AZ elasticity by nikeborome


									Article by: Agnieszka Zawada 2009

            Allocation and Distribution of Goods
             Illustrated by Tourism Market

Chapter 1. Tourism Market                                                      4
  1.1.      Basic Concepts Regarding Tourism Market………....………...………………4
  1.2.      Tourism Demand.………………………………………………………...……8
  1.2.1.    Definition and Specificity of Tourism Demand.…………………………….…8
  1.2.2.    Income and Price Elasticity of Demand.....…………………………………….9
  1.2.3.    Tourism Demand Characteristics……………...…………………………..….11
  1.3.      Tourism Supply…………….…………………………………………………11
  1.3.1.    Definition of Tourism Supply………………………………………………...11
  1.3.2.    Tourism Supply Characteristics………………………………………………12
  1.3.3.    Tourism Product and Its Constituents...……………………………….……...12
  1.4.      Tourism Service Prices….……………………………………………………13
Chapter 2. Allocation and Distribution of Tourist Goods and Services.………..…….…14
  2.1.      Concept of Allocation...………...……..………………………………..…….14
  2.2.      Concept of Allocation...………...…………..…………………………..…….14
  2.3.      Distribution Channels in Tourism…….……………..………………………..15
  2.4.      Function of Location in Tourism Distribution…………………………..……15
Chapter 3. Allocation and Distribution on the Polish Tourism Market…………………17

       Thanks to its advantageous location in Europe and a large number of attractive places,
Poland has become an important element of the world’s tourism market. Since the accession
of our country to EU, a dynamic development of this industry has begun. A large number of
travel agencies offering a wide range of services were established, the number of
accommodation facilities increased significantly (since 2002 it has been increasing
systematically by 50 to 60 new hotels every year); the same is true for the number of catering
and related services. What is more, hosting Euro 2012 will contribute to even faster
development of tourism market in our country.
        The aim of my project is to present Polish tourism market and I focus here on
allocation and distribution of available goods and services.
       In the first chapter I explain what tourism market is, what its characteristics are and
what elements compose it. Next, I briefly describe these elements, namely tourism demand
and supply together with their characteristics and services prices.
       In the next chapter I focus on allocation and distribution of tourism goods and
services. I define these concepts, name the distribution channels operating on the tourism
market and I also present the function of location in tourism distribution. Then, using specific
examples, I show how the concepts of allocation and distribution function in Poland.
       The last chapter contains the summary of the subject as well as general opinion on
tourism market in Poland.

                                           Chapter 1
                                         Tourism Market

1.1.    Basic Concepts Regarding Tourism Market
       Market as an economic category emerged together with the trade. At the beginning it
was a geographical and territorial concept regarding an actual meeting place of sellers and
buyers. Economic literature does not provide one, commonly accepted, definition of this
category. Market is understood as:
     A place and form of supply and demand confrontation as well as communication
       between suppliers and purchasers, which allows them to exchange any type of goods;
     A group of producers and consumers;
     A singled out object of transaction and exchange.
       According to S. Mynarski, market means: “trade relations in general (goods-money)
between the sellers offering their goods and/or services for fixed prices (hence submitting
supply) and buyers willing to buy these goods and/or services for legal tenders (hence
submitting demand).”
       Having such defined market, we can distinguish its following elements:

   -   Market entities, namely sellers and buyers,
   -   Market objects, namely goods and services as well as legal tenders,
   -   Market relations between market entities.

        Thus, in the subjective expression tourism market is a specific group of tourism
service buyers and tourism service providers making market transactions.
       In the objective expression tourism market can be defined as a process in which
customers (tourism service purchasers) and service providers (tourism service suppliers)
decide what they want to buy and sell and also on what terms.

       Tourism market has the following characteristics:
   -   It is a market of goods and services (with a predominance of services),
   -   There is a combined demand for goods and services, the sale of which complements
       one another,
   -   Production and consumption of a service happen at the same time, at the place of
   -   Tourism market not only exists at the place of tourists’ temporary stay but also at the
       place of their permanent residence before the departure and after the return.

        Tourism market can be analysed from many points of view, depending on different
criteria (tab. 1.1-1). Since each tourism enterprise can make its own market segmenting on the
basis of selected criteria, the classification presented in the table below is a theoretical
                                Table 1.1-1 Tourism Market Segmentation
                Segmentation Criteria                       Types of Tourism Markets

                                                     Local Market

                                                     Regional Market

                  Geographical Criteria              National Market

                                                     Continental Market

                                                     Worldwide Market

                                                     Market of Accommodation Services

                Type of Tourism Services             Market of Catering Services

                                                     Market of Transportation Services

                                                     Youth Tourism Market
                  Tourists’ Age Groups
                                                     Pensioner Tourism Market

               Relation: place of residence             Inbound Tourism Market

                 and place of destination               Outbound Tourism Market

                                                        Business Tourism Market

                                                        Congress Tourism Market

                                                        Medical Tourism Market

                                                        Leisure Tourism Market
                        Trip Aim
                                                        Heritage Tourism Market

