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( Glencoe Marketing Series: I II. Hospitality and Tourism I 5. The Tourism Business I I ©The McGraw-Hill Hospitality and Tourism Markets Companies, 2006 )Section

Travel and Tourism

96 Unit 2 Hospitality & Tourism Markets

AS YOU READ ...

YOU WILL LEARN

· To identify factors that contribute to the growth of tourism.

■ To discuss the reasons that people travel.

· To describe the different types of tours.

WHY IT'S IMPORTANT The travel and tourism industry is a broad and ever-changing industry with great growth potential. Understanding the scope of the industry helps professionals serve their customers.

KEY TERMS

· disposable income

· niche market

· package tour

· charter tour

< customized tour

PREDICT

Why might the travel and tourism industry continue to grow?

disposable income the money left from a person's gross income after taking out taxes

Introduction to Travel and Tourism

he travel and tourism industry includes businesses and government agencies that service travelers. For most countries, travel and tourism can represent a large percentage of total revenue. For example, in the United States, nearly one-third of all households took at least one trip away from home each month during 2003. In 2004, overall spending by domestic and international visitors in the United States increased more than 4 percent to $568 billion.

The Growth of Tourism

he growth of travel and tourism, despite instability in different parts of the world, is due to many factors that affect travel trends. Today some of these factors include trends toward dual family incomes, baby boomers who enjoy travel, health consciousness, available leisure time, new transportation options, increased Internet use, niche travel markets, and the growth of adventure travel.

Dual Family Income

In many two-parent families, both parents work outside of the home. Their income may provide additional disposable income, which is the money left from a person's gross income after taking out taxes. Disposable income may be spent on items such as cars, appliances, travel, and other recreation. Because leisure time is scarce, Americans treasure the quality time they are able to spend on vacations with their families.

Baby Boomers

Because of its size and spending power, the baby-boomer market makes up a large percentage of the traveling public. Over the next decade, this group will continue to travel. However, for older adults (55 years and above), expectations and needs regarding travel and accommodations may be different.

Health

Due to advanced health-care options, many senior citizens are traveling more frequently. Health-care options contribute to the increase of available tour programs, such as tour packages for people with disabilities, to a variety of destinations. Cruise lines offer specially designed packages for these groups.

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Leisure Time

Many employers indirectly support the growth of the travel and tourism industry by providing their workers with more liberal vacation time and flexible-time benefits. To take advantage of long holiday weekends and additional holidays thoughout the year, many travelers take mini-vacations in addition to traditional one-week or two-week vacations.

New Transportation Options

New low-cost airline carriers have increased the options for travelers considering long-distance trips. Low-cost airlines serve destinations previously available only to passengers who paid higher fares or who were willing to make many connections. This ease of access through new airlines has increased the number of travelers—especially travelers who visit family and friends.

The Internet

The convenience of booking a trip online has also contributed to the increased number of travelers. Previously used only for gathering information, the Internet is now a source of transportation, lodging, and sightseeing bargains. Many travel and tourism businesses operate full-service Web sites that provide information and booking capabilities. Travelers are taking a do-it-yourself approach to finding and booking travel and tourism options on the Internet.

Niche Markets

The emergence of niche markets has increased tourism. These markets draw more travelers. A niche market is a new market in tourism that bases travel on specific interests:

· Travel for the disabled

· Adventure travel

· Geotourism s Agritourism

TRAVEL FOR THE DISABLED One large niche market includes over 22 million people with disabilities, or 71 percent of adults with disabilities. Each of these people traveled at least once during 2003. The majority of people with disabilities travel for pleasure. Specialty tours, especially on cruise ships, have attracted a number of travelers who seek special services.

ADVENTURE TRAVEL As a niche market, adventure travel offers a broad spectrum of outdoor tourist activities, such as hiking, boating, mountain-climbing, exploring rainforests, or walking on glaciers. These activities may involve interaction with the natural environment away from the participant's home area. With adventure travel, there may be various risks, which must be overcome by the participant.

