CHAPTER 1 INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Economic development of a nation depends on the sectoral growth of its
primary, secondary and tertiary sectors. It is indicated new-established industrial
patterns that, during the early stages of industrialization, more concern must be on
the primary sector that includes agriculture, animal husbandry and allied
activities. This is followed by the secondary sector that includes industries, mines,
processing, etc. In response to the growth of these two sectors, the tertiary sector
that includes all the service sectors such as bank, communication, education,
health, tourism, etc will eventually expand. The government provides autonomous
investment during the initial stages in order to motivate the private establishments
to come and coexist in expanding the scale of operation. The priority of the
government and the policies for supporting a sector depends on the rate of return
expected. However, since independence the industrial pattern in India has showed
a deviation from the established patterns and the development has become
lopsided, whereas the sectoral contributions have skewed towards the tertiary
sector. Thanks to the economic reforms policies with an emphasis on the
globalization and privatization and the structural adjustment policies that got
further deepened such impartial growth of service sector. Although the
development is lopsided, the service sector has huge prospects with its range of
services including tourism services.

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 In the recent past, tourism industry has become a major force in the
economies of the world, contributing to huge economic activity. Such prospects
could be captured well by improving the infrastructure of tourism industry that
will bring enormous forward and backward linkages of services extending
employment and output. Hence, the economic impact of tourism is of utmost
importance to both the developed and the developing countries that provides a
plethora of benefits. Tourism industry plays a major role in maintaining the
balance of payments of a country. The social and economic benefits of tourism
infrastructure development in the form of investments in the related services
contribute considerably to the regional development. Tourism has a special
characteristic of providing multiplier effect in the economy, wherein every Rs
1000 spent by the tourist will generate multiple employment generation catering
to different class of persons that are intangible. Finally, tourism is a foreign
exchange-generating industry without much investment towards export or import
promotion. The industry of such significance may be developed with
entrepreneurial approach which is the need of the hour to reap the benefits of
expansion of tourism demands. An entrepreneur must be innovative, creative and
ever dreaming to progress.

1.2 ENTREPRENEURIAL APPROACH

The term entrepreneur is commonly used to refer a person who starts a
small business. This definition, however, excludes government and non-profitable
organizations that initiate tourism services by utilizing entrepreneurial strategies.
Key identifiers of entrepreneurial approaches can include environmental scanning
for trends and changes that have potential opportunities. The entrepreneur then
utilizes common managerial functions to exploit the opportunities for profit or
financial self-sufficiency. Therefore, the following definition is offered for
entrepreneurial approach in tourism: the actions of tourism-related organization
that searches for trends and changes in its environment, then brings together and
manages resources to exploit those changes as an opportunity (John et al., 2012).

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 Entrepreneurial approach can be either a single or a combination of
―Entrepreneurial Assessment‖ approach and ―Multidimensional Approach‖ to
examine the activities involved in entrepreneurship. Both these approaches are
methods to measure the entrepreneurial initiatives of the enterprises. In the
entrepreneurial assessment the main focus is on the process of entrepreneurial
activity that includes the following components: (a) The Entrepreneur, (b) The
Venture and (c) The Environment. The above three factors are analysed
quantitatively, qualitatively, strategically and ethically. The two specific
approaches of entrepreneurial activity are ―Macro‖ and ―Micro‖ views of
entrepreneurs
The integrative approach is built around the concept of contribution to the
entrepreneurial process and outcomes from the process, which can decide the
entrepreneurial strength. The multidimensional approach provides less distinct
categories, giving it a specific and detailed process to entrepreneurship.
The entrepreneurial approach to tourism is the opposite of the bureaucratic
methods of memos and meetings. Essentially, it is taking the same creative, free
market, fun, energetic approach that are used to sell to customers and applying it
to management. The entrepreneurial approach lets the people enjoy success, rarely
they have to experience the bitterness of failure. When the management and staff
learn how the business world works, they become more successful by thinking
more positive, creative, proactive business people.
The fact simply is that tourism is a vast, complex and multifaceted field
and that it is necessary to have a number of approaches to study the field, each
geared to somewhat different task or objective. Hence this study ―Entrepreneurial
Approach to Tourism Development‖ is interdisciplinary, which integrates many
approaches of tourism development.