                                                        Religious Tourism Market

                                                        Cultural Tourism Market

                                                        Incentive Tourism Market

                  (Source: “Marketing w turystyce” (Marketing in Tourism), J. Altkorn, p. 19)

        Tourism service market is created by exchanges between tourism service providers
and tourism service purchasers as well as parallel relations between them. Summing up my
reflections on the market, it is important to underline its two aspects:
   -   Entities, namely a seller and buyer alongside with the relations between them;
   -   Processes occurring within this structure (including exchange relations).
       When making a typical classification of entities and also referring to tourism service
market, we can name the following market entities:
   1. In the group of purchasers:
        Individuals (households),
        Institutions (entities buying tourism services in bulk, e.g. for the purposes of
           medical, social or congress tourism);
   2. In the group of providers:
        Tourism enterprises acting as an agent in organising and selling tour packages,
        Tourism enterprises rendering partial services,

   3. In the group of tourism policy entities:
        Central authorities defining market frames,
        Local authorities – involved in creating local and regional tourism products,
        Tourism organisations and associations,
        Economic self-government.

       Not only do the customers (services buyers) function on the tourism market but also
numerous and various enterprises rendering diverse services. Tourism entrepreneurship means
these entities which offer tourism services. (table 1.1.-2).

               Table 1.1-2 Tourism Entities Forming Supply on the Market

     Sector of                                                          Organisations
                            Transportation            Travel                                     Sector of Tourist
  Accommodation                                                          in Visited
                                Sector               Agencies                                      Attractions
     Facilities                                                            Places

Hotels                      Airlines             Tour Operators        Regional Tourism Entities Ensuring
                                                                       Organisations     Access to Such Tourist
Motels                      Ferries              Travel Agencies                         Attractions as:
                                                                       Local     Tourism
Guest Houses                Railway              Agents                Organisations     national parks, nature
                                                                                         reservations, botanical
Country Lodgings            Bus Carriers         Specialised           Associations      gardens, zoos, thematic
                                                 Organisations                           parks, amusement
Conference Centres          Car        Rental                          Tourist
                            Services                                                     parks, museums and
                                                                       Information       galleries, historic sites
Camping Sites

Sailing Centres

                                  (Source: “Ekonomika turystyki”, A. Panasiuk, p. 72)

             The relations between the entities participating in exchange processes not only include
     a subjective aspect but also an objective one. It refers to the elements of the market in general
     as well as to all relations occurring between them. The elements of the tourism market are:

          Tourism supply which expresses the suppliers’ manifested willingness to render
          Tourism demand which expresses the clients’ manifested willingness to buy tourism
          Tourism services prices.
           None of these elements, if examined separately, can be indentified with the market.
     Only when confronted and compared altogether, they constitute its objective essence.
            The figure presented below (Fig. 1.1.) illustrates services available on the tourism

              Tourism                               Tourism Policy
            Entreprise 1                               Entities
                                                                                        Individual Clients
            Entreprise 2
             Entreprise n                          Tourism Product

                            Price                                           Quality
                                                  Tourism Services                       Tourism Demand
Tourism Supply

Accommodation            Catering Services         Transportation           Tourism       Related Services
    Services                                          Services             Management

          Subjective Structure Elements

          Objective Structure Elements

          Market Instruments

                       Figure 1.1. Simplified Structure of Tourism Service Market
                                    (Source: “Ekonomika Turystyki” A. Panasiuk, p. 73)

         Individual elements of the tourism service market, as well as its entities, do not
  function separately. Supply, demand and price create a dynamic arrangement of relations,
  which defines market mechanism.

  1.2. Tourism Demand
  1.2.1. Definition and Specificity of Tourism Demand
          In economics demand is defined as a quantity of a given product a buyer is willing to
  purchase in a given frame of time and at a given price. The definition of demand referred to
  tourism market is very similar. According to W. Hunziker and K. Krapf, tourism demand is
  “a sum of tourism goods and services which tourists are willing to purchase at a given price”.
  C. Kaspar, defines tourism demand as “the willingness of a tourist to purchase particular
  quantities of tourism goods for a particular amount of money".
        Regularities regarding tourism demand are of different nature than those regarding
  demand on material goods. This is determined by the following factors:
      -     Tourism product not only consists of goods but also of facilities and services ;
      -     Product evaluation made by the consumer is often very subjective and hence the size
            and structure of demand is greatly influenced by immeasurable factors;
      -     Tourism is not about satisfying basic human needs, thus particular conditions must be
            met for tourism consumption to take place.
          The first two factors are tied with the nature of tourism product. They make tourism
  demand heterogeneous – not uniform. The third factor, however, refers to the matter of human
  needs. Basing on commonly accepted classification of needs, we should state that tourism is
  tied to satisfying needs of a higher category.
          Tourism demand emerges when a potential tourist reaches proper income level. Below
  this level only natural tourism consumption is possible.

          Natural tourism consumption does not need any additional costs. It encloses in everyday expenses and
can be practised at the place of permanent residence. As an example of natural tourism consumption, we can
imagine a holiday trip with children to the country, where our family lives, in order to help them during crops, or
a trip of a Warsaw citizen with cold snacks to Kampinos.

