1 tourism supply – ii: sectors 1. carriage by air 2. hotel and motel accommodation 3. air tour...

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Tourism Supply – II: SectorsTourism Supply – II: Sectors

1.1. Carriage by Carriage by airair

2. Hotel and motel 2. Hotel and motel accommodationaccommodation

3. 3. Air tourAir tour operation operation

4. 4. ControlsControls on supply on supply

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1. Carriage by Air1. Carriage by Air

Passenger air carriers measure output by Passenger air carriers measure output by passenger passenger seat kilometersseat kilometers (ps/km(ps/km), with supply ), with supply as available seat kilometers andas available seat kilometers and consumption as consumption as revenue seat kilometers.revenue seat kilometers.

The The costscosts of a passenger-carrying of a passenger-carrying airlineairline can can be divided into be divided into 4 4 broad groupsbroad groups::> > Airline-related Airline-related (FC)(FC) on averageon average 10 % 10 %> > Route-related Route-related (SFC)(SFC) 27 %27 %> > Flight-relatedFlight-related (SFC) (SFC) 45 %45 %> > Passenger-relatedPassenger-related (VC) (VC) 18 % 18 %

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Airline-related costsAirline-related costs are are inescapable inescapable FCFC such such as administration, reservations, marketing as administration, reservations, marketing and group services. and group services.

Route-related costsRoute-related costs are incurred as soon as are incurred as soon as the decision to service a the decision to service a particular routeparticular route is is made,made, > > the cost of aircraft the cost of aircraft (financing and depreciation), maintenance, and station costsmaintenance, and station costs ((providing providing check-in, offices and ramp handlingcheck-in, offices and ramp handling)) at online at online airports. airports. Route-related costs are therefore Route-related costs are therefore relatively fixedrelatively fixed (semi-fixed costs or(semi-fixed costs or SFC).SFC).

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Flight-related costsFlight-related costs are are variablevariable to the route but to the route but fixedfixed as soon as the ‘as soon as the ‘gogo’ decision is made to operate a ’ decision is made to operate a flight. flight. > > flight and cabin crewflight and cabin crew, fuel , fuel (usually the largest item, at around (usually the largest item, at around

30 % of costs to most airlines), 30 % of costs to most airlines), airport and air traffic control airport and air traffic control charges. charges.

Passenger-related variable costsPassenger-related variable costs include include > > meals, baggage handling and ticketingmeals, baggage handling and ticketing. . > > Since sales commission is directly related to Since sales commission is directly related to airfares, it is more logical to regard the airline’s return airfares, it is more logical to regard the airline’s return as a net price, leaving passenger-related as a net price, leaving passenger-related variablevariable costs at around costs at around 7 - 97 - 9 %. %.

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1. Carriage by Air1. Carriage by Air In the short run, scheduled airlines are committed to In the short run, scheduled airlines are committed to

operating operating licensedlicensed and and advertisedadvertised services, so that services, so that passenger-related costspassenger-related costs are the only are the only variablevariable ones. ones. Clearly then, the desired supply is that fixed by Clearly then, the desired supply is that fixed by capacity on each flight. capacity on each flight.

EnterprisesEnterprises see the see the highest revenue highest revenue oror yield from yield from the the flight, by using some of the following tactics:flight, by using some of the following tactics:

1.1. Setting Setting market pricesmarket prices for airfares in such a way for airfares in such a way that that TCs TCs are paidare paid for by a relatively for by a relatively low number of low number of passengerspassengers (typically with a load factor of 55 – 60 (typically with a load factor of 55 – 60 %). Given market segmentation, further seats can be %). Given market segmentation, further seats can be sold at progressively lower prices, down to standby sold at progressively lower prices, down to standby fares at (VC) level; all will be profitable (MR>MC).fares at (VC) level; all will be profitable (MR>MC).

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2.2. Ensuring that Ensuring that seat seat configurationsconfigurations in in various classes create the optimum various classes create the optimum yieldyield on on each flight.each flight.

3. 3. Selling each seat at the Selling each seat at the highesthighest possiblepossible farefare, by closely identifying the , by closely identifying the constraintsconstraints on market segments and using on market segments and using them to cut into them to cut into consumers’ surplusconsumers’ surplus. .

