THM 1 - Macro Perspective of Tourism and Hospitality

NEGROS ORIENTAL STATE UNIVERSITY
SELF INSTRUCTIONAL
MODULE
IN
MACRO PERSPECTIVE OF
TOURISM AND
HOSPITALITY
(THM 1)
Prepared by:
Cecille Mae T. Aguadera

Instructor
1 Self Instructional Module in Macro Perspective of Tourism

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T ABLE OF CONTENTS
Content
Table of Contents……………………………………………………………………
Unit I: Introduction…………………………………………………………………..
The Meaning and Importance of Tourism
The relationship of Tourism and Hospitality
Characteristics of Tourism and Hospitality
Importance of Tourism and Hospitality
Unit 2: The History of Tourism and Hospitality………………………………..

The Evolution and growth of Tourism and Hospitality as an industry
Pioneers in the Tourism and Hospitality Industry
The origin of Tourism and Hospitality in the Philippines
International Travel Patterns
Forces affecting the growth and change in the Hospitality Industry
Unit 3: The Psychology of Travel……………………………………………….

Relationship of wants needs and motives.
Classification of Travelers
Travel Constraints
Unit 4: The Economics of Tourism and Hospitality………………………….

The Role of Tourism and Hospitality in Economic Development.
Economic Impact of Tourism
Destinations as a market place
Undesirable Economic Aspects of
Tourism.
How to Maximize the Economic Effect of Tourism and Hospitality
Unit 5: The Sociology of Tourism……………………………………………….

The Social Nature of Travel
The Social Effects of Tourism
Socioeconomic Variables and Their Effects on Tourism
The Rise of New Travel Patterns
Preferences of the International Tourist
Types of Tourist Roles
Social Tourism
Unit 6: The Tourism and Hospitality Network and Supply Components…

Tourism and Hospitality Components
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Tourism and Hospitality Supply Components.

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Types of Accommodations
Hotel Classifications
Restaurants
Unit 7: Tourism and Hospitality Organizations…………………………………

International Organizations
Regional Organizations
Roles of National Organizations in Tourism
National Tourism Office (NTO)
Professional Tourism Organizations
Tourism Organizations in the Philippines
Unit 8: The Impacts of Tourism and Hospitality………………………………..

The positive and negative impacts of Tourism and Hospitality
The positive and negative social Impacts of tourism and Hospitality.
Impacts of tourism and hospitality on culture.
Environmental Impacts of tourism and hospitality
Unit 9: Macro Trends and Issues in the Tourism and Hospitality…………..

Industry towards global ethics
The Bright Future of Tourism and Hospitality
Unit 10: The Future of Tourism and Hospitality………………………………..

Safety and Security in Tourism and Hospitality
The Impact of the World’s Economy on Tourism and Hospitality
Using e-commerce Tools in Tourism and Hospitality
Tourism and Hospitality Education and Training
Emerging Tourism and Hospitality Markets
Quality Tourism and Hospitality Products and Services
Partnerships and Strategic Alliances in Tourism and Hospitality
The impact of health issues on tourism and hospitality.
Effects of Natural Disasters on Tourism and Hospitality
Climate Change and Tourism and Hospitality.
Unit 10: Sustainable Management of Tourism and Hospitality………….

Meaning of Sustainable Management of Tourism and Hospitality.
Managing Sustainable Tourism and Hospitality
Current Trends in Sustainable Tourism and Hospitality
Global Impact of sustainable Tourism and Hospitality
The Benefits of Sustainable Tourism and Hospitality

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Unit 1
The Meaning and

Importance of Tourism and
Hospitality Industry
Learning Outcomes:
At the end of this unit, students will be able to:
1. Define Tourism and hospitality in different perspective.
2. Differentiate the tourism to hospitality
3. Understand the relationship of tourism and hospitality
4. Understand the various components and its elements of travel tourism
5. Explain the historical changes which have affected the growth and development of the
tourism and hospitality industry
6. Explain the characteristics of Tourism and Hospitality
7. Appreciate the importance of Tourism and Hospitality
Topic 1: The Relationship of Tourism and

Hospitality
INTRODUCTION
The Tourism and Hospitality Industry: a powerful driver of the economic engine of nations. The
important roles of tourism and hospitality as the main instrument in socioeconomic development
of any nation cannot be overstated.

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Tourism and hospitality has become one of the world’s largest and fastest growing industries
and it is because of the several factors, such as rising levels of income, improvements in
transportation and the low cost airline services, easier access to destinations by tourists and the
diversification of the industry with new market niches.
Learning Objectives:
At the end of this topic, students will be able to:
1. Understand the tourism and hospitality industry

2. Explain the relationship of tourism and hospitality.
3. Understand the various elements of travel used as criteria for defining tourists.
4. Differentiate tourists from excursionists.
Presentation of Contents
Definition of Tourism and Hospitality
The word Tourism is derived from the Hebrew word “torah” which means studying,
learning and searching.
Tourism is the act and process of spending time away from home in pursuit of
recreation, relaxation, and pleasure, while making use of the commercial provision of
services. As such, tourism is a product of modern social arrangements, beginning in
Western Europe in the 17th century, although it has antecedents in classical antiquity.
According to Goeldner and Ritchie: Tourism is the processes, activities, outcomes

arising from relationships and interaction among tourists, tourism suppliers, and
surrounding environment that are involve in attracting and hosting of visitors.
Hospitality
The term is derived from the latin word “ hospitare” which means “to receive a guest”.
Hospitality it implies whereby a guest who is away from home is welcomed by a host where
basic necessities are provided such as food, beverages, and lodging.
Hospitality
An industry comprises business entity of food, beverages, lodging or a combination of these
businesses to travellers during stay in a destination.

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The relationship between Tourism and Hospitality
 Tourism affect hospitality
 Hospitality affect tourism
Hospitality Tourism
Promote each other and interact with each other
Making contribution to the national economy and promoting the development

of the society
Hospitality Tourism
-Accommodation -Attractions
-Food and Beverage -Transportation
Services services
-Time share -Tour Operators
-Events/Entertainment -Tourism
Information Centers
 Hospitality and Tourism cannot be separated.
An area where has good hotel and restaurant resources can attract more tourists. People are
search for better accommodation and dining location so the hospitality should be regarded
seriously. Tourism developed area have higher demand for the hotel, more tourists’ needs, more
place to live and relax. These two industries not only can bring income to promote the national
economy, but also solve the problem of employment and with the development of the society,
human’s activities promote the development of many new industries. Hospitality and tourism are
two of these industries.

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Scenario: Relationship of Hospitality and Tourism
Hi! I am Lalisa
Meet Lalisa!
Lalisa loves to travel. She has been to many different countries and has had many different experiences that she loves to
talk about. One day while out to lunch with a close friend, she began to tell her friend about her latest trip to Paris. She
talked about the food, the hotels, and all of the wonderful sightseeing she did. Not long into the conversation, it
dawned on her that all of her touristic travels are closely tied to the hospitality industry. You see, every time Lalisa
travels, she partakes in some sort of hospitality service. In this lesson, we'll look more closely at how these two areas are
connected.
Before we look at the connection between hospitality and tourism, let's review exactly what the hospitality industry is.
Well, the hospitality industry is an industry that offers services to us that go beyond our basic needs and generally
require extra income to purchase. These services include things like accommodations and restaurants. So, every time
Lalisa stays in a hotel and grabs dinner at a nice restaurant, she is supporting the hospitality industry.
Meaning of Tourists
In 1937, the League of Nations defined “tourist” as follows: “A tourist is a person who visits a
country other than that in which he or she usually resides for a period of at least 24 hours.” This
was held to include persons travelling for pleasure, domestic reasons or health, persons travelling
to meetings or on business, and persons visiting a country o a cruise vessel even if for less than
24 hours.
In 1963, a United Nations Conference on International Travel and Tourism recommended a new
definition of a “visitor” as “any person visiting a country other than that of earning money.” This
definition covers two classes of visitors:
 Tourists: Temporary visitors staying at least 24 hours, whose purpose could be
classified as:
a. Leisure, such as recreation, holiday, health, study, religion, or sport;

b. Business;
c. Family;
d. Mission; and
e. Meeting;

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 Excursionists: Temporary visitors staying less than 24 hours in the destination visited
and not making an overnight stay.
Visitors are further classified into:
 International visitor: Refers to any person who travels to a country outside his/her
usual environment.
 Domestic visitor: Refers to any person who travels to a place other than that of his/her
usual environment but still within the country.
Elements of Travel
Four Basic elements have been used as criteria for defining travellers and/or tourists.
These are: Distance, length of stay at the destination, residence of the traveller, and purpose of
travel.
1. Distance
What must be considered under distance is the difference between local travel or
travelling within a person’s home community and non local travel or travelling away
from home. It excludes commuting to and from work and change in residence.
A measure that has been used to distinguish travel away from home is the distance
travelled on a trip.
2. Length of Stay at Destination
The second basic element of travel used as a criteria for defining travellers is the length
of stay at a destination. The definition of tourist and excursionist are proposed by the
WTO (World Tourism Organization) is largely teased on length of stay. Tourists are
temporary visitors who make at least one overnight stay while excursionists are
temporary visitors who do not stay overnight in the destination that they visit.
3. Residence of the Traveler
The residence or origin of the traveller is the third basic element of travel. For business
and research purposes, it is important to know where people live.
4. Purpose of Travel
The fourth basic element is the purpose of travel. It can be divided into seven:
a. Visiting friends and relatives;

b. Conventions, Seminars and Meetings;
c. Business;
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d. Outdoor Recreation- Fishing, hiking and camping;
e. Entertainment-theatre and sports;
f. Personal-Family, medical and wedding
g. Others
The Nature of a Tour:

To analyze the nature of a tour systematically, it will be helpful to understand the difference
between domestic and international tourism, as well as independent and package tour.
Domestic Tourism: Travel taken exclusively within the national boundaries of the traveler’s
country. People find it easy to do so because there are no language, currency, nor documentation
barriers.
International Tourism: involves the movement of people across international boundaries. It is
more difficult to travel outside one’s country because the country visited has a different
language, currency, and documentation requirements, such as passports, visas, and other
conditions of entry to be met by tourists.
A package tour, sometimes called inclusive tour, is an arrangement in which transport and
accommodation is bought by the tourist at an all-inclusive price and the price of the individual
elements cannot be determined by the tourist. The tour operator who organizes the package tour
purchases transport and hotel accommodation in advance, usually obtaining these at a lower
price because he or she is buying them in bulk. He or she then sells the tours individually to
tourists direct or through travel agents. On the other hand, an independent tour is an arrangement
in which the tourist buys these facilities separately, either making reservations in advance
through a travel agent or en route during his or her tour.
Tourists purchasing package tours may do so on the basis of either individual or group travel. An
independent inclusive tour is one in which the tourist travels to his or her destination
individually, while in the group inclusive tour, he or she travels in the company of other tourists.
The abbreviations IIT and GIT are used for individual inclusive tour and group inclusive tour
respectively.