         Economics literature distinguishes a few types of tourism demand:

     Potential Demand – does not exist on the market, because it is not accompanied by
      consumers real purchasing power; it means a desire for purchasing particular tourism
      services or tourism products, which is not backed up with income possibilities.
     Effective Demand – is accompanied by proper income, thus exists on the market; the
      desire for purchasing particular tourism product is based on having a proper
     Realized Demand – the value of purchased goods in total (this demand type is equal
      to effective demand only in the case of the tourism market in equilibrium).
     Unsatisfied Demand – difference between effective and realized demand.
     Functional Demand – depends on the quality features of the product; it is a function
      of its use value.
     Non-Functional Demand – results from the influence of external effects on the
      evaluation of the product’s usefulness, however, the evaluation may change depending
      on other consumers’ reactions.

1.2.2. Income and Price Elasticity of Demand
       Income and Price Elasticity refers to an issue of tourism demand. Both indicators of
tourism demand elasticity are generally higher than those of the other types of the consumer’s
demand. This elasticity depends significantly on wealth level and the intensity of tourism
        Income Elasticity of Tourism Demand is the ratio of the relative change in the size
of demand for a particular good to the relative change in income. An income elasticity index
for tourism demand constitutes a measure for this reaction:

                                              EDPp =          :

where:         - relative (percentage) change in demand,                  relative (percentage) change in
        Increase in income leads to a growth in tourism demand, thus the income elasticity
index is positive. The assumed values are greater than unity, which means a more
proportional increase in demand in relation to the increase in income (the demand is highly
elastic: EDPp > 1). An important thing is that the formation of this index may vary, depending
on a market segment, as in the extreme ranges of earning capacity particular tourism services
might be perceived as basic or luxurious. In wealthy societies tourism expenses increase
faster, whereas in impoverishing societies they decrease faster than the remaining consumer's
expenses. This phenomena is described by Engel’s law, according to which the proportion of
expenses spent on food falls as income rises and the proportion of expenses spent on luxury
goods increases.
       The level of income elasticity of demand for tourism goods and services depends on
the tourism type. The very same trip may be perceived by some as a basic good, whereas the

others may treat it as a luxury product. Demand response to a luxury product is of low income
elasticity (EDPp < 1); this results from the following reasons:

    Consumers of luxury goods and services are wealthy enough to reach the level beyond
     satisfaction, thus the increase in their income does not lead to the change in their
     consumption (marginal propensity to consume is at minimum level);
    Tourism luxury products are so attractive for some groups of customers, that the
     knowledge of their income does not influence their decision to purchase these
     products and recedes into the background.

       The studies carried out in many countries proved that the income elasticity of tourism
demand is higher for foreign tourism than national tourism. Moreover, the research showed
that the income elasticity of tourism demand is much higher than the elasticity of other
consumer goods. It results, above all, from the fact that the demand of consumer goods
becomes satisfied in the moment of purchase. In tourism, however, a wide range of
possibilities to meet ones needs makes gaining the satisfaction practically impossible. As
income rises, a change in tourism consumption takes place, the change which consists in
switching the interest to goods and services of higher standard.

        Price of tourism goods and services also influences the size of tourism demand. Price
elasticity of tourism demand is defined as the ratio of relative change in tourism demand for
a particular good or service to the relative change in its price. Price elasticity index is
a measure of this relation:
                                           ECPp = :
where:      - is the relative (percentage) change in demand,           is a relative (percentage)
change in price.
        Generally speaking, as the price rises, demand for a particular good falls, and when the
price falls, then demand for that good rises. Such a statement is of a very general nature and in
many cases, if referred to specific trends of movement, it would be too simplified. It is a result
of the following reasons:
     Travelling is not always the consumer’s decision (e.g., business trips); a response of
        such demand to price changes is different than the response of the demand in the case
        of those who travel for pleasure;
     The demand of those travelling for their own pleasure is formed mostly by social and
        psychological factors, which cause unusual response to price changes;
     Tourism demand response differs depending on the type of product (typical or
        unique); thus, unlike in the case of much more expensive luxury services, price
        elasticity of standard services is high;
       Market research show that leisure trips in general have high price elasticity, whereas in
the case of heritage and specialised tourism, and particularly of business trips and travelling to
maintain ethnic bonds and friendships, price elasticity index is rather low.
        When discussing the price elasticity of tourism demand, we should describe the
essence of the cross elasticity of demand. Cross Elasticity of Tourism Demand is defined as
a relative change in tourism demand for a particular good or service x that occurs in response
to a relative change in price or service y. Cross price elasticity index is a measure of this

                                      EcMPp =        :

where:       - is a relative (percentage) change in demand for good or service x,            - is
a relative (percentage) change in price of good or service y, both being a complement or
substitute to good or service x.
       Negative cross elasticity of demand informs us that the goods and services x and y are
complements, whereas positive cross elasticity of demand indicates that these goods and
services are substitutes.
       Complementarity means that different use values supplement one another; it occurs
when the rise in the price of service y results in the decrease of demand for service x.
        Substitution means that goods and services can be replaced for different goods and
services; it occurs when a rise in a price of good or service y results in the increase of demand
for good or service x. Tourism goods and services can also be independent, which means that
a rise or fall in a price of a particular good or service does not bring about changes in demand
for other good or service.

