Tourism Industry :

Structure and
Components

UNIT 7 TOURISM INDUSTRY- STRUCTURE

AND COMPONENTS

Structure
7.0 Objectives
7.1 Introduction
7.2 Structure and Components of Tourism Industry
7.3 Accommodation
7.4 Transportation
7.5 Destination and Attractions
7.6 Travel Intermediaries and DMOs
7.7 Linkages and Integrations in the Tourism Industry
7.8 Let Us Sum Up
7.9 Key Words
7.10 Answers to Check Your Progress
7.11 Terminal Questions

7.0 OBJECTIVES
After studying this unit, you should be able to:
understand the concept of industry in general and tourism industry in
specific;
understand the structure and components of tourism industry; understand
the role of accommodation, transportation and various tourism
intermediaries in functioning of tourism industry; describe the
Destination Management Organisations; and describe various linkages
and integrations of tourism Industry.

7.1 INTRODUCTION

In the previous unit we have studied the tourism system The present unit will
deal with another important aspect i.e. tourism industry. Before, we move on
to explaining tourism industry, let us try to understand the term industry. What
does an industry means? How you define an industry? In layman terms, an
industry is the group of business organisations producing same/similar
products or services. For example, group of business organisations producing

97
Concept and Impacts of
Tourism

leather items i.e. foot wear, leather apparels etc. will be called leather industry.
Group of organisations producing various kinds of automobile like Maruti,
Tata Motors, Ashok Leyland etc.represent automobile industry. Tourism
product is not a single item rather it’s an amalgam of various services which
then makes the final tourism product. Hence, group of organisations which
deals with various components of tourism product constitutes tourism
industry. Over the years tourism industry has arisen as an important driver of
growth among the service sector in the world by providing lot of benefits in
terms of improved infrastructure, employment, per capita income, better
standard of living, foreign exchange earnings etc. As per World Travel and
Tourism Council economic impacts report for the year 2019, tourism industry
accounted for 10.3% of global GDP and 330 million or 1 in every 10 jobs
globally.

7.2 STRUCTURE AND COMPONENTS OF

TOURISM INDUSTRY

As we are aware that tourism product is an amalgam of various services,

which collectively offers the final product to the end user i.e. tourist. Before
we move further, let us have a quick recap of various components of tourism
product, which will help us in conceptualising the tourism industry. In case of
tourism product, various components (attraction, accessibility accommodation,
amenities, activities, local residents, tourist etc.) work closely together to give
desired results. But, these components also require the backing of
infrastructure, superstructure, sound information and good governance to
manage the tourism successfully. The six main components of tourism product
are:

1) Attraction
2) Accessibility
3) Accommodation
4) Activities
5) Amenities
6) Available package

1) Attraction : are the main pull factors which draw tourists to travel to the
destination. They may be natural or man-made and add to cultural or
social aspects of a destination.

2) Accessibility : comprises the modes of transportation (land, air or water)

and facilities present at the tourism destination.

98
 Tourism Industry :
Structure and
Components

3) Accommodation : provides the lodging, food and other services to the

tourist. They may comprise the hotel property or other supplementary
types of accommodation.

4) Activities : cover a range of actions a tourist can get involved in a

tourism destination such as mountaineering, trekking, rock climbing,
caving, camping, fishing, bungee jumping, mountain biking etc. These
activities in tourism have reached great levels owing to enhanced
awareness in health and fitness.

5) Amenities : are the various services and facilities a visitor needs at a

tourism destination. It is vital for the tourism and include very basic to
advance facilities such as convenience facilities, signage, emergency
facilities, postal services, shopping, theatre, parking etc. It at sometimes
is also referred to as “pleasantness” of a destination.
6) Available package : comprise the sum total of tourist services arranged
individually or in combination by the travel agent or tour operator.
Depending upon the various types of tourism the packages also can be of
different types and variably priced depending on the tourist services
included.

This complexity of tourism product gives rise to an industry which is equally

complex in structure and encompasses a wide array of organisations. A
schematic representation of tourism industry can be portrayed as per below
diagram.

Fig. 7.1: Structure of Tourism Industry, Bhatia (2006)

Let us have a look at each component of tourism Industry.

99
Concept and Impacts of
Tourism

1) Private Sector Support Services : This includes the guiding and

escorting services, travel insurance and foreign currency services, travel
trade press and tourism marketing service, travel trade publications etc.
These are the services which though not the part and parcel of final
tourism product in every case but these are essential for the execution
and operation of tour package effectively. This aspect of tourism
industry is primarily dominated by the private organisations.

