THM 10 – ENTREPRENEURSHIP IN TOURISM AND

HOSPITALITY

2nd Semester, S.Y. 2023-2024

CHAPTER 3 TOURISM AND HOSPITALITY BUSINESS ENVIRONMENT

Prepared by:

JANICE A. SOJOR, MSA

BSTM FACULTY
 CHAPTER 3
Tourism and Hospitality Business Environment

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

1. Understand the intricacies of business in the tourism and hospitality sector.
2. Describe factors that must be assessed in considering a business in the tourism
and hospitality industry.
3. Analyze the decision value chain in the tourism and hospitality areas.
4. Develop goals and objectives for a new business venture in the travel and
accommodation areas, and
5. Curate marketing and advertising strategy for a tourism and hospitality
business.

Introduction

Entrepreneurship in tourism and hospitality refers to the activities of the major

group of stakeholders of this service sector primarily designed for the effective and
profitable interaction of demand for and supply of tourism and hospitality products,
while at the same time ensuring critical and healthy competition resulting to an
improved economy.
Enterprise creation in this sector presupposes the embarking on legal and
sustainable activities in support of growing the travel and accommodation
livelihood.
With a greater level of income and a more flexible time, there are more
opportunities for business and personal travel

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 This resulted to a hospitality and tourism sector that has become one of the
fastest-growing industries in any world economy.
This chapter will introduce you to the interesting hospitality and tourism
industry within the context of entrepreneurial venture seeking, including learning
about its unique value chain and a look at some trends and innovation.

a. The Tourism and Hospitality Industry

The tourism and hospitality industry were seen as a major force that will drive
economies to a better state before the pandemic happened. As a result of the health
crisis brought about by COVID-19, a lot of countries closed their borders causing
significant effects to economies worldwide. Even countries considered to be the
most advanced nations were forced to impose quarantine measures in their
communities.
Worldwide lockdowns hindered many nations from engaging in business.
Major services have closed, and travel bans are enforced in many areas.
Among the greatly affected industries are the tourism and hospitality industry.
The major sector of this industry is forced to either significantly downgrade their
operations or close the business.
The airline sector of tourism suffered a lot due to travel restrictions cruise line
businesses are at a standstill, land travel is restricted to important businesses, and
tourist destinations lost clients because people fear exposure of the virus.

b. Tourism and Hospitality Industry System

The tourism and hospitality industry is expected to be a catalyst in spurring

socio-economic growth, generate employment, and contribute to the conservation of

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the environment and advance private-public collaboration. Businesses in this
industry are expected to be guided by these factors as they conduct their business.
The public and private partnership is included because each are expected to
play a role in the development of the industry.
The government or the public sector lay the guidelines and requirements for
all stakeholders to observe.
It also initiates development by building the necessary infrastructure,
pioneering the business ventures and encourage customer traffic in different
destinations.
The private sector is expected to follow the directions set by the government
infuse investments to jumpstart the local economy.
The industry is expected to be led by the private sector through investments,
generation of business opportunities, and employment.

c. Tourism and Hospitality Industry Value Chain

The tourism industry is composed of several sectors contributing to the

creation of products. A single tourism product might involve the contribution of
several sectors.
The following are the major sectors in the tourism industry:
Ø Travel intermediaries or the travel trade sector serves as the channel of
distribution of a tourism product. Travel agencies sell packages to earn
commissions while tour operators put together the different elements in one
product and earn profits through discounts.
Ø The transportation sector provides the means of reaching the target destination
or attraction. The different modes of transportation include land, water, and
air.

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 Ø The accommodation sector refers to the facilities and establishments provide
a bed for sleep and a roof to rest for a visitor. Accommodation may in a form
of a hotel with different classification depending on a standard of service,
location, and facility or inns, pension houses, motels, private homes even
campsites.
Ø The food and beverage service is composed of restaurants or any food
establishment that provide nourishment to guests. Drinks of any kind may also
be served in this establishment.
Ø Destination or attraction is the main reason why people travel. This
establishment is what compels a tourist to visit the area.
Ø The government sector is the one that overseas and regulates the industry. The
government provides the guidelines to follow when visitors engage in tourism.

Ø Tourism-related establishments are offices and entitles that provide for the
need of tourists. These establishments are part of the industry since they
provide support during business transactions in the industry. These include
the financial sector, the safety and security group, communication, retail, and
others.

d. entrepreneurship and entrepreneurs in tourism and hospitality

The tourism industry is composed of a very diverse collection of

establishments that are engaged in business under the tourism industry, as diverse as
the types are, so are the size of businesses. Businesses in the tourism and hospitality
industry may belong to the smallest form of businesses, from micro-businesses to
big and elaborate as international hotel chains or as high as international airlines.

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There is a lot of independent micro and small enterprise that support the tourism
industry.
Entrepreneurship in tourism and hospitality is all about identifying
opportunities, taking initiative, and creating new businesses within this exciting
industry. Here's a breakdown of the concept and the role of entrepreneurs in this
space.