1.2.3. Tourism Demand Characteristics
       Tourism demand is characterised by complementarity and substitution (discussed
        Tourism demand is also characterised by another extremely important feature, that is
restitution (renewability), expressed by:

    Another purchase of the same tourism product previously consumed,
    Purchase of a tourism product having higher quality, being more modern or trendy;
     this usually results from the increase of income.
       Mobility is yet another characteristic feature of tourism demand; mobility is
understood here as variability in space and springs from the people’s movement generated
also by tourist travels.
        Moreover, tourism demand also has a seasonal nature. Temporary increase of travels
depends on environmental factors, participation of a given area in the national and
international tourism movement, local tourism values and tourist facilities. Tourist seasons
change in individual regions and even towns. The changes of the tourist movement intensity
take place not only during a year but also during a week (e.g. weekend or business trips).
R.W. Butler defines the seasonal nature of tourism as a temporary imbalance, which can be
expressed by cyclical changes of values such as the number of visitors, their expenditures,
traffic intensity (also in relation to other means of transport), employment as well as fees
charged for using different tourist attractions.

1.3. Tourism Supply

1.3.1. Tourism Supply Characteristics

        Tourism Supply is a rather complex concept. This can be defined as the volume of
tourist goods and services offered for sale at a given price and in a given period. R. Łazarek
describes tourism supply as “the number of tourism goods and services which producers are
inclined to sell to national and foreign purchasers at a given country price (national tourism)
or exchange rate of a given country (foreign tourism).” Whereas according to S. Wodejko,
tourism supply is “the quantity of tourism products offered for sale at a given price and in
a given period.”

       Tourism supply is composed of an arrangement of factors such as:
- Attractions and environment of a target place,
- Infrastructure and services of the target place,
- Accessibility of the target place.
1.3.2. Characteristics of Tourism Supply

       The following list presents the most important features of tourism supply:
    1) Some elements of tourism supply are of para-tourist nature, which means that they
        can exist separately from tourism management;
    2) Tourism product is composed of facilities belonging to a general infrastructure of
        a state (mainly transport) – this means that supply, its structure and functioning,
        depends significantly on the economic situation in the country;
    3) The constituents of tourism product are complementary, which gives the supply of
        tourism services combined character;
    4) Many complementary facilities existing to provide basic services take on the nature of
        the capital-intensive investments, e.g. catering and accommodation services;
    5) Tourism supply is marked by high fixed costs and relatively low variable costs;
    6) Tourism supply is fixed in a spatial structure (this results from the fact that its
        location is determined by the presence of tourist values);
    7) The places in which tourism supply occurs usually have little value in reference to the
        material production;
    8) The tourism supply value depends on the absorption capacity of places with tourist
    9) The character of supply as well as of the environmental values determines the
        seasonal use of supply; this generates numerous negative consequences;
    10) Regularities in the shape of the main movement trends, especially the foreign
        movement, give tourist supply power to absorb import;
    11) Virtually all economic sectors and their operation determine the occurrence and
        functioning of tourism supply;
    12) Tourism supply is price inelastic.

        Tourism supply occurs in towns and areas having special tourist values. Only tourism
demand moves to the place of tourism supply occurrence. If the consumption is to take place,
the tourist him/herself must come to a tourist town. For tourism supply cannot be transferred.
Only some material elements of the tourism product can be purchased and used in a place of
the tourist’s permanent residence before his or her trip.
        The tourism product constitutes a subject of an exchange on the tourist market; hence
tourist supply can be justifiably and directly referred to this category.

1.3.3. Tourism Product and Its Constituents
        Tourism Product is a set of goods and services used by tourists who regard them as
a subject of their particular interest. V. T. C. Midlleton distinguishes five main constituents of
the tourism product. And these are:
   2.   Attractions and environment of a target place,
   3.   Infrastructure and services of the target place,
   4.   Accessibility of the target place,
   5.   Image of the target place,
   6.   Price.

         The tourism product consists of two economic categories, i.e. tourist goods and
facilities as well as services. The tourism product constituents are presented below (Fig.

                                              Tourist Product

                        Tourist Goods and                       Tourist Services

   Basic Goods                                                  Basic Services
                             Complementary                                                       Services
  Tourist Values               Goodstarne                  - Transport
                                                           - Accommadation                   - Guiding
- natural                 Tourist Infrastructure           - Catering                        - Hiring
- cultural                                                                                   Equipment
                         - Accomodation                                                      - Cultural
                         Services                                                            - Entertainment
                         - Catering Services
                         - Transport Network
                         - Transport Means
                         - Complementary
                                 Figure 1.3.3. Constituents of Tourism Product
             Source: “Marketing usług turystycznych” (Marketing of Tourism services) by A. Panasiuk, p. 111

   1.4. Prices of Tourism Services

          Price is the value of a commodity or services expressed in monetary units. In other
   words, price means an appropriate amount of money for which a commodity (or service) or its
   element can be purchased.

