Tourism Concepts II: The Tourism Industry and Its Network of Direct, Indirect and Support Services, the Components of Tourism, Horizontal and Vertical Integration, Liberalisation and Globalisation, the Impacts of Tourism, Seasonality, the Sociology of Tourism and Travel Motivators
1. The meaning and nature of the tourism industry, its inputs and outputs, and its network
An industry is normally a group of firms producing the same product. Tourism is different: it is defined by the consumer rather than the product, because a meal, a taxi ride or a room is a tourism product only when a visitor buys it. That is why tourism is often called an amalgam or a composite industry, and why its size can be estimated only by a satellite account. Its inputs are natural resources (landscape, climate, wildlife, beaches), cultural resources (monuments, festivals, crafts, cuisine), built infrastructure (roads, airports, water, power, telecommunications), capital, labour and skills, entrepreneurship, technology and public policy. Its outputs are, for the visitor, an experience assembled from many services; and, for the economy, income, employment, foreign exchange, tax revenue and, less happily, pressure on resources and communities.
| Layer of the network | What it includes | Examples |
|---|---|---|
| Direct services | Businesses that serve the visitor face to face and would shrink sharply without tourists | Airlines, hotels and other accommodation, travel agencies and tour operators, attractions, restaurants, car hire, cruise and coach operators, guides |
| Indirect services | Businesses that supply the direct providers or sell to visitors among other customers | Food and linen suppliers, laundries, handicraft and souvenir retail, taxis, banks and money changers, insurance, telecommunications, printing of brochures |
| Support (developmental) services | Public and private bodies that make tourism possible without selling to the tourist | Ministry and state departments of tourism, planning and regulatory bodies, infrastructure agencies, training institutes such as the Institutes of Hotel Management, trade associations, tourism finance |
2. The basic components of tourism, and horizontal and vertical integration
A destination can receive visitors only when a small number of components are in place, and the syllabus names three of them. Transport provides access, the means of reaching the destination and moving within it; accommodation provides the stay, from hotels to homestays; and facilities and amenities provide comfort at the destination, food and drink, shopping, entertainment, information, local transport, banking, medical care, water and sanitation. These serve the attraction, the natural, cultural or event resource that motivates the trip in the first place. Many texts compress this into the "A's" of a destination: attractions, accessibility, accommodation, amenities, activities and ancillary services. Each component depends on the others: a beach without a road or rooms is not yet a destination.
| Type of integration | Meaning | Tourism example |
|---|---|---|
| Horizontal | Firms at the same stage of the chain combine, by merger, acquisition or alliance | A hotel chain buying another chain; airlines forming alliances such as Star Alliance (1997), oneworld (1999) and SkyTeam (2000); the merger of Vistara into Air India in 2024 |
| Vertical, backward | A firm acquires a supplier earlier in the chain | A tour operator acquiring its own charter airline or hotels |
| Vertical, forward | A firm acquires a business nearer the customer | An airline or tour operator acquiring a chain of retail travel agencies |
| Diagonal or conglomerate | A firm moves into related services or unrelated businesses | A travel group adding insurance, foreign exchange and financial services |
The large European travel groups show vertical integration at its fullest: a single group owning retail agencies, tour-operating brands, airlines, hotels and cruise ships controls the whole chain from the brochure to the bed and captures the margin at every stage. The risk is concentration: when the vertically integrated Thomas Cook group collapsed in September 2019, about 150,000 British holidaymakers had to be repatriated at once. Integration brings economies of scale, control of supply and quality, and guaranteed distribution; it also brings market power, reduced competition and the exposure of every part to the failure of one.
3. Tourism business during liberalisation and globalisation
India's economic reforms of 1991 changed the tourism business on several fronts. Civil aviation was opened: private air taxi operators were allowed from 1990, the Air Corporations Act was repealed in 1994 so that private scheduled airlines could operate, a low-cost model arrived with Air Deccan in 2003, and Air India itself was privatised when the Tata group took it over in January 2022. The major airports at Delhi and Mumbai were leased to private operators in 2006. Foreign direct investment of up to 100 per cent in hotels and tourism is permitted under the automatic route, bringing international hotel chains and management contracts. Online travel agencies grew with the internet and electronic ticketing, and the e-Visa, introduced from 2014, eased entry for foreign tourists. Tourism had been given the status of an industry in 1982, which opened it to industrial finance and incentives.