Entrepreneurship in Tourism and Hospitality:

Ø Innovation. It's about finding new niches, developing fresh concepts, and
offering unique services or experiences that cater to the evolving needs of
travelers.
Ø Problem-solving. Entrepreneurs identify gaps in the market, like a lack of
budget-friendly accommodation options or a dearth of sustainable tour
packages. They then create businesses that address these issues.
Ø Adaptability. The tourism industry is dynamic, and successful entrepreneurs
need to be flexible and adjust their strategies based on changing consumer
preferences, technological advancements, and economic fluctuations.
Ø Visionaries. They possess a clear vision for their business and a passion for
the tourism and hospitality industry.
Ø Risk-takers. They're willing to take calculated risks to turn their ideas into
reality.
Ø Resourceful. They can identify and secure the resources needed to launch and
grow their businesses, such as funding, talent, and partnerships.
Ø Customer-centric. They understand their target market and prioritize
creating exceptional experiences for their guests.

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 e. Features of Tourism and Hospitality-Related Business

According to the UNWTO definition, a tourism product is a combination of

tangible and intangible elements, such as natural, cultural, and man-made resources.
Attractions, facilities, services, and activities. A tourism product is priced and sold
through distribution channels, and it has a life cycle.
In a few years after the pandemic, the tourism industry is foreseen to recover
and will grow at the same rate as before the pandemic. This trend is an opportunity
since it will create more investments and job opportunities. The anticipated growth
would require investments that will cater to tourists’ needs and qualified tourism and
hospitality professionals.
Here are some examples of entrepreneurial ventures in tourism and hospitality:
• Boutique hotels – the boutique hotels offers unique design, personalized
service, and a focus on local experiences.
• Adventure travel companies - Creating customized itineraries for thrill-
seeking tourists.
• Ecotourism lodges – it promotes environmentally sustainable travel practices
and cultural immersion.
• Online travel platforms - Connecting travelers with unique accommodation
options and local experiences.
• Food and beverage tours - Providing immersive culinary experiences that
showcase a destination's culture and cuisine.

Entrepreneurs in tourism and hospitality play a vital role in driving innovation,

creating jobs, and enhancing the overall traveler experience. They bring fresh ideas
and energy to the industry, ensuring it remains dynamic and caters to the ever-
changing needs of global tourism.

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 Before the pandemic, international tourism which in large aspect defines the
success of the industry, has reached 1.4 billion tourist who travelled all over the
world 2018. tourism generated US$1.7 trillion in worldwide experts in 2018. tourism
is considered to be n invisible export for it sells services rather than tangible
commodities.
Tourism plays an important role in promoting gender equality and women's
empowerment in the workforce. Tourism contributes a lot in terms of giving
employment opportunities for women. Among the different tourism businesses and
tourism-related establishments worldwide employ women both in formal informal
jobs. In the Philippines, not only do women belong in the workforce but they also
occupy significant positions in the company. It may be said that tourism can be a
gender equalizer industry.

f. Trends in Travel and Gastro Markets

Travel preferences and motivation may have changed if you are to compare
the reasons of tourists before and after the pandemic. As the world awaits on the
possibility of ending the pandemic with the rollout of vaccines, we expect a lot of
changes in the attitude and patterns in travel. One thing is sure in the tourism industry
–the desire to travel is innate among humankind. Even amid the pandemic, some
people are testing the limits of their luck and the tolerance of authorities by repeated
beaches of protocols and travel bans.

g. Innovations in the Tourism and Hospitality Business Environment

1. Industry 4.0
2. Business Models in the Tourism and Hospitality Industry
3. Different Types of Innovation

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 1. Industry 4.0
This concept basically means that the digitalization and traditional process
were linked together in a network. This results in an intelligent value chain and
product life cycle.
According to Klaus Schwab, the concept of the fourth industrial revolution
is best represented by the following products, driverless vehicles, advanced
robotics used in industries, and 3-dimensional printing. This concept also gave rise
to the idea of “smart” technology.
Smart technology is the network of tangible or intangible products supported
by digital systems. All the components are networked together to be able to
communicate intelligently with each other. This link is termed as “smart”
technology.
Smart products refer to the products that are adapted to the needs of the user
and can be connected to other systems through intelligent networking while smart
service refers to a combination of virtual and physical services that offer added value
to the customers.

2. Business Models in the Tourism and Hospitality Industry

An emerging business model that is very popular before the pandemic is the
sharing or collaborative economy. This model has a significant impact on the
hospitality and tourism industry. The concept of the sharing economy is utilizing
unused personal resources such as spare bedrooms and car seats more efficiently.
Before the pandemic, it was successful. But the pandemic may significantly affect
the business model since the people are very concerned with hygiene and safety.

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 3. Different Types of Innovation
Before the pandemic, there are innovations introduced by businesses in the
tourism and hospitality industry that has resulted in promising results. Advance
software technology and innovative digital devices are being used to cater guests’
needs that have predictable transaction needs.
Technology has brought a lot of innovations in the tourism and hospitality
industry including using personal phones as key cards to the rooms, self-check-in
using their phones as well, mobile reservation, self-check-in using kiosks, electronic
luggage tags, smartphone boarding passes, tablets as remote controls and many
others. Unknow to guests, some hotels gain competitive advantage by using
technology to enhance customer relationships. By using new system apps like
customer relationship management and customer intelligence tools, hotels can
customize guests’ experiences using order histories and consumption patterns.

References
Allen, K. (2013). Creating new ventures. Massachusetts: Centage Learning.
David, F. R (2011). Strategic Management concept and cases, 13th edition. New
Jersey: Prentice Hall.
Deakins, D. & Freel, M. (2010). Entrepreneurship and small firms, 5th edition.
New York: McGrawHill.

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