Current Trends and Issues

in the Tourism and

Hospitality Industry
chapter 7
Learning Outcomes:

At the end of this chapter, you should be able to:

1. discuss the social and economic changes that suggest a bright future for
the tourism and hospitality industry;
2.be familiar with the specific issues that owner and managers of the
tourism and hospitality establishments are likely to face in the following
areas: marketing, legal, human resources, operations, and consumer
affairs; and
3. identify the steps taken by the owners and managers of tourism and
hospitality entities to address the major issues confronting the industry.
The Bright Future of Tourism and Hospitality
In recent years, a number of significant social and economic changes have occurred that suggest
a bright future for the tourism and hospitality industry. These are:

1. Early retirement. At present, many workers retire at an earlier age than the case in previous
years. The US social security system provides benefits to workers as young as 62 years of age
and many employee retirement programs are based on years of service rather than on age. In
some retirement programs, specifically government programs, it is possible to work 25 or 30
years and receive benefits at the age of 55 or younger. The increasing number of people who
retire early is beneficial for the tourism and hospitality industry because these people use their
time to travel and see the world;

2. Longer life span. The average individual can now expect to live beyond the age of 70 and
many will live longer. This is in contrast to earlier generations when the average life span was
much less The increasing population of older, retired citizens who are richer due to pension
programs and are healthier provides a larger base of potential customers for tourism and
hospitality operations;
3.Shorter workweek. In the past, the six-day workweek was the standard for most working
people. At present, the five-day workweek is standard and the four-day workweek is becoming
common-leaving several days for other activities. The resulting increase in leisure time,
combined with faster and easier transportation, makes possible for many individuals to take
weekend vacations and travel to a degree they could not have made a few years ago. The
tourism and hospitality industry will surely benefit from this increase in travel;

4. Greater disposable income. The average family has more money to spend than before. This
is due to higher wages and two-earner households. A large portion of the additional disposable
income is spent on consumer goods and services. The tourism and hospitality operations
receive an important share of it;
5. Greater mobility. Improved roads and better transportation make it easier
to travel every year. The modern highway system has reduced the time
required for automobile travel between any two points. New planes use new
technologies which enable them to carry more passengers while using less
fuel. These increases in travel have a positive impact on tourism and
hospitality industry sales; and
03 03

6. Smaller families. The average family size has decreased. Thus, it is easier
for the family to travel and travel costs less if few family members travel.
Issues in Tourism and Hospitality
Although the future of the tourism and hospitality industry is
bright, it is not without problems. Those pursuing careers in
tourism and hospitality will find it necessary to obtain knowledge
with regard to a number of issues that the industry must face in
the future. Some have been issues for many years, but no final
solutions have been found. Others are emerging issues brought
about by social, economic, and technological change.
These issues can be categorized under the following headings:
1. marketing; 4. operations; and
2. legal; 5. consumer affairs;
3. human resources;
Marketing Issues
The marketing issues are changing demographics,
changing vacation patterns, market segmentation,
frequent guests programs, maturation in segments of the
fast-food industry, and consolidation.

Changing Demographics
The population of developed countries is aging. The median is now 33
years and is projected to increase in the coming years. This is an issue that
is significant to the tourism and hospitality industry. An older population has
preferences that differ from those of a younger population. Thus, service
providers will find it necessary to adjust their service products to the
changing preferences of the market.
 Another changing demographic characteristic is the
increase in the number of single-parent households. Single-
parent households generally have lower levels of
discretionary income. To reach this market, service
providers will have to develop new service products that will
appeal to this demographic segment at affordable prices.

A third demographic change is the continuing growth in

the number of people traveling for personal rather than for
business purposes. Approximately 74% of domestic
travelers travel primarily for a nonbusiness purpose. This
group is responsible for the increased percentage of the
travel market in the past 45 years and the growth is sure to
continue.
 The fourth demographic change is the growth in the number
of international travelers. One of the primary reasons is the
decreased cost of transportation relative to income, making
travel more affordable to everyone Another is increased vacation
time and a greater number of holidays in many countries.

Changing Vacation
Patterns
Citizens of industrialized countries are changing their vacation patterns.
The traditional once-a-year vacation of two weeks is declining in popularity.
For a growing number of people, vacations are becoming shorter and more
frequent.