Globalisation works on tourism in both directions. It widens markets through cheaper air travel, open skies agreements, the spread of global distribution systems and online platforms, and the liberalisation of trade in services under the General Agreement on Trade in Services (GATS), in which tourism and travel-related services are a separate sector. It also brings standardisation of products, the dominance of multinational chains and platforms, leakage of earnings abroad, and exposure to global shocks, from oil prices and financial crises to the COVID-19 pandemic, which cut international tourist arrivals worldwide by roughly three-quarters in 2020.
4. The economic, social, cultural and environmental impacts of tourism
| Dimension | Positive impacts | Negative impacts |
|---|---|---|
| Economic | Foreign exchange earnings, income and employment (much of it for women and the young), the multiplier effect, regional development, infrastructure that residents also use, tax revenue | Leakage of earnings through imports and foreign ownership, seasonal and low-paid work, local inflation in land and food prices, over-dependence on one sector, opportunity costs of public investment |
| Social | Better facilities and services, awareness and exchange between peoples, empowerment of local communities and women, reasons for young people to stay | Crowding and congestion, crime, begging and the sex trade, displacement of residents, social tension between hosts and guests, the demonstration effect |
| Cultural | Revival of crafts, performing arts and festivals, conservation of monuments, pride in local identity | Commodification of rituals and art, staged authenticity, loss of language and values, acculturation towards visitors' culture, damage to sacred sites |
| Environmental | Money and motive for protected areas and wildlife, awareness of conservation, improvement of the built environment | Pollution of air, water and land, solid waste, habitat loss and disturbance to wildlife, erosion of trails and beaches, water scarcity, crowding beyond carrying capacity |
Two ideas recur in the questions. Leakage is the share of tourist spending that leaves the destination, through imported food and equipment, repatriated profits of foreign-owned firms, commissions to overseas operators and wages of expatriate staff; the higher it is, the smaller the local multiplier. Staged authenticity is Dean MacCannell's term (1973) for the front-stage versions of local life that hosts present to visitors while keeping the "back stage" private; the tourist seeking authenticity is offered a performance of it. Overtourism, a word of the late 2010s, names the point at which visitor numbers degrade both the resident's quality of life and the visitor's experience.
5. The future of tourism business, seasonality, the sociology of tourism and travel motivators
The factors that will shape tourism business are demographic (ageing populations in the West and East Asia, a young and growing middle class in India), economic (disposable income, exchange rates, fuel prices), technological (mobile booking, artificial intelligence, dynamic pricing, digital payments), political and security-related (stability, terrorism, visa regimes), health-related (pandemics and health screening), environmental (climate change, extreme weather, rising sea levels, the pressure to cut aviation emissions) and social (new preferences for experiences, wellness, sustainability and remote work combined with travel).
Seasonality is the concentration of tourist flows in short periods of the year. It has natural causes, the climate (the monsoon, winter snow, summer heat), and institutional causes, school and public holidays, festivals and the customs of the generating markets. Each destination has a peak season, a shoulder season on either side of it and an off (lean) season. Seasonality leaves rooms, seats and staff idle for part of the year, raises prices and crowding at the peak and makes employment temporary. It is managed by differential pricing, off-season events and festivals, new products and markets (conferences, domestic tourists, retirees), and by diversifying the economy. A simple seasonality index is the arrivals of a month divided by the average monthly arrivals, multiplied by 100: a month with 30,000 arrivals in a year averaging 20,000 a month has an index of 150, meaning 50 per cent above the average month.
| Thinker | Contribution to the sociology and psychology of tourism |
|---|---|
| Erik Cohen, 1972 | Four tourist roles: the organised mass tourist and the individual mass tourist (institutionalised), and the explorer and the drifter (non-institutionalised) |
| Valene Smith, Hosts and Guests, 1977 | The anthropology of host-guest encounters and the cultural change tourism brings |
| Graham Dann, 1977 | Push factors of anomie (escape from a society felt to be meaningless) and ego-enhancement (the status travel confers) |
| McIntosh and Goeldner | Four categories of travel motivators: physical, cultural, interpersonal, and status and prestige |
| Philip Pearce, 1988 | The travel career ladder, adapting Maslow: motives rise from relaxation and safety through relationships and self-esteem to fulfilment as travel experience grows |
| John Urry, The Tourist Gaze, 1990 | Tourism as a socially organised way of looking at places that differ from everyday life |
Key takeaways
- Tourism is an industry defined by its consumer; its inputs are natural and cultural resources, infrastructure, capital, labour and policy, and its network runs from direct services (airlines, hotels, agents, attractions) through indirect suppliers to public and developmental support services.
- The basic components are transport, accommodation, and facilities and amenities serving an attraction; horizontal integration joins firms at one stage (hotel chains, airline alliances), vertical integration joins stages (a tour operator owning airlines and agencies), as the 2019 collapse of Thomas Cook showed at its riskiest.
