ANALYZING SUPPLY

ISSUES IN TOURIST

TRANSPORT

Theoretical perspective on tourism and transport supply issues

TOURISM SUPPLY - is a

complex phenomenon because

of both the nature of the

product and the process of

delivery

Theoretical perspective on tourism and transport supply issues

TOURISM SUPPLY

It is a composite product involving

transport, accommodation, catering,

natural resources, entertainment and

other facilities and services, such as

shops and banks, travel agents and tour

operators

Travel TradeSector

Accom

modation

Sector

Even

ts S

ecto

r

Tran

spor

tatio

nSe

ctor

Adventure &

Outdoor

Recreation Sector

Food Services

Sector

Attractions SectorEntertainmentSector

Tourism

Services

Graphics/Components(B&W2003)

Operating Sectors of the Tourism Industry

The Five Competitive Forces

FACTORS WHICH AFFECT SUPPLY ISSUES

Perfect competition

Contestable Markets

Monopoly

Oligopoly

FACTORS WHICH AFFECT SUPPLY ISSUES

PERFECT COMPETITION A number of assumptions exist:

there are a substantial number of consumers and firms, implying that neither can affect the price of an undifferentiated product

there is free entry to and exit from the market, assuming that there are no barriers

FACTORS WHICH AFFECT SUPPLY ISSUES

CONTESTABLE MARKET

The key principle here is that

new and established firms are able to challenge rival businesses through pricing strategies

Firms/ operators cannot charge more than average cost because more competitors would enter the market

FACTORS WHICH AFFECT SUPPLY ISSUES

MONOPOLY

The opposite of perfect competition, where a major business firm is able to exercise a high level of control over the price of the product and level of output

FACTORS WHICH AFFECT SUPPLY ISSUES

MONOPOLY

Firms operating in a monopolistic market charge prices above the average cost of production to generate high profit levels, so consumers pay a price higher than in a competitive market.

FACTORS WHICH AFFECT SUPPLY ISSUES

MONOPOLY

The United Aircraft and Transport Corporation was formed in 1929, when William E. Boeing teamed up with Frederick Rentschler of Pratt & Whitney.

FACTORS WHICH AFFECT SUPPLY ISSUES

OLIGOPOLY

Each firm controls its price and output levels and there re entry and exit barriers

An oligopoly market situation is characterized by supply conditions dependent in part upon the output and pricing decisions of competitors

FACTORS WHICH AFFECT SUPPLY ISSUES

OLIGOPOLY In an oligopolistic market, producers

can alter output and prices while taking account of their competitors likely reaction

The impact of inter-airline pricing and route –sharing agreements can achieve joint profits in an oligopolistic situation

FACTORS WHICH AFFECT SUPPLY ISSUES

OLIGOPOLY

Three leading food processing companies, Kraft Foods, PepsiCo and Nestle

The Supply Chain in Tourist Transport Services

Transaction chains develop to

link the TOURIST with the

SUPPLIERS of services in

tourism and the TOURISM

PRODUCT OR SERVICE

Four Types of Tourism Transaction chain

ORIGIN

A. DIRECT

PURCHASE

TOURIST

B. PURCHASE

through an

AGENT

TOURIST

TRANSPORT

Transport

DESTINATION

Accommodation

Entertainment/Amenities

Activities

Agent Transport Accommodation

Entertainment/Amenities

Activities

Four Types of Tourism Transaction chain

ORIGIN

C. DIRECT

PURCHASE

from TOUR OPERATOR

TRANSPORT DESTINATION

Tour Operator Transport

Accommodation

Entertainment/Amenities

Activities TOURIST

Four Types of Tourism Transaction chain

ORIGIN

D. PURCHASE

Via retail TRAVEL AGENT AND TOUR

OPERATOR

TRANSPORT DESTINATION

Tour Operator Transport

Accommodation

Entertainment/Amenities

Activities TOURIST Agent