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Activity
Direction: Site/Share a scenario that showcase the relationship of Hospitality and Tourism
Assessment
Identification
Direction: Identify each of the items below if it is under Hospitality (H) or Tourism (T).
Write your answer on the space before the number.
1. La mesa Eco Park
2. Jollibee
3. Hiking
4. Camping
5. Boracay Night Club
6. Theatre
7. Carmelita hotel
8. KFC
9. Scuba Diving
10. Bungee Jumping

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Reflection
Did the topic of this unit help you to widen your knowledge about hospitality and tourism
industry?

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Topic 2: Characteristics of Tourism and Hospitality
1. Discuss the components of the tourism.

2. Differentiate the characteristics of services.
3. Explain the Elements of tourism
Components of Tourism
The main components of tourism are Accessibility, Accommodation and Attraction or Locale.
According to the Enuga State Tourism Board, these are considered the 3 A's of tourism.
One of the main components of tourism, accessibility, refers to the ability for tourists to get to
the destination. This mostly includes transportation, which needs to be regularly scheduled,
economical, safe and comfortable. Depending on the destination, this includes cars and buses,
boats and ships, trains and airplanes.
The second component of tourism is accommodation. This means that tourists have a place to
stay upon reaching the destination and a way to get food. Much like accessibility,
accommodation also needs to be economical, safe and comfortable. The type of accommodation
also varies according to the location. For instance, a stay in the mountains may require a cabin or
a place to pitch tents. Other accommodations include hotels and motels.
The third and arguably most important component of tourism is attraction. This means that the
destination needs to have some draw that makes tourists want to visit. In same cases the draw is
scenic, like mountains and lakes. In other cases the draw might be historical relevance.
1. Accessibility (Transportation)
Accessibility means reachability to the place of destination through various means of
transportation. Transportation should be regular, comfortable, economical and safe. Today there
are various means of transportation like airlines, railways, surface (road transportation) and water
transportation. The transportation should be there for all kinds of tourists and destinations.

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2. Accommodation
It is a place where tourists can find food and shelter provided he/she is in a fit position to pay for
it. There are various types of accommodation from a seven star deluxe hotel to a normal budget
class hotel.
3. Attraction (Locale)
It is considered as the most important basic component of tourism. Attraction means anything
that creates a desire in any person to travel in a specific tourist destination or attraction.
Locale is another basic component of tourism. The locale may be used to include the holiday
destination and what it offers to the tourist. The holiday destination may offer natural attractions.
It is considered as the most important basic component of tourism. Fashion is an important factor
in the demand for various tourist attractions and amenities. The tourist who visits a particular
place for its natural beauty may decide to visit some other attractions due to a change in fashion.
Elements of Tourism: - There are certain elements or ingredients of tourism. They are the
fundamental attractions of tourism
1. Pleasing weather
2. Scenic attractions
3. Historical and cultural factors
4. Accessibility
5. Amenities
6. Accommodation
7. Safety and security
8. Other factors
a. Guide/ escort facilities.

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b. Basic medical facilities.
c. Electricity
d. Water
e. Communication system.
1. Pleasing weather
Fine weather with warm sun shine is one of the most important attractions of any tourist place.
Particularly good weather plays an important role in making a holiday pleasant or an unpleasant
experience. Tourist from countries with extremes of weather Visit Sea beaches in search of fine
weather and sunshine. Due to this many spas and resorts along the sea coasts come into
existence. In Europe, countries like Italy, Spain and Greece have developed beautiful beach
resorts. There are many such resorts along the coasts of Mediterranean sea like india ,
Philippines, Thailand Indonesia, Australia, Sri Lanka and some other countries have beautiful
sea beaches with fine weather are best examples where weather has played a prominent in
attracting tourists.
2. Scenic attractions
No doubt scenic attractions are very important factors in tourism. Scenery consisting of
mountains, lakes, waterfalls, glaciers, forests, deserts, is strong forces attracting people to visit
them. Thousands and thousands of tourists are attracted by the northern slopes of the Alps in
Switzerland and Austria and the southern slopes at Italy and also Himalayan.
3. Historical and cultural factors

Historical and cultural interest exercised tremendous influence over travellers. Large numbers of
tourists are attracted every year by the great drawing power of Stratford on Avon in England
because of its association with Shakespeare, or the city of Agra in India because of its famous
leaning tower. Large number of Americans and Canadians visit London because of its historical
and cultural attractions. So also the world famous caves of Ajanta and Ellora in India are visited
by tourists because of its architecture and painting.
4. Accessibility
Accessibility is another important factor of tourism. There should be accessibility for each and
every location of tourist attractions. If their locations are inaccessible by the normal means of
transport, it would be of little importance. All kinds of transport facilities are to be made
available for such locations. The distance factor also plays an important role in determining a
tourist’s choice of a destination. Longer distance cost much than to short distances.
5. Amenities

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Facilities are very essential for any tourist centre. They are considered necessary aid to the tourist
centre. For a seaside resort facilities like swimming, boating, yachting surf riding and such other
facilities like deeming recreations and amusements are very important feature. There are two
types of amenities; natural and manmade. Beaches, sea-bathing, fishing, climbing, trekking,
viewing etc. are come under the former category. Various types of entertainments and facilities
which cater for the special needs of the tourists come under the latter category.
6. Accommodation
The need and necessity of accommodation cannot be ignored in tourist destination.
Accommodation plays a vital role in this field. Many changes have taken place in
accommodation recently. New types of accommodation, particularly, holiday villages, apartment
houses camping and caravan sites and tourist cottage have become very popular. Usually a large
number of tourists visit a particular spot simply because there is a first class hotel with excellent
facilities. Today Switzerland, Holland, Austria and the Netherlands have gained reputation for
good cuisine, comfort and cleanliness.
7. Safety and Security

Safety and security are vital to providing quality in tourism. More than any other
economic activity, the success or failure of a tourism destination depends on being able to
provide a safe and secure environment for visitors.
Other factors
Besides the above factors, hospitality is one such factor among the variety of factors. It is
the duty of the host country to be hospitable towards tourists. For this French and Indian
governments have done a lot. A series of short films on various themes like “being
courteous”, “cleanliness” and “welcoming” a visitor” were prepared and exhibited
through a wide network cinema theaters all over the country. Slogans like “welcome a
visitor- send back a friend” were displayed at various important exists and entry points
like railway stations, airports and seaports. Following the above methods, many other
countries launched “Be nice” campaigns. It means that the tourists must be treated as
friends.
Characteristics of Tourism and Hospitality

Tourism and Hospitality has special characteristics which make it different from other industries
1. In tourism and hospitality, the product is not brought to the consumer; rather, the
consumer has to travel and go to the product to purchase it. In other industries, an item

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manufactured in a factory is brought to the wholesaler and retailer and ultimately to the
consumer.
2. The products of tourism and hospitality are not used up; thus, they do not exhaust the
country’s natural resources. The products of other industries have a limited life and at the
end of it are either junked or replaced with new ones.
3. Tourism and hospitality is a labor-intensive industry. It requires more manpower than

other industries.
4. Tourism and hospitality is People oriented. It is primarily concerned with people. One of
the most important motivations of tourists is to meet other people and see how other
people live.
5. Tourism and hospitality is a multidimensional phenomenon. It is dependent on many

and varied activities which are separate but interdependent.
6. The tourism and hospitality industry is seasonal. During vacation seasons, millions of
tourists travel, which result in increased revenues for several tourism agencies; but when
vacations are over, these companies experience a big decline in dollars earned.
7. The industry is dynamic. It is characterized by the changing ideas and attitudes of its
customers and therefore must be always prepared and willing to adjust to these things.
Tourism and Hospitality Services
What is a service? Services are a special form of product which consists of a activities, benefits
or satisfactions offered for a sale that are intangible and do not result in the ownership of
anything.
In the following, we will go into the most relevant characteristics of services. The most
important characteristics of services are:

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Services cannot be seen, tasted, felt,
Intangibility heard or Smelled before
Services cannot be separated from

Inseparability their providers
Variability Quality of services depends on who

provides them and when, where and
how
Services cannot be stored for later

Perishability sale or use
Intangibility
 Tourist products cannot be touched as they include flight experience on an airplane,
cruise on an ocean liner, a night’s rest in a hotel, a nice meal in a luxurious restaurant ,
view of mountains, a visit to a museum, a good time in a night club and much more.
These products are experiences. Once they have taken place they can only be recalled
and relished.
For example: A person who pays for massage will not see the effects of massage until the
massage is done to his/her body.
As a consumer cannot feel the service beforehand, they look for indications and evidence of
quality of service.
Inseparability
 In tourism and hospitality services, both the service provider and the customer must be
present for the transaction to occur.
If a service employee provides the service, then the employee is part of the service
For example: The food in the restaurant may be outstanding, but if the service staff
is rude, customers will down rate the overall service of the restaurant.
Another implication is that customers and employees must understand the service delivery
system because they are coproducing the service.

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For example: A couple may choose a restaurant but if a group of loud customers
is seated next to them, the couple will be disappointed.
Variability
 It means that the quality of services depends on who provides them and when, where and
how they are provided.
For example: Within a given hotel chain, one reception desk agent may be cheerful and
efficient one day but would be unpleasant and slow the other day.
Service providers’ service quality depends on his energy and his frame of mind at the time of
each customer encounter.
Variability or lack of consistency is the major cause of customer disappointment in the industry.
Perishability
 The service provided by the industry is highly perishable.
If the service is unused, it is wasted.
For example: A 70 room hotel that sells only 40 rooms on a particular night cannot
inventory the 30 unused rooms and then sell 100 rooms the next night because
revenue lost from not selling the 30 rooms is gone forever.
Activity
Direction: Share a scenario that best describe the following:
1. Intangibility:
2. Inseparability:
3. Variability:
4. Perishability:

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This Assessment
Direction: This section gauges the perception of how tourism and hospitality fits in the state and
regional economy and assesses the level of tourism and hospitality activity and the
transportation resources available.
1. I s there a need for more investment in the transportation resources to support the
current mix and level of tourism recreation travel? [ ] Yes [ ] No
If“Yes”describe
Reflection
What new things did you learn?

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Topic 3 Importance of Tourism and Hospitality
1. Appreciate the importance of tourism and hospitality in the economy.

