CHAPTER 5

Different Sectors of the Tourism

Industry and Their Roles
Chapter 5 highlights the different sectors within the tourism industry and the interlink between
them. Among the sectors are the private and public sectors. Inclusive of the private sectors are
the hospitality, transportation, intermediaries and other facilities. While in the public sector, the
government agencies at large and within the municipality level.

CHAPTER OBJECTIVE: To introduce the different sectors of the tourism industry and
establish the relationships among the sectors.

LEARNING OBJECTIVES:
After reading this chapter and completing the discussion questions and exercises, students
should be able to:

1. Differentiate the private and public sectors of tourism industry.

2. Explain the classification sectors and linkages of tourism industry
3. Create plan on how to sustain the linkages of tourism industry.
 DETAILED CHAPTER MAP

LESSON 5.1. CLASSIFICATION OF SECTORS AND

THEIR LINKAGES
Different sectors of the tourism industry are performing their particular roles in contributing to the
success of a destination. Generally, these sectors can be classified into two groups: ‘Private
Sectors’ and ‘Public Sectors’.

Private Sectors Public Sectors

• Hospitality • Government
• Transportation • Tourism Organization
• Attractions • Other Public Sector Facilitators
• Intermediaries
• Other Private Sector Facilities

(Note – some of the attractions, transportation and

hospitality organizations can also be owned and
managed by public organizations, such as the
government.)
Table 5.1 – List of Private and Public Sectors in the Tourism Industry

In order to facilitate the growth of the tourism industry and motivate more tourists to visit to a
destination, different sectors take their own roles to enhance the experience of tourists in different
stages. Table 5.2 shows 3 key stages which are commonly encountered by tourists in their travel
experience and the corresponding sectors involved in different stages.

Stages Examples of Sectors Involved

• Setting up arrangements • Travel services, e.g. tour operators
and travel agents
• Getting you there • Transport operator
• At the destination • Hospitality, i.e. accommodation
and food and beverage
• Tourism services, e.g. foreign
exchange, retail shops
• Attractions
• Business facilities
Table 5.2 – Different Sectors Involved in a Tourist’s Travel Experience
 LESSON 5.2. PRIVATE SECTOR

HOSPITALITY
Hospitality refers to those companies or organizations which provide “food”, “drinks” and
/or “accommodations” to their guests. Usually, it can be further divided into 2 main sectors:
accommodation sector and food and beverage sector.

• Accommodation – hotels, motels, inns, lodges

• Food and Beverage – fine dining, casual dining, fast food, cafes and bars

TRANSPORTATION
The actual movement of travelers is usually categorized as air, water, road and rail.
Transport is acknowledged as one of the most significant factors in contributing to the international
development of tourism. It provides the essential link between tourism origin and destination
areas. It also helps facilitate movement of travelers either for leisure or business.

• Air – domestic, regional, international

• Water – ferry, cruise
• Road – coach/bus, private car
• Rail – domestic, regional, international

Types of Flight

1. Scheduled Flights
• Refers to those flights operated regularly according to a published timetables and
fares.
• Irrespective to the number of passengers to be carried on any one flight, they serve
on a routine basis.
•
2. Non-scheduled Flights
• Also known as charter flights
• Do not operate on any set schedule or have predetermined fare structure
• Charter flights could go anywhere and at anytime when scheduled service do not
covered, and very often they supplement the service on regular routes during peak
seasons.

INTERMEDIARIES

1. Linkages of Intermediaries with Customers and Supplies

Intermediaries are “Middle-Men”, acting as a link between the customer and the supplier.
In the travel business, intermediaries usually involve travel agencies and tour operators.
The suppliers consist of airlines, cruise and ferry companies, coach/bus companies,
railways, hotels and motels, and car rental agencies. The customers include holiday
makers, business travelers, and those visiting friends and relatives.
Distribution Channels of Tourism Products
Intermediaries acting as middle-men are no longer the only way that customers
can purchase tourism products from suppliers. According to Figure 5.1, intermediaries
perform their role in both bilateral and multilateral distribution channels. However, in a
unilateral distribution, tourism products or services are directly distributed to customers
from suppliers without the presence of any intermediaries. There could be a number of
reasons which contributed to the direct distribution of tourism products and services from
suppliers to customers.

Three Different Forms of Distribution Channels

Unilateral Bilateral Multilateral

Service Supplier Service Supplier Service Supplier

Travel Retailer Travel wholesaler

Customer

Customer Travel Retailer

Customer

Figure 5.1 – Different Forms of Channels in a Travel Distribution System

2. Types of intermediaries

A. Travel Agencies

• Wholesalers
• Retailers
• Inbound travel agencies/outbound travel agencies

B. Tour Operators (wholesalers/retailers)

• Inbound tour group operators/outbound tour group operators

• Corporate client travel services
• Sightseeing tour companies

3. Travel Agencies

Definition of Travel Agent

• Outbound Travel Agent – a person who carries on business as an outbound

travel agent, and such a person is required to obtain a travel agent’s license.