ETHICS & ISSUES

Getting Everyone There

Many travel and tourism professionals realize that making travel possible for everyone is good business. For example, over 194,000 travel-related jobs are generated by travelers with disabilities. In 2002 alone, this market segment spent $13.6 billion on travel and tourism. According to the Open Door Organization, cruises are the most popular form of travel for people with disabilities, because cruise lines provide special services to meet their needs. If other segments of the travel and tourism industry improved accessibility, revenue from this market could double. Do you think travel and tourism businesses should be required to accommodate travelers with disabilities? Why or why not?

niche market a new market in tourism that bases travel on specific interests, such as ecotourism

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THE

Electronic

CHANNEL

Electronic Etiquette

Tourism is an international business. Professionals who work in tourism need to understand and adapt to the cultural and language differences of their business partners in order to work and negotiate effectively. For example, it may be acceptable to call business associates in the United States by their first names, but in Japan, such informality is reserved for close friends and family members. Many businesspeople are turning to the Internet to stay up-to-date on key aspects of international business etiquette. The same information you find online can now travel with you in handheld PDAs (Personal Digital Assistants) that are about the same size as cell phones.

Find out more about international business etiquette by visiting Web sites through marketingseries.glencoe.com.

GEOTOURISM/ECOTOURISM Another niche-market trend is geotourism, or ecotourism, which is tourism in exotic or threatened ecosystems for the purposes of observing wildlife or to help preserve nature. A study done by the Travel Industry Association of America (TIA) reported that about 75 percent of all Americans feel that their tour visits should not damage the destination's environment. Geotourism sustains or enhances the geographical location's character, which includes its environment, community, culture, heritage, and aesthetics.

AGRITOURISM Agritourism involves visiting a working farm or any agricultural, horticultural, or agribusiness operation. Tourists go to these sites for the purpose of enjoyment, education, or active involvement in the activities of the farm or operation.

Reasons to Travel

eople travel for a variety of reasons. Basically, there are two main reasons for travel—business and leisure. Business travel could be motivated by meetings, conventions, or other general business reasons. Leisure travel involves travel for pleasure. Some reasons for leisure travel are listed in Figure 5.1.

Tourism's Economic Impact

ll types of travel and tourism offer positive economic benefits. In the United States, one out of every eight people is either directly or indirectly employed in the travel and tourism industry. Travel employers include transportation providers and tour providers. In addition, the travel and tourism industry is one of America's largest retail industries, ranking third, according to the TIA. It is one of the largest employers in 29 U.S. states. Travelers in the United States spend approximately $17,000 per second, $1 million per minute, $60 million per hour, and $1.4 billion per day.

Figure 5.1

Reasons for Leisure Travel

TOURIST ATTRACTIONS Many people enjoy traveling for a variety of reasons. What do you think is the number-one reason for leisure travel? Why?

· Visiting family and friends

· Natural and constructed attractions

· Religious attractions

· Fairs and festivals A

· Cultural attractions

· Sports events

· Shopping

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98 Unit 2 Hospitality & Tourism Markets

marketingseries.glencoe.com

( Section f 1 Glencoe Marketing Series: Hospitality end Tourism III. Marketing Hospitality and Tourism )Selling Hospitality & Tourism

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AS YOU READ ...

YOU WILL LEARN

· To explain the types of selling.

· To list the steps of selling.

· To differentiate between features and benefits.

WHY IT'S IMPORTANT Selling is a process. It is important to understand the steps in the process to be effective at selling and servicing your customers.

KEY TERMS

· personal selling

• business-to-business selling " buying signals

· cross-selling

· selling up

· feature

· benefit

PREDICT

Describe a recent purchase you made. How did the sales associate approach you?

personal selling the type of selling that involves direct interaction between sales associates and customers

business-to-business selling the type of selling whereby one business sells goods or services to another business

Types of Selling

elling involves identifying the needs of customers and being able to meet those needs through providing products, or goods and services. Selling is also part of promotion, one of the four Ps of the marketing mix. Two types of selling are personal selling and nonpersonal selling. Nonpersonal selling does not involve interaction between people. Sales promotion, publicity, and advertising are types of non-personal selling. To be successful with any type of sales, a seller must know how to get information from customers to identify their needs. It is also important to be able to provide customers with information about a product and to convince them to make a buying decision. Personal selling is a process that involves a series of steps to exchange information.