2. Explain the impacts of tourism activity in the country.
Importance of Tourism and Hospitality
Tourism and Hospitality has become one of the world’s major industries. Both developing and
highly developed nations are now taking a closer look at the following potential benefits from
tourism and hospitality.
1. Contribution to the balance of payments. Tourism and hospitality can help correct the
balance of payments and deficits of many countries by earning the much-needed foreign
currency in international trade. Examples of countries in which the tourism and
hospitality industry has helped reduce the deficits are: Spain, Mexico, Philippines,
Thailand, Hong Kong, and Singapore.
2. Dispersion of development. International tourism and hospitality is the best means to

spread wealth among countries; thus, bridging the economic gap between the rich and
the poor nations.
3. Effect on general economic development. Expenditures by tourists can have beneficial

effects on all economic sectors and can lead to the development of different industries
and other economic activities.
4. Employment opportunities. Tourism and hospitality is a source of employment. It is a

service industry, which could have s significant effect on those countries with surplus
labor such as the Philippines. For countries where there is a high rate of
unemployment and underemployment, tourism and hospitality can provide a ready
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solution.

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5. Social benefits. Social exchange takes place when tourists come in contact with the
inhabitants of the places they visit. Their social background and their presence affect
the social structure and way of life of the local residents. In the same way, tourists are
also affected by the experience so that they often carry with them new habits and a new
outlook on life when they return home.
6. Cultural enrichment. Tourism and hospitality emphasizes a sharing and appreciation of

cultures rather than the lack of trust brought about by isolation. Through tourism and
hospitality, we can appreciate the rich human and cultural diversity that the world offers
and evolve a mutual trust and respect for one another and the dignity of life on earth.
Likewise, tourism and hospitality contributes to the preservation and development of the
world’s cultural heritage. It encourage governments to preserve historical sites and
monuments and motivates indigenous groups to preserve their heritage in the form of
dance, music, and artifacts.
7. Educational significance. Tourism and hospitality enhances one’s education.

International conferences, seminars, and study trips held each year enable people of all
nations to exchange ideas, propose solution to problems, and share their concerns. They
provide up to date information for enhancing the knowledge and skills required for the
development of the tourism and hospitality industry.
8. A vital force for peace. A properly designed and developed tourism and hospitality can
help bridge the psychological and cultural distances that separate people of different
races, colors, religions, and stages of social and economic development. In facilitating
more genuine social relationships among individuals, tourism and hospitality can help
overcome prejudices and foster international brotherhood and world understanding.
Thus, tourism and hospitality can become a real force for world peace.
Tourism’s need and importance in 2020 (during pandemic)

The importance of tourism and its industry is now much more visible. In 2020 and all
the countries are trying their best to contain the coronavirus pandemic and its effects and
are struggling to come out of it.
They are also now looking at their economies and how to bring these back to growth. The First
most badly affected industry as it is seen as highly risky activity.
Still, many countries have now began or are planning to restart tourism. This is because they
know how important tourism is to economies and how tourism can help bring back growth and
also create plenty of job opportunities.

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Application
Reflections and Discussions: How Tourism adapt to a new normal?
After a month of lockdown, it’s no surprise that people are very excited to get out when MGCQ
(modified general community quarantine) is announced and implemented. But even though some
of the regions are now under the MGCQ status still the governors from the different provinces
are unsure whether to totally open its border despite of the increasing number of infected in the
country and it is not only the officials who are unsure about the next steps, it’s also the tourism
businesses because the change is still continuing to dictate the immediate future, knowing the
likely trends is imperative for operators in the sector.
There’s a real tug of war going on-people are keen to get out from their lockdown locations, but
at the same time they’re guided by COVID-19 restrictions and are cautious of protecting their
personal health,”Prof Sigala says.
What this means is that a sense of safety and security will really drive tourists’ choices, affecting
not only how and where they travel, but also what they do on holiday.
People will be travelling for shorter periods and in smaller groups, preferably with family
members and friends, as the proximity of loved ones creates a sense of reassurance and reduces
perceived risks.
Nature and the outdoors are expected to dominate travel plans, with an end to group tours and
experiences, including theme parks, casinos, and to some extent, even visits to capital cities.
With risk reduction driving tourist choices, Prof Sigala says tourism operators must adapt.
Operators that instil trust are likely to lead the revival of tourism, “Prof Sigala says. Restaurants,
hotels, malls and museums modify and redesign experiences to accommodate social distancing
and hygiene issues, and this is what will need to continue.
Flexibility will also be important, as tourists are keen to keep control of their travel plans-right
up to the last minute-in case substances require them to change. This is a clear call for tourism
operators to amend rigid booking or cancellation policies if they wish to appeal to the new
tourists.
Prof Sigala says that while innovation and creativity will be valuable assets for all tourism
operators, those that embrace technology will undoubtedly be one step ahead of the competition.
Covid-19 has deepened people’s connection with digital services that is why technology is no
longer an option or a luxury for a tourism provider, but a survival necessity,”Prof Sigala says.
Contact free services and experiences will all be in demand.

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Equally, technologies that can monitor crowds, as well as identify and track health profiles are
likely to be a desirable feature for destinations.
The root causes and new realities imposed by the pandemic have caused fundamental changes to
the way we think, live, work and play. Which in turn, are transforming the nature of tourism
demand and supply alike.
Some of these changes may be temporary, but others are here to stay and will redefine the way
we practice and experience tourism for years to come.
What are the contact free services you could recommend for the hotel industry to overcome the
recession caused by covid-19?
What can you say about the current status of tourism and the remedy recommended to adapt in
the new normal?
Assessment
What is the role of tourism and hospitality in the growth of cultural experience in the
Philippines?

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Reflection
How might you use what you learned in the future in your life or profession?

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Unit 2
The History of Tourism
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Learning Outcomes:
1. Describe the history of the tourism and hospitality industry

2. Explain the origin of tourism and hospitality in the Philippines
3. Identify the international travel patterns
4. Describe the factors that favour the growth of tourism and hospitality.
INTRODUCTION
In order to truly appreciate the tourism and hospitality industry, it is important to

understand its historical origin. A person cannot project the future without understanding the
past. Philosophers say it another way: “Knowledge is telling the past. Wisdom id predicting the
future.” In line with this philosophy, this chapter will explore the history of this marvellous
industry called tourism and hospitality.
Topic 1 Evolution and Growth of Tourism and Hospitality as an industry
1. Explain the origin of Tourism and Hospitality industry

2. Appreciate the humble beginning of tourism and hospitality

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Early Tourism
Travel and exploration are basic to human nature. Man has traveled since the earliest times
although the term tourism was used only in the 19th century. “Tourism is derived from Hebrew
word torah which means studying, learning, or searching.
Tourism can trace its ancestry in the Old Testament. Noah with his Ark must have been the first
large-scale operator even though his passengers were mostly animals. There are numerous
references to caravans and traders in the Old Testaments. Chapter 26 and 27 of the Book of
Ezekiel describe trade and commerce in ancient Tyre and recount the travels abroad made by
merchants.
Early Tourism
Early Tourism has two forms:
1. Travel for business
2. Travel for religious reasons
Travel for Business

 Throughout the history, merchants have travelled extensively in order to trade with other
nations or tribes.
 The invention of money, writing and wheel by the Sumerians facilitated travel and
exchange of goods.
 The early Phoenicians toured the Mediterranean as traders
 Both the Greeks and Romans were well known traders and as their respective empires
increased, travel became necessary.
 At this time, there was also travel for private purposes.
 Roman traveller was largely aided by improvement in communications, first class roads
and inns (forerunners of modern hotels).

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Travel for religious reasons
 Took the form of pilgrimages to places of worship.
 Pilgrimages were made to fulfil a vow as in case of illness or of great danger or as

penance for sins.
 Besides Rome and Jerusalem, St. James of Galicia was the foremost destination of
English pilgrims in the 14th century.
 Beginning in 1388, English pilgrims were required to obtain and carry permits, the
forerunner of the modern passport.
Tourism in the Medieval Period

 During the medieval period, travel declined.
 Travel, derived from the word travail, became burdensome, dangerous and demanding
during this time.
 After the decline of the Roman Empire in the 5th century, roads were not maintained and
they became unsafe.
 Thieves inflicted harm on those who dared to travel.
 No one during this time travelled for pleasure.
 Crusaders and pilgrims were the only ones who travelled.
Tourism during the Renaissance and Elizabethan Eras

 With the Renaissance, a few renowned universities developed so that travel for education
was introduced largely by the British.
 Travel for education became popular in the 16th century.
 Under Elizabeth I, young men seeking positions in court were encouraged to travel to the
continent to widen their education.
 This practice was gradually adopted by others in the lower social scale.

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 In time, it became recognized that the education of a gentleman should be completed by a
“Grand tour” of the cultural centers of the continent which lasted for three years.
 The term was used as early as 1670. While apparently educational, the appeal
became social.
 Pleasure seeking young men of leisure travelled predominantly throughout France and
Italy to enjoy the cultures and social life of Europe, with Venice, Florence and Paris
as the key attractions.
 By the end of the 18th century, the practice had become institutionalized for the upper
class of society.
 As young men sought intellectual improvement in the continent, the sick sought a remedy
for their illness in “spas” or medicinal baths.
 The term “spa” is derived from the waloon word “espa” meaning fountain.
 Travelers immersed themselves in the healing waters. Soon Entertainment was added and
dozens of watering places became resort hotels.
Tourism during the Industrial Revolution
 The Industrial Revolution brought about major changes in the scale and type of
tourism development.
 It brought about not only technological changes but also essential social changes that
made travel desirable as a recreational activity.
 The increase in productivity, regular employment, and growing urbanization gave

more people the motivation and opportunity to go on holiday.
 The emerging middle class combined higher incomes and growing education into annual
holidays.
 To escape from their responsibilities and the crowded city environment, they travelled
to the countryside or seashore for their holidays.
 This led to the creation of working class resorts near major industrial centers.
Tourism in the 19th Century

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 Two technological developments in the early part of the 19th century:
Introduction of the railway and
the; Development of steam power
 The railroads created not only more business by providing reliable and cheap
transportation but also more competition as various private companies invested heavily
in hotels, resorts, and entertainment facilities.
 Thus tourism was transformed from a small business catering to the elite into the start of
a mass market that is travel by a large number of individuals.
 The use of steam power provided the increased mobility needed by the tourism business.
 Steamers on the major rivers provided reliable and inexpensive transportation that led
to the popular day trip cruises and the growth of coastal resorts near large industrial
towns.
 As tourism became organized in the later years of the 19th century, the organization of
travel became an established institution. Travel organizers emerged.
 The first and most famous of these was Thomas Cook.
 His first excursion train trip was between Leicester and Loughborough in 1841 with 50
passengers at a round trip fare of one shilling.
 The success of this venture encouraged him to arrange similar excursions using chartered
trains. In 1866, he organized his first American tour. In 1874, he introduced “circular
notes” which were accepted by banks, hotels, shops and restaurants.
 These were in effect the first travelers’ checks.
 Other tour companies which appeared in Britain at this time were Dean and Dawson in
1871, the Polytechnic Touring Association in 1872 and Frames in 1881. In the United
States, American Express was founded by Henry and William Fargo.
 As the 19th century drew to a close, photography and guide books became popular. A
huge variety of guide books which dealt with both local and overseas travel were sold
to tourists.
 The most popular of these was Baedecker, first published in 1839, which became the

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leading guide for European countries at the end of the century.