Additionally, international airlines use Additionally, international airlines use currencycurrency fluctuationsfluctuations to concentrate selling to concentrate selling in those countries whose currencies have in those countries whose currencies have appreciated relative to their home currencyappreciated relative to their home currency

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1. Carriage by Air- the marketplace for “full-fare” air services1. Carriage by Air- the marketplace for “full-fare” air services

FareFare DD SS

PP11

PP22

QQ11 QQ22 Output Output

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A ‘A ‘normanormal’ market equilibrium at airfare l’ market equilibrium at airfare PP22

would fill capacity, quantity would fill capacity, quantity QQ22 of seats. of seats.

However, published airfares are held at However, published airfares are held at PP11,, selling only selling only QQ11 seats and giving the seats and giving the airlines a load factor of airlines a load factor of (0Q1 / 0Q2) * 100(0Q1 / 0Q2) * 100

Remaining capacity (Remaining capacity (QQ22 – Q – Q11 ) can be ) can be cleared at discount fares down to ( cleared at discount fares down to ( PP22 ). ).

airline’s revenue is airline’s revenue is PP11QQ11 + P + P22 (Q (Q22 – Q – Q11 ). ).

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1. Carriage by Air1. Carriage by Air Why should airlines not simply Why should airlines not simply fixfix fares at fares at

PP22? ?

1.1. because because PP11 QQ11 probably gives greater probably gives greater revenue than revenue than PP22 Q Q22, with small savings in , with small savings in ((VCVC))

2. 2. airlines have the option of expanding airlines have the option of expanding revenuerevenue still further with still further with discountdiscount fares in fares in marginalmarginal markets. markets.

Even deregulated, competitive air markets in Even deregulated, competitive air markets in the USA have rarely produced the USA have rarely produced single-level single-level lowlow airfaresairfares..

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1. Carriage by Air – 1. Carriage by Air – charter airlinescharter airlines

However, charter airlines However, charter airlines operate operate de de factofacto with a with a flightflight as as a unit of outputa unit of output rather than passenger seat or ps/km. rather than passenger seat or ps/km.

AA flight will only be guaranteed given a flight will only be guaranteed given a minimum prebooked load factorminimum prebooked load factor (say, (say, 90%) and therefore 90%) and therefore minimumminimum guaranteed returnsguaranteed returns. Flights may . Flights may otherwise be canceled or consolidated. otherwise be canceled or consolidated.

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1. Carriage by Air – charter airlines1. Carriage by Air – charter airlines

WhilWhilee the ‘ the ‘normalnormal’’ fares must be lower, to fares must be lower, to guarantee a guarantee a high load factor, flight-relatedhigh load factor, flight-related costs in essence become costs in essence become variablevariable. .

Supply in the form of flights, can then be Supply in the form of flights, can then be much more readily much more readily adjusted to market needsadjusted to market needs

> > provided provided alternative usesalternative uses can be found for can be found for aircraft and crews, and aircraft and crews, and

> > provided station-manning is provided station-manning is flexibleflexible..

For this reason, most charter airlines contract For this reason, most charter airlines contract out station-manning, and rely heavily on out station-manning, and rely heavily on cross-leasingcross-leasing of aircraft. of aircraft.

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1. Carriage by Air – charter airlines1. Carriage by Air – charter airlines

Charter airlines can therefore offer a Charter airlines can therefore offer a dynamic response dynamic response flexibilityflexibility which which scheduled airlines cannot, and which scheduled airlines cannot, and which can serve recreational can serve recreational mass tourismmass tourism needs well.needs well.

Disregarding volume and Disregarding volume and actual fares, actual fares, mass leisure tourism demands high mass leisure tourism demands high seasonal seasonal flexibilityflexibility, which charter , which charter airlines can provide.airlines can provide.

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1. Carriage by Air – Change in supply and cost1. Carriage by Air – Change in supply and cost

In the In the long runlong run, airlines vary supply through , airlines vary supply through route route changeschanges and and through fleetthrough fleet and and systemsystem alterationsalterations linked to linked to costcost changes changes..

Costs per unit of output (available Costs per unit of output (available psps/km) change /km) change

> > with different inputswith different inputs (such as new aircraft offering (such as new aircraft offering higher average productivity per unit of output), or higher average productivity per unit of output), or

> > by changing route systems to obtain economics of by changing route systems to obtain economics of market sharing and to offer ‘market sharing and to offer ‘newnew’ products ’ products

a good example is the use of a hub-and-spoke route a good example is the use of a hub-and-spoke route system (system (a central route and multiple connecting a central route and multiple connecting routesroutes) either domestically or internationally to ) either domestically or internationally to increase the ‘increase the ‘supply of routes’.supply of routes’.

