How Can Tourism and Hospitality Businesses Manage Their Enterprises to Account for Fluctuations in Demand?

How Can Tourism and Hospitality Businesses Manage Their Enterprises to Account for Fluctuations in Demand? Every industry is always faced with some points of ups and downs in terms of demand and supply. This is an implication that the market is not constant or moves in one direction of steady rise in supply or demand. However, it is important to note that the fluctuations or ups and downs in demand are as a result of various factors, which control influence demand in the market. These factors differ from one industry to the other. The tourism and hospitality industry is one of the industries, which face numerous fluctuating demands due to the low and high seasons of the industry. It is largely dependent on seasons and it is very important for the players of this market to be able to read and understand the trends very well to avoid massive losses that normally come with season changes. Since the seasons are there to stay or the industry can do nothing to change them, it is up to the industry players to be innovative or sensitive enough to find ways of handling every season or market moment that comes across. Also, it must come up with strategies that can help them to avoid numerous market losses. In this essay, there are some methods will be mentioned to explore the possibilities of how tourism and hospitality businesses manage their enterprises to account for fluctuations in demand with using some examples.

The tourism, hospitality and events incorporate accommodation, restaurants, gaming, tour operations, holiday parks and events, amongst a wide range of events and activities. The markets that exist in tourism and hospitality provide potential benefits in the promotion of a nation’s economy and in marketing its products and services. Tourism is an economic sector that is composed of numerous industry participants. It is considered that the tourist product, as well as the visitors’ experience is generally an amalgam of services that fall across a wide range of industry participants including tourism operators, transport, retail, hospitality, restaurants, and educational as well as cultural services. Business should manage those affairs to account for the fluctuation of demand through managerial accounting information. This is because a good managing on accounting information could help the business to provide budget detail. For example, Walt Disney Company’s decision to establish the new theme park would be influenced heavily by estimates of the costs of building zoo and maintaining it throughout its life. The theme park’s managers also would rely on managerial accounting data in formulating plans for the park’s operations. Therefore, managerial accounting in those plans would be a budget detailing the projected revenues and costs of providing entertainment. Seasonality in tourism entails periods of peak and low times in regard to returns of the sector is as a result of diverse causes.

Understanding seasonality will help the industry and its players know when to deploy what kind of strategy. It is important to note that good management of seasonality must involve identification and keen analysis of the causes of seasonality. A major cause can be attributed to climate change, which adversely affects the trends of visitors especially due to unfavorable weather or otherwise. Climate change has largely affected the means of tourist destination selection, thereby leading to the loss of tourism revenue in given destinations. Tourism seasonality can be gauged by the use of numerous measures including the revenue collected, number of tourists, the rate of employment in the sector, as well as the activities related to tourism (Kulendran, 2012). Another factor that contributes to tourism seasonality is institutional and cultural practices. Institutions play a major role in determining the occurrence of tourism activities. Institutions bear the ability to create leisure time for undertaking tourist related activities, via the provision of holiday time. The state of the economy is a important factor regarding tourism seasonality, as it determines the resources available to visitors as most of the tourism expenditure is the excess resources after the acquisition of essential goods and services.

This is illustrated in Walt Disney’s approach of assisting managers in directing and controlling day-to-day operational activities require a variety of data about the process of providing entertainment services. For example, in directing operational activities, the park’s management team would need data about customer food-service demand patterns in order to make sure that appropriate staffing was provided in the theme park’s various food venues. In controlling operations, management would compare actual costs incurred with those specified in the budget. The tourism and hospitality business also need to know that seasonality bears some demand side costs, which pertain to the demand of the tourist destination. One such side cost is high prices, which is carried out as a measure of cost spreading thereby making the tourists to pay more during the peak season, in order to cater for the low revenue collected during the low season. Crowding is another side cost, in that during the peak hours, the tourists normally head to a destination in large numbers thereby leading to high numbers at a particular period of the year. In the same manner, the increased crowds increase the possibility of threats (Dawson, 2011). Such threats would increase the possibility of terrorism activities, thereby reducing the safety level of a destination.