2) Public Sector organisations : It consists of national or regional tourism

organisations (NTO’s or RTO’s) that primarily decides the broader
objectives, strategy and play a leadership role in the overall growth of
tourism. These organisations, primarily work for providing basic
infrastructure, general guiding principles and broader level marketing
and image making services for a destination. For example, Ministry of
Tourism, Govt. of India runs Incredible India marketing campaign,
similarly each state have its own State Tourism Development
Corporation which runs and operates state specific marketing and
promotional campaigns.

3) Carrier& Transport Organizations : Movement of people from place

of origin to destination is the basic perquisite for tourism phenomenon.
Carrier
and transport organisations are the ones which deal with movement of
people. There can be varied mode of transport like Road, Rail, Air and
Water etc. Transport organisations can be private as well as government
organisations. The modes of transport to a destination depend on the
geographic location of the destination.

4) Accommodation Establishments: Once a person is out of his usual

place of residence for more than 24 hours, most important thing he
requires is a place to stay i.e. the boarding and lodging arrangements.
Accommodation establishments like hotels, motels, resorts, B&B
establishments etc. are the one which caters to boarding and lodging
arrangements of tourists and without which the tourism product cannot
be formed. This segment is primarily dominated by private organisations
and a miniscule of organisations belongs to public sector as well.

5) The Intermediaries (Travel Agents & Tour Operators):This is one of

the most important parts of tourism industry. It is these intermediary
organisations like travel agencies and tour operators which actually
combine various ingredients of tourism product and offer it to the end
use i.e. the tourists. It is these organisations which ensure the execution
and performance of tourism product. This segment is primarily
dominated with private organisations and that too with small and
medium size enterprises. Though, the stakeholders such as the local
community and tourists are also the important components in the modern
terminology of tourism. The success of any tourism destination depends
on the footfall and demand of the tourists. Further, we shall have a
100
 Tourism Industry :
Structure and
Components

detailed view of some important components of tourism industry i.e.

Accommodation, Transportation, Attraction, travel intermediaries and
DMOs (Destination Management Organisations). But before that, let us
have a small quiz on what we have learnt so far.

Check Your Progress A

1) What are various components of tourism product?

.....................................................................................................................
.....................................................................................................................
.....................................................................................................................
.....................................................................................................................
.....................................................................................................................

2) What are private sector support services in tourism industry?

.....................................................................................................................
.....................................................................................................................
....................................................................................................................
.....................................................................................................................
.....................................................................................................................
3) Classify following activities in the various components of tourism.
Activity Component of Tourism
a) Hotels ………………………
b) Kayaking ……………………….
c) Water transport ……………………….
d) Postal services ………………………
e) Rural tours ……………………….
f) Youth hostel ………………………..
g) Zip-lining …………………………
h) Telecommunications …………………………

7.3 ACCOMMODATION

Accommodation is an essential component of the tourism industry. It is very

important and fundamental of all the attributes of the tourism supply. It plays
an important function both in the context of urban and rural tourism by
101
Concept and Impacts of
Tourism

providing lodging and dining opportunity for the visitors. The two broad
categories of accommodation are the hotel proper and the supplementary type
of accommodation. Hotel proper comprise of hotels, guest houses, downtown
hotels, airport hotels, boutique hotels, condominiums etc.On the other hand
supplementary types of accommodation consists of camping sites, caravans,
motels, bed and breakfast establishment, tourist holiday villages etc.

In Early times, the guest room were part of main private dwellings and
travellers were just treated as part of the family (Goeldner and Ritchie, 2007).
Though, hospitality is nearly as old as humanity. In ancient times, when man
lived in caves, then also members of other tribes were accommodated, the
classical example is of Lascaux cave in France as early as 15,000 BCE. In
ancient as well as middle ages, you will find numerous examples of
establishments offering hospitality to the travellers such as hospitals, spa, rest
houses in Persia and GrecoRoman civilizations; thermal baths in England,
Switzerland and Middle east; caravanserais along middle eastern routes;
Ryokans in Japan; religious orders offering accommodation for travellers at
monasteries and abbeys; staging posts for visitors and stations for couriers or
message carriers in China and Mongolia and inns opened in Europe (Kendall
College, 2018).

