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Seasonality. Team Members Jean-Pierre Nordmann Andrew Croasdell Mark Briggs Kirk Granger Andy Wilson Daniel Mahon Keir Birch Background. Seasonality is a major disadvantage of tourism and often leads to negative economic effects on a destination. Global tourism demand Peak season creates large revenue needs to last all year. Considering all tourist activities 10 worldwide at a given time will produce a less seasonal pattern Skiiing than looking at specific resorts. 5 E.G. high levels of tourism in Sea/Sun December to April (skiing) 0 somewhere else in April to Global JAN APR JUL September (sun holidays). OCT Specific resorts and the tourist provisions within them will be affected by seasonality. Causes of seasonality. Location Weather (Sun & Snow) Holidays school / works Attractions Festive holidays Behavioural Financial Economic climate Social / fashionable Media influence Consequences of seasonality. Seasonal employment Boom bust economic cycle Over/under utilisation of resources Dependence on tourism. Negative effects in times of crisis, such as war, terrorism or bad weather. Seasonality in focus. We will now look at how seasonality effects the following tourism functions: Tour operator Tourist attraction Hotel The Problem of Seasonality For The Outbound Tour Operator. The Top Four Tour Operators. SOURCE: Keynote Market Report, Travel Agents and Overseas Tour Operators, 2002 Tour Operators Booked Through Travel Agents (1999-2001) 24% 22% Thomsons Airtours Thomas Cook 14% 22% First Choice Others 18% Seasonality. SOURCE: Keynote Market Report, Travel Agents and Overseas Tour Operators, 2002 Percentage of Holiday Makers Per Month in 2001 20 15 Percentage 10 5 0 Jan/Feb May August Nov/Dec Month What Problems do they Face? Supply and demand are rarely in balance, and supply can not change quickly Fluctuation in demand effects capacity utilization, overcrowding in peak and under utilisation in low These lead to inefficient uses of resources, as such high operating costs So What do Tour Operators do? The introduction of new operating strategies has been key Introduction of different kinds of holidays e.g. Ski hols, Sports/Activity Hols Vertical integration has allowed tour operators to buy Hotel Chains and Airlines, this integration offers greater cost advantages Contd… Negotiating contracts with Hoteliers Segmenting the market by similarities Spread their fixed costs more evenly over the entire year Marginal costing techniques What Has This Lead to? Seasonality is often viewed as the reason for difficulties in gaining access to capital, for obtaining and retaining full time staff and for under utilisation of resources Adapting to seasonality allows: Resources to be utilised e.g. Flight Only Margins to be increased Less seasonality in the workforce Attractions – overcoming seasonality Attractions background Attractions are just one part of a tourism industry Attractions can be affected by: Destination -climate Accommodation -product Transport -location -environment Attractions -market Catering Organisers Seasonality effects attractions: - location and the destination in which it lies. - the attraction itself and not the surrounding area. Demand Management • 37% of uk attractions do not charge entrance fees • Price discrimination. -Charging different prices at different times • Special offers -buy one get one free -kids for free -newspaper offers Diversification -modifying attractions to appeal to different market segments. Blackpool Tower Blackpool located on the North West Coast of England. Two biggest attractions are the pleasure beach and Blackpool Tower. Blackpool hosts over 10 million visitors annually, of which 750,000 visit Blackpool Tower. Over 700,000 of these visit the Tower during Blackpools tourism peaks. Problems Seasonality is a huge problem for Blackpool Tower. Suffers seasonality problems due to the location in which it lies. Blackpool has many frequent visitors. A large proportion of Blackpools visitors are UK tourists. Entertainment image. As will be seen, the extent of seasonality on the destination and ultimately the tower has meant little can be done. What is currently being done about Seasonality? Open daily: -Summer – November – during seasonal peaks. -Christmas holidays -Easter Holidays -Half term holidays At all other times, the tower is open on Wednesdays and Weekends only. The Towers location is its major strength being situated in the UK’s most popular seaside destination. It is less than an hour away from Manchester airport and 7.5 million people live within 75 minutes. Continued. Trough Period - £5.00 for children - £6.50 for adults Peak season - £6.00 for children - £8.00 for adults Tower offers numerous different forms of entertainment: -the tower circus -jungle jims, -family party -tower ballroom. Also offers a loyalty card and a gold card. Seasonality in Hotels. Industry trends. Type of accomodation. % Peak season % Off peak season The impacts of seasonality do not affect hotels as much as the other tourist Hotel 10.2 15.4 Guest house / B&B. 16.3 5.1 sectors we have discussed. Self catering flat / cottage 26.5 18.8 Many hotels suffer seasonality on a Caravan / tent 15.3 40.2 weekly basis. Monday to Friday Business Home of friend / family 18.4 13.7 travellers. Weekends