At present, more people usually plan mini-vacations, adding two of their

annual vacation days to a three-day holiday weekend. In this way, they
manage to get away for a mini-vacation of five days while using only two
actual vacation days.
 Market Segmentation
Since 1980, the principal term in tourism marketing has been
marketing segmentation. Until the late 1970s, lodging
establishments attempted to appeal to broad general markets.
Their aim was to appeal to a broad group of potential visitors.
In recent years, the success of the limited service properties
has led to the development of other properties intended to
appeal to selected market segments. Some of the types of
lodge properties to become apparent include al-suite
properties, residence properties, sub-budget properties, and a
variety of budget properties, which differ by their varying
services and amenities.
 Examples of market segmentation have been
evident in food service in the past 10 years. A number
of restaurants that additionally offered extensive
something-for-everyone menus has began to see
reductions in business, as customers have chosen to
patronize restaurants offering specialized service
products.
As new market segments are identified, properties
designed to appeal to those segments are likely to be
developed.
Frequent Guest Programs
Because of the proliferation of properties and the increasing
competition among them, some lodging operators have begun to
develop programs to gain repeat business. Modeled on the
frequent-flyer programs which were successfully used by many
airline companies, these plans give credits to regular guests. They
can be redeemed in the form of reduced rates, upgrades, free
accommodations, free meals, or any variety of amenities. As
competition becomes keener, the number of these kinds of
programs will certainly grow. Many believe that these programs will
gain in the lodging business the same favor they have achieved
among airline customers.
 Maturation in Segments of the Fast-Food Industry

Segments of the fast-food industry are no longer expanding

to the extent that was formerly possible. The demand for
hamburger is not growing as fast as it once did, so operators find
it necessary to develop new products to maintain the desired
sales level. At present, establishments that previously offered
few products other than hamburgers now offer pizza, salads,
poultry, or other meat products. As public tastes continue to
change, food service operators will have to develop specialty
products to retain an adequate share of the market.
 Consolidation in the Commercial Lodging
Industry

Some experts are now predicting that the number of large

nationwide lodging companies will decrease in the coming years;
that a small number of firms will dominate the lodging industry by
acquiring smaller chains of regional or national properties. This
will enable successful companies to obtain the funds required to
expand their operations internationally.

The trend toward consolidation will have a tremendous impact

on all commercial lodging operations. Both independent
operation and owners of smaller chains will find it difficult to
compete with heavily advertised national and international
brands.
Legal Issues
The legal issues are liquor liability and ethics in
the tourism and hospitality industry.
Liquor Liability
In the past, there was a growing public concern over the increasing
number of alcohol-related automobile accidents. At present, alcohol and the
use of drugs is a factor in more than half of all automobile accidents. This led
the public to pressure state legislatures to act. Legislators have responded by
lowering the levels of blood alcohol in which an individual is considered
intoxicated and by increasing penalties on offenders. In addition, several states
in the US have imposed new regulations on the serving of alcoholic beverages.
In one US state, new regulations have made the discounting of drinks —the
so-called happy hour— illegal.
 In several states, establishments and their owners can be
held financially accountable if they serve alcoholic beverages
to an intoxicated individual who causes damage or injury after
leaving the establishment. In some places, this has caused
tremendous increase in the cost of liability insurance. This
prompted some bar owners to go out of business. It has also
caused some restaurant owners to stop serving alcoholic
beverages. Some restaurant and bar owners have changed
their market strategies. They now feature and promote non-
alcoholic drinks. As societal attitudes toward alcoholic drinks
continue to change, it will be necessary for food service and
lodging operators to adjust.
 Ethics in the Tourism and
Hospitality Industry

Ethics is an academic discipline that deals with

the study of codes of moral conduct practiced by
individuals or groups. Business ethics refers to the
application of a particular moral code to
relationships, activities, and discussions made by
individuals in business or industry. It is the code
that enables the individual in business to
distinguish right from wrong; to differentiate
between ethical and unethical behavior.
 Ethics in the tourism and hospitality industry has been the
issue for thousands of years. The business practices of some
operators of tourism and hospitality establishments are
questionable. For example, a manager of a new restaurant
may hire 20 waiters but intends to keep only the 12 most able
after the second week of operation. An owner may fail to
report all sales on his income tax returns. A tour guide may
cheat on his income tax by failing to report all his tips. Another
owner may cheat on his taxes by charging personal expenses
to the business. An employee in the purchasing department
may accept gifts from vendors in return for buying inferior
products. Business ethics is likely to remain forever in the list
of tourism and hospitality issues.
Human Resource Issues
Some of the human resource issues are sexual harassment, employee
turnover, employee assistance plans, and employee empowerment.