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Tourism in the 20th Century
 At the beginning of the 20th century, pleasure travel continued to expand, encouraged by
the increasing wealth, curiosity and outgoing attitudes of the people as well as the
increasing ease of such movement.
 World War I brought about many changes which influenced the volume of tourism.
 Early post war prosperity, coupled with large scale migration boosted the demand for
international travel.
 Interest in foreign travel was further enhanced by the first hand experience of foreign
countries.
 New forms of mass communications stimulated curiosity about other countries. In

addition to the influence of posters and the press, the cinema, radio and television
widened knowledge and interest in travel.
 After world war, forms of travel began to change radically.
 The railways as a means of travel declined with the introduction of the motor car.
 Motorized public road transport and improved road conditions led to the popularity
of seaside tours.
 World War II also led to the increased interest in travel. The war had introduced
combatants not only to new countries but to new continents, generating new
friendships and an interest in different cultures.
 Another outcome of the war was the progress in aircraft technology.
 Air travel had become more comfortable, safer, faster and cheaper in comparison with
other forms of transport.
 With the introduction of the Boeing 707 in 1958, the age of air travel for the
masses arrived, hastening the decline of sea travel.
 After the post war recovery years, there was an increase in private car ownership.
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 Travelers switched to the use of private cars and this change affected both coach and
rail services.
 The private car provided flexible transportation which freed people from the schedules
and fixed routes of public transport.
 It encouraged the growth of excursions and short stay holidays
 Resorts near major centers of population benefited considerably. Road

improvements brought more distant resorts closer to the major cities.
 The resourceful tour operators devised flexible packages.
 Hotels devised their own programs of short stay holidays
 The demand for hired cars on holidays overseas also increased substantially.
 The post war economic recovery provided an increase in discretionary income and leisure
which many people converted into increased recreation and travel
 Due to labor negotiations and social legislation, the length of official and paid holidays
increased.
 Governments have created more vacation time by incorporating isolated public holidays
into the familiar long “weekends” throughout the year.
 As business and trade prospered in the developed countries, business travel also
flourished, leading to the demand not only for individual travel but also for conference
and incentive travel on a world wide scale.
 The 1970 have also seen the emergence of new patterns of tourism. As economic power
has shifted between countries, new tourism generating countries arose, notably the oil
rich Arab countries and Japan.
 Europe as well as the developing tourist based economies of Asia have benefited from
this influx.
 The Philippines, Thailand, Singapore, Malaysia and Indonesia have strengthened

their tourist attractions to appeal to new markets.

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 Governments of many nations are encouraging the growth of both domestic and
international tourism as a means of job creation, economic diversification, and source of
foreign exchange.
 Beyond its economic significance, there is a growing realization of the role of

international travel in promoting world peace and prosperity.
History of Hospitality Industry
Hospitality Industry in Early Days
 The concept of hospitality industry is extremely old.
 It is mentioned in writings dating back to Ancient Greece, Rome and Biblical Times.
 In ancient times people felt the requirement of hospitality because they believed that
hospitality to strangers was necessary to their religious well being
 Hospitality in Ancient Greece is missionaries, priests and pilgrims formed a very large
part of the travelling public. They travelled understandable that certain elements of
religion were intermingled with the idea.
 Visit to holy places, perhaps oracles or temples that had a dominant position in their
relation.
Medieval Period
 During medieval period the travellers were English people.
 Inns were actually private homes.
 Nobilities stayed in monasteries.
 Stagecoach became favoured transportation.
 In ancient Persia accommodation known as “khans” were constructed.

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 In later year of Roman Empire taverns and inns provided shelter for travelling
merchants, actors and scholars.
 The high spot of that era in terms of hospitality was the development of ‘posthouses’
by the Persians along the caravan routes.
Renaissance Period
 During this period there were high demand for inns and taverns.
 Hotel de Henry, the first hotel, was build on 1788.
 It was build at a cost of $17,500.
 There were 60 beds.
 Coffee houses came during this period.
The Eighteenth Century
 Eating and sleeping places developed during the period.
 Taverns started to appear in New York/New England.
 Inns started to function in Pennsylvania
 Ordinaries developed in southern colonies
 Coffee houses became extremely popular in Europe and were incorporated in many of
the inns.

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The French Revolution
 Changed the course of culinary history
 Escoffier brought the brigade system.
 M. Boulanger, father of modern restaurant, called the soup he sold “resorantes”.
 Revolution caused some of the chefs to come to the new world.

 Philippine Tourist and Travel Association (PTTA)
Nineteenth Century
 In the last quarter of the nineteenth century, public dining was not popular.
 Many hotels were constructed without dining facilities
 Hotel guests took their meals in their rooms
 In 1875, a dining facility was opened in the Albermarle Hotel in London. By this time,
the term restaurant referred to the dining room of a hotel.
 In London, more luxurious hotels began to appear. Some were known for their excellent
guest accommodation and superior food. One of the best known hotels was the Savoy
which was opened by Richard d’Oyly Carte in 1889.
 In the Savoy, d’Oyly Carte employed two men who became famous throughout the
world-Cesar Ritz and Auguste Escoffier. The general manager was the renowned
Cesar Ritz and The Chef de cuisines was Auguste Escoffier.
 Auguste Escoffier was one of the greatest chefs of all time. He is known for his classic
book, Le Guide Culinaire. He also installed the Kitchen Brigade System.
 The Americans used their ingenuity to create something for everyone. Delmonico’s was
the only expensive and aristocratic restaurant in the United States. It was famous for its
fine food. Delmonico’s served Swiss-French cuisine and became the center of
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American

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gastronomy or the art of good eating. It is also known for its bilingual menus-Baked
Alaska, Chicken à la king, and lobster newberg. The Delmonico steak is named after the
restaurant.
 Other American cities had their own hotel palaces such as the Palmer House in Chicago,
St Clarke in New Orleans, and the Planters Hotel in St. Louis. The Hotel Del Coronado in
San Diego became famous because of its unique architectural style.
 Although the modern hotel was a American invention, the Europeans contributed the
European Plan which meant that a guest need not pay for both room and meals in one
lump sum, but could pay for only the room and order the meals separately from an à
la carte menu of eat elsewhere.
 More innovations in Hospitality occurred in the nineteenth century such as the custom of
dining out, better methods of preserving food through canning and vacuum packing, mass
feeding for school children, and the establishment of ice cream parlors.
Twentieth Century
 After World War II, travel started in many parts of the world.
 In 1958 there was an advent of cross continental flights.
 In 1958 trans-Atlantic flights developed.
 First motel in California began during this period.
 Resurgence of inner city lodging properties.
 Interest in cruises increased.
Twentieth Century Restaurants
 1921- Walter Anderson and Billy Ingraham began the White Castle Hamburger Chains.
The name White Castle was chosen because white stood for purity and castle for
strength.

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 1925- Howard Johnson opened his original restaurant in Wollaston, Massachusetts. In
1934, the Rainbow room opened. This art deco restaurant supported the re-emergence
of New York as the center of power and glamour. In 1937, Trader Vic’s restaurant
opened. The social elite was attracted to the Polynesian-themed restaurant which served
exotic drinks including the Mai Tai that Vic invented.
 1927- Marriott’s Hot Shoppe and root beer stands opened. At about this time, the drive-
in and fast food also sprang up in America.
 1939- A restaurant called Le Pavillon de France opened in New York. By the end of
1930, every city had a deluxe supper club or night club. The Four Seasons also opened
in 1939.It was the first restaurant to offer seasonal menus (summer, spring, fall, winter)
with its modern architecture and art as a theme.
 1950s-The emergence of fast food restaurants.
 1960s- Fine dining became popular because businessmen liked to eat well.
 1970s- New establishments were introduced such as the Taco Bell, TGI
Friday, Houston’s, and Red lobster in the restaurant industry.
 1990s-Started with recession which began in 1989. The hospitality industry experienced a
downturn due to the Gulf War. Organizations strived for profitability, hence, they
downsized and consolidated.
 1993- The economic recovery was very strong. Thus, several mergers and acquisitions
have taken place. Many corporations have expanded overseas. Eastern Europe and
China have opened up.
Activity
Discuss early Tourism

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How did the Industrial Revolution bring out major changes in Tourism and Hospitality
development?
Assessment
Explain the Contribution of the French Revolution in the history of restaurants
Reflection
What did you learn that was unexpected?

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Topic 2 Pioneers in the Tourism and Hospitality
Industry
1. Know the famous individuals and its contribution in the Tourism and Hospitality Industry
2. Appreciate their contribution in the growth and development of the Industry
The Pioneers of the Tourism and Hospitality Industry
There are several outstanding individuals who have made a significant contribution to the growth
and development of the tourism and hospitality industry. They are Cesar Ritz, Ellsworth Milton
Statler, Conrad Hilton, Thomas Cook, Howard Dearing Johnson, J. Willard Marriott, Ray Kroc,
Isadore Sharp, and Ruth Fertel.
Cesar Ritz
Cesar Ritz became the general manager of Savoy Hotel in London, one of the most famous and
luxurious hotels in the world. He made the hotel a cultural center for high society. The Ritz name
is synonymous with refined, elegant hotels and service. At present, the Ritz-Carlton hotels bear
his name.
Ellsworth Milton Statler

Ellsworth Milton Statler is considered to be the premier hotel-man of all time. He brought a high
standard of comfort and convenience to the middle class traveller at an affordable price. He was
the first to put telephones and radios in every guest room together with full-length mirrors, built-
in closets, and a special faucet for ice water.
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Conrad Hilton
Conrad Hilton was once recognized as “the biggest hotel man in the world.” He was described
by the New York Times as the “master of hotel finance.” He was careful not to over finance and
had a flawless sense of timing. In 1954, he formed the first major chain of American Hotels- a
group of hotels which followed standard operating procedures.
Thomas Cook
Thomas Cook is recognized as the first professional travel agent. He was the founder of the
world’s first travel agency. He is credited for making world travel possible for middle class. The
phrase “Cook tour” is still used at present to refer to a tour that goes to many places and stops
briefly at each place.
Howard Dearing Johnson