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1.3 NEED FOR ENTREPRENEURIAL APPROACH BY TOURISM
SERVICE PROVIDERS
Tourism industry comprises of many small and medium tourism
establishments (SMTEs). The roles played by these establishments are significant
and crucial to provide the best of services and satisfaction to the tourists during
their visit. It can be Airline, Travel agent, Hotels, Tour guides or Government
departments. This makes the human resource component a vital factor in
providing efficient service. When a tourist returns from the country of visit with
full satisfaction, he or she serves as a brand ambassador for the country visited.
This leads to word of mouth publicity and is cost effective. The meaning of Indian
slogan ―Athithi devo bhava‖ is ―guests are like God‖. Indians are known for their
hospitality that continues still in modern India. It is significant to know that
tourism entrepreneurs play a vital role in developing tourism of a region/country.
It is a well-known fact that tourism has become a major force in the
economy of the world, an activity of global importance and significance (Cooper
et al., 1996). Given the importance of the tourism sector, the various participants
who are service providers including travel agents contribute to the growth of the
tourism sector and thereby to an increase in GDP. However, there is a lack of
entrepreneurial approach without much professionalism, ability to introduce
innovation and face competition among the existing travel agents (but a few are
highly professional). The travel agents may need to integrate various services to
retain the customers, enhance the services and get the feedback which would go a
long way in sustenance of such enterprises.
While tourism seems to be a satisfying sector for investors and
entrepreneurs, the concept of tourism entrepreneurship has not been completely
understood. The limited literatures available in the field of tourism
entrepreneurship put forward little entrepreneurial behaviour in the sector.
However, reality proves to be the opposite. The hospitality and tourism industry
have been fertile for entrepreneurial business. World renowned Thomas Cook’s
tour packages, Ray Kroc’s McDonald’s, Walt Disney’s theme parks, JW
Marriot’s and Conrad Hilton’s hotels are just a few classic entrepreneurial brands

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in the world of hospitality and travel enterprises. These great personalities were
driven by their inner need to succeed and make a difference in some way, they
were truly successful entrepreneurs and focused on their opportunities and
pursued them with great dedication and courage in the face of opposition and
stumbling blocks. Owing to their perseverance, all these entrepreneurial leaders
have imprinted their names and businesses in the history of hospitality and travel
industry. It can be concluded that an entrepreneurial approach is just as relevant
and important in hospitality, leisure, sports and tourism as in other sectors, if not
more so.
Tourism entrepreneurs play a key role in promoting the tourism business.
Entrepreneur is one of the most essential inputs in the tourism development of a
country or in the regions within the country. Entrepreneurial capacity and
proficiency make a difference in the rate of tourism growth. Dynamic search of
opportunities, entrepreneurial alertness, previous knowledge and social networks
of entrepreneurs promote the tourism business. The centrality of entrepreneurship
in contemporary management is echoed by Wickham (2004) who states that an
―entrepreneurial approach‖ is no longer seen as an option but as the only option
for managers seeking to enhance the performance of their organizations. It is
important whether the business is a new start-up striving to establish itself in the
marketplace, an established business seeking to strengthen itself, or a
governmental or non-profitable organization meeting the opportunity and
challenge of the shifting boundaries between the government and private sectors.