Similarly, increased demands leads to a reduction in the availability of the accommodation, due to a high number of tourists, which has the ripple effect of increasing the prices of services. For instance, Walt Disney engages in measuring the performance of activities, subunits, managers, and other employees within the organization. One means of motivating people toward the organization’s goals is to measure their performance in achieving those goals. Such measurements then can be used by tourism and hospitality business as the basis for rewarding performance through positive feedback, promotions, and pay rises. On the other hand, there are the supply side costs that are related to seasonality as well. Revenue is especially one element that is a factor in the supply of services in the tourism sector. There is usually an increase in the prices of services and associated activities during the peak seasons (Assaf, 2012). There is the creation of a breakdown in the cash flow system, due to the seasonal breaks in the overall tourism activities. This occurrence places a strain on the return of investment, as the seasonal revenue may not be in a position to make adequate returns on the investment made in the sector. Such costs incurred include activities related to seasonal recruiting, in order to cater for the increased demand during the peak times of the year. The seasonal fluctuations in tourism activities subsequently leads to the under utilization of available resources, as well as their over utilization at given times in the year.

To this end, it is necessary to undertake the seriously measures in order to ensure a continuous revenue flow, as well as ensure continuity in the tourist activities. In order for a destination to operate as a solid and sustainable tourist economy in all year round, the fundamentals of good business practice ought to be in place. One of the critical fundamentals is supply and demand of the product or service in place. In considering the tourism sector, it requires the creation of a destination proposition that ensures that demand and supply are met as required all the year round, thereby creating a year round visitation (Gil-Alana, 2008). The creation of such a schedule is essential in order to ensure that the tourism industry is capable of creating as well as sustaining the essential and key drivers of the sector’s economic and societal growth. The drivers of the tourism industry include sustainable employment, constant revenue generation, continuous trade, the development of relevant infrastructure, societal identity, return on investment, as well as investor confidence. Moreover, if the business want to create all year round destination, a careful definition of the tourist segments for fluctuation in demand is essential. This is more so as the segments make up the total destination proposition. A careful management of the flow of travelers is extremely necessary, inclusive of those from both leisure and business segments, which is important throughout the year. An upsurge in tourism is capable of creating exciting, inspiring highs in a nation’s economic activity, which requires being sustained in the long run (Kulendran, 2012).

This is in order to avert the tourism lows from making those working in the tourism industry being laid off, which is bound to have a ripple effect of causing a drop in the household income, which will be a dent in the economic activity. Consequently, such an undertaking is likely to result in a decline in the payment of utilities, having a major effect on the social wellbeing of families. Such a trend is bound to continue up until a time when the next high season allows for re-employment, repayment as well as re-attendance and rebuilding. Such a trend is likely to result in a cycle of highs and lows, with the high leading to a boost in economic activities, while the low seasons negate the gains that have been made in the high season (Assaf, 2012). As such, it is important to establish necessary measures to ensure that the tourism and hospitality industry is able to maintain the economic activities of a nation over a period of a year with minimal breaks from the associated activities. The net effect of such an undertaking is bound to have positive social effects on the destination residents. Paramount to the creating of a year round destination is the creation of niche tourism sectors, for which the destination is capable of offering, and as a result, owns them as part of the total destination proposition. Niche tourism is basically the formal development as well as the investment into the tourism subsectors that are carefully as well as strategically designed. The design is in order to promote and attract travelers with a specific and sophisticated interest (Dawson, 2011).