- After 1991 India opened aviation (Air Corporations Act repealed 1994, Air Deccan 2003, Air India to the Tatas in January 2022), leased major airports, allowed 100 per cent FDI in hotels and tourism under the automatic route, and introduced the e-Visa from 2014.
- Impacts are economic, social, cultural and environmental, each positive and negative; leakage shrinks the local benefit, MacCannell's staged authenticity names the front stage offered to visitors, and overtourism is growth beyond what residents and visitors can bear.
- Seasonality has natural and institutional causes and peak, shoulder and off seasons, measured by month ÷ average month × 100; Cohen's four roles, Dann's anomie and ego-enhancement, McIntosh's four motivator groups and Pearce's travel career ladder are the core of the sociology of tourism.
Practice questions (10)
Attempt each one before opening the answer. Every explanation names the tempting wrong option as well as the right one, because that is where marks are lost.
A tour operator that acquires a chain of retail travel agencies to sell its own packages is an example of
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Answer: B — forward vertical integration
The travel agency stands between the tour operator and the customer, so buying agencies moves the operator forward along the chain towards the buyer. Acquiring an airline or hotels would be backward integration, and buying another tour operator horizontal.In the network of the tourism industry, a training institute such as an Institute of Hotel Management belongs among the
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Answer: C — support or developmental services
Support services make tourism possible without selling to the tourist: government departments, planning and regulatory bodies, infrastructure agencies, trade associations and training institutions. Hotels and airlines are direct services, and laundries or food suppliers indirect.A hill station receives 2,40,000 tourist arrivals in a year, and 30,000 of them arrive in May. Taking the seasonality index as the month's arrivals divided by the average monthly arrivals, multiplied by 100, what is the index for May?
Numerical answer — type the value.
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Answer: 150
The average month has 2,40,000 ÷ 12 = 20,000 arrivals. May's index is 30,000 ÷ 20,000 × 100 = 150, so May is 50 per cent busier than the average month, a peak-season month.Which of the following are non-institutionalised tourist roles in Erik Cohen's 1972 typology? Select all that apply.
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Answer: A — The drifter; D — The explorer
Cohen separated the two mass tourist roles, which rely on the tourism industry's institutions, from the explorer, who arranges his own trip but still seeks some comfort, and the drifter, who shuns the industry altogether and lives with the local people.The concept of "staged authenticity", in which hosts present a front-stage version of their culture to tourists, was put forward by
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Answer: D — Dean MacCannell
MacCannell (1973), borrowing Goffman's front and back regions, argued that tourists seeking the authentic are shown staged versions of local life. Plog classified tourist personalities, Butler modelled the destination life cycle and Leiper the tourism system.Assertion (A): A destination where hotels import most of their food and are foreign-owned gains less local income from each rupee of tourist spending. Reason (R): Imports and repatriated profits are leakages that reduce the local multiplier effect of tourist expenditure.
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Answer: A — Both A and R are true, and R is the correct explanation of A
Both are true and R explains A. Money spent on imports or sent abroad as profit does not circulate again in the local economy, so the rounds of re-spending that make up the multiplier are cut short.Which of the following are negative socio-cultural impacts of tourism? Select all that apply.
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Answer: A — Imitation of visitors' consumption by local youth (the demonstration effect); D — Commodification of rituals and crafts for sale to visitors
Commodification and the demonstration effect are standard negative socio-cultural impacts. Foreign exchange earnings are a positive economic impact, and the revival of performing arts is a positive cultural one.The periods immediately before and after a destination's peak season, when demand and prices are moderate, are called the
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Answer: C — shoulder season
The shoulder season lies on either side of the peak; operators use it for discounted packages, events and new markets to spread demand. The off or lean season is the trough of the year.McIntosh and Goeldner's grouping of travel motivators into four categories consists of
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Answer: B — physical, cultural, interpersonal, and status and prestige
The four groups are physical, cultural, interpersonal, and status and prestige. Escape, relaxation, prestige and novelty are drawn from Crompton's list, anomie and ego-enhancement are Dann's, and safety to self-actualisation are levels of Maslow's hierarchy.Which statement about the liberalisation of Indian civil aviation is correct?
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Answer: B — The Air Corporations Act was repealed in 1994, allowing private scheduled airlines, and Air India passed to the Tata group in January 2022
The 1994 repeal ended the monopoly of the state corporations on scheduled services; Air Deccan in 2003 was the first low-cost carrier, not the first private airline. FDI in hotels and tourism is allowed up to 100 per cent automatically, and Delhi and Mumbai airports were leased to private operators in 2006.