spain, Turkey or any other popular destination, is not of concern to the mass operator as there is very little difference between the almost identical sun, sea and sand commodities. Of course, there are language differences and some variance in culture but the core tourist product is virtually the same. This type of product offering is widely available and the supply not only exceeds demand, but is continually increasing. 427
Tour operators and destination sustainability: S Carey et al
Table 2 A comparison of mass and specialist/alternative operators Objectives and activities
Mass tour operators
Specialist/alternative tour operators
Product
Standardized product, undifferentiated, focus on relative quality: price value for money, accommodation type, resort facilities and climate. Accommodation supply mostly on (80%) commitment contract. Highly packaged offering with many resort activities pre-arranged
Offer 'unique' locations with a high standard of accommodation. May specialize in activities which offer experience of the local culture and resort facilities. Lower level of commitment contract. More independent holiday activities offered on an individual basis in the resort
Price
Low to medium price range based on high level of sales. Frequent use of sales promotions. Pricing is sensitive to consumers' ASP, cost basis, profit targets and the competition. Tactics are usually cost plus and what the market will bear
Higher prices (may be double), pricing tactics usually cost plus, what the market will bear with an emphasis on the required profitability
Promotion
Use of brochure to appeal to the target market. Mainly company brand and actual holiday product promotion. Information is tightly organized, uniform throughout brochure for all destinations and features the essential components of the holiday offering
Use of brochure to promote the company product, the country and differentiating aspects of a unique image. Much more general resort information
ASP
Average package cost £300-450. Resort spending £200-300 (based on a 2 week holday)
Average package cost £500-700. Resort spending £500-600 (based on a 2 week holiday)
Target market
C1, C2, possibly B
A, B, CI
Overseas resort operations
Remuneration based on salary and commission aiming to make a profit or to break-even. Excursion sales targets set. Representatives average age 25-30 years, possibly some knowledge of languages, often with little previous experience of the country or industry. Responsible for ensuring client safety and comfort in accordance with current legislation. Clients are offered some local area information but excursion, car hire etc. are mainly promoted. Average cost to the tour operator for the overseas operations per client is £1-5
Remuneration mostly based on salary and bonus for good customer service record. Usually no excursion sales target. Representatives aged between 25-60 years with an average age of around 35 years, mostly with good language skills, excellent knowledge of the country/resort area, plus previous experience in the industry. Clients are offfered a high level of local information. Responsible for client comfort and safety in accordance with legislation. Cost of the operation per client varies from £15 to £30 for land based holidays
Structuring of the product
Strong influence on the nature of information offered before and during the holiday by the reservations, transportation and the overseas staff. Up to 80% of holiday activity is organized by the operator. Minimal exposure to local culture. Generally less experienced clients with less exploration/adventure needs. Normally psychocentric to mid-centric in character
Clients are given a much higher level of information concerning the country and resort. The tourists are encouraged to participate and experience local life. Only around 20% of resort activities are organized by the operator thus encouraging maximum possible exposure to local life. Clients are reasonably experienced with developed exploration needs. Tend towards the near allocentric character
428
Tour operators and destination sustainability: S Carey et al
Table 2 contd. Objectives and activities
Mass tour opertors
Specialist/alternative tour operators
Future strategies
To adjust capacity, where necessary making significant reductions and moving to destinations which offer better quality and value for money at the same time yielding higher profit levels (global market). Generally preferring to avoid destinations where it proves difficult to conduct business. Operators follow market trends which are based on price sensitivity and good value for money
To reduce capacity in difficult or unprofitable destinations. To seek new destinations in order to spread the product portfolio risk. They generally seek to avoid destinations where the public and/or the private sector has an uncooperative attitude and ineffective development plans
Sustainable tourism strategies
Mass tour operators do not assume responsibility for environmental issues, but react to the needs of the market. There is no real interest in the long term welfare of the destination. Declining infrastructure and poor quality of service is the responsibility of the destination. The way forward is for the public and private sector to support and work co-operatively with mass tourism in order to raise standards of product/service quality competitively. The destination needs to develop effective communication strategies for both the consumers and the trade. The greater understanding of the consumers' needs will enable the destination strategists to develop effective plans for sustainable tourism
The specialists are interested more in the protection of the environment. They tend to take an active part in campaigns aiming to reduce pollution. They encourage destination policy makers to develop long term viable and sustainable'tourism strategies. They seek to improve and increase the diversity of the destination's assets, for example, sell or focus on activities, culture, manmade and natural attractions and any other form of alternative tourism. They perceive service delivery as a key to long term sustainability. However, they consider that regulations at all levels of planning and development need to be enforced at all times. Continuous improvement of training and education for all tourism employees is imperative for sustainability
Conversely, the specialists differentiate the product according to the destination's unique appeal. For the specialist operator every country's marketing mix will vary according to the target market's characteristics. Prices will reflect the cost of the range and quality of the services offered. ' U p market' clients require more information about the destination and look for experiences within the local culture and environment. The overall economic benefits by the mass tour operator are higher than those of the alternative tour operator, but the total benefits and positive impacts of the alternative tourism are far greater than the costs to the destination. However, the specialists market share is considerably smaller, in comparison to the mass tour operators, and impossible to sustain the whole tourism industry. On the other hand, mature tourist destinations cannot afford to reject mass tour opera-