In India, the hotels were constructed before the World War II at various
locations which were very frequently visited by British and Indian aristocracy.
Very few companies and Indian entrepreneur were involved in the hotel
business such as East India hotels of Oberoi group owned by Rai Bahadur
M.S. Oberoi and The Taj group owned by J.R.D Tata (Devendra 2001, Sufi,
2015).Some of the wellknown hotels during British period in India were
(Devendra, 2001):
The Rugby Matheran (1876)
The Taj Mahal Hotel Mumbai (1900)
The Grand Kolkata (1930)
The Cecil hotels Shimla and Muree (1935)
The Savoy Mussoorie (1936)
In order to promote the tourism and hospitality sector, the Indian Tourism
development corporation (ITDC) was set up in 1966 and ministry of Tourism
and civil aviation was created in 1967, after separating it from the ministry of
transport and shipping. In 1975, ITDC started its hospitality business by
purchasing a hotel in Chennai and naming it as Hotel Chola. Subsequently,
between 1975 and 1977, the Welcome Group of Hotel constructed 3 hotels.
Then, after seeing the success in hotel business many individuals became
entrepreneurs leading to construction of hotels in secondary cities and deserts
in 1970’s. Government also granted licences to large hotels in 1982 owing to
Asian games. Further, the government realised the importance of tourism and
in 1986, established independent ministry of Tourism and also got the industry
status. In 1998, the tourism got the “export house” status. This all

102
 Tourism Industry :
Structure and
Components

subsequently led to the growth of the tourism and hospitality sector and
enhanced investment trends in the sector.

7.4 TRANSPORTATION

Transportation is also an important component of tourism product. It involves

movement of individual from one place to another and makes the tourist
destination accessible to the tourist. The transportation can be done by air, sea
and surface. Transportation not only facilitates movement of tourist but also
enhance the overall experience of the visitors.The various factors taken into
account before selecting any mode of transportation is time available for
travel, distance to be covered, status of the tourist, comfort, geographical
position, benefit, competition, status, security and price involved. Each mode
of transport has its own advantages and disadvantages.

1) Land Transport: It is also known as ground or surface transport and it

insures the movement of people, goods and various types of cargo from
one location to another over surface. It may involve pathways, roadways,
tramways or railways. A pathway mainly involves a path, way or a route
in remote rural areas which are forested or mountainous where a human
being or animals can only travel. It is known as Head loads (or human
transport) or Pack animals (or animal transport like horse, mule, donkey,
yak etc.). These are used in tourism to explore treks, passes or even to
explore mountain peaks and ranges. Roadways involve roads for
transportation of goods and people (including tourists). These may be
metalled (paved) or non-metalled (unpaved). These roadways in India
are also classified into national, state, district or village roads. Road
transport may also be known as vehicular transport (involving bus, truck,
auto rickshaw, bicycles etc) or non-vehicular transport(involving humans
who acts as Porter’s or carry passengers on palanquins, rickshaw or
animals such as horse, mule, donkey, camel, elephants etc. to carry loads
or pull carriages, Tanga or carts). Roadways are important means of
transport in mountainous regions and rural areas. The advantages of
Road transport are that they are suitable for short distances, ensure
service at door, allow flexibility of service, ownership of motor vehicles
allows travel at time of need and even they act as feeder to other modes
of transport. But even there are some disadvantages associated with it
such as it is less organised, not good for long distance transportation, less
safe and more dependent on the adversaries of nature.
Tramways are tracks which ensure running of rail like vehicle without
locomotives and also known as the lightly laid railways or electric street
railways. They ensure fast and rapid transport of people in Urban or
suburban areas and mostly use electric power. In olden days, Trams
were also pulled by animals mainly horses or even had a small steam
locomotive or Diesel or even run by gas, naphtha gas or coal gas. Some
103
Concept and Impacts of
Tourism