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2. Hotel and motel accommodation2. Hotel and motel accommodation

TheThe location, ownership and varying location, ownership and varying cost cost structuresstructures cause a cause a varietyvariety of supply responses of supply responses to market conditions.to market conditions.

The majority of hotels and motels possess a The majority of hotels and motels possess a fixedfixed supplysupply of rooms available for letting, and of rooms available for letting, and theythey will ideally wish to sell all their capacity – a will ideally wish to sell all their capacity – a 100 % 100 % occupancy rateoccupancy rate. .

In this they are like airlines. In this they are like airlines.

However, establishing a measure of output and However, establishing a measure of output and supply is complicated in two wayssupply is complicated in two ways::

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2. 2. Hotel and motel accommodationHotel and motel accommodation

FirstlyFirstly, , occupancyoccupancy may be may be measuredmeasured in three in three different ways: different ways:

A A basicbasic occupancyoccupancy rate rate measures the measures the percentagepercentage ofof rooms usedrooms used on a given night by on a given night by guestsguests

A A bed occupancy ratebed occupancy rate establishes how many establishes how many guests are physically accommodated as a guests are physically accommodated as a percentage ofpercentage of maximum capacitymaximum capacity; for example ; for example many double or twin rooms many double or twin rooms (which internationally (which internationally

account for overaccount for over 8080 % of hotel rooms)% of hotel rooms) may be let as may be let as singlessingles

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2.Hotel and motel accommodation2.Hotel and motel accommodation

A A revenue occupancy figurerevenue occupancy figure compares room revenue on one night compares room revenue on one night with the theoretical maximumwith the theoretical maximum; ; every every roomroom will have awill have a full-pricefull-price or or published rack ratepublished rack rate, but many may be , but many may be let at let at discountsdiscounts for various reasons. for various reasons.

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SecondlySecondly, rooms may deliberately be , rooms may deliberately be let at less than market rates (and let at less than market rates (and possibly at a loss) to possibly at a loss) to cross-subsidize cross-subsidize foodfood and and beveragebeverage, , functionfunction or or otherother operating operating areasareas, or simply is therefore , or simply is therefore forgoneforgone ((sacrificedsacrificed)) in favor of other in favor of other objectives. objectives.

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2. Hotel and motel accommodation2. Hotel and motel accommodation In general, hoteliers would wish to supply 100 In general, hoteliers would wish to supply 100

% of their rooms, at full % of their rooms, at full bed-occupancybed-occupancy and and full revenue-occupancyfull revenue-occupancy. .

This is because their This is because their cost structurecost structure contains a contains a large large fixed costs componentfixed costs component

However, they may sometimes face a choice However, they may sometimes face a choice of selling of selling >> fewerfewer rooms at rooms at fullfull raterate or or > > more more at a at a discountdiscount (for example when a (for example when a tour group with monopsonist buying power – tour group with monopsonist buying power – able to negotiate very low prices – is a able to negotiate very low prices – is a potential customer). potential customer).

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2. 2. Hotel and motel accommodationHotel and motel accommodation

However, However, the the extra revenueextra revenue may be more than may be more than swallowed upswallowed up by increased variable costs, such by increased variable costs, such as cleaning, laundry and power, which vary with as cleaning, laundry and power, which vary with room room occupationoccupation. .

In In seasonal tourism destinationsseasonal tourism destinations, a distinction , a distinction may be made as regards overall ‘may be made as regards overall ‘supplysupply’: in ’: in low low seasonseason hoteliers take on the block group hoteliers take on the block group bookings, but they may be bookings, but they may be reluctantreluctant to do so in to do so in high season because of the better chance of high season because of the better chance of selling rooms at selling rooms at rack rate later.rack rate later.

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2. Hotel and motel accommod2. Hotel and motel accommodationation

Worldwide average lodging cost breakdownWorldwide average lodging cost breakdown (%) (%)

FCFC VCVC TotalTotal

LaborLabor 2020 2525 4545

Financial chargesFinancial charges 3030 - - 3030

dep. & fixed propertydep. & fixed property

Energy and maintenanceEnergy and maintenance 5 5 1010 1515

Laundry, linen and diposablesLaundry, linen and diposables - - 5 5 5 5

OtherOther 55 - - 55

TotalTotal 6060 4040 100100

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The difficulty many hoteliers face is that The difficulty many hoteliers face is that laborlabor levelslevels are an are an indicatorindicator of of service qualityservice quality which in turn characterizes individual lodging which in turn characterizes individual lodging establishments and allows them to command establishments and allows them to command price differentialsprice differentials. .