tors because of the massive economic dislocation it would cause to the local and national economy. One point in favour of larger scale development is the ability to control licensed accommodation standards and recoup tax revenues, which is often difficult with small and fragmented tourism developments. For overseas operations, the primary objectives of all tour operators are to enhance and extend their services to the clients. The mass market tour operators' main objective to break-even and possibly make a small profit, results in reducing the economic and socio-cultural benefits for the destination. The mass tour operators have more influence and power based on their superior knowledge of the market, than the destination suppliers. They are able to drive prices down to compete at home and, thus, reducing the revenues of the destination suppliers considerably. Decisions to reduce capacity 429
Tour operators and destination sustainability: S Carey et al
are made by the tour operators only and not by the destination. Tour operators also contribute directly and indirectly towards the negative environmental and socio-cultural impacts due to their short term objectives towards the destinations and the overriding concern for financial success. The alternative tour operators' strategies lead to more positive economic, socio-cultural and environmental impacts for the destination. The low number of local employees working as tour operators' destination staff decreases the knowledge of and 'local' influence on the tourists. This lack of understanding leads to a diminished span of control on their transactions with the tour operators. This situation may deteriorate further for some of the European destinations given the changes in EU regulations which make it possible for tour operators to open and staff their own ground handling agencies. Tourism development, at destination level, is led primarily by the tour operator. The image of the product is primarily influenced by the tour operators' promotional activities at home. The tour operators' control over the whole tourism experience due to their volume planning, image creation, destintion contracting, the type of excursions offered, nationality of overseas staff and pricing policy puts them firmly in control of the demand. This is unlikely to lead to sustainable tourism. The tour operator will move to another destination as soon as their financial interests can be served better. As mentioned, the supply of commodity destinations is greater than the potential demand. This results in destinations being vulnerable and initiates a dependency culture upon the tour operators. The concept of designing a 'culture bubble' or product/holiday experience control, is an essential part of the mass tour operators competitive advantage strategy. Tour operators are keen to establish their own brand identities through their brochures and reinforce that with their overseas resort activities. However, tour operators lack of loyalty to any one destination means that reservations staff are being trained to be more aggressive in their switch selling techniques. The overall income of the tour operators increases from excursion and ancillary service sales. Tourists are strongly encouraged to place more trust in tour opertors arrangements than those offered by local suppliers. This approach often creates an adversarial position between the tour operators and the destinations. The alternative tourism demand is relatively small in volume and high on profitability but less established and more expensive for the consumer. According to Morgan, 2° Gilbert -'',zz and Witt e t a l . z3 the growth of alternative tourism (independent, cultural, activities, rural etc.) is likely to lead to a decrease in mass package holidays. Indeed, even Charles Newbold of Thomson Holidays in an article 24 wondered if 'the package holiday as we 430
know it is going out of fashion'. This opens the debate on the future sustainability of mass tourism. Other types of alternative tourism as viable options for mature destinations need to be explored and evaluated in order to achieve sustainable tourism. This could allow for the development of small and medium sized enterprises which have government support to exploit business opportunities in harmony with all stakeholders' interests. They offer the benefit of customized products, powerful cultural character which is of benefit to the tourist as well as country, personalized services and commitment by the labour force. The EU is keen to support such initiatives but there is a need for training, marketing, associations or consortia style arrangements to gain economies of scale as well as help with financial matters for such enterprises. The competition between destinations, globally, is becoming more intense. Therefore, issues of product quality 2-',2~ and value for money has to be one of the main objectives of the destination's strategy. 23 The NTOs need to consider alternative strategies, for example, market intelligence, segmentation, education etc. in order to improve the suppliers' understanding of the consumer and their intermediaries. To achieve incremental and sustainable benefits (economic, socio-cultural and environmental) for the hosts and the guests, a greater level of participation is required by the supply and demand side. Encouragement towards a gradual increase of the alternative tourism, from a very low base to significant level as well as a controlled reduction/divestment of mass tourism in the medium to long term would result in a wider product/destination portfolio, higher levels of control and involvement, and a sustainable tourism industry based on quality and a mixture of 'unique' and familiar products. The supply side needs to take responsibility for the planning, organization and implementation of a coherent, sustainable tourism policy which integrates the public and private sectors.
Conclusions The differences between the mass and alternative tourism effects on the destination are significant. Sustainable tourism depends, to a varying degree, on the strategies of the tour operators as well as those of the destination. The level of influence on the demand is far greater from the mass tour operators than from the destination's own marketing. The higher degree of control on the product/tourism experience ('culture bubble') by the mass tour operator is far greater than that of the alternative/ specialist tour operators. The level of a tourism product commoditization and the 'culture bubble' has corresponding effects on the sustainability of tourism. The increased global competition requires
Tour operators and destination sustainability: S Carey et al
more effective, integrated long term strategic planning, higher investments, stronger alliances, accurate customer knowledge, better standards of education, higher quality of 'unique' products/ services and overall better value for money than the competitors. A balanced, Societal Marketing approach towards a broader spectrum of other tourism types is more likely to achieve a sustainable tourism rather than the equivalent of a single, dominant type of tourism. As such much more emphasis has to be placed on the role of intermediaries in acheiving sustainable goals.
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