Howard Dearing Johnson was the pioneer of brand leveraging. He was one of the first to
introduce franchising in the 1930s. At present, Howard Johnson is one of the famous names in
the restaurant and hotel business.
J. Willard Marriott
J. Willard Marriott founded the Marriott Corporation which has continues to be an important
asset of the hospitality industry. Through his strong faith and determination, J. Willard Marriott
began with a root beer stand which was founded by necessity and built it into a multibillion
dollar industry.
Ray Kroc
Ray Kroc has been the most financially successful of all hospitality entrepreneurs. He founded
the McDonald’s Corporation, a multibillion dollar industry, through his strong dedication,
organizational skills, perseverance, and incredible aptitude for marketing. Kroc developed
several operational guidelines such as Quality Service Cleanliness and Value or QSC&V .
Kroc’s motto “Never be idle a moment” was also incorporated into the business.
Isadore Sharp
Isadore Sharp, a first generation Canadian, was a founder of Four Seasons Regent Hotels, the
world’s largest hotel chain and a multimillion dollar global hotel empire. The success of the Four

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Seasons Regent Hotels is largely due to the drive determination, and personal taste and style of
Isadore Sharp.
Ruth Fertel
Ruth Fertel was the founder of Chris Steak House, the largest upscale restaurant chain in the
United States. It has 59 operations- 54 in the US and Puerto Rico and five internationally. It sells
more than 11,000 steaks daily with a gross income of two hundred million dollars a year.
Because of this volume, Ruth Fertel is the most successful woman restaurateur at present.
Activity
Direction: Describe the contributions of the following individuals below:
Cezar Ritz:
Ellsworth Milton Statler:
Conrad Hilton:
Thomas Cook:
Willard Marriott:

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Assessment
Explain how these famous individuals affect the modern era of tourism and hospitality industry.
Reflection
What new things did you learn?

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Topic 3 Origin of Tourism in the Philippines
1. Explain the start of tourism in the country.

2. Know the different individuals and its contribution to the growth of tourism
and hospitality in the country.
Origin of Tourism in the Philippines
Tourism and hospitality in the Philippines began when the original inhabitants of the country
roamed around in search of food.
 Tourism in the Philippines began when the original inhabitants of the country roamed
around in search for food.
 Inter-tribe travel occurred although mode of travel was crude.
 A more recognizable form of tourism appeared in the Philippines when the country
was discovered by Ferdinand Magellan and when galleons or wooden boats sailed
between Mexico and the Philippines during the galleon trade.
 The Philippines were claimed in the name of Spain in 1521 by Ferdinand Magellan, a
Portuguese explorer sailing for Spain, who name the islands after King Philip II of
Spain. They were then called Las Felipinas.
 During the American occupation of the Philippines, American were able to reach Manila
after two weeks on board the Pan American Airways air-clippers.

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 In the 1900’s steamship and the airline pioneers, the “China Clipper” and the
“Manila Clipper” brought some passengers to Manila via Hong Kong.
 The introduction of more comfortable and faster means of transportation gave the early
impetus for tourism in the Philippines.
 Travelers from the US, Chins, Japan and Europe were provided inland tours by
entrepreneurs with their unregistered private cars and coaches called
“colorum”.
 Colorum means illegal tour handling and the illegal use of private vehicles for public
use. It was tolerated by the government authorities at that time since tourism at this time
was not yet developed.
 In 1952, the first tourism association in the Philippines was organized. This was the
Philippine Tourist and Travel Association (PTTA)
 The Philippine Tourist and Travel Association (PTTA) which was organized to put
together all existing travel establishments serving both domestic and international
travellers.
 The PTTA was funded by the government to promote the country’s tourism industry.
 Later, the government organized the Board of Travel and Tourist Industry (BTTI) to
regulate, supervise and control the tourism industry and to subsidize the PTTA as
its promotional arm.
 The Philippines has undergone economic, social and political crises starting in the
1960s up to the 70s which hindered the development and promotion of tourism.
 Accommodations were inadequate and airline industries were not given much incentive
to promote the Philippines as a visitor destination.
 Due to the turbulent conditions in the country, the tourist industry was denied the
peace and order, sanitation, financial support, and other important factors for tourism
development.
 It was only in 1972, after the declaration of martial law when tourism in the Philippines
prospered. This was due to favourable conditions such as safety of tourists, better
services and sanitation facilities, more financial support from the government and the
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vigorous cooperation of the private sector. Thus the Philippines became a “
bargain destination” to foreign visitors.
 As several tour groups arrived in the Philippines, more accommodations, food and
beverage facilities and more airline frequencies were established. A temporary “tourist
boom” existed in the Philippines in the early 70s.
 The Philippine tourism industry flourished in the 1970s and early 1980s but declined
in the mid 1980s, with the average length of tourist stay falling from 12.6 days in
earlier years to 8.9 days in 1988.
 In 1987, tourism growth was slower in the Philippines than in other Southeast Asian
Countries.
 About 1.2 millions tourists visited the Philippines in 1992, which was a record high in the
number of tourist visits since 1989.
 In 2000, the Philippines’ tourist arrivals totalled 2.2 million. In 2003, it totalled
2,838,000, a growth of almost 29%, and was expected to grow as much as 3.4 million in
2007.
 In the first quarter of 2007, the tourist arrival in the Philippines grew as much as 20% in
same period last year.
 In 2011, the Department of Tourism recorded 3.9 million tourists visiting the country,
11.2 percent higher than the 3.5 million registered in 2010.
 In 2012, the Philippines recorded 4.27 million tourist arrivals, after the Department of
Tourism launched a widely publicized tourism marketing campaign titled “It’s More Fun
In The Philippines”.
 The tourism industry employed 3.8 million Filipinos, or 10.2 per cent of national
employment in 2011, according to data gathered by the National Statistical Coordination
Board.
 In a greater thrust by the Aquino administration to pump billions of dollars into the
sector, tourism is expected to employ 7.4 million people by 2016, or about 18.8 per
cent of the total workforce, contributing 8 per cent to 9 per cent to the nation’s GDP.
 Tourism and hospitality in the Philippines at present is the result of the

continuous development and promotion of tourism and hospitality from 1950 to
the present.
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However, the growth in the tourism and hospitality industry is not very spectacular
compared to our neighbouring countries in terms of tourist arrivals. Records show that
the Philippines is still in the tail-end of arrivals compared to other Asian destinations,
such as Hong Kong, Singapore, Thailand, Korea, Taiwan, and Japan.
The National Tourism Organization (NTO) of the Philippines or the Department of Tourism has
embarked on several plans and programs to ensure the pleasant and the hospitable entry, stay,
and departure of tourists, as well as to assure a harmonious, positive, and constructive
development of the tourism and hospitality industry. Among these are:
1. Increase visitor arrivals especially from nearby markets like Japan, Korea, Hong
Kong, and Taiwan and high spending markets like Germany.
2. Increase tourism and hospitality receipts through longer stays (now set at 11 days) and
higher spending per day (estimated at $ 110 per day), which can be accomplished by
more attractive destinations and tours, more shopping and dining, and getting not just the
budget traveller, but also the upscale markets;
3. Expand domestic tourism and hospitality through more promotions, cheaper tour
packages, and new facilities, especially for the lower income segments;
4. Expand the capacity for tourism and hospitality by promoting more private sector
investments;
5. Improve the standards of service through the expansion of training programs for
the professionalization of the tourism and hospitality management and labor force;
6. Program major tourism and hospitality infrastructure projects;
7. Engage in major tourism and hospitality estate and resort development;
8. Classify facilities in tourist sites according to international standards;
9. Strictly enforce the tour facility standards;
10. Promote self regulation within the different sectors of the tourism and hospitality
industry;
11. Complete the national tourism plan and a destination tourism plan;
12. Encourage consumer advertising in selected markets;

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13. Work closely with the private sector in product development;
14. Develop and strengthen linkages with the local government, the private sector, and the
general public through tourism and hospitality councils.
Activity
What are the problems of tourism in the Philippines?
What is the Philippines best known for?
Assessment
Direction: Identify the following.
1. What year that tourism in the Philippines flourished?

2. In what year that Philippines became the bargain destination to foreign
visitors.
3. What are the functions of Board of Travel and Tourist Industry?
4. What is the first tourism association in the Philippines?
5. Who discovered Philippines?
6. What is the first name of Philippines?

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7. What is the tourism marketing campaign title of the Philippines?
8. The unregistered private cars and coaches are called?
9. What year that the Philippines have undergone economic, social and
political crises?
10. What is the reason why people travel before?
Reflection
Did you learn what you expected to learn?

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Topic 4 Forces Affecting the Growth and Change in
the Tourism and Hospitality Industry
1. Understand the factors affecting the development and growth of Tourism and Hospitality
Industry
2. Identify the international travel patterns
3. Give the top ten countries generating international travel
Positive factors that hastened the growth of Tourism and Hospitality
1. Rising disposable income for large sections of the population. In general, more money
means more travel. At present, the two- income family is widespread. Moreover, the
world is experiencing a redistribution of income which encourages more people to
travel.
2. Growth in the number of retired persons who have the desire and the energy to travel.
Life expectancy is increasing. There are fewer deaths now than before which is the
result of more concern for diet and exercise.
3. Increase in discretionary time- Shorter workweeks and longer vacations. The workweek
has decreased considerably from 50 to 60 hours to less than 40 hours. Flextime
programs allow a three or four day workweek. Some European countries grant paid
holidays to their workers.
4. Greater mobility of the population. People became more accustomed to travel because of
the increase in travel opportunities and desire to escape from the stress and pressures of

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modern life.

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5. Growth in the number of “singles”. People living alone have more free time than
couples; hence, they want to socialize through travel.
6. Greater credit availability through credit cards and bank loans. “Travel now, pay later”
stimulates travel.
7. Higher educational levels. Since millions of students attend colleges and universities,
they tend to become more interested in foreign cultures.
8. The growth of cities. The Industrial Revolution brought about the migration of people
from the rural areas to the urban centers resulting in the growth of urbanization. City
residents travel more than people living in rural areas to escape from the congested
urban environment.
9. Simplification of travel through the package tour. Tour packages- everything planned,
arranged, and included in one piece are more important to the older traveller, the new
traveller, and the less sophisticated traveller.
10. Growth of multinational business. Worldwide business interests increase both the need
and habit of travel.
11. Modern Transportation technology. Technological advances in transportation have made

long- distance travel faster, less expensive, and more comfortable.
12. Shift in values. At present, several people place more value on experience rather than
material possession. They prefer to travel rather than own expensive houses, cars, clothes,
and jewelry.
13. Advances in communication. Television and movies enlarge the travel perspective. The
world is brought into the living room through television.
14. Smaller families and changing roles. American and European birthrates have declined,
giving the adults more free time to get away from family responsibilities. Sexual equality
and shifts in household roles encourage more travel.
International Travel Patterns
Major travel flows occur between the United States and Western Europe. Secondary regional
patterns exist between South America, the Caribbean, Africa, the Near East, and the Far
East. Travel to Africa is usually one way, originating in Europe.