This may not be a great problem in low-wage This may not be a great problem in low-wage economieseconomies, but , but it is more serious in high-wage it is more serious in high-wage economies.economies.

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Consequently hotel companiesConsequently hotel companies substitute substitute labor-saving labor-saving capital equipmentcapital equipment and and industrially produced inputs for their own industrially produced inputs for their own expensive labor, which unfortunately tends expensive labor, which unfortunately tends to replace variable costs with fixed costs. to replace variable costs with fixed costs.

Supplying at full capacitySupplying at full capacity becomes even becomes even more important and pricing policy reflects more important and pricing policy reflects this.this.

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PressurePressure in the other direction in the other direction (to convert fixed costs to (to convert fixed costs to

variable costs)variable costs) has produced an increasing separation has produced an increasing separation between hotel/motel between hotel/motel ownershipownership andand managementmanagement. .

Whereas before the 1960s most hotel companies Whereas before the 1960s most hotel companies owned their own properties, it is now usual for owned their own properties, it is now usual for medium and large establishments to be owned by medium and large establishments to be owned by property companies, and for the hotelier to operate property companies, and for the hotelier to operate with a with a management contract management contract oror lease lease. .

Most well known chains such as Most well known chains such as Hilton, Hyatt, Hilton, Hyatt, Ramada or SheratonRamada or Sheraton operate the bulk of their operate the bulk of their hotels this way. hotels this way.

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This acknowledges that there are two This acknowledges that there are two businesses operating in different businesses operating in different markets. markets.

The property company seeks an The property company seeks an investment vehicle, especially in investment vehicle, especially in cities cities and major destinationsand major destinations, with capital , with capital appreciation and rental or appreciation and rental or profit-sharing profit-sharing returns. returns.

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The hotelier is relieved of fixed-cost The hotelier is relieved of fixed-cost finance payments, and provided a fee finance payments, and provided a fee or rental can be linked in some way to or rental can be linked in some way to profit or revenue, the cost becomes profit or revenue, the cost becomes semi-variable. semi-variable.

There is then more There is then more flexibilityflexibility in in supply decision-making.supply decision-making.

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3. Air tour operation3. Air tour operation

Air tour operation originated principally Air tour operation originated principally in Europe in the early 1950s as a in Europe in the early 1950s as a supply-drivensupply-driven sector. sector.

TourTour operators operators actact as as wholesalers/retailerswholesalers/retailers by buying vacant by buying vacant seats seats en blocen bloc at a considerable at a considerable discountdiscount. .

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3. Air tour operation3. Air tour operation The price would be less then published The price would be less then published

airfares and at anything down to the level of airfares and at anything down to the level of VCVCss,, whichwhich could could be very low - with actual be very low - with actual prices being determined by the relative prices being determined by the relative bargainingbargaining powerpower of tour operators and of tour operators and airlines. airlines.

In order to protect their In order to protect their full-fare marketsfull-fare markets, , airlines began to impose conditions on the airlines began to impose conditions on the resale of seats by tour operatorsresale of seats by tour operators some of some of which are still in effect today.which are still in effect today.

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The The principal conditionprincipal condition often was (and is) often was (and is) that the air travel could only be sold as a that the air travel could only be sold as a component of an inclusive tourcomponent of an inclusive tour ((ITIT) ) incorporating destination accommodation or incorporating destination accommodation or other services. other services.

This made This made tour operatorstour operators into into manufacturersmanufacturers building building ITsITs as as separateseparate products. products.

Tour operators then carried the business risk Tour operators then carried the business risk of selling product of selling product stocksstocks themselves. themselves.

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In buying accommodation for their In buying accommodation for their ITsITs, tour , tour operators bargainoperators bargain to secure discounted to secure discounted prices.prices.

RelativeRelative bargaining powerbargaining power dictates dictates final final pricesprices. .

