What is the difference between recreation and tourism?
To analyse and understand the behavior of organizations in the recreation, leisure and tourism sector, we need to be able to clarify their aims and objectives.The first question is whether the organization is in the private or government sector.The main objective for most private-sector organizations is to make money.Tourism Concern is a not-for-profit organization that encourages ethical and sustainable tourism.Parks, museums, and swimming pools that were desirable but not commercially profitable were traditionally set up by government organizations.According to which party holds political power, attitudes to the extent of government provision and use of subsidies vary across countries.
The government owns public-sector organizations.This is either national government or local government.
Sometimes services are free, sometimes they are subsidized, and sometimes it is provided at full commercial rates.Swimming pool charges can be subsidized, but sometimes the full cost of provision is not.Some facilities, such as parks, libraries and children's playground, are free.
Local government organizations are owned by the local population.The decisions of strategic management are taken by the local council.Each local government area has members who represent them.The majority of seats on the council are held by a political party and they can dictate policy through a series of committees.
The financial framework within which the other committees must operate is provided by the planning and resources committee, which determines the medium- to long-term strategy of the council.The day-to-day management of local government-run services depends on the nature of the service being provided.Council employees are responsible for overall management and services which are spread out across a local government area, such as parks, will be run from the council offices.The service director at the council offices will be in charge of the leisure centre's management.
The aims of local government and its organizations are determined by the political party that holds the majority.For example, leisure provision will vary between local authorities which have different political parties in power.Market-driven provision and lower local taxes are favored by the right of the political spectrum.Free or subsidized public provision is offered by those to the left.To determine the differing aims of political parties, we need to consult their manifestos and review their actual provision.Political parties don't operate in a vacuum.They will be influenced by that.
Edgecombe looked at a major dilemma facing local government leisure facility managers in Australia - that of providing recreation services, whilst at the same time minimizing financial deficits and avoiding significant negative impacts on private enterprises providing similar services.
Public corporations, government departments and other government agencies can be further divided into national government-owned organizations.
State-run industries are sometimes referred to as public corporations.Goods or services are usually given to the public.There are examples of these.
Air India started life with two planes, one palm-thatched shed and one full-time pilot.In its first full year of operations, it flew 160,000 miles and carried 155 passengers.Air India was renamed after it was converted into a public company.
The government decided to nationalize the air transport industry in India after the financial condition of airlines deteriorated.Air India International was established to operate the overseas services after the merger of eight domestic airlines.
The politics of individual countries affect the extent of nationalization of recreation, leisure and tourism industries.Most television stations, airlines, and railways in the USA and the UK are run by private-sector organizations.
Government departments are in charge of implementing policy.The recreation leisure and tourism sector of the economy is affected by a number of government departments.Examples include:
Government departments tend to work at a larger level than other government agencies.Examples include:
From country to country, the aims of nationalized industries vary.In some cases, public corporations aim for public service provision without the limitations imposed by the profit motive and are able to provide services that are loss making.Private-sector management styles may not be apparent in these instances.In the UK and the USA, public corporations have been subjected to efficiency targets, performance indicators and target rates of return on investment, all of which have made them more closely mimic private-sector organizations.The aims of the nationalized industry are contained in their charters or constitutions.
Planning, monitoring and reviewing of provision and legislation are some of the things that the aim of government departments is to do.The aims of the Government Department of Resources, Energy and Tourism in Australia are shown in Exhibit 2.2.The three areas of energy, resources and tourism are covered by this department.The exhibit shows that the department is to provide both policy advice and implement programme delivery services.Sometimes leisure, tourism and recreation fall under the same government department, but other times they are separate.The aims of other government agencies are usually focused on a narrow field.
Through the provision of high-quality policy advice and programme-delivery services for the Australian government, we enhance Australia's economic prosperity by improving productivity, competitiveness, security andsustainability of the resources, energy and tourism sectors.
In delivering policy advice and implementing the government's policies, we are responsive to the Minister.
We focus on achieving constructive and collaborative relationships with our stakeholders, underpinned by genuine consultation, feedback and robust service delivery.
Through informed judgement and prudent risk management, we provide high-quality evidence-based advice.
We encourage a positive workplace with high levels of personal leadership and integrity.We strive to learn and innovate.
The Australian government is committed to creating a policy framework to expand Australia's resource base, increase the international competitiveness of our resources sector and improve the regulatory regime, consistent with the principles of environmental responsibility and sustainable development.
