Tour Package Types & Industry Dependence

After analysing the tourism industry, Bruce Poon Tip realized there’s an opportunity to provide a different type of tours which travelers would be interested in. The traveling industry primarily offered two types of tour packages: Western-style comforts with fancy hotels and air-conditioned transportation or backpacking. The first type of travel which has tourists stay in hotels and eat at places owned and staffed by Western companies doesn’t provide the tourists the chance of experiencing the local culture.

Western-style tours offer the opportunity for visitors to stay in all inclusive resorts that has them spend most of their time at the compound.

This defeats the purpose of traveling which is to experience a different people and culture. In addition, these Western-style tours don’t provide any significant monetary benefit to the local areas as most of the visitor’s spending is done at Western-owned establishments. Backpacking is second type of traveling which was prominent. This is not well suited for Westerns because most only get three vacation weeks per year.

Backpacking needs more time as transportation is slow and more time is spent at each location.

Furthermore, backpacking can be dangerous as it requires travelers to experience a region they are not familiar with by themselves. This can be specially dangerous for females who are backpacking alone. Bruce realized these options are very limited for travelers. He sought out to start a tourism company which offers a different type of traveling: one that allows visitors to experience the local culture in a way that is sustainable and at the same time helps the local economies.

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G Adventures changed the tourism industry’s boundaries by offering customers an opportunity to help the local areas in which they were visiting. Social responsibility and tourism were combined with the innovation of G Adventures.

An industry’s macro-environment can influence business decisions and have a significant impact on the industry’s overall profitability. The travel industry is highly dependent on external factors such as the health of the overall economy and currency exchange rates. Economic growth which translates to well paying jobs will provide disposable income to the middle class. This will result in more tourism business for the industry. In recessions, industries such as tourism, hospitality, and airlines take a significant hit in revenue as the middle class is hesitant to spend money to travel.

Currency exchange rate movements may have a direct impact on the profitability of the tourism industry. If the countries which are being visited develop a stronger currency, it will mean less profit for the tourism companies. On the other hand, if the tourist’s home country has a stronger currency, it will enable them to get increased value for their money. This will encourage tourism since travelers will get more value. Tourism companies which offer packages to customers all around the world need to take into account exchange rates for all the relevant countries in order to price their services accordingly. This can become a complicated issue and companies need to use foreign exchange hedging strategies to mitigate the inherent risk of transacting in multiple currencies. In addition to the overall economy and exchange rates, technology forces has a huge influence on the tourism industry.

The advancement of the internet has created a world with is flat. News travels faster and people are more conscious as to their impact on the world. Social responsibility is a huge phenomenon as the younger generations who have grown up with the internet demand corporations they do business with to be become more environmentally friendly. This impact of technology has caused travel companies to concentrate on more responsible travel. It is common practice to see travel brochures with claims that their company’s are part of the “green movement” which promises more sustainable business practices.