TOURISM AND HOSPITALITY MARKETING

CREDITS: 3 units

NUMBER OF HOURS: 54 hours

COURSE DESCRIPTION:
This course will equip students with the necessary skills to develop actual marketing campaigns for a
business within the tourism and hospitality industry. Emphasis is on the analysis of the market, its
competition and its product; preparation of a financial budget and the development of short-term and
long-range strategies to achieve desired profit through effective advertising, sales, and an effective
public relations plan.
CHAPTER TOPIC
1 Introduction to Tourism and Hospitality
Marketing
2 The Tourist Market and Segmentation
3 Tourism and Consumer Behavior
4 The Marketing Plan
5 The Tourism and Hospitality Product
6 Pricing in Tourism and Hospitality
7 Promotional Tools: Advertising, Direct Marketing,
Personal Selling, Public Relations, and Sales
Promotions
8 Digital Marketing
9 Distribution Channels in the Tourism and
Hospitality Industry
10 Destination Branding and Marketing
11 Relationship Marketing
12 Tourism and Hospitality Marketing and its Future
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CHAPTER 1 INTRODUCTION TO TOURISM AND HOSPITALITY

MARKETING
Time Allotment: 2 hours

Learning Objectives:

At the end of this unit, students must have:

1. Defined tourism marketing and its functions;

2. Differentiated tourism products from consumer products;
3. Explained marketing as a management process; and
4. Discussed the evolution of marketing and the integrated marketing approach.

Learning Contents

Introduction

Marketing became a buzzword in the world of business when the competition to gain market
share began among businesses. Marketing has evolved from simple trade to production orientation, to
sales orientation. When businesses realized that production was increasing, they began competing for
recognition within the market. The customer has become king and building relationships with them has
become the heart of any successful business enterprise. With the rise of relationship marketing and
social media marketing, the rules of the game have changed.

Tourism is one of the leading industries of the future. Next to information technology and
telecommunications, tourism contributes largely to the generation of jobs and the strengthening of
economies. Much attention has been given to how tourism can continually grow. Just like any other
business, marketing plays an integral role in its continuing growth.

Tourism has become one of the world's largest and fastest growing industries. Many new
destinations emerging apart from traditional favorites – Europe and North America. These new
destinations are hopeful for the economic gains that tourism can bring, which include an increase in
trade, infrastructure, and job generation. In figures, tourism contributes 10.3% to the global Gross
Domestic Product (GDP), provides one out of 10 jobs and generates exports amounting to $1.7 trillion
(WTTC 2019). Despite a few setbacks, tourism has displayed uninterrupted growth from 25 million
international tourists in 1950 to 1.4 billion in 2018. It was projected that a total of 1.8 billion visitors will
be travelling internationally by 2030 (UNWTO 2019). The success of any business in the travel and
hospitality industry is highly dependent on its marketing efforts.
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In the Philippines, despite the six-month closure of Boracay, the country’s flagship destination,
the industry was able to diversify and offer other destinations to cater to a wider array of tourists.
Moreover, it was able to break its 2018 record for foreign visitor arrivals of 7.1 million. Tourism has
contributed 12.7% to the country’s GDP (₱2.2 trillion). Locally, it has created 5.4 million jobs. Visitor
exports contributed 10.7% to total exports and generated ₱599.2 billion (PSA 2019).

As of 2019, the tourism industry’s contribution to the country’s GDP has surpassed the
Department of Tourism (DOT) 10% GDP contribution target for 2022 under the National Tourism
Development Plan (NTDP) 2016-2022; however, the Philippines still aims to have 12 million foreign
tourists and create 6.5 million jobs by 2020 (DOT 2016). The COVID-19 pandemic was an understandable
setback for the NTDP’s goal of 9.2 million foreign visitors in 2020 (Oxford Business Group 2021). In the
first seven months of 2020, tourists’ arrivals dropped by 73%, from 4.9 million to 1.3 million. “The year
2021 will be about local tourism,” claims Bernadette Romulo Puyat (Tabios 2020), rooting for domestic
tourism as a way to recover while across borders travel restrictions are still being implemented. The DOT
will be reviewing its NTDP targets, as the revenue generated from tourism sharply declined and as the
ban on inbound international travel remains. However, it was forecasted that international travel would
bounce back in the medium term with an estimate of 6.2 million in 2024. Because of this, the Tourism
Promotions Board of the Philippines is compelled to creatively explore ways to keep the connection with
tourists, developing strategic marketing programs for the medium and long terms, aiming to align with
the national tourism product development thrusts.