Sexual Harassment
Sexual harassment may be defined as unwelcome sexual
advances, requests for sexual favors, and other verbal or physical
conduct of sexual nature that take place under any of the
following conditions:
1. submission is made a condition of the person's employment;

2. submission to or rejection of such conduct is used as a basis for

employment discussions affecting the person; and

3. it unreasonably interferes with the person's work performance or

creates an intimidating, hostile, or offensive work environment.
 Most cases of sexual harassment involve complaints by females
about coworkers or superiors. In the last 10 years, the number of cases
has grown because an increasing number of women have become
willing to speak out.
Because employers are liable for the actions of their employees at
work, it is very important for employers to take the following steps:
1. institute a strict policy banning all forms of sexual harassment in the
workplace;

2. develop appropriate training programs for managers and employees so that

all will understand and become sensitive to the nature of sexual harassment;
and

3. establish procedures for handling all complaints promptly, fairly, and in a

sensitive manner.
Employee Turnover

Employee turnover is one of the major issues confronting

managers of tourism and hospitality enterprises. With turnover rates
averaging approximately 100% per year, managers are always faced
with the problem of losing experienced employees and hiring less-
experienced employees as replacements. Faced with inexperienced
replacements, several managers believe they have only two choices-to
shoulder the high training costs associated with developing new
employees into efficient workers or to incur the equally high costs
associated with working with untrained employees. Very few realize
that there is a third alternative-to retain valuable employees and
reduce turnovers.
 Many managers in the tourism and hospitality industry understand
the requirements to reduce turnovers. These include adequate wages
and benefits, reasonable working conditions, reasonable work
schedules, and reasonable. treatment of employees by managers.
However, only few managers put these requirements into practice.
Several managers and employers still treat their employees as in they
were parts of a big wheel rather than people. They hire workers at the
lowest possible wages, fail to provide proper training, then admonish them
for not doing their. work correctly. They assign workers' schedules without
taking into account the workers' personal preferences, change the
schedules of the workers without previous notice, and order them to report
for work on their day-off. Then, managers complain about employees who
resign to accept equal jobs with other employers.
Employee Assistance Plans
Employee assistance plans (EAPs) are included in the discussion of
major issues in the tourism and hospitality industry because they are one
of the secular steps to pay attention regarding the problems of their
employees. The problems of those employed in the tourism and
hospitality industry include psychological problems, family issues,
financial problems, legal issues, health, as well as educational issues.
The tourism and hospitality manager who establishes
EAPs to benefit employees will eventualy develop a more
loyal workforce, one that is willing to make a great effort to
attain the operational goals of the enterprise. In addition, the
manager who helps the employees will reduce employee
turnover.
Employee Empowerment
In some tourism and hospitality establishments, managers have developed
rules and procedures that employees are directed to follow. These include.
directives such as inflexible rules for checkout time, rules prohibiting free refills on
coffee, strict limits on the number of hand towels per guest, or directives
prohibiting substitutions on special dinner menus. These may affect the overal
impression of a guest regarding a particular food service or lodging enterprise. For
some guests, these rules may be enough to make them decide never to return.

Many owners and managers have realized the ineffectiveness of setting strict
rules governing every detail of guest service. Thus, they now set policies that are
guest-oriented. They empower their employees to make decisions that will
improve the quality of service to guests without having a negative impact on
operations.
 Operations
The Issues
operations issues include automation, smoking/nonsmoking
areas, sanitation and public health, and recycling solid waste.
Automation
Automation is the process of using electronic and mechanical
equipment and machinery to complete some or all of the tasks
associated with a given enterprise. The two primary reasons for
automating an enterprise are:
1. to increase the speed of work; and

2. to reduce the cost of work.