of world’s popular trams located in Lyon (France), Paris (France), Dijon

(France), Zurich(Switzerland), Vienna (Austria), New York (USA),
London (England), Petersburg (Russia), Melbourne (Australia), Prague
(Czech republic) and Tours (France). They act not only as means of
transport but also as tourist attractions. Railways also known as train or
rail transport is a means of transport to transfer people and goods on
wheeled vehicles which run on steel rail tracks. The railway system in
Great Britain is the oldest railway a in the world built by George
Stephenson and his son Robert. Also, the world’s first Inter-city railway
line was built by George Stephenson between Liverpool and Manchester
in 1830.
The main advantages of rail transport system is that it is fast,
comfortable, safe, most energy efficient transport, suitable for long
distance travel and whose carrying capacity can be increased or
decreased to a certain limit by adding or reducing boggies. However, it
has also some disadvantages such as it provides less service in the rural
areas, its routes and timing are fixed and it is inappropriate for short
distances.The Amtrak (2,50,000km);China’s rail network
(1,00,000km);Russia (85,500 km); India (65000 km); Canada (48,000
km); Germany (41,000 km); Australia (40,000 km); Argentina (36,000
km); France (29,000 km) and Brazil (28,000 km) are some of the largest
rail networks in the world. And, all of them are an extravaganza for the
tourists visiting these countries. Also, some of these rail networks run
tourist trains such as Golden Eagle in Russia, Venice Simplon-Orient
Express (between Paris and Istanbul), Golden Eagle Danube Express
(Budapest, Vienna, Prague and Sarajevo), Ravos Rail (luxury train of
South Africa), Royal Scotsman luxury train (UK), Chepe train of
Mexicoand Ghan luxury train of Australia (Adelaide, Alice Springs,
Darwin).
Indian railway network is also the world’s fourth largest railway network
in the world with the route length of 68155 kilometers. India’s first
passenger train ran between Mumbai and Thane for a distance of 34 km
carrying 400 people in 14 carriages on the broad gauge track. In order to
promote tourism in India, Indian Railway run special tourist and luxury
Tourism trains in India which covers not only religious, but leisure
destinations across the country. Some of the popular trains are Bharat
Darshan tourist train, Steam Express, Buddhist Circuit Tourist train,
Gangtok Darjeeling Holiday special train, Palace on Wheels (Rajasthan),
Golden Chariot(Karnataka), The Royal Orient (Gujarat and Rajasthan),
Fairy Queen (New Delhi and Alwar), Deccan Odyssey (Maharashtra)etc.
Maharaja Express is run by Indian Railway Catering and Tourism
Corporation (IRCTC) on five circuits of Rajasthan and is the most high-
priced luxury train in the world. Also, in the present context, the Indian
railways have taken several initiatives to upgrade its infrastructure and
improve its quality of service through research, Design and
standardisation.

104
 Tourism Industry :
Structure and
Components

2) Water Transport: Water transport or waterways is an important mode

of transportation for both passenger and cargo. It requires watercraft
such as
boat, ship or barge which moves over the water body such as River,
Lake, Canal, Sea or Ocean. It is one of the oldest and cheapest modes of
transport which requires water and do not requires use of capital
investment for construction and maintenance of tracks like railways. The
operational cost of water transport is very less and it is very suitable for
transporting heavy cargo over long distances. The majority of the world
cargo is transported through water transport and it has the largest
carrying capacity in the world. It is commonly subdivided into inland
waterways or water transport (Rivers, Canals and Lakes) and ocean
transport (sea, ocean).The benefit of water transport is that it is cheap,
requires no construction and maintenance of tracks, very beneficial for
heavy goods and also is very useful when transporting materials in the
time of natural calamities like flood. The main disadvantage of water
transport is that it is comparatively slower than air and rail. Also, certain
amount of risk is involved in transporting goods as there is always
danger of sinking of ships or large boats in water.

3) Air Transport: Air transportation is fastest means of transportation

from one place to another. It is an important enabler and facilitator at
global level to achieve economic growth and development. It provides
vital connectivity on national, regional and international level and helps
to generate trade, promote tourism and create employment opportunities.
Air travel is facilitated by public and private sector airlines which may
have scheduled or non-scheduled operations. Advent of jet planes and
jumbo jets has greatly revolutionised the international tourism scenario
over the years. Air travel has the inherent advantages of being the fastest
mode of travel, though it lacks the flexibility unless significantly high
amount is invested in charter flights. In India, the air transport was
dominated by government sector airlines i.e. Indian Airlines for
domestic routes and Air India for international routes, however after the
economic reforms of 199091, the airlines business was opened for
private players. Emergence of low cost air lines like Air Deccan
transformed the air transport sector in India. Recognising the potential of
air transport in growth and development of tourism, Govt. of India has
upgraded many airports to international standards as well as started the
Udaan scheme to start flight operation on routes which are not profitable
initially or less profitable. Under this scheme, private airlines are invited
to operate flights on the routes not yet fully commercialised and
government gives the subsidy to promote them. Khajuraho and Varansai
have witnessed a significant improvement in international tourism to
these destinations, after improvements in air connectivity. At present,
some airlines offer their own tour packages by combining their
commercial flights with hotel stays and other destination amenities.