Marketing for tourism covers several levels, from the tourism destination as the product itself,
down to the specific tourism products and services that a tourist should avail of to complete the tourist
experience. These products include transportation (airline, cruise ship, bus, etc.), accommodation
(hotels, inns, apartelles, bed and breakfast), food and beverage (restaurants, catering, bars), attractions
(amusement parks, museums, zoos, marine sanctuaries, etc.), amenities, and souvenir shops, among
others.

What is tourism actually selling then? Tourism is not a single product. It is a combination of
products and services which results in a holistic experience for the traveler.

UNIQUE CHARACTERISTICS OF THE TOURISM INDUSTRY

Unlike consumer products that can be availed off the shelf, tourism products have unique
characteristics that make that make their marketing and promotions quite challenging. The tourism
product is intangible, inseparable, variable, perishable, seasonal, and substitutable. Additionally, tourism
is a high involvement product.

A. Intangible
Tourism products cannot be touched, smelled, tasted, felt, nor heard prior to purchase. They cannot
be subjected to prior scrutiny. One cannot examine nor test them before purchase, unlike consumer
products.

A destination that promises fresh air from its beaches or a scenic view of the mountains cannot send
a sample. Consumers rely on photographs of the place, comments or reviews from those who have
visited the place or availed of the services and promises from the company itself.
TOURISM AND HOSPITALITY MARKETING

This is the photograph of Boracay. The beauty of this scene can only be appreciated
when one is actually at the destination. Looking at the photograph will never equate to the
experience of having one’s hair blown by the wind, feeling the sun’s penetrating heat while basking
in it, and hearing the roar of a motorboat. Therefore, word of mouth is a highly effective means of
promoting tourist destinations.

B. Inseparable
The tourism product cannot be separated from the consumer. When tourists avail of products and
services, they must personally go to where the products are. Since what is being sold is the
experience, the product and the consumer cannot be in two different places; they must be in the
same place.

A tourist who avails of airline tickets needs to be physically present inside the
airplane to avail of the product. Products cannot be delivered to where the consumer is. It is the
consumer who goes to where the product is to avail of the product.

Activities within the destination can only be enjoyed when one is a part of it. Spectators have a
different experience compared to actual participants in the tourist activity.

C. Variable
The tourism experience is likely to be different depending on when the product is availed, who one is
with, and how the service providers deliver the service at the time of consumption.
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One may have gone to the same restaurant several times and have a different
dining experience each time. While the first time in the restaurant may have been quiet, the second
time, one finds it to be noisy. There may have been few customers during the first time and a rowdy
group of teenagers during the second time, hence, the variability of the tourism product.

This is the primary reason why standardization of operations is crucial in the tourism industry. Chain
and franchise establishments make it a point to standardize the way they provide products and
services to address the variability component of the industry.

D. Perishable
The tourism product is one of the most highly perishable of products. Perishability, as used in this
context, refers to not being able to forward inventory to the next day. It does not refer to food being
spoiled and thrown away. Products become perishable when they can no longer be consumed today
even when no one consumed them the day before, unlike consumer products such as a pen. If the
pen was not sold today, it can still be sold in a warehouse to be available for sale the next day.

Airline and restaurant seats, hotel rooms, and function rooms are perishable products. A seat or a
room that is not sold today cannot be sold some other day.

A hotel with 100 rooms that was half full yesterday will only again have 100 rooms
today. The 50 rooms that were unoccupied the day before cannot be sold the following day; the
hotel fails to earn from the unsold rooms. A hotel will always have the same number of rooms for
sale on any given day.

Revenue management addresses the perishability factor of the tourism product.