Final negotiated prices may also depend on:Final negotiated prices may also depend on:

> > the the seasonseason and the hotel’s and the hotel’s occupancy occupancy raterate

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> > whether the whether the operatoroperator booksbooks, and , and guaranteesguarantees paymentpayment for, a set block or for, a set block or allocation of rooms, or allocation of rooms, or merelymerely books on an books on an ad hocad hoc basis basis (the former results in cheaper prices for (the former results in cheaper prices for the operator but a semi - fixed cost compared with a the operator but a semi - fixed cost compared with a variable cost for the latter)variable cost for the latter)

> > continuitycontinuity of the operator’s of the operator’s demanddemand, , where demand in low season is a strong where demand in low season is a strong bargaining counter not only for low rates, but bargaining counter not only for low rates, but also protecting the operator’s allocation in also protecting the operator’s allocation in high season.high season.

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From purchasing blocks of seats From purchasing blocks of seats on scheduled services as on scheduled services as inputsinputs, , some air tour operators progressed some air tour operators progressed to to chartering whole aircraftchartering whole aircraft, often , often on days when aircraft were on days when aircraft were standing standing idleidle owing to owing to schedulingscheduling methodsmethods. .

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Although the potential saving to the Although the potential saving to the operator on individual seats is less, the operator on individual seats is less, the operator can gain the same advantage operator can gain the same advantage overall as charter airlines, by working with overall as charter airlines, by working with a a very high load factorvery high load factor. .

LargeLarge operatorsoperators also own also own busbus fleetsfleets, , attractionsattractions and sometimes their own and sometimes their own accommodationaccommodation..

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In purchasing inputs, especially air carriage, In purchasing inputs, especially air carriage, the tour operator’s objective is to obtain the tour operator’s objective is to obtain program program series ofseries of ITs.ITs.

With With charter charter IT (ITC or CITIT (ITC or CIT), for example, ), for example, this means regular this means regular weeklyweekly or or two-weekly two-weekly departuresdepartures, where this week’s outward flight , where this week’s outward flight brings home last week’s tourists, and brings home last week’s tourists, and accommodation is used continuously. accommodation is used continuously.

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It is often more difficult to have It is often more difficult to have this regularity with ITs using this regularity with ITs using scheduled servicesscheduled services (ITXs or inclusive (ITXs or inclusive

tours by excursion),tours by excursion), but the principle but the principle otherwise holds good.otherwise holds good.

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3. Air tour operation- sample income and expenditure 3. Air tour operation- sample income and expenditure percentages for an air tour operatorpercentages for an air tour operator

Gross IT (trading) revenueGross IT (trading) revenue 100%100%

Less commission on salesLess commission on sales 1010

TotalTotal 9090

AirfaresAirfares 4747

AccommodationsAccommodations 3535

Taxes and ground transfersTaxes and ground transfers 22

Other costs & overheadsOther costs & overheads 55

TotalTotal 8989

Net trading profitNet trading profit 11

addadd

Profit from insurance & excursion salesProfit from insurance & excursion sales 22

interest on repayments & surplus on foreign interest on repayments & surplus on foreign exchange dealingexchange dealing

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The table above reveals The table above reveals two key thingstwo key things. . FirstlyFirstly, many operators do little better , many operators do little better

than than break-evenbreak-even on trading directly in on trading directly in their their ITIT products, owing mostly to products, owing mostly to competitioncompetition. .

Many obtain as much, or as in this case Many obtain as much, or as in this case more, more, profitprofit from from interestinterest received on received on depositsdeposits and and prepaidprepaid holidays, from holidays, from dealing in dealing in foreign exchangeforeign exchange, and from , and from selling ‘selling ‘add-onadd-on’’ products products. .

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SecondlySecondly, air travel and lodging are the , air travel and lodging are the two two major input costsmajor input costs. .

These more than anything dictate tour These more than anything dictate tour operators’ operators’ supplysupply. .

A feature or product characteristic for many A feature or product characteristic for many ITsITs is an overall price advantage to the tourist is an overall price advantage to the tourist compared with purchasing individual compared with purchasing individual components. components.

This This advantageadvantage has been found in some cases has been found in some cases to be around to be around 15 %15 % up to perhaps up to perhaps 40 %40 % or more. or more.