attract short breaks. Second Home 3.1 6.8 Prices are significantly lower on a Other 10.2 N/A weekend to attract customers. Source: Dorset tourist board figures. Location determines the level of seasonality, as seaside located hotels will suffer more fluctuating demand than a city based business focussed hotel; due to weather, habit, and school holidays manipulating demand. In many cases, the use of hotels increases in the off peak season, as the figures produced by the Dorset tourist board highlight. The percentage of visitors staying in a hotel peak season is 10.2, this increases to 15.4 off peak. This again is due to lower prices and special offers. Price discrimination. One technique Hotels can use is price discrimination. ‘Charging different people different amounts of money for the same service in order to manipulate demand.’ Quality Exec king King & Sofa Suite This can be seen in the table Feb. Midweeek 109 134 144 154 opposite, as it shows the prices for a Feb. Weekend 70 95 105 115 Marriott hotel both midweek and Mar. Midweek 109 134 144 154 weekend. As you can see weekend Mar. Weekend 75 100 110 120 customers pay up to 25% less for Jul. Midweek 109 134 144 154 the same service. Jul. Weekend 75 104 124 134 This is a good method of demand Aug. Midweek 109 134 144 154 manipulation, however this is only Aug. Weekend 75 104 124 134 applicable to city centre type hotels. Resort based hotels (e.g. seasides) Nov. Midweek 109 134 144 154 may need to do the opposite to this Nov. Weekend 70 95 105 115 by lowering prices midweek, as Source: Marriott hotels price list. Hollins Hall. there is sufficient weekend demand most of the time. Location. As previously mentioned, the location of a hotel can have a Seasonality of Tourism in Dorset. great bearing on its seasonality. Hotel based around 200000 resorts or attractions suffer the same peaks and troughs as the 150000 Visitor resorts themselves. 100000 numbers. In the example of a seaside 50000 resort; tourists only really visit 0 in the summer months. This Jan Mar S1 leaves a large 8 or 9 month off May Jul Sep Nov peak period of low demand. Month. Seaside resorts are not synonymous with business or Source: Dorset tourist board figures. conferences, therefore people have very little reason to visit them in the shoulder season, causing a major ‘trough’ in the economy. Reverse yield management. Hotels employ the concept of reverse yield management in order to try and ensure they have high utilisation and reduce the effects of seasonality. Unlike the airline industry where the earlier you book the flight the cheaper the ticket. In the hotel industry, the longer you leave it before booking the room, often the cheaper it is. This is because the marginal cost of renting a room is very small, and as long as a booking is covering the variable costs and is at least making a contribution to fixed costs, most hotels will accept a far reduced price for the room rather than have it vacant. Hollins Hall Hotel. ‘It is only a 10-minute drive from Leeds/Bradford We will now focus on a real life International Airport. hotel, and how they seek to Business travellers will overcome the problems of find a welcome retreat in seasonality. the hotel's 200-acre site Hollins Hall Hotel is part of the with its extensive meeting Marriott chain, it is situated in facilities & Country Club.’ Shipley, about 5 miles from the management centre. ‘This is an ideal base It is mainly marketed as a business from which to explore hotel, as the main features are its local attractions such as close proximity to local businesses, as well as as the cities of Leeds and Salt's Mill, with the Bradford. Business services are well David Hockney advertised also. Exhibition, Bronte The hotel is also described as being Country, Harewood ‘perfectly located in the heart of House, York and Yorkshire.’ The local tourist Harrogate, Museum of attractions are also listed in order to appeal to leisure travellers. Film, Photography & Television.’ Source: www.Marriott.com Demand management. Core business. Subsidiary activities. Price discrimination. Up Golf course. to 25% cheaper to stay Gymnasium. on a weekend. Conferences. Marriott reward scheme. Weddings. Senior travellers discount Parties. of at least 15%. Champagne Sunday Theatre breaks. brunch. Conference facilities. Weddings. Conclusion. The concept of seasonality can never be fully resolved, however there are methods that tourist functions can employ in order to reduce the negative effects. These can include: Pricing strategies – price discrimination. Accurate forecasting of demand. Diversification. Flexibility of resources. Despite these methods to help resolve negative impacts there are natural phenomenon that can not be manipulated by any management techniques. For example: Climate. Disasters. War & Weather. Recommendations. Generate accurate demand forecasts Further diversification needs to be undertaken: New markets, ‘Adventure holidays is the fastest growing market in the tourist industry.’ Source: www.hyron.nf.ca/tourism New customers. E.g. 50 + winter breaks. Try to create relationships with third parties. Ie schools trips in off peak periods. Educate people, in order to reduce dependence on tourism, by promoting other industries. Any Questions?
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