With the proper tools for forecasting price and occupancy, yield can be maximized.
TOURISM AND HOSPITALITY MARKETING

E. Seasonal
Seasonality does not only refer to the seasons of the year or the weather conditions. It also refers to
behavioral patterns of the travel market. The seasonality of the tourism product hinders it from
maximizing its profits all year round. Hence, intensified marketing during the lean season will help
increase demand for the product. This is also the reason most tourism products, such as airlines and
resorts, have different rates throughout the year. Such differences in rates help manage capacity and
yield to maximize profitability.

F. Substitutable
Competition in the tourism industry is intensifying. With new destinations emerging and competing
in the global marketplace, one destination can easily be substituted for another destination.

When a new restaurant opens, the old favorites are relegated as second choices. It
is quite a challenge to establish loyalty among clients since there is a wide range of product offerings
to choose from. With the many choices available, the tourism product is highly substitutable.
However, identifying one’s competitive advantage and a unique selling proposition may help make a
tourism product less substitutable.

Marketing plays an important role in the purchase of tourism products. Because of the
aforementioned characteristics of the tourism product, a marketing strategy needs to be developed
to make the product competitive in a highly commercialized marketplace.

Marketing plays an important role in the purchase of tourism products. Because of

the aforementioned characteristics of the tourism product, a marketing strategy
needs to be developed to make the product competitive in a highly
commercialized marketplace.
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G. Tourism as a High Involvement Product

Decision-making in the purchase of tourism products is considered of high involvement. Tourism
products of high involvement mean that there is a greater degree of thought or study involved prior
to the purchase. Expensive, complex, and unrepeatable are characteristics of high involvement
products.

Purchase of expensive products should likely to go through a long and detailed process of canvassing
and comparing brands, suppliers, and product features. If the product commands a high price worth
more than one’s monthly salary, one will surely make detailed comparisons before finalizing any
purchase. Travel products, home appliances, and real estate properties fall under this attribute.

Consumers may find complex products difficult to purchase. The difficulty may arise from the need to
understand the features or details of the product. Travel packages can be considered as complex
mainly due to the variety of products and services available and the “jargon” (technical words) used
in explaining some of these products. The same holds true for highly technical products such as
electronic gadgets and computers.

The unrepeatable nature of travel makes it a “once-in-a-lifetime” purchase. With the novelty-seeking
behavior of most tourists and the high cost of travel, travel purchases may not be repeated or may
be infrequent. Hence, more careful scrutiny is exercised prior to purchase. Aside from travel
products, special events such as weddings and debuts fall under this characteristic.

Unlike low involvement products, which are inexpensive, simple, and familiar, more detailed scrutiny
of alternatives, longer time for deliberation, and high expectations for satisfaction happen when
consumers avail of tourism products and services that are of high involvement.

Marketing plays a vital role in the purchase of high involvement products. It leads consumers to think
about the product and its features as well as to assure them of its quality. It helps clarify doubts and
lessen risks involved in the purchase of the products. Since tourism products and services are high
involvement products, customers also demand a high level of satisfaction.

Table 1.1 High Involvement Products versus Low Involvement Products

High Involvement Low Involvement

Expensive Inexpensive
Complex Simple
Unrepeatable Familiar

TOURISM MARKETING DEFINED

In the past, marketing was associated with only advertising and selling. However, these two activities are
now part of a more complex set of strategic activities that comprise marketing. There has been a
TOURISM AND HOSPITALITY MARKETING

misconception that marketing is a task that is performed solely by account managers and marketing
officers. A highly successful establishment makes marketing a concern not only of guest contact
positions but of every employee of the establishment. Customer satisfaction is at the center of
marketing. It is easy to persuade a customer to make the initial purchase but making the customer
return for more is dependent on his/her satisfaction from his/her initial experience. Hence, marketing
becomes not just the concern of the marketing officer but the concern of everyone in the company to
ensure that the customer’s needs are met; he/she leaves the establishment happy, satisfied, and willing
to come back; and better yet, that he/she will be willing to tell others how extremely satisfied he/she
with the quality of the product or service the establishment provided.