           W. Hunziker and K. Krapf concluded that “price is one of the most remarkable
   manifestation of economic thinking and activity.” It assumes the existence of the market.
   According to this conclusion, the establishment of price takes place on the tourist market. On
   this market such forces as demand and supply meet. To know the tourist market and price
   establishment means to previously learn about the characteristics of demand and supply to
   such an extent in which they trigger economic phenomena, that is the extent in which they
   influence the tourist market and price establishing.”

           In the case of tourism services, the price has many names, e.g. prices of air, railway,
   bus or ferry services are called fares, a travel agent receives an acquisition rate or commission
   for the sales of tickets or trips prepared by a tour operator.

          Hence, price is an amount of money for which a consumer purchases goods or
   services from producers or sellers; moreover, it is also a commission for providing agent
   services. We distinguish offered price – a sum of money for which the person offering
   a product is willing to sell it, and transaction price – an amount for which a transaction was

       Also in tourism prices have particular functions usually combined; these are:
   -   Aggregation, prices reduce expenditures and results to the lowest common
       denominator and hence provide objective basis for business entities to choose different
       types or forms of tourism or types or standards of tourism services;
   -   Informative, prices constitute a basis of optimal choice.
   -   Resource Distribution, prices influence allocation of resources in a given industry or
   -   Allocation of Income, prices determine the actual distribution of national income,
       constitute an instrument used by the budgets of the state, an enterprise as well as
       a household for shaping their income;
   -   Income, prices should at least provide reimbursement of incurred costs, whereas
       income should include profit and means for development investments;
   -   Income Redistribution, i.e. encumbering prices with taxes and other additional
       payments thanks to which the state obtains resources for its current purposes;
   -   Stimulating, the function which makes the prices established on the grounds of
       demand-supply relation constitute fundamental motivation for action as they stimulate
       to take actions according to the market requirements;
   -   Customer Satisfaction, this function consists in satisfying the customer at a given
       price level.

        Prices influence the structure of global demand and global tourism supply. They are
a tool to shape the structure of tourist demand and supply and an instrument to restore balance
on the tourist market through playing with demand and supply, competitiveness and price

                                 Chapter 2
        Allocation and Distribution of Tourism Goods and Services

2.1. Concept of Allocation
       Resource Allocation – means distribution of resources to different competing targets.
As resources are limited, whereas the possibilities of their usage – numerous and versatile,
managing here consists in allocation – distributing rare resources to different and possible
usage options in the production and distribution processes.

         Allocation on Tourist Market – consists in, first, allotting financial resources from
the state budget, EU resources, or any other funds to tourism development, e.g. expanding
accommodation facilities (financial allocation), second, in arranging hotels and sports
facilities etc. (actual allocation).

       In this project I would like to discuss actual allocation, i.e. the arrangement of tourism
goods and services on the Polish tourist market.

2.2. Concept of Distribution

       Distribution means a method of product (material goods or services) passing down to
the end purchaser. Distribution is an element of the communication process between an entity
offering a given product and the end consumer. It serves as an instrument for an enterprise to
influence the market of consumers of a given product offer.
       The two following factors play a major role in distribution: the type of the distribution
channel and distribution method (logistics) including actual delivery of products to these
channels and the end (final) consumer.
        Distribution of Services refers in fact to creating convenient conditions for
consumption (execution) of services for customers in relation to place, time, and form.
        In the case of the tourism services, an ability to reach a potential consumer with
a given service offer is an important element of distribution. Therefore, the actual distribution
is not about providing a service to the customer, as this is impossible due to its intangible
nature and strong dependence of the production process on the place in which consumption
takes place; it is about delivering the customer him/herself to the tourism service. In such
a case, it is important to create and organise a fast (both for the customer and tourist
businesses), cheap (for the customer), and profitable (for the businesses) system of tourism
service distribution.
        The tourist businesses aim at offering to tourists (potential and present customers)
their tourism products in appropriate form and method as well as at particular time and place.
        Distribution of Tourism Services is to link potential purchasers to the places where
services take place, i.e. a hotel facility in the case of hotel service, catering facility in the case
of catering service etc.

2.3. Distribution Channels in Tourism
       Economic literature provides numerous definitions of distribution channels.
J. Krippendorf describes the tourist distribution channel as a “chain of independent
enterprises through which a product or right to it moves from a producer to the final
purchaser.” On the one hand, the distribution channel is a peculiar “way for the product”, and
on the other – a set of chain links participating to pass it down.

       Division of Distribution Channels:
    Due to the number of chain links participating in sales:
      Short (of small number of chain links or without intermediaries),
      Long (of large number of intermediating chain links).
    Due to the number of intermediaries:
      Direct (without intermediaries),
      Indirect (with intermediaries).
    Due to the number of participants running businesses:
      Narrow (having small number of participants),
      Wide (having large number of participants).
      Organising its distribution, a tourist enterprise can base on one channel as well as on
many channels. If a company operates through more than one channel, this is a case of multi-
channel distribution.