 Automation in the travel industry is here to stay.
Computerization will affect the industry principally in three areas,
namely:
1. Communications. Business travelers frequently change their
itineraries to suit their changing requirements. Much time at
present is lost in making alternative arrangements through
vendors or distributors from payphones, hotel rooms, or
secretaries' phones. Portable communication data units
(PCDUs), a portable telephone or computer, allows a business
traveler to communicate with any travel entity from any place
including airplanes and rearrange or reconfirm his travel plane;
 2. Interactive CRTs. Interactive television is now being used
in some cities. Within a few more years, more cities will be
using it. It is possible that much of the order placement process
will be shifted to interactive television. Specific order forms can
be programmed into a database that can be accessed by any
number of users. If calls are reduced to one-third by interactive
CRTs, travel counselors will be reaching productivity levels of
$2.5 million to $5 million per annum each. Hence, the cost of
getting a traveler on an airplane, into a hotel, or a car is highly
reduced and the profitability of the distribution system as well
as the cost to the traveler is maximized; and
 3. Elimination of Tickets. There is no longer a need for the
traveler to carry an actual document for an airplane seat or a
hotel reservation. A traveler may place the order about his
impending trip on his interactive television, and insert his travel
card into the appropriate slot on the side of the console. After
all arrangements and confirmations have been made, the
computer magnetically codes his card. The traveler arrives at
the airport, goes to the appropriate gate, and as he enters the
airplane right before he hangs up his carry-on bag, there is a
slot into which he simply sticks his card. If the response is
positive, he presses a button and a receipt pops out of the wall.
 One of the biggest problems of agents nowadays is how to find
the most efficient way to deliver the traveler's documents. The
elimination of tickets has the biggest impact on the distribution
system because the role of the agent as a trustee is eliminated.
Consequently, the order-taker-only agent will also be eliminated.

At present, some food service and lodging establishments have

automated to the extent that guests and customers no longer have
direct contact with any staff member. There are lodging operations in
which a guest inserts a credit card in an electronic device, enabling
him to check in without speaking to the room clerk at the desk. Check
out can be done through a touch-sensitive screen on the television set
in the guest's room. Food and beverages can be taken from vending
machines.
 It is interesting to note that food service
and lodging establishments have tended to
maintain the appearance of service even though
automated devices have been installed. For
example, some hotels with automatic elevators
have continued to hire personnel to run the
elevators. Guests are still given a high level of
service using more modern and efficient
equipment than the older manual elevators. The
technological capacity to automate grows daily and
the tourism and hospitality industry will have to
determine the extent to which it should use the
Smoking/Nonsmoking Areas
As more and more customers of tourism and hospitality entities demand
smoke-free areas for dining and smoke-free sleeping accommodations, the
industry will continue to exert efforts to meet these demands. This is
specifically true in places in which legislation orders that appropriate facilities
be made available. Hence, restaurants apportion sections of their dining
facilities to accommodate the requests of nonsmokers. Some even install or
improve ventilation equipment.

Many lodging establishments have set aside accommodations for

nonsmokers. In some hotels, smoking is prohibited in the lobbies, corridors,
elevators, and other areas. Airlines have also established nonsmoking areas.

The prohibition of smoking in tourism and hospitality enterprises is an issue

that is of increasing importance to owners and managers in the coming years.
 Sanitation and Public Health
A very important issue in food service is sanitation.
Everybody agrees that all steps should be taken to prevent
illnesses that are caused by the manner in which food is
handled or to the food itself.
Proper food handling has always been an issue in the
industry. Managers must always be sure that food is bought
from responsible vendors. Food must be kept at suitable
temperatures to prevent the growth of bacteria. It should be
placed under proper conditions to prevent infestation by insects
or rodents.
 The surfaces of equipment must be cleaned very well to ensure that
food is not contaminated during preparation. Washing is a necessity in
food service such as the washing of the hands of the employees, the
washing of the fresh food to remove chemical residue, as well as the
thorough washing of china, glassware, flatware, pots, and pans that are
used in the preparation and service of food and beverages.

