The tourism and hospitality product is highly inflexible in terms of capacity as evident by the fact that the number of beds in a hotel or the seats in an airplane remains fixed irrespective of the fluctuations in the number of consumers. Mangers in the tourism and hospitality industry face challenges in responding to demands for expansion in the operating capacity due to unexpected upsurge in the number of customers during peak seasons.1 On the other hand, managers face recurrent costs during low seasons, because they cannot reduce the number of hotel beds or seats in an airplane due the decline in the number of customers.
The inflexibility of the tourism product introduces challenges to the management of operating costs, because operators cannot warehouse the product for future sales. The pricing of the tourism and hospitality product suffers due to the desire by operators to balance the returns on their investment and offset losses incurred during off-peak seasons. The structure of operations in the tourism and hospitality industry demands the consumption of the product at a rate, which is proportionate to production.
For example, the generation of profits in travel services demands the sale of each seat per flight, because it is impossible to sell the unused seat once the plane departs. Similarly, a hotel operator makes profit by selling each room per night. The loss of opportunity to sell a room or airplane seats leads to unrecoverable losses for operators in the tourism and hospitality industry.2 The inability to transfer the value of the tourism and hospitality product limits the scope of designing long-term sales strategies.
The intangibility of the tourism and hospitality product hampers the transfer, display and test of the product in advance. Tourism services are experiences such as a flight, ocean liner cruise, night rest in a hotel or viewing of mountains. The unique nature of the tourism product means that people purchase services, quality and value of which they cannot categorically define. Consumers cannot experience good time in a nightclub before they pay the price for the service. Whether an experience turns out to be good or bad, consumers cannot relish the experience unlike in the case of ordinary products that include a warrant.
The uncertainty regarding the tourism product increases risk-aversion among consumers regarding packages with scanty information and description online, on brochures and among tourism enthusiasts. Most consumers of tourism packages have doubts on the quality of the product that they are purchasing for the first time. Doubts on the product introduce challenges regarding the introduction of new packages in the market. Operators in the tourism and hospitality industry have to invest a lot in marketing strategies and programs to create product familiarity among potential clients.3
A new product in the tourism and hospitality industry will often take longer to gain popularity among consumers compared to a product in other industries. Operators in the tourism industry can only transfer the use of a product such as hotel rooms and beds rather than the product itself. The intangible nature of the tourism product introduces marketing challenges, because operators have to invest in mechanisms of making the abstract elements of a product tangible in order to apply the intended marketing strategies. The intangibility of the tourism product makes it easy for competitors to copy and forces operators in the tourism industry to rely on providing original and consistent services to retain customers.4
The tourism and hospitality product has a limited life span, which leads to wastage of the product if the projection on consumption turns out wrong. The perishable nature of the tourism product influences operators in the industry to opt to sell a product in advance rather than per the current market demand. Overbooking in the tourism and hospitality industry has been the result of the adoption of countermeasures due to the challenges of maintaining inventory of a perishable product.
Operators in the tourism industry sell a product in anticipation of future demands. Overbooking introduces the possibility of losses in the event of poor projections regarding the number of customers who should turn up.5 An increasing number of operators are adopting the strategy of multiple distributions to spread the risk of a perishable product. The challenges of providing an alternative product for clients during unexpected fluctuation in demand increase the economic viability of overbooking as opposed to selling a product at the market pace.
The tourism and hospitality product is highly inconsistent and introduces challenges on standardisation. The inconsistency of the tourism product arises because creation of most tourism packages involves customisation through the elimination or addition of services to an existing package according to market demands. The tendency to aggregate a tourism product means that a deviation in a single phase of creating a product introduces discrepancy in the product’s excellence.6 Every flight has a distinct experience from other flights of the same characteristics.
The experience of spending two days and three nights in a hotel is different for every customer despite the fact that attributes such as price and additional services remain unchanged. Operators in the tourism industry cannot recall the experience of a customer to offer it to other buyers of the same product.7 The inconsistency of the tourism product leads to alteration in customers’ perception of a product, which is subject to the influence of factors, such as weather, mood of the chef, construction site and interaction with other customers.
The production and consumption of the tourism and hospitality product occur simultaneously unlike products in other sectors, where production, storage and consumption occur in a hierarchal manner. One distinct characteristic of the tourism product is that consumers first purchase a product before its production. The fact that the production and consumption of the tourism product occurs at the same location and time implies the inseparability of the tourism product from the provider.8 Consumers of the tourism product have to travel to the location of the product, which eliminates the benefits of increasing sales by taking the product to the consumers.
The inseparability of the tourism product from the producer increases sensitivity to the aspect of the human component in service provision. The interaction between staff and customers is a core element of the consumption process and alters the perception of the quality of the product.9 The tourism product lacks features such as durability and production quality, which introduces the tendency to judge the behaviour and mood of service provider in determining the quality of the product.10 A tourism operator cannot take a hotel room of preference to the consumer because of the immobility of the tourism product and the attachment of the investment to a locality.
Fyall, A, & B Garrod, Tourism marketing: a collaborative approach, Channel View Publications, Clevedon, 2005.
Garrod, B, & A Fyall, Contemporary cases in tourism, Goodfellow Publishers Ltd., Woodeaton, Oxford, 2011.
Hudson, S, Tourism and hospitality marketing a global perspective, SAGE, Los Angeles, 2008.
Jobber, D, & J Fahy, Foundations of marketing, 3rd edn, McGraw-Hill Higher Education, Maidenhead, 2009.
Kotler, P, JT, Bowen & JC Makens, Marketing for hospitality and tourism, 6th edn, Pearson Education, Upper Saddle River, NJ, 2013.
Lovelock, CH, J Wirtz & P Chew, Essentials of services marketing, Prentice Hall, Singapore, 2009.
Morgan, M, & A Ranchhod, Marketing in travel and tourism, 4th edn, Routledge, New York, 2010.
Ryan, D, & C Jones, The best digital marketing campaigns in the world mastering the art of customer engagement, Kogan Page, London, 2011.
Song, H, & SF Witt, Tourism demand modelling and forecasting modern econometric approaches, Pergamon, NewYork, 2000.
Williams, S, The nature and structure of tourism, Routledge, London, 2004.
- A Fyall & B Garrod, Tourism marketing: a collaborative approach, Channel View Publications, Clevedon, 2005, p. 228.
- B Garrod & A Fyall, Contemporary cases in tourism, Goodfellow Publishers Ltd., Woodeaton, Oxford, 2011, p. 59
- S Hudson, Tourism and hospitality marketing a global perspective, SAGE, Los Angeles, 2008, p. 289.
- D Jobber & J Fahy, Foundations of marketing, 3rd edn, McGraw-Hill Higher Education, Maidenhead, 2009, p. 73.
- P Kotler, JT Bowen & JC Makens, Marketing for hospitality and tourism, 6th edn, Pearson Education, Upper Saddle River, NJ, 2013, p. 117.
- D Ryan & C Jones, The best digital marketing campaigns in the world mastering the art of customer engagement, Kogan Page, London, 2011, p. 97.
- CH Lovelock, J Wirtz & P Chew, Essentials of services marketing, Prentice Hall, Singapore, 2009, p. 56.
- M Morgan & A Ranchhod, Marketing in travel and tourism, 4th edn, Routledge, New York, 2010, p. 213.
- H Song & SF Witt, Tourism demand modelling and forecasting modern econometric approaches, Pergamon, NewYork, 2000, p. 125.
- S Williams, The nature and structure of tourism, Routledge, London, 2004, p. 271.