1.4 NEED FOR THE STUDY

On the basis of review of literature, it is apparent that tourism
entrepreneurship was researched only in some aspects of entrepreneurship and
very few studies were undertaken in a holistic approach covering the entire
entrepreneurial approach perspective. Hence, this study of entrepreneurial
approach in tourism is considered as significant for the success of tourism
industry. It is important to ensure the contentment of the tourists which will lead
to the development of tourism industry; this can be achieved by adopting an

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entrepreneurial approach. From the literature review it is evident that most of the
earlier studies on tourism entrepreneurship are in the context of overseas
experience. Only a few studies have been undertaken in the Indian context. It is
also observed that no study has related the ―Entrepreneurial Approach‖ to
―Tourism Development‖ in the Indian context. The approach adopted by entrants
into tourism business, innovative ways of doing their business and current
problems faced by entrepreneurs in travel agency business will be of significance
as it will fill the research gap identified and to develop a linkage between tourism
development and entrepreneurial approach. Tourism industry, being a service
industry, does not require much physical investment. Such features of the industry
help several men to venture into initiating services in tourism industry. Travel
agency is one component that has recently emerged as a self employment unit in a
microscale to a large-scale business tied up with Airlines, hotels and resorts and
other private tourist operators.
Tamil Nadu has been known for pilgrimage tourism and hence attracts a lot
of domestic tourist players. Tourism development is taking place all over the
world. In India the state of Tamil Nadu has been a frontrunner because of its
historical and temple architecture. Historical and cultural heritage, monuments are
present in every district which attracts international tourists. Hence, Tamil Nadu
has been chosen for the study for intensive analysis covering Tiruchirapalli and
Coimbatore districts that are well connected with international and domestic
airlines. Tiruchirapalli is a centrally located district in Tamil Nadu with Rockfort,
Srirangam and other places of historical significance in the Asian context,
connected well with an international airport since 1964.

1.5 PERFORMANCE OF TOURISM INDUSTRY

Globally the tourism industry posted 9% of global GDP (USD6.6 trillion)
of Economic activity (Total Demand) in 2012, and this is projected to grow at
7.3% pa from 2013 to 2023, to USD104.0bn in 2023 (in constant 2012 prices).
Tourism has indeed grown to become a major social and economic force in the
World (McIntosh et al., 1995). The total contribution of Travel & Tourism to

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GDP was USD147.8bn (6.6% of GDP) in 2012, and increased to 7.0% in 2013,
and it is forecasted to rise by 7.6% pa to USD327.6bn in 2023. In India the total
contribution of Travel & Tourism to GDP was INR6, 385.1bn (6.6% of GDP) in
2012, increased by 7.3% in 2013 and it is forecasted to rise by 7.9% pa to INR14,
722.3bn in 2023 (World travel and tourism council). From the above data it is
apparent that there is a good growth in the tourism sector worldwide and the
forecast for south East Asia is promising with excellent growth forecasts. Tourism
plays a pivotal role in socioeconomic development. It fosters international
understanding as a part of ―Global Village Concept‖.
With the advantages in terms of connectivity, tourism potential, inbound
tourism of these two sample districts, it is quite possible to promote tourism to its
maximum. It is observed that only a very negligible number of entrepreneurs
operate in the study area. They promote only the outbound international tourism
which is more profitable than promoting the inbound tourism. Inbound tourism
promotion is carried out by the corporate tourism entrepreneurs such as Sita,
Travel Corporation of India, Kuoni Travel India, Cox and Kings and Thomas
Cook. Tourism entrepreneurs who started a decade or two ago as entrepreneurial
organizations had good business initially.
Tourists need a complete experience of a visit to museums, historical
monuments and exposure to cultural activities. The other activities entertainment,
sports, dance, music, festival, cuisine, adventure, health, education and business
add colours to their experience. With the progress of transportation,
communication and economic status, the demand for tourism has increased
alongside.