The Australian government is committed to providing adequate, reliable and affordable energy to meet future energy consumption needs and to underpin strong economic growth, consistent with the principles of environmental responsibility and sustainable development.
The Australian government is committed to maximizing tourism's net economic contribution to the Australian economy and to fostering an industry that promotes the principles of environmental responsibility and sustainable development.
Public-sector organizations are sensitive to the changing priorities of the government because of their dependence on tax funding.Spending cuts will be imposed through the public sector if the economy as a whole is not healthy.
The government owns national government organizations on behalf of the population.Each type of organization is different.
Private-sector organizations are not owned by the government.They can be categorized into profit-making organizations and non-profit making organizations.
Those with unlimited liability, those with limited liability and companies which are quoted on the stock exchange are profit-making private-sector organizations.
If the organization becomes indebted, the owners of the companies face no limit to their contribution.Should the business cease trading, most of their personal assets can be used to settle their debts.This includes everything that can be sold from the business, as well as housing, cars, furniture and stereos.Because of the discipline that unlimited liability brings, there are very few requirements to start trading as this form of business.This type of business organization has advantages.
The formation of a limited liability company allows its owners to create a separate legal identity and limit their exposure in the event of company failure.There is a separate legal identity on the company.There is a difference between the position of unlimited liability organizations and this.There is a limit to the amount of capital that can be contributed by an investor.An investor may lose their original investment if one of these organizations stops trading with debts, but liability would cease and personal assets would not be at risk.
The benefits of the limited liability company mean that they are bound by tighter rules than are unlimited liability organizations.Such companies usually need to give details.
Private companies and public companies are further divided into limited liability companies.The latter's shares are freely traded on the stock exchange.There are pros and cons to moving from a private limited company to a public one.As the stock exchange provides access to thousands of potential investors, the ability to raise more capital is a key advantage of becoming a public limited company.Extra costs are associated with flotation.The costs of bringing a company to the market are included.The risk of loss of control is a constant need to perform and produce high profits in the short term as a public limited company.It is more difficult to retain control of public companies than private limited companies because of the free access to share ownership and lack of control on transfer of shares.Exhibit 2.3 shows a company flotation in the travel industry.Amadeus, a leading travel IT company, was refloated on the Madrid Stock Exchange in 2010 meaning its shares were made available to the public and that the owners of the company were able to raise a large amount of capital.
Amadeus is a leading transaction processor for the global travel and tourism industry.Travel providers include airlines, hotels, railways, cruise lines, ferries, car rental companies and tour operators.Amadeus has distribution and IT systems that cover itinerary planning, fare-searching, reservations, ticketing, airlines schedule and inventory control, passenger check-in and departure control.In 2009, it earned 2.46 billion.
The company was delisted from the Madrid Stock Exchange in 2006 after BC Partners and Cinven bought their stake from airlines.This meant that the company was taken over by a private limited company.Amadeus became one of Europe's largest flotations in 2010 when it returned to the Spanish Stock Exchange.Amadeus offered 98.9 million shares in a primary offering and 36.9 million existing shares to institutional investors.About 25 per cent of the firm was represented by this share offer.The price range for the listing was between 9.2 and 12.2 per share.In the event that it raised over 1.3 billion in the listing, it had a market cap of around $450 million.5 billion.The share price rose by 7.36 per cent by midday on the day of the flotation.
The Qantas group is the major national and international airline in Australia.Qantas was once a nationalized industry run by the Australian government according to the exhibit.The airline was funded from taxes.Some governments still own national airlines because they believe they play a role in the economy.The private sector can be difficult to finance large capital purchases by airlines.Competition and enterprise are stifled when nationalization occurs, resulting in a poorer service for air travellers.Air travel is still a luxury and the state should not subsidize it out of taxes.State-run industries can be run on bureaucratic lines because they are inefficient and inflexible.
Qantas is the largest domestic and international airline in Australia.In Australia, Asia and the Pacific, the Americas, Europe and Africa, it employs around 35,000 staff and serves 173 destinations.
The long-term vision of the Qantas Group is to operate the world's best premium airline, Qantas.
Qantas is listed on the Australian Stock Exchange.Qantas was once owned by the Australian government.The airline was privatized in the 1990s.The public share offer was launched in 1995.Qantas shares were listed on the Australian Stock Exchange with a float price of $1.90 on July 31, 1995.