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The heaviest flow of air traffic into Europe in between New York and London. Within Europe,
the major flows are between London and Paris, London and Frankfurt, Milan and Rome. The
cities in Europe most frequently visited by tourists are London, Paris, Frankfurt, Amsterdam,
Brussels, Zurich, Geneva, Madrid, Copenhagen, Vienna, Milan, Rome, and Munich.
The top ten countries generating international travel in rank order are:
1. United States
2. Germany
3. United Kingdom
4. Canada
5. Japan
6. France
7. Netherlands
8. Mexico
9. Switzerland
10. Australia
Europe generates about half of overseas travellers to the US. Travel between European countries-
intercontinental travels has been very popular. This is one of the reasons of Europe’s large share
of the worldwide travel market.
Activity
Draw the growth of patterns in the global tourism industry by creating a bar or plot graph that
compare tourist arrivals in the year 2015-2020.

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Assessment
Discuss the factors that hastened the growth of tourism and hospitality.
Explain the International travel patterns
Reflection
What do you still want to learn about?

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Unit 4
The Psychology of Travel
Learning Outcomes:
1. Explain the relationship of needs, wants, and motives to tourist motivations

2. Identify the travel generators.
3. To describe the characteristics of travellers based on purpose of travel
4. To analyze the travel constraints
INTRODUCTION
There are several reasons why people travel. Most people travel because they want to see their
families and friends who live far away. Invitations from families and friends are seldom so you
will decide to travel just to see them. People travel because they want to learn others cultures.
They want to see the difference between their culture and other cultures. They want to learn
others culture because for them travelling is fun while learning.
Travelling is not only for rich people. Whether you are poor or in the middle class, you can travel
as long as it fits your budget. Some travel for their goals, some travel for fun and relaxation and
some travel for experience .
Topic 1: Relationship of Wants, Needs and Motives.
1. To show awareness of the factors motivating people to travel

2. Clarify the relationship of needs, wants and motives.
3. Explain the relation between Maslow’s hierarchy of needs and travel motivations listed in
travel literature
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Motivation for Travel
Several studies on tourist motivations have listed various reasons why people travel. Some of the
motivations listed in travel literature are:
-Escape -Relaxation
-Relief of tension -Sunlust
-Physical -Health
-Family togetherness -Interpersonal relations
-Roots or ethnic -Maintaining social contacts
-Convincing oneself of one’s achievements -Showing one’s importance to others
-Status and prestige -Self discovery
-Cultural -Education
-Professional/Business -Wanderlust
-Interest in foreign areas -Scenery
Motivation: Something that stimulates interest or causes a person to act in a certain way. It is the
driving force that causes the flux from desire to will in life.
For example: Hunger is a motivation that elicits a desire to eat.
Four Classes of Basic Travel Motivators

1. Physical motivators: Related to rest, sports participation, beach recreation, relaxing
entertainment and other motivations directly connected with health.
2. Cultural motivators: Include the desire to know about other countries examples are
music, art, folklore, dances, paintings and religion.

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3. Interpersonal motivators: Pertain to the desire to meet other people, visits friends or
relatives, escape from routine, from family and neighbours.
4. Status and prestige motivators: Concern ego needs and personal development. Included
in this group are trips related to business conventions, study, and pursuit of hobbies and
education. Travel would enhance one’s recognition and good reputation.
Travel as a Means to Satisfy a Need and Want

The key to understand tourist motivation is to view vacation travel as a vehicle to satisfy one’s
needs and wants. Tourists do not go on vacations just to relax and have fun, to experience
another culture, or to educate themselves and their children; they take vacations in the belief that
these vacations will satisfy, either completely or partially, various needs and wants.
Relationship of Needs, Wants, and Motives
The difference between a need and a want is awareness. It is the duty of people involved in
marketing to convert needs into wants by making the individual aware of his need deficiencies.
This awareness must be accompanied by motivation. A motive enables a person to do something.
Motivation occurs when an individual wants to satisfy a need. To enable a person to be
motivated to satisfy a need, an objective or goal must be present. An individual will be
motivated to buy a product or service if he perceives that the purchase of the product or service
will be beneficial in satisfying the need of which he is no aware. Thus, it is role of marketing to
suggest objectives such as vacation, cruises, or flights to satisfy needs, an awareness of which
has already been created. This process is described in Figure 1.
Figure 1 Maslow’s Hierarchy of Needs

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This theory by Abraham Maslow in his 1943 work, “ A theory of Human
Motivation”, explains that as humans meet basic needs, they seek to satisfy
successively higher needs that occupy a set of hierarchy.
Abraham Maslow
Relationship of needs, wants, and motives

 Need: is something that is necessary for organisms to live a healthy life.
 Want: is something that is desired. It is said that every person has unlimited wants but
limited resources.
 Motives: something (as a need or desire) that causes a person to act.

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Maslow’s Theory of Motivation and Travel Motivations
1. Physiological needs- these are biological requirements for human survival.

For example: air, food, drink, shelter, clothing, warmth, sex, and sleep.
If these needs are not satisfied the human body cannot function optimally. Maslow
considered physiological needs the most important as all the other needs become
secondary until these needs are met.
2. Safety needs- once an individual’s physiological needs are satisfied, the needs for
security and safety become salient. People want to experience order, predictability and
control in their lives. These needs can be fulfilled by the family and society.
For example: Emotional security, financial security, law and order, freedom from fear,
social stability, property, health and wellbeing.
3. Love and belongingness needs- after physiological and safety needs have been fulfilled,
the third level of human needs is social and involves feelings of belongingness. The need
for interpersonal relationships motivates behaviour.
For example: friendship, intimacy, trust and acceptance, receiving and giving affection,
affiliating, being part of a group.
4. Esteem needs- are the fourth level in Maslow’s hierarchy-which Maslow classified into
two categories:
Esteem for oneself: dignity, achievement, mastery, independence
The desire for reputation or respect from others: status and prestige
Maslow indicated that the need for respect or reputation is most important for
children and adolescents and precedes real self esteem or dignity.
5. Self-actualization needs- are the highest level in Maslow’s hierarchy, and refer to the
realization of a person’s potential, self fulfilment, seeking personal growth and peak
experiences. Maslow (1943) describes this level as the desire to accomplish everything
that one can, to become the most that one can be.
Individuals may perceive or focus on this need very specifically

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Need Motive Tourism Literature References
Physiological needs Relaxation Escape, Relaxation, Relief of tension,
Sunlust, Physical and Mental
relaxation of tension.
Safety needs Security Health, Recreation, Keep oneself
active and healthy for the future
Love and belongingness needs Love and Affection Family togetherness, Enhancement of
kinship, Companionship, Facilitation
of social interaction, Maintenance of
personalities, Interpersonal relations,
Ethnic roots, Show one’s affection for
family members, Maintain social
contacts
Esteem needs Achievement Status Convince oneself of one’s
achievement; show one’s importance
to others, prestige, Social Recognition,
Ego Enhancement, and
Professional/Business.
Self-actualization needs Personal Fulfillment
Tourist motivations
A. The need to escape or change B. Travel for Health
C. Sports D. Social Contact
E. Status and Prestige F. Personal Values
G. Cultural Experience H. Travel for Education
I. Shopping and Bargain Hunting J. Professional and Business Motives
K. Search for Natural Beauty
The need to escape or change

 The greatest reason for travel can be summed up in one word –escape.
Travel for Health

 Development in the field of medicine has influenced travel for centuries, giving rise to
the concept of health tourism.

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Sport
 Interest in sport either as participant or spectator is attracting large segments of the
population.
Social Contact
 Much travel grows out of the social nature
 Human beings are social animals;
 They need contact and communication with others.
Status and Prestige

 Travel provides the means of ego or self enhancement.
 Travel to a poor country can provide the traveller with a feeling of superiority.
 Travel can also provide a means of mingling with wealthy and social elite.
Personal Values
 The notion of personal values is an important travel motivator.
 Many people are urged to travel to satisfy personal values and as the search for; spiritual
experience, patriotism and wholesomeness.
Cultural Experience
 Cross cultural exchanges, experiencing how other people live and fostering international
understandings are some of the reasons to satisfy curiosity about other culture, lifestyles
and places.
Travel for Education

 The search for knowledge and truth is inherent in every individual.
 Travel offers an opportunity to satisfy urge to learn.
Shopping and Bargain Hunting

 To many people the joys developed from buying certain goods may be the major reason
for travel.

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Professional and Business Motives
 Great numbers of people travel for professional and business motives.
Search for Natural Beauty

 Travel to satisfy ones search for beauty.
Activity
Discuss the basic travel motivators. Give examples for each.
Assessment
How does Maslow’s hierarchy of needs affect motivation?
Reflection
Why is motivation needed?

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Topic 2: Classification of Travelers
1. Classify travelers based on personality and purpose of travel.

2. Describe the characteristics of pychocentrics and allocentrics.
Classification of travelers based on personality

Phychocentric- people centered on self are inhibited and unadventuresome. When travelling,
they prefer to visit “safe” destinations. They do not want to experiment on the accommodation,
food and entertainment.
Allocentrics- people having interest on other person are highly curious and thrive on stimulation
and change. They have a strong need for variety and new experience.
Midcentrics- people who resides in the middle. They prefer going to a safe place but still
hesitate to experience new things.
Classification of travelers based on the purpose of travel

The two classifications of travelers based on travel purpose are the business travellers and the
pleasure/personal travelers
A. Business Travelers
1. Regular Business Travelers
2. Incentive Travelers
Regular Business Travelers

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Among business travelers, the cost of the trip is shouldered by a company; hence, travel is
not influenced by personal income. The volume and rate of growth of business travel is not
greatly affected by the cost of travel. This means that business travelers will continue even if
the price of travel services increases.
Many studies have been conducted to find out the characteristics of regular business
travelers. The results of these surveys revealed that business travelers are well-educated, rich,
have high level jobs, and tend to fly often. More recent surveys have shown that ratio of
women business travelers to men travelers have grown rapidly. These surveys show that
there are major differences between male and female business travelers. Some of these are:
1. Women business travelers are slightly younger
2. They tend to stay longer at their destinations
3. They are more apt to be unmarried than males;
4. They are more likely to attend a meeting or convention
5. They are more likely to book through a travel agent;
6. They have a greater preference for downtown accommodation facilities closer to work;
and
7. They are more concerned with security aspects of accommodation facilities.
Business Travelers Attending Meetings, Conventions, Congress