       The following factors shape the channels of tourism service distribution:
         Time and spatial arrangement of demand on the tourist market according to individual
          types of tourism services;
         Structure, extent, and flow of demand of the services provided by different tourist
          entities (travel agents, hotels, carriers etc.);
         Preferences of those purchasing tourism services and actual possibilities of purchasing
          these services;
         Relationships between competing forces of market influence generated by individual
          instruments of price and non-price competition.
           Individual manufacturers pass their products down to wholesalers and organisers of
    sales who combine them in service packages offerred then to retailers, who provide services
    to consumers. Figure 2.2. presents different distribution channels on the tourism service

Direct Provider of                                                                            Consumer (Tourist)
Tourism Service

Direct Provider of                             Retailer (Tourist                              Consumer (Tourist)
Tourism Service                              Agent, Travel Agency,

Direct Provider of             Wholesaler (GDS,                   Retailer (Tourist           Consumer (Tourist)
Tourism Service                 Travel Agency)                     Agent, Travel

Direct Provider of          Wholesaler            Agent (Travel          Retailer (Tourist         Consumer
Tourism Service              (GDS)                  Agency)                  Agent)                (Tourist)

                        Figure 2.2. Distribution Channels on Tourism Service Market
                            Source: “Marketing usług turystycznych”, by A. Panasiuk, p. 109
                                         GDS – Global Distribution Systems

            The selection of appropriate distribution channels in a tourist enterprise depends on:

         Tourism Product – type of tourism services, their purpose, target market for which
          they are intended, their manufacturer, or their own specificity;
         Location of Consumption Place (e.g. of hotel or restaurant);
         Mark-Up – resulting also from length of the distribution channel, i.e. the longer the
          channel is, the higher the service price for the final consumer becomes;
         Financial Resources, whose amount and availability determine expenditures for the
          development of the most convenient and effective channels of tourism service
         End Consumers of Tourism Services, their appropriate division and segmentation
          highly influences the choice of distribution channel by a given tourist business;
         Competitors’ Innovation in Distribution.

          2.4. Function of Location in Tourism Distribution
                  An appropriate location constitutes one of the most important elements in the tourist
          activity. A hotel or travel agency chooses its location on the grounds of the provider’s seat in
          which tourism services will be provided. Location is greatly determined by the type and
          frequency of contacts with customers. Such contacts can be divided according to three basic
             1. Customer comes to a tourism service provider; in such a case, the location
                constitutes the basic factor for using the hotel’s or travel agency’s services;
             2. Service provider directs his or her representative to the customer; this case refers
                to intermediating in the sales of hotel and also catering services by a specialised tourist
                company, most often by a travel agency;
             3. Remote contacts or on-line; a system of booking, in which the customer books or
                buys a tourism service via telecommunication lines (e.g. Internet services).

                                                          Chapter 3
                 Allocation and Distribution on the Polish Tourism Market

                 Arrangement (actual allocation) of tourist facilities in Poland is uneven, especially in
          the case of accommodation resources. The supply size and structure by type and space in
          reference to accommodation involves first of all the presence and rank of tourist values and
          the type of demand. Almost half of all facilities of collective accommodation (table 3.1-1) is
          located in four provinces having high tourist values:
             -     Zachodniopomorskie (Western Pomerania) – 848 (12.6%),
             -     Małopolska (Little Poland) – 843 (12.5%),
             -     Pomorskie (Pomeranian) – 807 (12.0%),
             -     Dolnośląskie (Lower Silesia) – 720 (10.7%).

                 Tabel 3.1-1 Collective Accommodation Facilities According to Provinces in 2007
                                   (on the basis of the Polish Central Statistical Office)

                       Faciliti                                                 Sold Night’s      Usage of
   Detailed List                Accommodation/Beds                 Users
                         es                                                    Accommodation Accommodation/Beds

in total                 6 718                     582 105 18 947 160                   54 953 722            37.8
Lower Silesia              720                      46 990 2 022 808                     5 268 222            34.1
Kujawsko-Pomorskie         307                      24 657    756 208                    2 830 316            45.8
Lubelskie                  307                      18 997          615 782                  1 410 282        32.3
Lubuskie (Lubusz)          319                      22 684          649 679                  1 435 725        28.4
Łódzkie (Łódź)             219                      16 099          816 077                  1 718 950        35.6
Małopolskie                843                      64 127        2 830 461                  8 014 017        39.9

Mazowieckie               320                   35 818        2 497 898      4 816 195                    42.2
Opolskie (Opole)          121                    7 891         218 663         584 917                    27.6
Podkarpackie              336                   20 652         592 621       1 814 199                    32.9
Podlaskie (Podlasie)      169                   11 349          464 249        942 813                    35.5
Pomorskie                 807                   85 947        1 578 196      6 156 973                    39.2
Śląskie (Silesia)         394                   33 292        1 588 721      4 154 790                    36.5
Świętokrzyskie            129                    9 831          391 615      1 119 254                    39.2
Warmińsko-Mazurskie       371                   38 231          869 005      2 407 709                    31.3
Wielkopolskie             508                   36 538        1 382 897      2 715 128                    28.7
(Greater Poland)
Zachodniopomorskie        848                  109 002        1 672 280      9 564 232                    46.1

                 It is worth noticing that the province capital cities take great part in the supply of
          accommodation in individual provinces. For instance, Warsaw concentrates 90.8% of the
          entire supply of hotel accommodation in Mazovia Province. Significant concentration of
          accommodation services occurs also in Cracow (79.2% of Little Poland Province) and
          Wrocław (75.1% of Lower Silesia).