Small firms remain small due to the fact that these sources are only available to supply limited funds.The incorporated firms are able to raise capital through additional routes.
A share is a small portion of ownership in a company.In return for capital, the company issues shares certificates.The price of shares goes up and down according to relative demand and supply in the market place.From the perspective of a shareholder, shares can be seen.Since no dividends are paid if the company does not make any profits, share capital is of low risk.A company doesn't have to make payments if it goes through an unprofitable period.Growth in the capital value of shares is one of the reasons shareholders are attracted to shares.There is a risk as there is no guarantee of dividends and the value of shares can go down as well as up.
The interest on the Debentures is fixed and can be seen as a loan.When profits are low, they pose a problem for the company because they still have to pay out the fixed interest, but their interest rate is attractive when profits increase.Debenture holders get a guaranteed rate of return and are paid before shareholders so they are less risky than shares.It is not possible to benefit from higher dividends when a company is growing and making good profits.
There are many aspects of financing shown in Table 2.1.The Eurotunnel rail tunnel was built between England and France in the 1990s.Capital was required to finance the project.Table 2.1 illustrates the financing of Eurotunnel.Eurotunnel's capital is made up of loans from banks which carry interest until they are repaid, and share issues which will not pay dividends until profits are earned.If profits from the tunnel are not enough to repay loans and interest, the company may be forced into insolvency.The company's assets would be sold to repay the banks.The shareholders would get nothing.The shareholders are assigned a lower priority than the loan providers.They wouldn't lose their personal assets, just the value of their shares, because their liability is limited.Under a more optimistic, high-profit scenario, payments to the banks are limited to previously negotiated rates, leaving substantial profits to be distributed in the form of high dividends to shareholders.There are three different forms of share issue illustrated in this case.
Insurance has been taken out against the possibility of shares remaining unsold because of the share issues.The unsold shares would be purchased by the firm at a pre-agreed price.
Second-hand shares that are sold on the stock market do not provide new capital to companies.The prices of shares are determined by supply and demand.The stock market approximates to a perfect market with prices constantly changing to bring supply and demand into equilibrium.The supply of shares depends on the following:
Exhibit 2.4 shows the changing fortunes of Qantas shares.It shows how share prices can change.It shows how global economic events can affect share prices.The price of Qantas shares fell from a high of $6 a share in 2008 to a low of $1 in 2009.The flotation price 13 years earlier in 1995 had a fall in value of more than 20 per cent.It shows the potential benefits and risks of holding shares.526 Qantas shares would have been purchased by anyone with a AUS$ 1000 investment in 1995.If they had sold those shares in 2007, they would have made a profit.If they had sold the shares in 2008, they would have made only a small profit.
Organizations in the private sector want to maximize profits.Exhibit 2.5 illustrates the objectives of The Walt Disney Company where it can be seen that maximizing long-term shareholder value is a prime concern.Large corporations and small- and medium-sized enterprises make up the private sector.These were previously classified as limited liability corporations.It's easy to understand small-business organizations.The owner can act as a strong incentive to maximize profits.It is possible that profit maximization is subject to personal considerations.Small-business owners who build a business around a hobby that allows them to earn an income while pursuing their interest are referred to asLifestyle Entrepreneurs.
The Walt Disney Company is a leading diversified international family entertainment and media enterprise with four business segments.
The Walt Disney Company wants to be one of the world's leading producers and providers of entertainment and information, using its portfolio of brands to differentiate its content, services and consumer products.The company wants to maximize earnings and cash flow and allocate capital toward growth initiatives that will drive shareholder value.
The picture for corporations is more complex due to size of operations and number of shareholders.The managing director is in charge of directing managers in the day-to-day running of the organization.The company policy is determined by the board of directors.A potential conflict of interests can be caused by this.Company profits are maximized when shareholders see their dividends and capital gains.This is an important objective for managers since they are answerable to shareholders.They may seek other objectives, such as maximizing personal benefit, which may include kudos from concluding deals, good pension prospects, well-appointed offices and high-specification company cars.
The purpose and size of non-profit organizations in the private sector vary greatly.They span national organizations with large turnovers, smaller special interest groups, professional associations and local clubs and societies.