Marketing
- (P. Kotler, et.al., 2017) the process by which companies create value for customers and build
strong relationships in order to capture value from the customers in return.
- (P. Kotler, 2002) a social process where individuals and groups obtain what they need and want
through creating and exchanging products and value with others.
- (Kotler, Bowens, and Makens, 2010) the art and science of finding, retaining, and growing
profitable customers.
- (American Marketing Association, 2013) the activity, set of institutions, and processes for
creating, communicating, delivering, and exchanging offerings that have value for customers,
clients, partners, and society at large.

When a product is a need (necessity), it is easy to sell since customers do not have any choice but to buy
it. Marketing a want, however, is challenging. A want is something one can live without. Unlike a need,
which is a necessity, a want is a luxury wherein its purchase can be denied, deferred, or delayed.
Tourism products fall into the want category; therefore, making it more challenging to convince
consumers to make a purchase, especially during an economic downturn or recession.

The third definition paves the way for concepts such as customer-centered marketing. Finding, retaining,
and growing profitable customers involve strategic planning to ensure customer satisfaction and
building of customer loyalty. Repeat visits and referrals are the ultimate goals of ensuring that
customers become extremely satisfied with one’s products and services. Gone are the days when
establishments are happy with a one-time sale. Nowadays, establishments need to establish loyal
customers who will speak highly of their products or services. Research shows that it is more expensive
to create new customers than it is to retain old ones. Finally, growing the business with regular
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customers will contribute greatly to one’s bottom line. Building strong relationships with one’s regular
customers can be done through consistently superior customer service.

Tourism and hospitality marketing used to be defined in generic terms with all the other products.
However, with tourism and hospitality becoming a vast industry, it can no longer be taught using generic
marketing concepts. Tourism and hospitality marketing, because of its unique characteristics of
intangibility, inseparability, variability, perishability, seasonality, and substitutability, is distinct in how it
is applied. The marketing of tourism products such as destinations and attractions and hospitality
products such as food and accommodations has become extremely complex.

Tourism Marketing – a management process where destinations, products, and services are designed,
promoted, and distributed to meet the needs and wants of prospective tourists.

MARKETING AS A MANAGEMENT PROCESS

Since the provision and consumption of tourism products and services usually occur simultaneously, the
marketing orientation should involve the entire organization. The marketing management process
involves the following key processes (Lumsdon, 1997):

1. Marketing Information System

- with the advent of technology, the provision of this enables the organization to compile
an updated set of information about its customers, competitors, and the organization’s
capability and effectiveness.
2. Marketing Planning
- involves an analysis of the marketing environment in relation to the potential of one’s
business.
- also involves the setting up of objectives and an evaluation of the milestones that the
company has reached. The creation of marketing strategies will help increase business
by obtaining the best fit between the company’s resources and its target market
position.
3. Planning Tactical Campaigns
- ensures that practical and realistic tactical campaigns are conducted in support of the
comprehensive marketing strategy.
4. Marketing Operations
- involves the challenging part of implementing the planned strategic and tactical
campaigns by coordinating with all stakeholders, fine-tuning the marketing mix, as they
unfold, and ensuring that activities are conducted as planned.
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5. Monitoring and Control

- involves the ongoing process of evaluating sales data and financial performance versus
marketing activities conducted.
- also includes the handling of customer feedback and complaints (if any) and
coordination with what the staff has to say about the marketing campaigns.
- finally, includes being aware of what the competitors are doing.

CORE MARKETING FUNCTIONS

1. Marketing Information Management – entails gathering information about customers to better

serve their needs and improve decision-making.
2. Financing – involves planning to ensure that resources are available to maintain and improve the
business.
3. Pricing – ensures that the value and cost of goods and services offered to customers will be at
the level that the customers are willing to pay.
4. Promotion – prepares the various promotional strategies that will enable the products to be
introduced and sold to the customers.
5. Product/Service Management – involves designing, developing, maintaining, improving, and
acquiring products and services to meet the needs of the customers.
6. Distribution – involves bringing the products and services to the customers in the best way
possible.
7. Selling – the ultimate measure of marketing success. Strategies on following up the sales, closing
the sale, and making a repeat sale are crucial tasks of marketing.