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3. Air tour operation- a supply schedule 3. Air tour operation- a supply schedule (backward-sloping) for air ITs(backward-sloping) for air ITs

MarketMarketPricePrice

PP33

PP22

PP11

QQ11 QQ33 QQ22 Quantity suppliedQuantity supplied

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Along tour operation supply schedule SSAlong tour operation supply schedule SS11, a , a market price market price PP11 calls forth supply calls forth supply OOQQ11 of ITs. of ITs. If market price rises to If market price rises to PP22, supply will be , supply will be increased to increased to OOQQ22, , but market price but market price PP33 means that;means that;

> > tour operators’ tour operators’ marginsmargins are are squeezedsqueezed, and , and

> > travel and lodging suppliers are not travel and lodging suppliers are not interested in selling to interested in selling to operatorsoperators, so the , so the supply of ‘supply of ‘componentscomponents’ dries up.’ dries up.

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This assumes that all market prices This assumes that all market prices (whether for selling direct or through tour (whether for selling direct or through tour

operators)operators) move together, which is move together, which is normally the case. normally the case.

As a result, operators are forced to As a result, operators are forced to reduce supply to reduce supply to OOQQ33..

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4. Controls on supply4. Controls on supply

Controls are placed on supply in Controls are placed on supply in tourism tourism industry industry by both by both government authoritiesgovernment authorities and the and the various sectors’ own trade various sectors’ own trade associationsassociations. .

The controls may be both The controls may be both longlong and and short-short-termterm in effect. in effect.

Governments establish Governments establish controlscontrols principally through principally through licensinglicensing and and gradinggrading. .

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Licensing systems operate in many Licensing systems operate in many areas to areas to regulateregulate;;

> > the the numbernumber of of supplierssuppliers and and

> > the products which they supply, both the products which they supply, both nationally and internationally. nationally and internationally.

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4. Controls on supply4. Controls on supplyFor example, national governments negotiate For example, national governments negotiate

bilateralbilateral agreementsagreements to to determinedetermine international international scheduledscheduled air routes air routes and the and the capacitiescapacities of seats to be of seats to be offeredoffered, including , including how those capacities will be how those capacities will be sharedshared between between countriescountries; ;

individual governments thenindividual governments then license specificlicense specific carrierscarriers to provide set to provide set proportionsproportions of those of those capacities. National governments may capacities. National governments may licenselicense domestic air carriagedomestic air carriage (and(and also also other carriage) in a similar way.other carriage) in a similar way.

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This form of regulation has been justified This form of regulation has been justified for reasons of for reasons of

- - orderlyorderly(regular)(regular) competitioncompetition, ,

- - protectionprotection of national carriers’ business, of national carriers’ business,

- - control of standardscontrol of standards, ,

- - providing providing servicesservices on uneconomic but on uneconomic but socially socially desirabledesirable routes, and routes, and

> > other other politicalpolitical and and diplomatic endsdiplomatic ends. .

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Other formsOther forms of licensing include those of licensing include those for for travel agents, tour guides, foreign travel agents, tour guides, foreign exchange dealing for tourists and a exchange dealing for tourists and a range of other activitiesrange of other activities where the aims where the aims are primarily either are primarily either

> > to to enforce service quality standards enforce service quality standards or or

> > to protect consumersto protect consumers against lossesagainst losses following financial following financial misdealing or failuremisdealing or failure. .

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. Controls on supply. Controls on supply

Consumer protectionConsumer protection applies to the applies to the travel agency and tour operation sectors of travel agency and tour operation sectors of many countries, and is accompanied by many countries, and is accompanied by various kinds of financial bonding. various kinds of financial bonding.

The economic effect is to The economic effect is to create barrierscreate barriers to entry and therefore restrict supply, so to entry and therefore restrict supply, so that such systems are frequently adopted that such systems are frequently adopted by by trade associationstrade associations (on behalf of their (on behalf of their existing members) as well as by existing members) as well as by governments.governments.

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Grading systemsGrading systems can also indirectly can also indirectly effect effect supply. supply.

A lodging proprietor may then A lodging proprietor may then restrict restrict supplysupply of one grade of accommodation of one grade of accommodation in order to in order to concentrateconcentrate on on another more another more profitableprofitable one, or one, or shut downshut down altogetheraltogether if if not permitted to charge whatever rate is not permitted to charge whatever rate is considered necessary to meet considered necessary to meet objectives. objectives.

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The The influenceinfluence of these controls of these controls and other, more direct, ones such and other, more direct, ones such as planning restrictions or straight as planning restrictions or straight price control on price control on tourism industry tourism industry marketplaces will be examined in marketplaces will be examined in the next chapter.the next chapter.

1 tourism supply – ii: sectors 1. carriage by air 2. hotel and motel accommodation 3. air tour...

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