Characteristics of the Tourism Industry

My thesis focuses on the tourism industry – or more specific the tourism industry in Tyrol, Austria. There are certain important characteristics about that industry which make it necessary and exciting for companies when planning a marketing/social media strategy. What is so special about tourism compared to the producing or trading industries?

Perishability

Perishability is one of the most important characteristics of the tourism industry. The products/services in the tourism and travel industry are consumed as they are produced. Hotel rooms and cable car seats cannot be warehoused for futures sales. When a hotel room is not booked tonight, you cannot take ‘tonight’ and sell it tomorrow. Once the train left the station, unused capacity cannot be sold afterwards – provided that it was no time-traveling train.

As an uncertainty in customer demand leverages this issue, hotels and travel agencies tend to overbook available rooms and seats. Finding an alternative product for the customer and living with the consequences of overbooking is statistically more economical.

Inconsistency

Noise

Image by Andy Carvin

Products of the tourism industry always differ. Even the same hotel room in the same week with the same weather can be perceived differently due to the mood of the chef. It is always about the experience that the customer makes. Rational product attributes like price, nights of stay, and additional services can only be compared to a minor degree. It is challenging to deal with the customer perception of the product (the perceived quality) as it is highly affected by numerous uninfluenceable aspects such as weather, construction sites, other customers etc. Hence, the product is very inconsistent and cannot be standardized.

Investment and immobility

Ball and Chain

Image by Travis S.

Talking about hotels and other accommodations there is usually a big capital lockup in the assets. Hotels have furniture, restaurants, TV-sets, laundry-service, pools, saunas etc. – invested capital that has to pay off.

And that’s not all – all those investments are attached to one locality which means that those tourism companies are to a huge extent dependent on the attractiveness of the region, the country, its surroundings and so forth.

People-oriented

The tourism industry builds entirely upon people. The interaction between the staff and the customer determines the perceived product quality. Unlike tangible products where the customer buys certain features, production quality, durability etc. the holiday quality results from personal interactions starting with the information and booking process over the stay up to the journey home.

Inseparability

Sleigh Ride

Image by Peter E. Lee

Most travel products are first sold and the produced and consumed at the same time. This is an aspect which clearly sets tourism apart from tangible products. When you buy a new computer it is produced and shipped before you see it on the website or at the retailer’s premise. The consumption of that computer – using it – takes place after purchase at your home. You cannot take the hotel room home – only the small bottles of shampoo and toothpaste. And you cannot enjoy the alpine sleigh ride in your living room. Tourism products can only be consumed at the supplier’s premise.

Intangibility

Tirol

Image by Tirol Werbung

Tourism products are intangible. A night in a hotel, a day in a ski-resort, the calm flight with the nice attendant, and the smiling tour-guide taking you to the peak of an alpine mountain – all this cannot be touched. Tourism is all about the time spent and the experience made. The products sold by tourism companies both can’t be reproduced or reused. Nor can the feeling of consumption be captured to its full extent. There are merely attempts with photographs and video cameras. Probably everybody was already in the situation where you showed your holiday pictures to your family or friends and said “Well, it looked better when I was there. The picture cannot really reproduce the sentiment)… Tourism is a subjective picture planted into the customers’ minds.

Inflexibility

Travel products are fairly inflexible in terms of fluctuation. Hotels cannot change their capacities quickly enough to react on spontaneous fluctuations in demand. Hence, such companies try to balance between high and low demands, so that it’s not too much of a pain for the company when restaurant tables remain empty and for customers when there are no more tables available.

Imitability

Offers and products by tourism companies are generally easy to copy. When the neighbor hotel adds a masseur to its SPA offer you more or less only need somebody with a firm grip and here you go. So how can hotels build a unique selling proposition? Originality, consistency, location etc. – but not by hoping that their services are not imitable.

These are all relevant characteristics, which have to be taken into consideration for marketing activities.  In my further posts I will discuss traditional marketing measures and social media marketing for this industry and I will slowly approach the ubiquitous ROI. So stay with me!

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5 comments on “Characteristics of the Tourism Industry

  1. hey Sebastian,
    whats about Responsiveness (time), Assurance and Reliability (keep certain level of standard, service, also limite staff fluctuation) and communication in general (complaints, questions to the destination, etc.)?

    • Hey Hanna,
      thanks for your thoughts and engagement! What do you mean when you are talking about the responsiveness? Do you mean that the tourism companies can react quicker to changes in customers’ needs and in turn adapt its product/service range?

      I totally agree on your points about assurance, reliability and communication. These are key quality indicators for the customer. Customer service and the customers’ need of consistency and reliability exists in every industry and it’s getting more important through the customers’ power in social networks. But especially in the tourism markets – as stated in the post – the perception of quality is totally people-driven. You have to have good staff because there are a lot of “faces to the customer”. The receptionist, the tour guide, the travel agent, the cleaner …

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