                Map 3.1-1 Tourist Facilities of Collective Accommodation in 2007 – as at 31 July

               Map 3.1-2 Tourists Using Tourist Facilities of Collective Accommodation in 2007

Visitors in hotels and remaining facilities of collective accommodation;

dark green box – Hotels, light green box – Other

Visitors in tourist facilities

            Figure 3.1-1 Accommodation Services in Poland Between 1991 and 2007
                          (only facilities of collective accommodation)

       According to the data provided by the Polish Central Statistical Office, in 2006 the
number of accommodation facilities slightly decreased for the second time in comparison to
the year before (Fig. 3.1-1). It is worth mentioning, however, that the number of hotels,
especially those of a higher standard (three- and five-star hotels), increased once again (by
5%). The number of facilities numbered among “other not classified” was decreasing.

                Source: The Polish Central Statistical Office (as at 31 July of a given year)

        The number of hotels has been regularly increasing in Poland. We owe this to
investments in the hotel industry on the one hand and to the improvement of statistical
reporting and to realising categorisation on the other; this is clearly proved by the figures
related to the five-star hotels (Fig. 3.1-2).

       In 2006 the number of hotels as well as accommodation places increased by 5%. In the
case of the five-star hotels, we witnessed an increase by almost one fifth. The three- and two-
star hotels provide the highest number of accommodation places, i.e. 44% and 26%

      In 2006 we witnessed a significant growth of room usage index once again (from
43.1% to 44.9%).

          Figure 3.1-2 Number of Hotels and Hotel Rooms between 1991 and 2007

          Green line: number of hotels; red line: number of rooms (in thousand)

              Source: The Polish Central Statistical Office (data as at 31 July of a given year)

        If the hotel companies wish to win the highest possible number of customers, they
should focus on creating an efficient sales system based on a booking system, simultaneously
taking location and new methods of reaching the customer into consideration; in other words,
they should focus on organising and establishing new distribution channels being responsible
to market variability. The information Internet network is of crucial importance here.
       Next years will bring the construction of many new hotels and modernisation and
expansion of already existing facilities. This is triggered by the preparations for hosting Euro
2012 in Poland which will welcome about 20 million foreign tourists. Such an event is a great
opportunity for our country to develop the tourism market.
       New stadiums will be constructed in Warsaw, Gdańsk, Poznan, Wrocław and two
reserve stadiums in Chorzów and Cracow for the European Championships.

        It is necessary to improve transport accessibility, that is the construction of
motorways, dual carriageways, ring roads (Map 3.1-2), introduction of modern
communication solutions (airports, bus terminals, railway stations etc.). All this is crucial to
provide tourists with convenient access to facilities. In the coming years the Polish airports
will be expanded and new terminals will be built (Map 3.1-3). Moreover, the road network
and railway lines are to be modernised.

                                                       Map 3.1-2

Heading: Motorways and Dual Carriageways – Progress


Motorways          Dual Carriageways            existing

                                                in progress in 2008

                                                in progress since 2007 until 2013

                                                to be constructed between 2014 and 2020

                                                in progress – BOT or PPP between 2007 and 2013

                                                side tasks between 2007 and 2013

A1 MOTORWAY                                                             A4 MOTORWAY
1 Gdańsk – Nowe Marzy – 91 km/2005-2008                               17 Motorway in use – 2km
2 Nowe Marzy – Toruń – 61 km/2008-210                                   18 Zgorzelec – Krzyżowa – 51 km/2006-2008
3 Toruń Stryków – 144 km/2008-2010                                     19 Motorway in use – 381 km
4 Stryków – Tuszyn – 40 km/2008-2010                                  20 Kraków – Szarów – 20 km/2007-2009
5 Motorway in use – 18 km                                              21 Szarów – Tarnów – 57 km/2009-2011
6 Piotrków Tryb. – Częstochowa – 83 km/2008-2010                      22 Tarnów – Rzeszów – 80 km/2010-2013
7 Częstochowa – Pyrzowice – 55 km/2008-2010                           23 Rzeszów – Korczowa – 86 km/after 2013
8 Pyrzowice – Sośnica – 43 km/2008-2010
9 Sośnica – Bełk – 16 km/2007-2008                                    A6 MOTORWAY
10 Bełk – Świerklany – 14 km/2007-2010                                24 Motorway in use – 21 km
11 Świerklany – Gorzyczki – 19 km/2007-2009                           25 Klucz – Kijowo (redevlop.) – 8 km/2005-2007

A2 MOTORWAY                                                           A8 MOTORWAY

12 Świecko – Nowy Tomyśl – 105 km/2007-2009                           26 Wrocław Ring Road – 28 km/2008-2010
13 Motorway in use – 252 km
14 Stryków – Konotopa – 94 km/2005-2010                               A18 MOTORWAY
15 Warsaw (Lub. Interchange) – Międzyrzecz Podl. – 92 km/2011-2014
16 Międzyrzecz Podl. – Kukuryki – 62 km/after 2013                     27 Olszyna – Golnice – 71 km/2004-2010