National and local governments apply strict sanitary standards to

food and beverage operations. Some conduct regular inspections and
apply sanctions on those found violating the regulations. The
sanctions range from imposing fines, publishing lists of violators in
newspapers, and closing the establishment of consistent violators.
To ensure compliance with local sanitary codes, many
food and beverage operators hire consultants to
conduct regular inspections and to help in the
immediate correction of any violation. As consumers
become more aware of the potential harm brought
about by improperly handled food, preventing possible
violations of local codes will be a significant issue to
food and beverage operators.
Recycling Solid Waste

In previous years, there has been a gradual closing of the

landfills that were used for disposing solid wastes and a growing
awareness of the harmful effects of either burning solid waste or
dumping it into the sea. This has resulted in major waste
disposal problems in some places.

In some cities, the cost of removing solid wastes is increasing

to the extent that government and citizens are unable to pay. In
many of these areas, separating recyclable plastic, glass, and
other items from other solid wastes greatly decreases the
quantities that require disposal.
 The trend toward recycling is likely to increase. Many in the
tourism and hospitality industry who have not been previously
affected by this issue will eventually find it necessary to adopt a
recycling program.
Consumer Affairs
Issues
The consumer affairs issues are fire, safety, truth in
menus, and diet/nutrition/ health.
Fire Safety
Fire safety has always been an important issue in the tourism and
hospitality industry. In earlier centuries, taverns, inns, and hotels which
were usually constructed of wood were regularly destroyed by fire.
Many were burned to the ground and a large number of people were
killed or crippled.
 During the twentieth century, hotels, motels, and other lodging
establishments have instituted many changes, among which are
improvements in design and construction as well as improvements in the
fire control systems installed in buildings. Examples are electronic smoke
detectors, automatic systems to summon fire departments, better
sprinkler systems, and so on. Because of these systems, people became
safer.
However, a number of dangers associated with fire remains to be
considered. In case of fire, guests in hotels and other lodging
operations may face danger from the toxic smoke resulting from the
burning of furniture, fixtures, and fibers produced from man-made
materials. In a fire, many of the artificial fibers used in wall coverings,
carpets, draperies, and upholstery produce toxic fumes that can be
more dangerous than the fire itself.
 Another problem is related to construction. In recent years, new
buildings were well-insulated to decrease heating and cooling
expenses. In some buildings, windows were not designed to be
opened. Temperature and air were controlled by very complicated
central systems. In case of fire in such buildings, there is a danger
that smoke may spread quickly throughout the building. At present,
individual room ventilation is installed to preempt the danger.

Truth in Menus
For food service operators, preparing truthful menus is an ethical
practice that should never be violated. However, a small minority
have produced menus that are not accurate indicators of the food
served in their establishments.
 Some serve US Choice beef when their menu states US Prime
beef. Others serve portions with fewer ounces than the number listed
in the menu. Still, others have not used the actual ingredients
suggested by their menus and have substituted one product for
another such as turkey for chicken, margarine for butter, generic
products for name brands, and domestic products for imported ones.

In some areas, consumer production laws have been passed

so that those who violate the regulations risk fines and loss of
licenses. It is important that those in the tourism and hospitality
industry conduct their operations ethically in order that consumers
will have complete faith in the truth of their menus, the
wholesomeness of their food, and the honesty of their business
practices.
Diet/Nutrition/
Health
Since the public is very much concerned about healthy diets
containing less fat and lesser calories, many food service
operators are adjusting their menus to the changing public tastes.
Some are devoting sections of their menus to food for the diet-
conscious; others are assigning certain menu items for those
interested in food that is low in sodium and cholesterol. An
increasing number of restaurants exert efforts to attract health-
conscious diners. Some have eliminated unhealthy food from their
menus.