This is especially paramount in the development of competitive as well as visionary destinations. As such, the tourism sector could point out numerous niches that are bound to elicit an enough level of interest in tourists to guarantee continuous business. Niche sectors in the tourism industry include eco-tourism, cruise tourism,religious tourism, cultural tourism, and wine tourism amongst others. A nation can identify numerous niches in the tourism sector that are bound to elicit interest from visitors thereby making it a favorite tourist destination that attracts visitors all year long. Such niches would include wildlife, camping sites, nature walks, beaches, cultural events and celebrations, and lavish lodging places. Wildlife is especially one interesting and exciting mode of attracting tourists. The wild can be considered an essential element in ensuring the continuity of the tourist activities. This is especially considering that wildlife will be available all year long, and as such, no breaks or seasonal times when they’re sighting can occur. Reservation of the wildlife is thereby a paramount undertaking that can be effective in ensuring that tourism continues all year round. Preservation of nature is important; as such an undertaking would give way for visitors to tour and take adventure walks.

The preservation of beaches is a worthy undertaking as it allows for visitors to make trips and take a day off their busy schedules. On the same side, cultural activities present another essential tool that can be utilized in order to face the fluctuation in demand and promote tourisms. Organizing occurrence of cultural festivities can serve as a major tourism attraction activity, with international visitors touring in order to attend the festivities and partake in the cultural activities and this is what Walt Disney Company is doing in all theme parks. For instance, Hong Kong Disneyland pulled Halloween celebration in. They created functions such as “Trick or Treat Spooktacular” for children, haunted house for adventure lovers and some special foods and drinks to coordinate the festival (Hong Kong Disneyland accessed 21of May). The construction of lavish places for tourists to stay could serve as a major attraction, which ensures all year round visits by tourists (Assaf, 2012). Such undertakings are in the long run bound to make the tourism industry sustainable while providing a cushioning of the effects of the high and low seasons. Once the subsectors are identified and developed, they lead to the creation of tourism business sectors that have a greater tourist offering.

To this effect, their propositions are made clear, with their goals and proposition clearly defined, and the target audiences clearly pointed out. Such an undertaking is bound to ensure that the subsectors are developed as is necessary, and the tourism sector is made sustainable all year round (Gil-Alana, 2008), with minimal breaks in its activities as regarding seasonal occurrences. Although most of the niche tourism sub-sectors are created as secondary and temporary as well as tactical projects within a greater tourism sector, they can be mobilized to involve continuous activities that are sustainable in the long run. Adequate planning and setting aside of the necessary resources are bound to make niche tourism a sustainable undertaking in an economy bound to improve the general tourism industry of a nation (Kulendran, 2012). They are capable of forming an essential framework for a destination that is competitive enough and one that enhances traveler’s connectivity. In addition, visionary destinations, which are involved in the building of the tourism economy and the future of tourism through the development of a disciplined strategic management, are geared towards the improvement of the tourism sector. Such a sector recognizes the role of the niche sub sectors and makes the relevant efforts and allocation in order to enhance the development of such sectors that are meant to ensure the creation of a sustainable tourism sector. Niche sectors aid in attracting incremental arrivals (Dawson, 2011). Through a response to the specific market targets in the tourism industry, the niche sectors are capable of attracting visitation.

This is paramount as they are able to keep the visitors number level high at the times of the year when interest of the undertakings is at its peak. It also allows the tourism industry to effectively manage seasonality. In conclusion, it is evident that the management of hospitality enterprises during fluctuation of demand is dependent on the creation and activation of the niche sectors; they are able to attract visitors during the low season periods of the industry, thereby providing the necessary baseline of the sector employment activity. This is especially paramount in that it allows persons employed by the sector to be kept at work by the activities associated with the niche sub sectors. This is especially so, as they keep the visitors around and provide the necessary economic activity to keep them employed during the times of low activity. This is thereby paramount in ensuring and sustaining the tourism related economic stability and prosperity, while at the same time creating social harmony and unity. Additionally, niche tourism allows a given destination to achieve essential shifts in the general perception of the destination, thereby creating a given reputation concerning the associated tourism activities occurring thereof. This can be exceptionally helpful in the instances when a destination is seeking to change a long held perception of a destination and more so in a negative light. Such perceptions regard national identity, quality as well as capability.