105
Concept and Impacts of
Tourism

Check Your Progress B

1) Explain:

a) Ground transport
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
b) Head loads
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
c) Roadways
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
d) Tramways
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
e) Railways
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
f) Inland waterways
.......................................................................................................................

106
 Tourism Industry :
Structure and
Components

.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
g) Ocean waterways
.......................................................................................................................
.......................................................................................................................
....................................................................................................................... ......
.................................................................................................................
.......................................................................................................................
2) Match the following Tourist trains with country:
a) Golden Eagle Between Paris and Istanbul
b) Venice Simplon-Orient Express Russia
c) Golden Eagle Danube Express Australia
d) Ravos Rail UK
e) Royal Scotsman luxury train South Africa
f) Ghan Luxury train of Mexico

7.5 DESTINATIONS AND

ATTRACTIONS

The attractions of a destination play an important role in pulling tourists. More

is the diversity in attractions, more is choice available for tourists and more is
the variety of tourism activity available. According to UNWTO (1992),
“Destination is a geographical area consisting of all the services and
infrastructure necessary for the stay of a specific tourist or tourism segment.
Destinations are the competitive units of incoming tourism. Destinations are
therefore an important part of a tourism product.”Burkart and Medlik
(1974)defined destination as the geographical unit which can be a city or a
town or a village or an island or a nation or a region or a continent. This
geographical unit can be known as a tourist destination which would help in
convenient focus for the understanding of tourist, tourism, stakeholders
involved and the impact of tourism on the local community. However, the
potential of a tourism destination can be judged by three main factors such as
attractions, accessibility and amenities. These factors may also be termed as
the tourist qualities of a destination.

107
Concept and Impacts of
Tourism

Mill and Morrison (1992) defined tourism destination as a part of tourism

system where a mix of interdependent elements produce an experience. But, in
order to have a memorable and long lasting experience, all elements should be
present and interact with each other positively. These interdependent elements
are attractions, facilities, infrastructure, transportation and hospitality.

We can sum up all the above aspects to form a universal definition of tourism
destination as “a geographical unit or physical space where a tourist stays for
at least one night and where a mix of interdependent elements such as
attractions, facilities, infrastructure, transportation and hospitality interact to
give a memorable experience to the tourists.” In tourism destination, there are
boundaries which are physical or administrative, so that its various aspects
such as management, images, and perceptions can be defined which also lead
to market competitiveness. Local tourism destinations can be on a massive or
smaller scale such as a continent (Asia), or a continent region (South Asia), or
a country (India) or a region (south India), or a state (Himachal Pradesh) or an
island (Lakshadweep) or a city (Shimla) or a town (Dharamshala) or a village
(Pragpur) or a self-contained unit (water park).Tourism destination comprises
numerous elements such as Attractions, Amenities, Accessibility,
Accommodation, Activities, Package price, Image & character and Human
resources. Attractions are the main motivating forces which pull tourists. The
attraction is any entity (object), someone (person), place, or conception
(concept) which attracts visitors either geographically or else through remote
electronic means to enable them tourism experience. Generally, attractions are
divided into two broad categories such as cultural and natural, but according to
the world heritage centre, they can be divided into Geophysical-
landscapeaesthetic (mountains, rivers, gorges, caves etc.), Ecological-
biological (organisms, communities, ecological events such as migration,
predation etc.), Cultural-historical (archaeological remains, human
construction, human practices, human evolution etc.) and Recreational
(include man-made attractions such as theme parks, museums, theatre’s,
botanical garden etc.).Also, these attractions are noticeable at a variety of
scales which again are dependent on market observation. Some attractions
draw local crowds (a statue), domestic tourists (religious event) or
international tourists (Mt. Everest).