Personal Selling

Most of us are familiar with personal selling, or selling that involves direct interaction between sales associates and customers. Personal selling can occur in a retail store, in your own home, over the telephone, or in an office. For example, personal selling is one aspect of telemarketing. A direct-marketing strategy, telemarketing involves more than just selling. Careful research, good timing, and a well-trained sales staff are necessary for effective telemarketing. Sellers must be able to convince and overcome customers' objections over the telephone. When properly applied, telemarketing can be a useful personal-selling method.

DO-NOT-CALL LISTS An increase in telemarketing calls caused the enactment of recent legislation to limit these calls. Consumers who do not want to hear from telemarketers register their telephone numbers on do-not-call lists nationwide. This prevents telemarketers from calling numbers on the lists.

Business-to-Business Selling

Business-to-business selling is the type of selling whereby one business sells goods or services to another business. For example, a hotel needs linens, towels, food, beverages, and many other products to operate its business and to provide its product, which is overnight accommodations.

Products can be sold over the telephone, through a catalog, in a retail store, or over the Internet. Regardless of where the selling occurs and to whom, the process that leads to a sale involves a series of activities called the steps of selling.

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The Sales Process

ll sales of products—from overnight accommodations and romantic cruises to fine dining and escorted tours—involve a series of steps, or a process, which lead to the desired outcome, or the sale. (See Figure 12.1 on page 245.)

Seven Steps of Selling

The sales process usually involves the following seven steps:

1. Approach—Identify customers.

2. Determine needs—Find out what the customers want or need.

3. Present the product—Select a product to fit the need or want and make a recommendation.

4. Overcome objections—Answer questions or eliminate doubts about a product or service.

5. Close the sale—Motivate the customer to action.

6. Perform suggestion selling—Present ideas for additional product sales.

7. Follow up—Stay in touch with the customer after the sale.

—» SELLING ON THE NET As of 2004, the number of Americans using the Internet for travel planning stabilized at 63.8 million people. However, the number of travelers who actually book airline tickets, hotel rooms, and other travel services online continues to grow.

Every sales situation is different. Some situations may require repeating steps, taking the steps out of sequence, or skipping a step. For example, if your first recommendation for a tour package is rejected, you might go back to step three and get more information. The following segments focus on the specific steps of selling and provide examples of how a travel agent might apply the steps.

STEP 1: APPROACH Identifying customers means more than just finding new or potential customers. It also means qualifying them. When you qualify a customer, you try to determine if he or she is ready to buy or is just browsing. You also need to know if the customer is able to pay for the product, and if he or she has the ability to make a buying decision if presented with one. Once you are satisfied that you are dealing with a qualified buyer, you start building a rapport to find out what he or she needs or wants.

STEP 2: DETERMINE NEEDS In step two, find out what the customer needs or wants. To fully understand this, ask open-ended questions. This allows a customer to provide personal information and to communicate what he or she seeks from the product. Open-ended questions cannot be answered with a simple "yes" or "no." They require more detailed answers. By asking questions, such as who, what, where, when, and why, you can get useful information to determine a customer's needs to offer the right product.

For example, you are a travel agent, and one of your customers wants to book a trip. You will need to know who is traveling and what type of travel experience he or she wants. Find out the destination, the travel dates, and the reason for the trip.

TECH

NOTES

Direct Distribution

Many travelers book hotel rooms through online intermediaries, such as Expedia and Orbitz, instead of going directly to a hotel's Web site. These intermediaries buy blocks of hotel rooms at deep discounts, and then mark up the price slightly for consumers, who receive substantial discounts. However, the consulting firm Hospitality eBusiness Strategies believes that hotel operators need to "balance the direct versus indirect distribution and regain control of their Internet presence."

tapList three ways hotels benefit from increasing distribution on the Internet after reading information through marketingseries.glencoe.com.

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Selling the New JetBlue

. .Ri How do you stir up the

J .. .1H£.. airline industry? If you're AIRWAYS n .. ., ,

David Neeleman, you create

a discount airline that makes new rules and turns

a profit. After years of experience in the airline

industry, Neeleman started JetBlue. In the 1980s,

he ran Morris Air Corporation, a discount carrier

that pioneered the use of electronic ticketing.

Over the next decade, he worked at different

airlines and technology companies. These

experiences led up to his dream of creating his

own airline. This airline would right the wrongs

of current industry leaders. He would improve

customer experience, eliminate inefficiencies,

and pass the value on to customers.

