What is tourism industry?

Understand what tourism industry is from its definition, meaning & composition.

All About Tourism industry

Tourism Industry: Definition, sectors, value chain

The industry of tourism

What is tourism? Tourism is defined and understood as the activity of travelling and touring. It is basically a set of inter-connected activities of tourists while travelling to a place. And, so tourism as an industry means and covers the same things but from an economic and monetary point of view. Tourism industry is and comprises of all the companies which provide the products and services that are meant and used by tourists at different stages of travel and tourism.

Tourism is a very vast, vibrant, dynamic and growth oriented industry. Tourism as an industry is the set of all business activities which serves the needs tourists while they visit different places by way of tourism, touring or travelling.

Tourism is in fact a very broad industry comprises of different sectors or sub industries which produce and offer various similar and different products and services which create the demand for tourism and actually make the act of touring and travelling for tourism possible.

Define tourism industry

Tourism industry therefore can be defined as the set of industries which facilitate by providing infrastructure and products and services and make possible travelling for different purposes and travelling to places of leisure and business interests. Tourism industry is all about providing necessary means to assist tourists throughout their travelling.

There are two ways to look at the definition of tourism industry, demand side and supply side.

By the definition of tourism, it is an activity of tourists or people travelling for some purpose and it includes all the things they do during their travel. This way tourism as industry becomes the sum of all the products and services consumed or used by tourists which directly and indirectly support their tourism activity. This way, travel bookings, transportation, hotel stay, food, destination visits, etc., all become part of tourism.

The supply side is just looking at the other side of this. So, the supply side tourism industry definition is the sum of all the industries which provide all the products and services which make directly and indirectly help tourists in their travel and make it possible for people to travel and do tourism activity.

The industry is also referred to as travel and tourism industry and also simply as travel industry. Travel is although little different and does not always mean tourism yet tourism industry is often called as travel industry. This is due to the fact that in business, monetary and economics terms travel is usually considered as tourism.

Tourism industry value chain

The understanding and definition of tourism industry brings us to the tourism industry value chain. As we understood that the industry of tourism operates through a vast network of inter-connected and related industries as well as other ancillary industries which aim to serve the tourists and people on travel for different purposes.

Tourism industry value chain is very large. This value chain of tourism industry is or can be elastic and flexible and can also be much larger and widespread.

The broad value chain of tourism comprises of travel and tour services like booking and reservation; transportation industry (international and national travel and transportation); accommodation; hospitality industry; food & beverages; tourism products and destinations and related products and services; local travel and transportation.

This tourism industry supply or value chain is a broad and general value chain. This tourism industry supply or value chain shapes and defines the various tourism industry sectors, which we will discuss in the next section. The key sectors of tourism are primarily based upon the leisure tourism which is one of the types of tourism. However, we have added few more sectors to cover as much of the tourism industry as possible.

Tourism as an industry is very different from other industries in the world or in India as a developing market or the US, UK or Europe as the developed market. This is especially true and visible when it comes to the value chain or supply chain.

Unlike all the other industries, tourism as the industry has very open, elastic and flexible value chain.

This all depends upon the tourism. The industry is basically to cover all of the tourism. So, this industry is and can be as large, as deep and as widespread as the Tourism itself will be.

Tourism Industry Supply Chain features and characteristics

  1. Is flexible & expandable
  2. Widespread across industries and sectors
  3. Can go deep at many points within an industry or sector
  4. Covers tourism natured and similar types of industries
  5. Covers many different industries remotely related to tourism
  6. Also (may) cover many more industries not related to tourism and therefore not a direct part of tourism industry
  7. Many points and parts of this value chain become a complete and expandable value chain in themselves depending upon the type of tourism and its needs

How tourism industry value chain varies with tourism types

As we understood that the industry of tourism comprises of all the products and services which tourists consume. The value chain is therefore the combination and entire chain of companies for the supply of all these products and services.

Apart from the general tourism industry value chain, there can be and are many other supply chains which for this industry. These value chains will be different from the general value chain of tourism industry, in small or big way. All this will depend upon the type of tourism we are considering.

Again, the concept of tourism types applies here. The value chain is all that the industry of tourism supplies. For different tourism types there will be different products and services consumed.

As per the tourism in consideration, the nature, quantum and value of tourism services provided by the industry differs. Therefore there will be different supply chains for different types of tourism.

So, depending upon the different tourism types and the objectives the value chain and the sectors changes. For example the sectors and value chain of MICE travel and tourism, which is one significant part of business tourism and hence one important part and type of tourism, will be different from any leisure type of tourism.

All this broadly creates the entire market landscape or target market of tourism industry with the entire set of target audience. And the classifications of tourism creates the different market segments and customer segments.