Travel Pulse surveys indicate that 20% of all business travel trips are for the purpose of
attending meetings, conventions, and congresses.
Incentive Travelers
Incentive travel is a special type of business travel. It is travel given by firms to employees as a
reward for some accomplishment or to encourage employees to achieve more than what is
required. Incentive trips have risen sharply according to the society of incentive travel executive
(SITE). Salespeople are given trips for reaching a set goal in overall sales of a particular item or
in the number of new accounts. Experts say that these incentive trips last for five days and
usually include spouses. Prize trips are often combined with business and sales meetings,
especially those to foreign destinations in order to be eligible for tax deduction.
The increasing popularity of incentive travel had led to the establishment of incentive travel
organizations. They negotiate with suppliers such as hotels, and airlines to determine the cost of
incentive travel trips. Thus, they act as specialized types of tour wholesalers. To their prices, they
add a mark-up of specialized types of tour wholesalers. To their prices, they add a mark-up of
15% to 20% for their services and costs in packaging the incentive travel trip.
Corporations usually have the following objectives in buying incentive travel trips;
-Increase overall sales volumes; Sell new accounts;

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-Improve morale and good will; Introduce new products;
-Offset competitive promotions; Bolster slow seasons;

-Help in sales training; Sell slow items; and
-Obtain more store displays and support consumer promotions
Companies who buy incentive travel trips are usually those involved in insurance, sales,
electronics/radio/television manufacturing, automobile and truck manufacturing, farm equipment
manufacturing, auto parts/accessories/tires, heating/air-conditioning, electrical appliances
manufacturing, office equipment manufacturing, and building materials manufacturing.
B. Pleasure/Personal Travelers
This group consists of people travelling for vacation or pleasure. They are also called
nonbusiness travelers. Experiences and research have shown that nonbusiness travelers have
different spending patterns from business travelers. In general, the demand for travel services
by nonbusiness travelers is elastic with respect to prices. This means that the nonbusiness
travelers are very much concerned with the increase in the price of travel services since the
cost of travel is usually shouldered by the traveller himself. The traveller likewise chooses
the vacation area.
Traveling for pleasure is the largest segment of the international market and the fastest
growing. The reasons for the growth are the rising of income levels in developed countries,
urbanization, higher educational levels, increase in leisure time, and the length of paid
holidays.
1. Resort Travelers;
2. Family pleasure travelers;
3. The elderly; and
4. Singles and couples.
5. Resort Travelers;

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Resort Travelers
Surveys have shown the resort travelers are better educated, have higher household incomes, and
are more likely to have professional and managerial positions. It is also notable that majority of
resort travelers have families with children.
Family Pleasure Travelers

The family pleasure travelers can be divided into three groups, namely: junior families,
midrange families, and mature families. These are defined according to the ages of the husband
and wife and the educational stages of their children as follows:
1. Junior Families- With parents aged 20-34 having preschool and/or grade school children
only;
2. Midrange Families- With parents aged 35-44 with grade school and/or high school
children only; and
3. Mature Families- With parents aged 45 or over with children who are of high school age
and older.
Family pleasure travel trips are motivated by three objectives. The first objective is to use
ravel as an educational experience for their children. The second objective is to do something
different. The third objective is to use travel to bring family closer together. The major
hindrances to family pleasure travel are the cost of travel, particularly the cost of
transportation, accommodation, food, the ability of the parents to have privacy from their
children, and the problems of organizing and coordinating family pleasure plans.
The Elderly
An examination of population trends in developed countries particularly in North America
clearly indicates that the population is aging. At present, there are many people who are fifty
years of age and over, including a greater number of people in the retirement age category.
These population shifts have made the elderly persons a lucrative target for tourism
destination areas. Persons in the “50 plus” age bracket are called active affluents or people
with the money and the desire to travel extensively. Active affluents generally search for
learning experiences, cultural enrichment, socialization, and activities which led to self-
fulfillment.

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Singles and Couples
Another important segment of pleasure travel consists of singles and couples. They take their
vacations to fulfil their psychological, intellectual, and physical needs by giving them the
opportunity to rest, relax, escape the routine of pressures of daily living, enjoy the
naturalness of life, and to express total freedom. A resort chain that targets singles and couple
is the Club Meditteranee. Club Med is not only organization which taps the singles and
couples pleasure travel segment; other resorts and destinations particularly in the Caribbean
region have also targeted this market segment.
Activity
Decide whether you are a psychocentric, allocentric or midcentric tourist. Choose a destination
that matches your personality type and explain how this destination or tourist attraction pulls you
to travel and visit the place.
Assessment
Discuss the basic travel motivators. Give examples for each.

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Reflection
How does something you learned connect to what you already knew?

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Topic 3: Travel Constraints
1. Identify the main constraints to travel

2. Analyze the travel constraints.
Travel Constraints
The main constraints to travel are:
A. lack of money;
B. lack of time;
C. lack of safety and security;
D. physical disability;
E. family commitments;
F. lack of interest in travel; and
G. fears of travel
A. Lack of Money

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Lack of money is the major travel constraint. Less money means less travel. The wealthy
members of society are the ones who travel most. People with more disposable income
will be able to travel more than those who just earn enough to live on.
B. Lack of time
Lack of available time is another inhibiting factor to tourist travel. The desire to travel
and the financial ability to travel are insufficient if one does not have the time to travel.
A senior company executive may have plenty of money to spend but very little time
available. A combination of time and money must be present for travel and tourism to
take place.
C. Lack of safety and security
Lack of safety in public places, hotels, and travel centers cause people to prefer to remain
in the security of their neighbourhood and home. Areas may acquire the reputation of
being dangerous and thus become less desirable travel destinations as what has happened
in the Philippines, the Caribbean, and parts of Mexico, Spain, and Italy, where there has
been a sharp increase in the number of thefts, robberies, shootings, and assaults among
the local people. Tourists will not go to destinations that they consider unsafe.
D. Physical Disability
Physical disability in the form of bad health or physical handicap may keep people at
home. Elderly who are more susceptible to illness such as heart trouble, hypertension,
arthritis, and bronchitis travel less. After the age of 70, very few travel because for most
of them, long trips are tiring, changes in food are upsetting, and a strange bed may cause
sleeplessness.
E. Family commitments
Family commitments inhibit travel. Parents with young children find it inconvenient and
expensive to go on holiday. During the child rearing period, family obligations increase
significantly for women and to a similar but lesser degree, for men. Travel is curtailed
and more time is spent at home. Indeed, family commitments of any kind, whether it be
young children, taking care of the sick, or looking after older people really affects travel.
F. Lack of interest in travel

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This is mainly due to a preference to simply stay at home. This condition may be due to a
variety of factors, such as dislike of travel, shyness in meeting people, dislike of changing
routine, and many more.
G. Fears of travel
Some people do not want to travel because of fears of travel. Fear of flying is quite
common and accounts for many people who insist on driving to a vacation area instead of
boarding a plane. Fear of the unknown keeps many people from leaving their own
country or even their own city.
Activity
How do pleasure travelers manage their travel constraints?
Assessment
Enumerate the travel constraints. Explain how they inhibit travel.
Reflection
Did you find the topic interesting?

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Unit 4
The Economics of Tourism
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Learning Outcomes:
1. Explain the role of tourism and hospitality in economic development;

2. Analyze the economic impact of tourism and hospitality on a destination area;
3. Differentiate the direct effects from the secondary effects of tourist expenditures on
the economy of the host area;
4. Elucidate the meaning of tourism multiplier and its effect on the economy of the host
country;
5. Describe the undesirable effects of the economic aspects of tourism and hospitality; and
6. Identify the strategies which can maximize the economic effects of tourism
and hospitality.
INTRODUCTION
Tourism’s economic impacts are touted by the industry for a variety of reasons. Claims of
tourism’s economic significance give the industry greater respect among the business
community, public officials, and the public in general. This often translates into decisions that
are favourable to tourism and hospitality industry. Community support is important for tourism
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and hospitality, as it is an activity that affects the entire community. Tourism and hospitality
businesses depend extensively on each other as well as on other businesses, government and
residents of the local community. Economic benefits and costs of tourism and hospitality reach
virtually everyone in the region in one way or another. Economic impact analyses provide
tangible estimates of these economic interdependencies and a better understanding of the role
and importance of tourism in a region’s economy.
Economic impacts are therefore an important consideration in state, regional and community
planning and economic development. Economic impacts are also important factors in marketing
and management decisions. Communities therefore need to understand the relative importance of
tourism to their region, including tourism and hospitality’s contribution to economic activity in
the area.
Topic 1 The Role of Tourism and Hospitality in

Economic Development
1. Understand the role of tourism and hospitality in economic development;
2. Learn the economic impact s of tourism and hospitality on a destination area;
The Role of Tourism and Hospitality in Economic Development

Several developing countries have used tourism and hospitality development as an alternative to
help economic growth. The reasons for this are: first, there is a continous demand for
international travel in developed countries; second, as income in developed countries increases,
the demand for tourism and hospitality also increases at a faster rate; and third, developing
countries need foreign exchange to aid their economic development.
The organization for Economic Cooperation and Development (OECD) has concluded that
tourist and hospitality provides a major opportunity for growth to countries that are at the
intermediate stage of economic development and require more foreign exchange earnings.
Tourism and hospitality is an invisible export which differs from international trade in many
ways.