BREAKING THE MOLD

Unlike other start-up companies, Neeleman raised a record amount of investor cash before the business opened. The funds allowed JetBlue to acquire a fleet of new Airbus A320 airplanes instead of old cast-offs. While the new planes were more expensive, they required less

maintenance. The aircrafts also featured an all-coach-class design with leather seats and individual DirecTV screens. These amenities surpassed those of other coach and discount competitors.

In addition, JetBlue used technology to streamline operations and cut costs. Sales agents worked from home, which saved on office expenses and improved employee morale. Pilots used laptops instead of bulky paper flight manuals. Tickets were electronic instead of paper. Passengers could receive a $5 discount when they purchased tickets through the JetBlue Web site instead of through travel agents. These strategies resulted in smoother operations and big profits. Legacy airlines such as United and Delta took notice and began creating their own discount carriers to duplicate the success of JetBlue.

1. How did JetBlue use technology to assist in selling?

2. Describe JetBlue's sales approach to customers.

CONNECT

What are some signals that you might give to show you are ready to buy?

buying signals verbal or nonverbal signs of a customer's readiness to buy

STEP 3: PRESENT THE PRODUCT After you have listened to the customer, you should select a product to meet his or her needs or wants. During this stage of the sales process, restate what the customer told you and ask for confirmation. For example, you might say, "Paul, you told me you are looking for a romantic getaway near the ocean to celebrate your wife's 50"1 birthday. You would like to schedule spa treatments for you and your wife. If possible, you would like a tee time at the golf course on Saturday afternoon. Later you want to surprise your wife with red roses in the room before dinner. Does that sound right?" Asking for feedback allows the customer to confirm your understanding of what product he or she wants and can provide more details that will help you make the best recommendation. Then you make your product recommendations to the customer. Look for buying signals, which are verbal or nonverbal signs of a customer's readiness to buy. Buying signals can be verbal, such as "that sounds good to me," or nonverbal, such as nodding in agreement or touching a brochure. Depending upon the customer's buying signal, you, the sales associate, may take step four or five.

Glencoe Marketing Series: I III. Marketing Hospitality Hospitality and Tourism and Tourism

STEP 4: OVERCOME OBJECTIONS A customer may object to making a buying decision for many reasons. He or she may not be convinced that your recommendation is right. The customer may doubt what you have said is true or accurate. Step back and demonstrate how your recommendation addresses his or her needs. Offer more information, such as a brochure or photograph. A customer's objections can be due to your lack of information. For example, the answers to questions in step two did not give you information about the customer's budget— and so you recommended a product that was out of the customer's price range. Go back to step two and get more information to make another, more suitable recommendation.

STEP 5: CLOSE THE SALE If you have been successful with the earlier steps, you will probably be successful at motivating your customer to buy. Closing the sale means getting a commitment from the customer to purchase the product. Before this step, you might seek commitment from your customer by asking indirectly for the sale. You can do this throughout the sales process by asking "Does that sound good to you?" or "Can you picture yourself on that beach?"

STEP 6: PERFORM SUGGESTION SELLING This step involves presenting ideas for additional product sales. The suggested products might be related to the original purchase. For example, you can offer a car rental with a travel package. You may also have the opportunity to cross-sell or sell up. Cross-selling is the method of selling the customer additional related products tied to one name. Selling up is offering a more expensive or upgraded version of the original recommendation.

CALCULATING NET REVENUE

Vin sells a vacation package for $1,200. His costs include 37 percent for hotels, 15 percent for bus rentals, and 25 percent for advertising. What is his net income?

«*For tips on finding the solution, go to marketingseries.glencoe.com.

QUESTION

What is closing the sale?

cross-selling the method of selling the customer additional related products tied to one name

selling up offering a more expensive or upgraded version of the original recommendation

The Sales Process

( Determining needs )PERSONAL SALES STEPS This selling process is used in all industries. The principles also apply to sales of hospitality and tourism products. During which step does the sales associate or agent eliminate customers' doubts about the product?

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S & l§!

QUALITY SERVICE In hospitality and tourism businesses, service can make a big difference to customers who may become lifetime clients. Why would service be especially Important for keeping a small agency In business?