7.6 TRAVEL INTERMEDIARIES AND

DESTINATION MANAGEMENT
ORGANISATIONS (DMOS)

Intermediaries are the organisations which makes a link between the producers
of goods/services and end users/buyers. There can be multiple layers of
intermediary organisations depending on the nature of goods/services and
nature of industry. In case of tourism industry following travel intermediaries
are there:

108
 Tourism Industry :
Structure and
Components

Tour Operators
WholeSale Travel Agencies
Retail Travel Agencies
Specialised Agencies
Destination Management Organisations
Ground Operators/Ground Handling Agents.
Personal Selling Agents / General Selling Agent (PSA/GSA)
Tour operator is basically an organisation or firm which buys independent
travel components separately from their suppliers like air tickets from airlines,
rooms nights from hotels etc., combines these components to form a tour
package which is sold with their own price tag either directly to the public or
through other intermediaries like wholesale travel agencies or retail travel
agencies or other specialised sales channels like GSA/PSA. Based on their
area of operations tour operators can be further classified into inbound tour
operators (catering to incoming tourists), outbound tour operators (catering to
outgoing tourists), domestic tour operators(catering to domestic tourists) or
ground operators(providing ground arrangements services on the destination).
Wholesale travel agencies purchase the packages from tour operators or may
make its own packages by purchasing various components from suppliers.
Wholesale travel agencies further sell the tour packages either through the
network of retail travel agencies or directly to the clients. Retail travel
agencies on the other hand sell tourism products directly to the public on
behalf of product suppliers and get the commission in return. In case of some
destinations there are specialised travel agencies selling specific kind of
tourism products only. For example a travel agency at some wild life
destination selling tourism services like game drives etc specific to that
destination only. There we may have GSA/ PSA which are travel
organisations authorised by specific suppliers to sell their products on their
behalf in the areas where they don’t have their own presence.
For example, Thomas Cook can appoint some local travel agency in a city like
Karnal or Kurukshetra as their PSA to sell their packages in return of
commission.
Apart from above, we have the Destination Management Organisation(DMOs)
which manages the tourism activity at destination level. The role of these
destination management organisations is to provide leadership for the
management of tourism at destination level and to co-ordinate various
activities under a rational strategy (Bornhost, Ritchie & Sheehan, 2010 in
Chand, 2018). According to Inksonand Kolb (1998), DMO are “formal entities
in which a complex interaction of people, materials and money are used for
the creation and distribution of goods and services”. Hence, these DMO cover
a wide array of issues big or small related to external and internal
environments such as governance, leadership, management ethics innovation

109
Concept and Impacts of
Tourism

human resource Management communication networks outsourcing and

organisation learning (Kaurav, Prakash and Singh 2017 in Chand, 2018).
DMOs may have many functions depending on the nature of the destination
but five main areas of activity are:
1) Coordination of sub sectors of tourism.
2) Help local community understand the importance of travel and tourism
industry.
3) Helping development of tourism facilities and image of a tourism
destination.
4) Assisting tourists through visitor service centres.
5) To establish liaison role in order to boost external organisations such as
tour operators, travel agents, event planners, hoteliers, resorts etc.
These DMO function at various levels and can be categorised into three types:
1) NTO or NTA: known as national tourism organisation or national
tourism authority. This is the highest level of DMO or at country level.
For example, Ministry of Tourism, Govt. of India, ITDC etc.
2) RTO or STO: Known as regional tourism organisation or state Tourism
organisation which operates at Regional or State level. For example,
MPSTDC(Madhya Pradesh State Tourism Development Corporation
Limited), HPTDC (Himachal Pradesh Tourism Corporation).
3) LTA/ LTO: Known as local tourism association or local tourism
organisation functioning at local, city or town level. For Example,
Kurukshetra Development Board (KDB), GMC (Gwalior Municipal
Corporation), MCGM (Municipal Corporation of Greater Mumbai).

7.7 LINKAGES AND INTEGRATIONS IN TOURISM

INDUSTRY

As we have seen that tourism industry has a complex structure which is owing
to the peculiar nature of tourism product. In order to perform its functions
effectively travel organisations like travel agency or tour operators need to
work in closely with many other organisations. Below figure shows various
linkages that exist in tourism industry. As we can see the travel agency need to
have close ties with not only the accommodation and transportation
establishments but also with government organisations like Ministry of
Tourism, Ministry of External Affairs, Banking & Insurance Companies etc.

110
 Tourism Industry :
Structure and
Components

Transport
Lodging Co. Cruise Co. Road Rail
Airlines Hotels
Domestic & Models
International Resorts
Others
Tour Wholesalers

Tourism
Associations Insurance Co.
Travel Agency

Cultural and Foreign Travel

Ministry of
Entertrainment Co.
External Affiars
Organisations

Educational Banking
Govt. DOT Institutions Companies

Fig. 7.2: Travel trade linkages, Travel Agency Management (2000)

Now, before discussing the integration in tourism industry, it is necessary to

have an idea of supply chain in general and tourism supply chain in specific.
Supply chain in general is the movement of goods or services from the
producers to the end users. In case of tourism, since there is no tangible
product, rather it is the amalgam of various services, in view of new age
distribution channels, tourism supply chain can be depicted as per below
diagram.