THE MARKETING MIX

Kotler (2010) says that marketing facilitates the exchange process and the development of relationships
by carefully examining the needs and wants of consumers, developing a product or service that satisfies
these needs, offering it at a certain price, making it available at a particular place or channel of
distribution, and developing a program of promotion to create awareness and interest.

1. Product or Service – refers to what the company offers to satisfy a consumer’s want or need.

2. Price – the value that the seller puts on the product or service. This includes the cost of the product
and the profit the seller wishes to make. This is also the amount a customer must pay in exchange for
the product or service.
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3. Place – the means by which the product or service reaches the consumer.

4. Promotion – the strategic plan by which customers are informed about the product or service and its
value. It also encourages customers to purchase the product or service.

A well-planned and executed marketing mix will enable marketers to move their products or services
successfully to the consumers.

Figure 1.1 The Tourism Marketing Mix

The seven (7) core functions of marketing and the marketing mix will help in understanding the role of
marketing in a tourism organization. Just as the definition of tourism marketing has evolved through the
years, its strategies, tools, and implementation have also differed over time. The development of new
technology, among others, has made marketing a dynamic task leading to the birth of the integrated
marketing communications approach.

INTEGRATED MARKETING COMMUNICATIONS APPROACH

The promoting and selling of products have become heavily reliant on traditional advertising techniques
which have become more expensive but less effective. The Integrated Marketing Communications (IMC)
approach was born from the need of businesses to enhance the promotion of their products.
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Integrated Marketing Communications – the process of using all forms of promotion to achieve
maximum communications impact while maintaining a consistent image for the products or services.

Factors that Contributed to the Growth of IMC

1. Growth of technology
- made consumers become less responsive to traditional advertising. The remote control
allows viewers to change channels while commercials are going on. TV and radio have
become more fragmented. People have shifted to using computers and the internet more
often than traditional mass media channels. The internet has also allowed businesses to
communicate in more creative ways with their target customers. Interaction is enhanced
with the use of smartphones and Wi-Fi networks, where information is now available
literally at our fingertips.

2. Incentive-based compensation
- poses a challenge for advertising agencies to
come up with an integrated approach in mixing
the different promotional tools to yield
maximum results because the more effective
their marketing strategy is, the higher their pay
will be. Hence, the shift to incentive-based
compensation is a win-win strategy for both the
business owner and the advertising agency.

3. Consolidation of the retail industry

- has affected the way people consume products. Big retailers can dictate the brands that will
make it to their shelves. Thus, manufacturers are at the mercy
of these big retailers. Retailers can dictate the discount scheme
and merchandising support they would need from
manufacturers. Otherwise, their products will not make it to
the shelves of the grocery store.

4. Database marketing
- also enhanced the use of the IMC approach. With
enhanced computer programs adopted by many
tourism establishments such as hotels, airlines, and
restaurants, database management is facilitated.
These databases would be most helpful in carrying
out direct marketing campaigns such as
telemarketing and loyalty programs. The behavior
and needs of consumers are tracked, and customers
are served more efficiently through the
management of a sound and updated database.
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Due to the advent of technological advancements, the IMC approach has become a popular option in
maximizing resources and optimizing results. Many opportunities have opened for the tourism marketer
in terms of new and cheaper ways of promoting destinations, products, and services. Digital marketing
strategies have made smaller destinations with fewer resources noticed in the crowded marketplace
due to videos or social media posts that have become viral.

Combining traditional and digital promotional strategies gave rise to the integrated marketing
communication approach, acknowledging the fact that there is no particular tool that will push
awareness and sales but rather a wise and efficient use of the various tools spaced out at the proper
timing and the accurate identification of the proposed target market.

Figure 1.2 Use of Integrated Marketing Approach

Various studies have shown that the IMC approach has been an effective way for companies to reach
their target market and to achieve company objectives within the available budget. Given strategy and
strategic thinking, IMC can maximize a company’s limited resources; thus, allowing small players in the
tourism industry to compete with established brands.