ETHICS & ISSUES

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Traveling With Disabilities

In 1986, Congress passed the Air Carrier Access Act (ACAA). This act states that "no air carrier may discriminate against any otherwise qualified handicapped individual by reason of such a handicap, in the provision of air transportation." However, many travelers with disabilities have difficulty traveling. Among the biggest complaints is the lack of specially equipped restrooms on flights, missing connecting flights because of inadequate help, low-quality wheelchairs, and untrained escorts. Legal action is usually not a realistic option. The ACAA does not award the cost of legal fees to plaintiffs who win. Many lawyers will not take these cases. What might airlines do to help travelers with disabilities?

STEP 7: FOLLOW UP Your goal is to gain a customer for life. As we learned in Chapter 10, the sales process continues with repeat customers or new customers who have been referred by existing customers. To establish a long-term relationship with a customer, you need to ensure his or her satisfaction. Following up after the sale might include a phone call the next week to check on the customer's satisfaction with the purchase. You might send a postcard to wish the client a "bon voyage" or a note thanking the client for his or her business. Keep files on clients with information about anniversaries and birthdays. You can send additional notes or cards that remind the customer about your business. Follow-up is an important part of providing excellent service, and excellent service helps market hospitality and tourism products.

Sales-and-Service Link

ou have learned that hospitality and tourism products have an intangible quality because they are difficult to sample in advance. Only menus, brochures, tickets, and maps are tangible goods that are available to see prior to experiencing the product. Photos and memories are all that remain of intangible experiences, such as vacations or a meal at a special restaurant. Service is what distinguishes hospitality and tourism products from other products.

The Importance of Service

Selling without service is a disappointment. The waiter who ignores you or is rude can ruin even the most exquisite meal. A coffee-stained carpet or an unmade bed can ruin your impression of a five-star hotel. Providing quality service means more than just meeting the needs of a client. Customers expect their needs to be met. They also expect respect, prompt and efficient service, and a knowledgeable sales staff with a professional attitude. In today's society, customers demand more and expect good service.

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Selling Features and Benefits

ecause most hospitality and tourism products are intangible, it is helpful to make those products more real to customers. One of the best ways to make a product more tangible is to emphasize its features and benefits.

Product Features

A feature is a basic, physical, or extended attribute of a product or purchase. For example, in addition to an engine and tires, a car may have antilock brakes and all-wheel drive. It may also offer a number of other features, such as a sunroof, air bags, automatic windows, and a CD player. These features describe the functions.

Product Benefits

A benefit is a feature advantage of a product. For example, air bags allow maximum safety in a head-on collision. A CD player allows the driver and passenger to listen to music while riding in the car. Customers buy a product based on what it does for them. In other words, features tell, and benefits sell.

USING BENEFITS TO SELL How will an all-inclusive cruise in a balcony cabin benefit customers? An all-inclusive cruise means there are no hidden charges and no need to carry money for meals and entertainment. A balcony cabin means that guests can enjoy a sunset on a private deck.

I PART 2 H

SUPERFUTURE GUIDE

Continued from Part 1 on page 241

As the Superfuture City online guide grows, the Web site continues to provide free information for curious Internet users. However, special services have been added to generate income from the site. Specialized tour itineraries can be created for users. Advertising and promotional opportunities are available. In addition, users can book hotel reservations online, with discounts for Superfuture customers. Over 120,000 loyal users have been attracted without the costs of advertising. Berkowitz created partnerships with companies such as Diesel, Prada, Tokyo Designers Block, and other groups. With more cities, shops, and services being added, the site's future looks super.

ANALYZE AND WRITE

1. Write two sentences about how Superfuture reviews might sell travel.

2. Is the Superfuture Web site a good channel of distribution for travel products? Write a paragraph explaining your answer.

Selling to the Customer

Product benefits can be described in a variety of ways. They can be adjusted to appeal to the different needs and wants of your clients. It is important to apply the information learned from the customer during the sales process to sell the benefits that will satisfy those needs.

feature a basic, physical, or extended attribute of a product or purchase

benefit a feature advantage of a product

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Quick Check

C2>

RESPOND to what you've read by answering these questions. 1. What are the steps of selling?

2. How are sales and service linked?

3. What is feature-benefit selling?

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