111
Concept and Impacts of
Tourism

Fig. 7.3: Tourism Supply Chain, Basic of Tourism (2004)

As we can see in the above figure the end user i.e. tourist have the option to
purchase the tourism product from any member of the supply chain based on
the information and resources available with him. Integration in business
parlance means that one of two members from the supply chain collaborate by
means of mergers, acquisitions or any other in order to have the economic
benefits of reduced number of intermediary and economies of scale and scope.
Integration can be of three types i.e. vertical integration, horizontal integration
and diagonal integration. Whereas the vertical integration can be further
classified into two types bases on the direction of integration i.e. forward
vertical integration and backward vertical integration. Let us have a better look
at various types of integration with special reference to tourism supply chain.

A) Horizontal Integration – This type of integration occurs when the

organisations at the same level of supply chain collaborate with each
other for reaping the economic benefits of scale. So, in tourism supply
chain if two or more wholesale travel agencies or two/more retail travel
agencies or two/more destination companies collaborate with each other
by way of mergers/acquisitions etc in order to have benefits of
economies of scale in their business operations then it is called
Horizontal Integration.

112
 Tourism Industry :
Structure and
Components

B) Vertical Integration – In vertical integration organisations at different

levels of supply chain collaborate with each other in order to have the
economic benefits of economies of scope. For example, a wholesale
travel agency takes over a retail travel agency or an airline or hotel
taking over a retail/whole sale travel agency. The direction of integration
if its towards customer i.e. downwards in the supply chain it is called
forward vertical integration and if the integration is towards producers
then it will be called as backward vertical integration.
C) Diagonal Integration – This is the integration that takes place between
the organisations which are not the part of same supply chain but they
offer products complimentary to each other. For example, a wholesale/
retail travel agency may collaborate with any banking or insurance
company to cater the foreign exchange and insurance needs of its
customers, then it will be the case of diagonal integration. A restaurant
chain may collaborate with petrol marketing companies to open its
outlets at selected petrol pumps and then both can have the benefits of
economies of scope by extending the product line.

7.8 LET US SUM UP

Tourism product has its unique characteristics which further makes tourism
industry a complex one. Main components of tourism industry being private
and public sector support organisations, carrier and transport organizations,
accommodation organisations, travel intermediaries etc. play an important role
in overall performance to tourism product. Accommodation being an essential
component of the tourism industry is very important and fundamental of all
the attributes of the tourism supply. It plays an important function both in the
context of urban and rural tourism by providing lodging and dining
opportunity for the visitors.

Transportation also being an important component of tourism product has its

own relevance in ensuring the movement of individuals/groups from one place
to another thus making the tourist destination accessible to the tourist. The
transportation can be done by air, sea and surface. Transportation not only
facilitates movement of tourist but also enhance the overall experience of the
visitors.The various factors taken into account before selecting any mode of
transportation is time available for travel, distance to be covered, status of the
tourist, comfort, geographical position, benefit, competition, status, security
and price involved. Each mode of transport has its own advantages and
disadvantages. Apart from these, we have destination and attractions which are
primary pull factors for tourists. More the diversity of attractions at a
destination, more it will have the appeal for perspective tourists. Travel
intermediaries like tour operators, wholesale travel agencies, retail travel
agencies etc. too play their role in bringing the tourism services closer to end
users. The complexity of tourism product, further makes to have linkages with
113
Concept and Impacts of
Tourism

many other government, non-government organisations necessary. Also, like

other industries, travel organisations go for various kinds of integrations in
order to have the benefits of economies of scale and scope.

7.9 KEY WORDS

Accessibility: Comprises the modes of transportation (land, air or water) and

facilities present at the tourism destination.

Accommodation: It provides the lodging, food and other services to the

tourist. They may comprise the hotel proper or other supplementary types of
accommodation.

Amenities: Amemities are the various services and facilities a visitor needs at
a tourism destination. It is vital for the tourism and include very basic to
advance facilities such as convenience facilities, signage, emergency
facilities, postal services, shopping, theatre, parking etc. It at sometimes is also
referred to as “pleasantness” of a destination.

