2. Tourism Industry spreads & meets Demand
Tourism Value Chain spreads tourists spent wider across many industries, bringing more value for economy - Economic Importance of Tourism Industry
Tourism as an industry fulfills the need and demand created by the tourism as an activity. Now, tourism, as mentioned in its definition, is not an industry as such rather a group of industries. This creates the value or supply chain of tourism industry. The 12 basic types of industries classified by UNWTO listed above are the tourism value chain industries
Tourism is made up of these industries and their products, and more. This is the value chain of tourism where different industries and players provide products and services to fulfill the demand and needs of tourists.
This tourism value chain is created on the basis of the three needs mentioned above which create demand for various different products and services. But what this value chain also means is that tourism creates demand for not just one or two industries but so many different industries all together. This makes it very important from point of view of economic growth as it provides revenues and other benefits like employment generation to these industries.
First of the tourism specific demands which it creates is for travel and transportation industry to reach tourist destinations. This involves air, water, rail and road transportation industries. Secondly, it creates various demand for the hospitality industry which includes accommodation, food & beverages, resorts, etc. The third demand which is the main one and often supersedes these two is for bookings and reservation industry.
These industries, specifically transportation and hospitality, by themselves are huge and span across various sub industries, and therefore play important role in the economy of any country. These are also some of the very basic type of industries. This makes tourism very important.
The 2nd demand it creates is spread across the accommodation and hospitality industry, food & beverages industries, local travel & transportation services industry, destination management and recreational services.
Tourism boosts many more industries beyond its value chain
The 3rd demand is for the supportive and relatively undefined segment of demand. These could include services from local restaurants, local food joints and places to eat; entertainment places cinemas & theme parks or cultural or sports activities; and may even include retail products and services; shopping malls; or electronics & telecommunications products and services. Tourists are there to experience and enjoy so there is no definitive limit as to what they may do or buy additional to their planned tourism activities. This further strengthens the role and significance of tourism for a country and its economy.
All these services and their respective industries are part of tourism and collectively form the tourism industry value chain.
The 12 industries listed by UNWTO broadly define and describe tourism industry value chain. According to the typical process a tourist takes when going for a tour, we can re-arrange those 12 industries in the following way:
Primary Activities:
- Travel agencies and other reservation services activities
- Railway passenger transport
- Road passenger transport
- Water passenger transport
- Air passenger transport
- Accommodation for visitors
- Food and beverage serving activities
- Transport equipment rental
Secondary Activities:
- Cultural activities
- Sports and recreational activities
- Other country-specific tourism characteristic activities
- Retail trade of country-specific tourism characteristic goods
So, by its definition and composition tourism can be termed as a high value and high spending commercial activity. But what makes it more important is the wide spread of tourism revenues over several industries. This makes tourism contribute more widely and strongly to the economy. This way it results in more and wide employment generation, more industry revenues, much more induced spending by those industries, much contribution towards taxes, etc.
So, tourism creates a huge demand for different products and services for the whole economy. This sector consistently brings in new consumers for these industries as well.