All this is also the broad tourism value chain. This value chain operates and serves in different proportion according to these market segments of tourism.

Tourism Industry Sectors

The tourism, as we explained earlier, operates through its different sectors. These sectors are what make up this industry and are also its value chain. One can also understand the tourism industry through these sub industries and components.

All these tourism industry sub industries or sectors also turn out to be its growth drivers.

Let us briefly list out all the sectors of tourism industry.

10 Sectors of Tourism Industry

1. Natural tourist attractions: Natural attractions are the very base and the driving factor for tourism industry. The scenic beauty of a place; the sunrise or sunset in a particular city; beaches like the famous beaches of Hawaii, Philippines or Goa; rivers like the Nile, the Ganges, Amazon river; mountains like the Himalayas. All these are natural attractions for which millions and millions of tourists and people travel across the world.

2. Man-made tourist attractions: Then there man-made tourist attractions which also attract scores of tourists. The firsts in this list would be the 7 wonders of the world. Beyond these also there could be many types of attractions like museums, gardens, zoos, water parks, amusement parks, casinos, etc.

We would also include various entertainment events or activities like theatres, concerts, shows, launches, etc.

3. Cultural and other festivals & events: Cultural, religious or other type of events keep taking place everywhere in the world. There are many such recurring events or festivals or gatherings which attract countless enthusiastic tourists and travelers from across the world.

The Tomatina festival coming up in August 2019 is one such festival that has global following and attendance. Another such event just happened in India in February 2019 was the Kumbh Mela which saw around 20 million people attend it and take a holi dip at the confluence of three holi rivers: the Ganga, Yamuna and Saraswati in the city of Allahabad in India.

4. Sports and recreational sector and activities: People travel around the world to attend various sports events or activities at different famous places. People to cities famous for their winters and snow for sports like skiing.

5. Tourism and travel trade services: This is the core services sector of tourism industry. This sector covers organizations which provide various travel and tourism services like complete tour packages, travel & transportation bookings, hotel reservations, destination search and bookings, etc.

6. Transportation sector: Transportation sector is the very base and means of tourism. Covering air, water, road and railways, transport sectors provides the means to travel to various destinations.

7. Accommodation or Hospitality industry: Accommodation or Hospitality is another key sector of tourism. While travelling anywhere, tourists need to stay there and therefore need proper hotels or other type of accommodations. They also need all related services to make their stay and travel pleasant and convenient.

8. Food & Beverages industry: Food & Beverages sector plays a very unique role in tourism. Just like hotels & accommodation, tourists also need the wide ranging services of food & beverages industry. This is not just limited to the hotels tourists stay in. Restaurants, take aways, etc. also play an important part here.

Food & beverages are also one of the attractions of a place and a type of tourism. Food tourism is one of the types of travel where people travel to places which have famous local food and flavors.

9. The MICE sector: The MICE travel and tourism is a wide industry in itself that draws various visitors from across the globe. People travel to attend business, professional and other type of events. There are so many different types of events happening all over the world in different cities everyday. This sector boosts the whole tourism industry and is also one its important segment.

10. Business tourism sector: Business tourism is another sector which involves business travelers travelling for various business purposes. This is little different from the MICE or events sector. Here business travel is not for event participation particularly. Businessmen, professionals travelling for all types of official work like client dealing, new market survey, etc. form part of this tourism and travel segment.

Value and contribution of tourism industry

Tourism is one of the very important industries in the world. The value and importance of tourism industry is very high for every country because it contributes far more and much wider. Tourism brings benefits and advantages and contributes in the overall growth and development of the economy of a country and also in progress of the society and social structure of a country. It also helps and motivates in preserving of natural resources.

Tourism industry is one of the top sources for employment across the world helping in generating about 10% of employment. It also contributes about 10% of the global GDP and therefore becoming an important factor for economic growth in the world and for every country.

The Industry growth drivers

This industry is driven by tourists. These tourists are its primary and only customer segment who show the need and desire to visit places for different reasons.

It is also driven by the progress and development in its value chain industries in providing more services, facilities, convenience, etc., to its customers segment to make travel and tourism more desirable, easy and attractive.

Some of the key drivers for tourism industry are:

  • Tourism needs and desires

  • Income growth

  • Travel affordability

  • Availability of more leisure time

  • Social, cultural, sports and other recreational events

  • New tourist attractions and destinations

  • Communication advancements

  • Better and faster transportation facilities

  • Infrastructure development, connecting and bringing remote and more destinations on travel map

  • Hospitality industry attractiveness

  • Growth in business events

  • Growth in International business and dealings

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