The aims and missions of voluntary groups are not profit driven.They include protection of special interests, promotion of ideas and ideals, regulation of sports and the provision of goods and services which are not catered for by the free market.The differences between private, public and not-for-profit concepts were examined by Andersson and Getz.The author on the right of the photo is a tourist at the David Sheldrick Wildlife Trust's Orphans' Project.This is a charity that depends on donations.The aim is to rehabilitate elephants.
To be trusted as a leading independent guardian of Australia's built, cultural and natural heritage, and defender of our sense of place and belonging in a changing world is the vision of the Trust.Its goal is to:
The mission of the HKTB is to maximize the social and economic contribution that tourism makes to the community of Hong Kong.
Discuss the differences between the different aspects of the mission agenda for each organization using Figure 2.1.
It is important for economists to understand the pricing policy of recreation, leisure and tourism organizations if they are to identify organizational type.
At the age of 17, Richard Branson started his business career with a student magazine.He opened a record shop in Oxford Street, London, after founding Virgin as a mail order record retailer.
The maturity of the Virgin empire was demonstrated when it floated on the London Stock Exchange.In his book, he explains why he changed his mind about the benefits of being a public company so that the management could take Virgin private again.He pointed to the duty of appointing and working with outside directors as one of therous obligations.He felt that he no longer had the ability to make quick decisions.If we had to wait 4 weeks for the next board meeting before authorizing Simon to sign, then we would probably lose them altogether.
The one year when Virgin was quoted on the stock exchange was the company's least creative year because the executives were taken away from management.
Virgin Blue was launched in Australia in 2001.At the end of March 2003 the airline had made a pre-tax profit of AUS$158 million and is expected to report profits of about $150 million for the year.
The company will be listed on the stock market by Christmas.The listing of Virgin Blue was delayed because of the adverse effects on the aviation sector from the war in Iraq and the severe acute respiratory syndrome outbreak.
The float valued the group at over a billion dollars.The airline raised about 400 million dollars from the flotation.Giving the company enough cash to expand internationally is one of the main reasons for the strategy.Virgin Blue wanted to use the money raised to launch a low-cost airline in the USA and it was also planning new routes to New Zealand and the Polynesian islands.The group was considering speeding up the expansion of its Virgin Mobile operations in the USA.
According to Grant Williams of Reynolds & Co, there seems to be a strong interest in Virgin Blue's float, but this is not a lot of money and there won't be much around for the retail market.
The money from Virgin Blue could be used to increase the group's war chest, according to a Virgin spokesman.Plans for a low-cost carrier in the USA are quite advanced.
According to the Wall Street Journal, Virgin America is one of the best funded start-up airlines in history.Virgin America was a new airline.It has a package that includes brand new planes, attractive fares, service excellence, in-flight Internet, mood-lit cabins, leather seats and on-demand menus.
The Virgin Group has grown to become a leading global company that operates in a wide range of businesses.In 30 countries, it has created more than 300 branded companies.In 2009, global branded revenues were over 12 billion dollars.Its portfolio includes some things.
What do you think about Richard Branson's first venture as a mail order record retailer?
In their seminal article on lifestyle entrepreneurs, Ateljevic and Doorne noted that lifestyle and non- economic motives can be important stimuli for tourism entrepreneurship and represent a significant part of the small-business sector.Quality of life over profit is a hallmark of lifestyle entrepreneurs.The solution for lifestyle entrepreneurs is to set up their own business because it's difficult to find this combination in traditional business.This desire for quality of life combined with running a business means that Lifestyle Enterprises can allow for flexible hours, a preferred location, or a particular stance with regard to ethical practices.Small accommodations providers, yoga retreats and specialized restaurants are examples of such businesses.
The long-term survival of lifestyle entrepreneurs in tourism may be a constraint on regional economic development.There is a cohort of lifestyle entrepreneurs in the New Zealand tourism sector.They found that the rejection of economic and business growth opportunities is an expression of a personal socio political ideology.The authors found that the rejection of profit as an over-riding motive does not result in financial difficulties or a stagnation in the development of the business.New opportunities are created to engage with niche consumers who portray common values.The research concluded that lifestyle entrepreneurs can be associated with the creation of innovative services and products and that this business format can make an important contribution to the development of a sense of place and community.
How do aims, mission, ownership and control differ between businesses?
Distinguish between the public sector, public limited companies and nationalized industries, giving examples of each in the recreation, leisure and tourism sector.