• Outbound Travel Service – a service is an outbound travel service if:

a. it is provided or obtained by an outbound travel agent for the public

b. it is comprised of any two or all of the following:
• carriage by means of conveyance, on a journey which is to
commence in the originating country and which thereafter is to take
place mainly outside the originating country.
• accommodations at a place outside the originating country
• arrangements for an activity which is to take place outside the
originating country and which where included in the package,
constitutes a substantial part of it.
c. It is package which is available only at an inclusive price
d. The service or arrangements constituting the package have been
determined in advance of being made available to the public.

• Outbound Package Tour – is a term commonly used by members and the public
to refer to an outbound travel service which includes the provision to a group or a
person of service relating to transport, accommodation, activities, outbound tour
escorts, local tourist guides, etc.; or of such service as air-plus-hotel packages.

• Inbound Travel Agent – it means a person who carries on business as an inbound

travel agent and such a person is required to obtain a travel license.
 Product Knowledge Required by a Travel Agent

Product Knowledge Examples

1. Destinations • Climate conditions
• Political situations
• Special events and public holidays
• Customs culture and cuisine of
country/destination
• Major attractions
• Health and other hazards
• Currency exchange rates
• Travel regulations and documents
• Accommodation facilities
2. Airlines • Reservation system
• Route operations
• Flight schedules
• Fares
• Types of airplanes
• Services offered on board
• Connecting flights, etc.
3. Airports • Timings
• Facilities
• Custom and security regulations
• Taxes
• Distance from cities
4. Surface (Rail and • Time tables
Road) and Water • Connections
Transport • Fares and car rentals
• Facilities
• Reservation systems and procedures
etc.
5. Principal • Image and financial standing
Suppliers • Service offered
• Quality of service
• Commission offered
6. Knowledge of • Package tours
Other Aspects • Local excursions
• Special Interest tours
Table 5.3 Product Knowledge Required by Travel Agent

Other General Knowledge and Skills by a Travel Agent

• Customer and Personal Service

• Geography
• Sales and Marketing
 • Transportation
• English Language
• Clerical

Role and Functions of Travel Agencies

Travel agencies, in their role as “middlemen,” combine tourism activities originally
carried out on unconnected, individual basis, linking customers with tourism service
suppliers and thereby promoting the development of the tourism industry.

Functions of Travel Agencies

• Providing one-stop tourism products
• It is the most important retail channel for tourism products
• Facilitating customers’ tourism activities and promoting the development of the
tourism industry.

OTHER PRIVATE SECTOR FACILITATORS

4. Travel Insurance
5. Foreign Exchange
6. Credit Cards
7. Retail Shops and Restaurants
8. Travel Publications
9. Internet Solution Providers

LESSON 5.3. PUBLIC SECTOR

MAJOR ROLES OF GOVERNMENT IN TOURISM DEVELOPMENT

• Planning and Facilitating Tourism – requires research, this is to access the level
of demand or potential demand or potential demand to the region as well as to
estimate the resources required to cater for the demand and how these are best
distributed.

• Control and Supervision of Tourism – this is necessary to prevent undesirable

growth to maintain quality standards to help match supply and demand and to
protect tourists against industrial malpractice of failure.

• Direct Ownership of Components of Tourism Industry – some government owns

parks, airlines and airports, galleries, museums, historic sites, streets and
highways, railways, buses, harbors and ferries, subways, hotels, resorts,
swimming pools, golf course and even liquor stores, so as to facilitate the
development of the tourism industry.

• Promoting Tourism to Home and Overseas Markets – government attempts to

increase tourism growth by effective marketing, concentrating their publicity on
less popular attractions or geographical regions and doing more promotional work
during off-season.
GOVERNMENT DEPARTMENTS AND PUBLIC TOURISM ORGANIZATIONS INVOLVED IN
TOURISM
• Passport
• Visa
• Health Requirements
• Customs and Taxes/Duties
• Public Security

THE CASE OF THE PHILIPPINES – ROLE AND WORK OF THE PHILIPPINE GOVERNMENT
AND KEY LOCAL TOURISM ORGANIZATIONS

• Department of Tourism
• Tourism Promotions Board
• Tourism Industry Board Foundation, Inc.
• Hotel and Restaurant Association of the Philippines
• Tourism Infrastructure and Enterprise Zone Authority
• Philippine Retirement Authority

KEY INTERNATIONAL TOURISM ORGANIZATIONS

• United Nations World Tourism Organization (UNWTO)

• Pacific Asia Travel Association (PATA)
• International Air Transport Association (IATA)