Hotel Proper: It is a conventional type of Hotel facilities and provides all

facilities of hotel such as lodging and boarding. Example- All suite hotels,
Airport hotels, Boutique Hotels etc.

Supplementary Type of Accommodation: There are additional categories of

accommodation which are different from conventional hotels. They basically
provide lodging facilities’ for e.g. Dharamsala, youth hostel, Dak bungalow,
sanatoria, youth hostel etc.

Land Transport: It is also known as ground transport and it insures the

movement of people, goods and various types of cargo from one location to
another. It may involve pathways, roadways, tramways or railways.

Water transport: Water transport or waterways is an important mode of

transportation for both passenger and cargo. It requires watercraft such as boat,
ship or barge which moves over the water body such as River, Lake, Canal,
Sea or Ocean. It is one of the oldest and cheapest.

Pathways: It mainly involves a path, way or a route in remote rural areas

which are forested or mountainous where a human being or animals can only
travel. It is known as Head loads (or human transport) or Pack animals (or
animal transport like horse, mule, donkey, yak etc.).
Inland waterways: It was the main dominant mode of transport before the
arrival of railways and development of road transport.

Air Transport: Air transportation is fastest means of transportation through

air. Examples are Helicopters, airplanes, hot air balloons; blimps, gliders, hand
gliders, parachute, and jet aircraft are all vehicles for Air travel.

114
 Tourism Industry :
Structure and
Components

Tourism destination: A geographical unit or physical space where a tourist

stays for at least one night and where a mix of interdependent elements such as
attractions, facilities, infrastructure, transportation and hospitality interact to
give a memorable experience to the tourists.

Attraction: It is any entity, historic monument, individual, someone (person),

location, or conception (concept) which attracts visitors either geographically
or otherwise to enable them tourism experience.

DMO: DMOs are known as destination management organisations. They are

formal units/bodies in which an intricateinterface of people, materials and
money occurs and which is used for the creation and distribution of tourism
services.

NTO or NTA: known as national tourism organisation or national tourism

authority. This is the highest level of DMO or at country level. Example-
ministry of Tourism, ITDC etc.

RTO or STO: Known as regional Tourism organisation or state Tourism

organisation which operates at Regional or State level. Example: MPSTDC
(Madhya Pradesh State Tourism Development Corporation Limited), HPTDC
(Himachal Pradesh Tourism Corporation).

LTA/ LTO: Known as local tourism association or local Tourism organisation

functioning at local, city or town level. Example: GMC (Gwalior Municipal
Corporation); MCGM (Municipal Corporation of greater Mumbai).

Linkages: A linkage industry is in tourism are industries which are associated

with Tourism in such a way that the existence of one is dependent on the
other,

Integrations: Involves approach of accomplishing things collectively. It is a

way of merging general or generic talent and resources to yield products or
delivery quality services.

Horizontal Integration: Occurs when one company/business offering the

similar products overtakes the other company/business.

Vertical Integration: It is when one company enhances its business into

another area by overtaking another company. However, it is on a different
level of the chain.

7.10 ANSWER TO CHECK YOUR PROGRESS

Check Your Progress A

1) See Section 7.2

115
Concept and Impacts of
Tourism

2) This includes the guiding and escorting services, travel insurance and
foreign currency services, tourism marketing service and travel trade
publications etc.
3) Activities in the various components of tourism:
Activity Component of
Tourism
a) Hotels Accommodation
b) Kayaking Activity
c) Water transport Accessibility
d) Postal services Amenities
e) Rural tours Package Available
f) Youth hostel Accommodation
g) Zip-lining Activity
h) Telecommunications Amenities
Check Your Progress B

1) See Section 7.4

2) Match the following Tourist trains with country:

a) Golden Eagle in Russia,

b) Venice Simplon-Orient Express (between Paris and Istanbul),
c) Golden Eagle Danube Express (Budapest, Vienna, Prague and
Sarajevo),
d) Ravos Rail (luxury train of South Africa),
e) Royal Scotsman luxury train (UK),
f) Chepe train of Mexico and
g) Ghan luxury train of Australia

7.11 TERMINAL QUESTIONS

1) What is the structure of the tourism industry?

2) What are the components of the Tourism Industry?
3) Write a note on Accommodation.
4) What are the various modes of transportation?
5) What is a Tourism destination?
6) What are Intermediaries in Tourism?

116
 Tourism Industry :
Structure and
Components

7) What are various linkages in tourism industry? Explain with suitable

examples.

117