Table 1.1 Tourist Arrivals in Tamil Nadu

S.No Year Domestic Foreign Total Growth Rate (%)
(Rs. in Lakhs)
1 2010 1030.10 28.05 1058.15 31.60
2 2011 1367.51 33.08 1400.59 32.36
3 2012 1841.37 35.62 1876.99 34.01
Source: Policy Note 2013–2014 of Tamil Nadu Tourism, Culture and Religious
Endowments Department

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 It is clear from Table 1.1 that the tourism industry is growing year after
year with inflow of both domestic and foreign tourists. However, the rate of
growth is negligible. Adequate policies with incentives to promote tourism
industry will help to expand the scale of operation.

1.6 ENTREPRENEURSHIP IN TOURISM

Entrepreneurship is a multidisciplinary subject that has attracted
researchers with different backgrounds; it has addressed the topic from varied
methodological traditions using diversity of theoretical frameworks (Cornelius et
al., 2006). From the perspectives of entrepreneurship, tourism provides a specific
context that is perceived to be different from other industrial sectors in terms of
identification of entrepreneurial opportunities and the process of their consumable
tourism product. In this process, there is more often a multiplicity of stake holders
with individual motivation for a coordinated approach to develop a vital
component of the economy through a strategy that is focused on economic yield
while considering environmental, social and cultural values.
Since 1980s, tourism has traditionally been viewed by government and
public sector agencies as a growth sector with a potential to stimulate
entrepreneurship, new firm formation, employment growth and regeneration of
local economies. There has been little questioning of these fundamental
relationships as towns, cities and districts face global competition to retain,
develop and nurture national and local economies. The public sector has largely
endorsed the role of tourism and economic development to maximize the use of
the unique assets to differentiate their tourism offering, but there is now global
competition among localities pursuing these strategic goals. When failure to
innovate across the tourism sector occurs at a destination level, there is a high
likelihood that loss of destination competitiveness could lead to a downward
spiral of decline in the destination lifecycle. Innovation is the essence of tourism
as a service sector and vital to remain competitive as well as ensuring continuous
improvement to the visitor experience.

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 Hjalager (2002) explains on the typical areas of innovation, based on her
observations on the initial work of Schumpeter (1954), which outlined the main
areas for industrial innovation that include product innovations, process
innovations (eg new ways of delivering services), market innovations (ie new
ways of communicating with the customer, eg the internet) and logistical
innovations (ie innovations in supply chain delivery of services such as vertical
integration to deliver a seamless tourism experience). Hjalager (2002) has
reviewed many of the academic studies of tourism and innovation, highlighting
that to revamp the limited levels of innovative behaviour that characterize the
tourism industry is not an insurmountable problem, a feature also observed by
Hall and Williams (2008). Indeed, Sundbo et al. (2007) suggest that most
innovation that occurs in tourism is not technological; it comprises a change in
behaviour by businesses — a culture shift. Some of the principal factors that
affect the culture of innovation in a country are the attitude, support structures and
approach of the state.

1.7 RESEARCH QUESTIONS

1. What are the socio demographics of the tourism entrepreneurs and their
significance to tourism development?
2. What are the motives of the tourism entrepreneurs to start travel agency
business and its significance to tourism development?
3. What are the significance of human resources and physical infrastructure of
the organization towards tourism development?
4. How do the business tie-ups and collaboration contribute to the business
development?
5. What are the innovative services provided by the tourism entrepreneurs and
their significance to tourism development?
6. What are the constraint and difficulties which the tourism entrepreneurs
face during the initial stage and the impact on the tourism development?

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 7. What is the level of growth of the tourism entrepreneurs from the
inception to the present stage?
8. How do travel agencies as a component of tourism industries contribute to
economic development?

There is lack of adequate research on tourism entrepreneurship in general

and entrepreneurial approach in particular which constitute the major handicap in
the research field. Accordingly there is no much literature about the role of
entrepreneurs in tourism in the study area. It is also important to highlight the gap
in our understanding of how small medium tourism establishments, in destinations
influence overall economic development (Shaw and Williams, 2004). The tourism
entrepreneurs are mainly in the business of travel agents, tour organizers and tour
operators, hospitality and related supplementary businesses. The role played by
these entrepreneurs by marketing the essential products and services to the tourists
have significantly fuelled the growth of tourism in the study areas. The research
on tourism entrepreneurs will help to have better understanding of its progress and
potential.