         (Source: by Art Direction: B. Bialecka, Biuro Studiów CDDKiA (Analysis Office of General Administration of
                                         National Roads and Motorways), 14.12.2006)
                                                                 Map 3.1-3

                  Heading: Existing and Planned Airports in Poland
                  Legend: red symbol – Civil airports

                 green symbol – Sports and military airports which are to be transformed into
civil airports
                 blue symbol – Civil airports which are to be constructed
                 light green symbol – Other locations considered for civil airports
         Note: In the case of Lublin, Kielce and Olsztyn, only one of the two locations will be
         Source: PMR Publications, 2007
        Specialised tourist enterprises, mainly travel agencies, play an important role in the
distribution of tourism services. Potential customers can use the services of a tourist
intermediary and get information about the offers in which they are interested. In Poland the
highest concentration of such tourist entities can be found in those provinces whose
inhabitants are most likely to leave for leisure and those which have great tourist values. The
highest number of these entities occurs in Mazovia Province (542 which is 19% of all entities
holding concession for this business activity). This dominating position of the province has
been established thanks to numerous travel agencies which are opening their branch offices in
Warsaw, despite having their seats in other cities. The second position with regard to the
number of tourist businesses belongs to Silesia (381 entities, i.e. 13.4% of the total number).
The following positions belong to Little Poland, Lower Silesia, and Greater Poland (table 3.1-
2 and map 3.1-4).62% of all travel agencies operates in these five leading provinces.

           Tabel 3.1-2 Travel Agencies Having Licences to Run the Business Activity
                                   (according to provinces)
Province                  2000      2001      2002     2003      2004       2005      2006    2007
Poland in total           2792      3237      3650     3504      2839       2627      2689    2839
Lower Silesia              269       307       350      353       260        240       234     247
kujawsko-pomorskie          87       110       123      129       102         87        90      88
Lubelskie                   93       100       100       92        73         67        69      76
Lubuskie                    45        53        60       63        51         39        46      46
Łódzkie                    186       204       214      201       157        149       147     149
Małopolskie                266       298       369      378       313        301       319     353
Mazowieckie                514       626       706      622       501        486       507     542
Opolskie                    65        69        80       82        64         63        59      62
Podkarpackie               101       113       118      118        98         94        96     101
Podlaskie                   89       100       107       99        90         83        85      86
Pomorskie                  164       217       266      230       197        177       181     185
Śląskie                    385       443       486      489       396        361       361     381
Świętokrzyskie              61        64        65       58        57         50        49      54
                             88      104       120      124        98        100       102        106
Wielkopolskie               226      259       304      297       242        206       216        229
Zachodniopomorskie          153      170       182      169       140        124       128        134

                                      Source: Data of Tourism Department;
  (data for 2007 – database of Centralna Ewidencja Organizatorów Turystyki i Pośredników (Central Register of Tourist
                                         Organisers and Agents) on 13.12.2007)

                                                    Map 3.1-4


       Poland is a very attractive country in relation to tourism and has exceptional natural
resources in Europe.
        It is necessary for us to develop an information and distribution base related to tourism
services with special attention paid to developing services via the Internet in order to promote
Polish towns and increase the availability of tourism product both in Poland and abroad.
        The accessibility of towns must be enhanced without damaging natural resources –
ring roads, car parks, airports, bus terminals, railway stations etc. should be constructed.
       Moreover, the Polish towns should be able to provide a wide range of services to
operate and compete on the tourist market. This needs establishing and expanding the services

            Sports and recreation (indoor swimming pools with thermal pools, ice rinks,
             exercise and training halls, fitness trails, tourist trails, ski runs for downhill and
             cross-country skiing, equestrian centres, golf courses, recreation clubs);

            Cultural (cultural and entertainment facilities – concert and exhibition halls,
             amphitheatres, entertainment clubs);

             Catering (restaurants, cafes, tea shops);

             Information and reception (tourist information centres and offices, data banks,
              modern media solutions etc.).
          The Polish accession to the European Union in 2004 and especially the organisation of
   Euro 2012 allow us to further develop our tourist market. Thanks to the EU financial support
   Poland has a chance to become and important player on the world’s tourist market.


1. Panasiuk, A., Ekonomika turystyki (Economics of Tourism), PWN Scientific Publishing House,
   Warsaw 2007.
2. Panasiuk, A., Marketing usług turystycznych (Marketing of Tourism Services), PWN Scientific
   Publishing House, Warsaw 2005.
3. Altkorn, J., Marketing w turystyce (Marketing in Tourism), PWN Scientific Publishing House
   PWN, Warsaw 2000.
4. Łazarek, R., Ekonomika turystyki, School of Economics, Warsaw 1999.
5. Naumowicz, K. Turystyka (Tourism), Higher School of Business in Piła, Piła 1998.
6. Przygotowanie do prowadzenia działalności gospodarczej (Preparation to Running a Business),
   Part 3, module: Tourism Services (Barbara Wierzbowska).



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