The trend to healthier dining will surely continue. Successful

food service operators will have to give greater attention to the
nutritional content of food in the years to come.
The Future of Tourism and Hospitality
The World Travel and Tourism Council forecasts that travel and
tourism will grow ạt 40% to 50% in the next 10 years. This
tremendous increase presents great challenges and career
opportunities for tourism and hospitality graduates nowadays.
According to John Naisbitt, the futurist, the global economy of the
twenty-first century will be propelled by three super-service
industries namely telecommunications, information technology, and
travel and tourism. The following tourism and hospitality items are
but a few examples of the wave of the future:
1. increased speed and shopping use of the Internet in developed
countries;
2. extended reach in less-developed countries;
3. improved security of personal information;
4. robotic labor sources;
5. reservation systems with more sophisticated, voice-activated,
artificial intelligence;
6. improved navigational systems for rental cars;
7. electronic entertainment venues in rental cars and on planes
and cruise ships;
8. upgraded Internet personal digital assistants for operations;
9. marketing mass customization;
10. comprehensive branding campaigns for large and small
operators;
11. virtual online customer communication;
12. just-in-time seats/rooms/car inventories;
13. electronic travel agents;
14. blended hybrid accommodations;
15. global anti-terrorist microchip security systems;
16. more nutritional fast-food offerings;
17. emphasis on ecotourism; and
18. improved customer relationship marketing information.
 SUMMAR
Y retirement, longer life spans, shorter workweek,
Several social and economic changes are likely to affect the future of the tourism and
hospitality industry. These are early
greater disposable income, greater mobility, and smaller families. Many of the issues
that have to be considered by tourism and hospitality managers can be classified into
five areas, namely, marketing, legal, human resource, operations, and consumer
affairs. Marketing issues include changing demographics, changing vacation patterns,
market segmentation, frequent guest programs, maturation in the segments of the
fast-food industry, and consolidation in the commercial lodging industry. Legal issues
include liquor liability and ethics in tourism and hospitality. Human resource issues
include sexual harassment, employee turnover, employee assistance programs, and
employee empowerment. Operations issues include automation, smoking/
nonsmoking areas, sanitation and public health, and recycling solid waste. Finally,
consumer affairs issues include fire safety, truth in menus, and diet/nutrition/health.
Travel, tourism, and hospitality will grow tremendously in the global economy of the
twenty-first century.
 DISCUSSION
QUESTIONS
1. Identify the social and economic changes that suggest a bright
future for the
tourism and hospitality industry.

2. Discuss the specific issues in the following areas:

a. marketing
b. legal
c. human resources
d. operations
e. consumer affairs
3. Give the reasons for automating a tourism and hospitality
enterprise.

4. Discuss the steps taken by employers to prevent sexual

harassment in the workplace.

5. Identify the steps taken by owners and managers of tourism and

hospitality establishments to address the major issues confronting
the tourism and hospitality industry.

6. Explain the future of tourism and hospitality in the next 10 years.

changes that suggest a bright future for the
tourism and hospitality industry.
 CHAPTER ACTIVITIES
1. Conduct a research on why non-alcoholic drinks increased in popularity.

2. Conduct a study on the origin of cocktails.

3. Research on how ethics and social awareness have influenced the

tourism and hospitality industry.

4. As catering manager of a large banquet operation, the flowers for the

hotel are booked through your office. The account is worth $15,000.00 per
month. The florist offers you a 10% discount. Will you accept it? If so, state
why. If not, give your reasons.
 KEY TERMS AND
automationCONCEPTS
employee assistance plans
market segmentation
changing demographics
employee empowerment
nutrition
consolidation
employee turnover
public health
current issues
ethics
recycling solid waste
current trends
fire safety
sanitation
diet
human resource issues
sexual harassment
disposable income
liquor liability
truth in menus
 CHAPTER
Identify the following.
QUIZ
1. The study of the codes of moral conduct practiced by individuals or groups.
2. The unwelcome sexual advances, requests for sexual favors, and other verbal
or physical conduct of sexual nature.
3. The problems of employers in dealing with their employees.
4. The assistance given by employers to their employees.
5. The merging of several independent businesses within the same company
which is the result of buyouts and takeovers.
6. Travelers who travel outside their home country.
7. The process of using electronic and mechanical equipment and machinery to
complete the tasks of a certain enterprise.
8. The study and use of practical measures for the preservation of public health.
9. The act or process of nourishing.
10. The food and drinks that a person normally consumes.
ll.
Enumerate the following.
11-16. List down the marketing issues in the tourism and hospitality
industry.
17-20. Enumerate the human resource issues in the tourism and
hospitality industry
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