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1. In tourism and hospitality, the consumer collects the product from the exporting
country, thereby eliminating the freight costs for the exporter except in cases in which
the airline used are those of the tourist-receiving country.
2. The demand for pleasure travel is largely dependent on non-economic factors, such as
local disturbances, political unrest, and changes in the fashionability of resorts/countries
created mostly by media coverage. At the same time, international tourism and hospitality
is both price elastic and income elastic. This means that changes in price and income will
also change the demand for pleasure travel.
3. By using specific fiscal measures, the exporting or tourist-receiving country can

manipulate exchange rates so that those for tourists are higher or lower (normally the
latter is implemented in order to attract large numbers of tourists) than those in other
foreign trade markets. Also, tourists are allowed to buy in domestic markets at the same
prices as the local residents (the exceptions are the duty-free tourist shops operated in
many Caribbean islands and elsewhere).
4. Tourism and hospitality is a multifaceted industry that directly affects several sectors
in the economy, such as hotels, shops, restaurants, local transport firms, entertainment
establishments, handicraft producers, and indirectly affects many others, such as
equipment manufacturers and utilities.
5. Tourism and hospitality brings many more non-monetary benefits and costs than other
export industries, such as social, cultural, and environmental benefits and costs.
Economic Impact
When travelers outside the destination area spend on goods and services within the destination,
tourism and hospitality acts as an export industry by bringing in revenues from outside sources.
Tourist expenditures also increase the level of economic activity in the host area directly. Many
countries have utilized tourism and hospitality as a means to increase foreign exchange
earnings to produce investment necessary to finance economic growth.
The tourism and hospitality industry’s economic impact on a destination area can be
immense since it provides a source of income, employment, and foreign exchange.
Direct and Secondary Effects
In order to measure the economic impact of tourism and hospitality on the destination area, it is
important to know the direct and secondary effects of visitor expenditures on the economy of the
area. Tourist expenditures received as income by businesses such as hotels, restaurants, car
rentals, tour operators, and retail shops serving tourists have a direct effect on the economy of the
host area. The term “direct” means that the income is received directly. Indirect or secondary
effects mean that the money paid by tourists to businesses are, in turn, used to pay for supplies,
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wages of workers, and other items used in producing the products or direct services bought by
tourists.
Tourism Multiplier
The term “multiplier” is used to describe the total effect, both direct and secondary, of an
external source of income introduced into the economy. The tourism multiplier or multiplier
effect is used to estimate the direct and secondary effects of tourist expenditures on the economy
of a country. The multiplier effect is illustrated in Figure 2
Local Tour
Operator
Increased Spend
Personal Income
Save
Handicrafts Seed Fertilizer

Raw Materials Import
(Leakage)
Tourist Purchase of Supplies
Wages
…
Hotelier
Rent Food …
Savings
Wages
Services
(e.g. Taxi)
Figure2. Multiplier Effect

Source: Mill, R.C. and Alastair Morrison. The Tourism System. Dubuque, IA: Kendall/Hunt, 1998.
A tourist makes an initial expenditure into the destination. This expenditure is received as income by local
tour operators, handicrafts store owners, hoteliers, and taxi drivers. In the first round of transactions, a
hotelier may use some of the money received to buy some supplies, pay some wages, and retain some
profits. The income in the second round may be spent or saved, while the employee who has received
payment for services rendered may spend some of it on rent and some on food, and may put some into
savings. The money spent on supplies in the third round of spending goes for such things as seed,
fertilizers, and imported raw materials. Any income spent on imports has leaked out of the local economy.
This process continues until the additional income generated by a new round of spending essentially
becomes zero. Leakage is the value of goods and services that must be imported to service the needs of
tourism and hospitality. To estimate the total economic impact on an area, imports must be subtracted
from the income generated by visitors.

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The formula for tourism multiplier is:
y
K=
E
Where:
K = the multiplier
y = the change in income generated by E
E = the change in expenditure (the initial sum of money spent by the tourist)
The size of the multiplier depends on the extent to which the various sectors of the economy are
linked to one another. When the tourism and hospitality sectors buy heavily from other local
economic sectors for goods and services, there will be a smaller tendency to import and the
multiplier will be greater than if the reverse were smaller tendency to import and the multiplier
will be greater than if the reverse were true.
A simplified formula for tourism multiplier is:
1-L
K=
1-(c-cj-tic) (1-td= b + m)
Where:
K = the multiplier
L = the direct first-round leakages
c = the tendency to consume
cj = the proportion of that propensity spent abroad
tic = the indirect tax
td = the value of direct deductions (income tax, national insurance, and so-on)
b = the level of government benefits

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m = the value of imports
Most developing economies have an income multiplier ranges between 0.6 and 1.2, while
developed economies have a range between 1.7 and 2.0.
Cost-Benefit Ratio
Those concerned with developing the tourism and hospitality industry, whether a
government or a private individual, would like to know the extent of potential benefits and their
costs. Benefits divided by costs equal the cost-benefit ration. To arrive at these ratios, the
following procedures are used:
1. Determine where the tourist money is spent;
2. Determine what percentage of each expenditure leaves the local economy;
3. Derive a “multiplier effect” a ratio applied to income that reflects multiple spending
within an economy;
4. Apply the multiplier effect to the tourist expenditures to arrive at the total benefits of
tourist expenditures in dollars;
5. Derive a cost-benefit ratio expressed as dollars received/dollar spent; and
6. Derive a cost-benefit ratio to tourist expenditures to provide estimates of income and

costs of tourist business to a community, for both the private and public sectors.

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The Positive and Negative Impacts of Tourism and Hospitality
Undesirable Economic Aspects of Tourism

Some undesirable economic aspects of tourism and hospitality are higher prices, and
economic instability. Because of additional demand and/ or increased imports, tourist purchases
may result in higher prices in a destination area. This would mean that local residents would also
have to pay more for products and services.
Since pleasure travel is a discretionary item, it is subject to changes in prices and
income. These fluctuations may result in economic instability.
How to Maximize the Economic Effect of Tourism and Hospitality

Growth Theories
Some economic growth theories have been proposed to maximize the economic effect of
tourism and hospitality within a destination area. These are the theory of balanced growth and
the theory of unbalanced growth.
Proponents of the theory of balanced growth suggest that tourism and hospitality should be
viewed as an important part of a broad-based economy. This theory states that tourism and
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hospitality needs the support of other industries. Its objective is to integrate tourism and
hospitality with other economic activities. To obtain maximum economic benefit, tourism and
hospitality goods and services should be locally produced.
Supporters of the theory of unbalanced growth see tourism and hospitality as the spark to
economic growth. While the proponents of the theory of balanced growth stress the development
of supply, supporters of the theory of unbalanced growth emphasize the need to expand demand.
As demand is increased through the vigorous development of tourism and hospitality, other
industries will move to provide products and services locally.
Economic Strategies
The key to maximizing the economic effects of tourism and hospitality is to maximize the
amount of revenue and jobs developed within the region. To attain this objective, some economic
strategies have been adapted, such as import substitution, incentives, and foreign exchange.
Import Substitution
It imposes quotas or tariffs on the importation of goods which can be developed locally. It
also grants subsidies, grants, or loans to local industries to encourage the use of local materials.
Its objective is to minimize the leakage of money.
Incentives
The wise use of incentives can encourage the influx of capital, both local and foreign,
necessary to develop tourism and hospitality supply. The most common forms of incentives are:
1. Tax exemptions/reductions on imported machinery, materials, and the like;
2. Reduction in company taxation by means of favourable depreciation allowances on

investment, or special treatment in relation to excise taxes, sales taxes, income taxes,
turnover taxes, profit taxes, or property taxes;
3. Tax holidays (limited period);
4. Guarantee of stabilization of tax conditions (for up to 20 years);
5. Grants (for up to 30% of total capital costs);

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6. Subsidies (guaranteeing minimum level of profit, occupancy, etc.);
7. Loans at low rates of interest;
8. Provision of land freehold at nominal or little cost or a low rents;
9. Free and unrestricted repatriation of all or part of invested capital profits, dividends,
and interest subject to tax provisions; and
10. Guarantees against nationalization or appropriation;
Before implementing an incentive strategy, a destination should:

1. Examine the performance of the schemes of other countries in light of their resources
and development of objectives;
2. Research the actual needs of investors;
3. Design codes of investment concessions related to specific development objectives with

precise requirements of investors; and
4. Establish targets of achievements and periodically monitor and assess the level of
realization of such targets.
Foreign Exchange
Many countries have placed restrictions on spending in order to maximize foreign
exchange earnings. They have limited the amount of their own currency that tourists can bring in
and take out of the destination to ensure that foreign currency is used to pay bills in the host
region. Tourists may be required to pay hotel bills in foreign currency. Visitors may be required
to show that they have enough money for their stay before they are permitted to enter the country
or they may even be required to enter with s specified amount of foreign currency for the
duration of their visit.
Activity

and Hospitality
Direction: Site an event that shows positive impacts of tourism and hospitality in the economy.
Assessment
What economic impacts does tourism and hospitality have?
Reflection
Did the topic of this unit help you to widen your knowledge about economic impacts in tourism
and hospitality industry?

and Hospitality
and Hospitality

THM 1 - Macro Perspective of Tourism and Hospitality

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THM 1 - Macro Perspective of Tourism and Hospitality

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NEGROS ORIENTAL STATE UNIVERSITY

Cecille Mae T. Aguadera

1 Self Instructional Module in Macro Perspective of Tourism

Unit 2: The History of Tourism and Hospitality………………………………..

Unit 3: The Psychology of Travel……………………………………………….

Unit 4: The Economics of Tourism and Hospitality………………………….

Unit 5: The Sociology of Tourism……………………………………………….

Unit 6: The Tourism and Hospitality Network and Supply Components…

3 Self Instructional Module in Macro Perspective of Tourism

Unit 7: Tourism and Hospitality Organizations…………………………………

Unit 8: The Impacts of Tourism and Hospitality………………………………..

Unit 9: Macro Trends and Issues in the Tourism and Hospitality…………..

Unit 10: The Future of Tourism and Hospitality………………………………..

Unit 10: Sustainable Management of Tourism and Hospitality………….

4 Self Instructional Module in Macro Perspective of Tourism

The Meaning and

Topic 1: The Relationship of Tourism and

5 Self Instructional Module in Macro Perspective of Tourism

1. Understand the tourism and hospitality industry

Definition of Tourism and Hospitality

According to Goeldner and Ritchie: Tourism is the processes, activities, outcomes

6 Self Instructional Module in Macro Perspective of Tourism

 Tourism affect hospitality

 Hospitality affect tourism

Promote each other and interact with each other

Making contribution to the national economy and promoting the development

 Hospitality and Tourism cannot be separated.

7 Self Instructional Module in Macro Perspective of Tourism

a. Leisure, such as recreation, holiday, health, study, religion, or sport;

8 Self Instructional Module in Macro Perspective of Tourism

2. Length of Stay at Destination

3. Residence of the Traveler

a. Visiting friends and relatives;

The Nature of a Tour:

10 Self Instructional Module in Macro Perspective of Tourism

11 Self Instructional Module in Macro Perspective of Tourism

12 Self Instructional Module in Macro Perspective of Tourism

At the end of this topic, students will be able to:

1. Discuss the components of the tourism.

13 Self Instructional Module in Macro Perspective of Tourism

3. Historical and cultural factors

7. Safety and security

a. Guide/ escort facilities.

3. Historical and cultural factors

15 Self Instructional Module in Macro Perspective of Tourism

7. Safety and Security

Characteristics of Tourism and Hospitality

16 Self Instructional Module in Macro Perspective of Tourism

3. Tourism and hospitality is a labor-intensive industry. It requires more manpower than

5. Tourism and hospitality is a multidimensional phenomenon. It is dependent on many

Tourism and Hospitality Services

17 Self Instructional Module in Macro Perspective of Tourism

Services cannot be separated from

Variability Quality of services depends on who

Services cannot be stored for later

18 Self Instructional Module in Macro Perspective of Tourism

19 Self Instructional Module in Macro Perspective of Tourism

What new things did you learn?

20 Self Instructional Module in Macro Perspective of Tourism