1.8 OBJECTIVES
The present study has been undertaken to study the entrepreneurial
approach adopted by the tourism entrepreneurs in Tiruchirapalli and Coimbatore
Districts. The study has the following specific objectives:

a) To study the socioeconomic profile and the nature of services offered by

travel agencies as tourism entrepreneurs in the study regions of
Tiruchirapalli and Coimbatore Districts of Tamil Nadu.
b) To analyse the performance of travel agencies as tourism entrepreneurial
firms in terms of flow of customers, various kinds of services offered,
access to different kinds of infrastructure, forms of collaboration and tie-up
with other institutions.
c) To examine the contributions of travel agencies as tourism entrepreneurs in
promoting tourism in the study area.

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 d) To find out the financial and human resource management, the challenges
faced by the travel agencies as tourism entrepreneurs in sustaining in the
competitive environment.
e) To suggest based on findings to enhance the performance of the tourism
sector through travel agencies for further research and policies.

1.9 HYPOTHESES OF THE STUDY

H1: There is a relationship between Contribution of the entrepreneur, with their
level of motivation, human resources, human resources constraints and
general constraints towards tourism development.

1.10 SCHEME OF PRESENTATION

The present study is presented in six chapters.

Chapter 1: Background of the Study, Entrepreneurial Approach, Need for

Entrepreneurial by Tourism Service Providers, Need for the Study,
Performance of the Tourism industry, Entrepreneurship in Tourism,
Research Questions, Objectives, Hypotheses of the Study and
Limitations of the Study.
Chapter 2: Review of existing literature in the area of tourism and tourism
entrepreneurship.
Chapter3: Materials and Methods, Statement of the Problem and
Conceptualization of the Research Topic, Research Design,
Sampling, Data Collection, Scope and Period of the Study,
Variables Identified in the Study and the Tool Used for Analysis.
Chapter 4: Profile of the Study Area with Tourism Destinations, Festivals,
Tourist Arrivals, Accessibility and Airports.
Chapter 5: Analysis and Discussion.
Chapter 6: Summary of Findings and Recommendations and Conclusion.

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1.11 LIMITATIONS OF THE STUDY
Only two districts namely Tiruchirapalli and Coimbatore districts were
covered that may not represent the entire universe given the diversity in the nature
of services being offered by travel agencies. The study is limited to approved and
unapproved tourism entrepreneur that may not represent the entire tourism
industry. Moreover, the approved and the unapproved tourism entrepreneur may
have wide differences which may be different in cities or regions where only
approved travel agencies work. Hotels, Airlines, Tour guides and cruise operators
(both Private and Government) were not included in the study which constitutes
the tourism sector. The inbound tourism activities were only focused in this study
as such the findings may have limited application. Out of the total number of
interviews conducted, there were a few with poor response rate where all the
questions were not answered in total, and they were excluded from the analysis.
Thus out of 70 samples attempted, only 68 were complete and taken for the study.
The outcomes of the study are pertinent only to the study area and may not qualify
for generalization. However, efforts have been made to analyse the qualitative and
quantitative data with all care and concern to generalize the findings and
contribute towards improvement of the travel agencies to expand their market.

1.12 SUMMARY
In this Chapter Background of the study is dealt outlining the
Entrepreneurial Approach and the need for it to be adopted by the entrepreneurs.
The Need for the study is dealt mentioning the performance of tourism industry,
highlighting the Entrepreneurship in tourism. The research questions, objectives
and the hypotheses of the study are discussed. Finally the limitations of the study
are stated. The following Chapters, Review of the Literature, Materials and
Methods, Profile of the Study Area, Analysis and Discussion, Summary of
Findings, Recommendations and Conclusion are discussed.

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