Seasonality.

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Transcript Seasonality.

Seasonality.
Team Members
Jean-Pierre Nordmann
Andrew Croasdell
Mark Briggs
Kirk Granger
Andy Wilson
Daniel Mahon
Keir Birch
Background.
Global tourism demand
10
Skiiing
5
OCT
Global
JUL
0
APR
Sea/Sun
JAN
Seasonality is a major disadvantage
of tourism and often leads to
negative economic effects on a
destination.
Peak season creates large revenue
needs to last all year.
Considering all tourist activities
worldwide at a given time will
produce a less seasonal pattern
than looking at specific resorts.
E.G. high levels of tourism in
December to April (skiing)
somewhere else in April to
September (sun holidays).
Specific resorts and the tourist
provisions within them will be
affected by seasonality.
Causes of seasonality.
Location
Weather (Sun & Snow)
Holidays school / works
Attractions
Festive holidays
Behavioural
Financial
Economic climate
Social / fashionable
Media influence
Consequences of seasonality.
Seasonal employment
Boom bust economic
cycle
Over/under utilisation of
resources
Dependence on tourism.
Negative effects in times
of crisis, such as war,
terrorism or bad
weather.
Seasonality in focus.
We will now look at how seasonality
effects the following tourism functions:
Tour operator
Tourist attraction
Hotel
The Problem of Seasonality For
The Outbound Tour Operator.
The Top Four Tour Operators.
SOURCE: Keynote Market Report, Travel Agents and Overseas Tour Operators, 2002
Tour Operators Booked Through Travel Agents
(1999-2001)
22%
24%
Thomsons
Airtours
Thomas Cook
14%
22%
First Choice
Others
18%
Seasonality.
SOURCE: Keynote Market Report, Travel Agents and Overseas Tour Operators, 2002
Percentage of Holiday Makers Per Month in 2001
20
Percentage
15
10
5
0
Jan/Feb
May
August
Nov/Dec
Month
What Problems do they Face?
Supply and demand are rarely in balance, and supply
can not change quickly
Fluctuation in demand effects capacity utilization,
overcrowding in peak and under utilisation in low
These lead to inefficient uses of resources, as such
high operating costs
So What do Tour Operators do?
The introduction of new operating strategies has
been key
Introduction of different kinds of holidays e.g. Ski
hols, Sports/Activity Hols
Vertical integration has allowed tour operators to buy
Hotel Chains and Airlines, this integration offers
greater cost advantages
Contd…
Negotiating contracts with Hoteliers
Segmenting the market by similarities
Spread their fixed costs more evenly over the entire
year
Marginal costing techniques
What Has This Lead to?
Seasonality is often viewed as the reason for
difficulties in gaining access to capital, for obtaining
and retaining full time staff and for under utilisation
of resources
Adapting to seasonality allows:
Resources to be utilised e.g. Flight Only
Margins to be increased
Less seasonality in the workforce
Attractions – overcoming
seasonality
Attractions background
Attractions are just one part of
a tourism industry
Attractions can be affected by:
-climate
-product
-location
-environment
-market
Seasonality effects attractions:
- location and the destination in
which it lies.
- the attraction itself and not
the surrounding area.
Destination
Accommodation
Transport
Attractions
Catering
Organisers
Demand Management
•
37% of uk attractions do not charge entrance fees
•
Price discrimination.
-Charging different prices at different times
•
Special offers
-buy one get one free
-kids for free
-newspaper offers
Diversification
-modifying attractions to appeal to different market segments.
Blackpool Tower
Blackpool located on the North West Coast of
England.
Two biggest attractions are the pleasure beach and
Blackpool Tower.
Blackpool hosts over 10 million visitors annually, of
which 750,000 visit Blackpool Tower.
Over 700,000 of these visit the Tower during
Blackpools tourism peaks.
Problems
Seasonality is a huge problem for Blackpool
Tower.
Suffers seasonality problems due to the
location in which it lies.
Blackpool has many frequent visitors.
A large proportion of Blackpools visitors are
UK tourists.
Entertainment image.
As will be seen, the extent of seasonality on
the destination and ultimately the tower has
meant little can be done.
What is currently being done
about Seasonality?
Open daily:
-Summer – November – during seasonal peaks.
-Christmas holidays
-Easter Holidays
-Half term holidays
At all other times, the tower is open on Wednesdays and
Weekends only.
The Towers location is its major strength being situated in the
UK’s most popular seaside destination. It is less than an hour
away from Manchester airport and 7.5 million people live within
75 minutes.
Continued.
Trough Period
Peak season
-
£5.00 for
£6.50 for
£6.00 for
£8.00 for
children
adults
children
adults
Tower offers numerous different forms of entertainment:
-the tower circus
-jungle jims,
-family party
-tower ballroom.
Also offers a loyalty card and a gold card.
Seasonality in Hotels.
Industry trends.
Type of accomodation.
% Peak season % Off peak season
Hotel
Guest house / B&B.
Self catering flat / cottage
Caravan / tent
Home of friend / family
Second Home
Other
10.2
16.3
26.5
15.3
18.4
3.1
10.2 N/A
15.4
5.1
18.8
40.2
13.7
6.8
Source: Dorset tourist board figures.
The impacts of seasonality do not affect
hotels as much as the other tourist
sectors we have discussed.
Many hotels suffer seasonality on a
weekly basis. Monday to Friday Business
travellers. Weekends attract short breaks.
Prices are significantly lower on a
weekend to attract customers.
Location determines the level of
seasonality, as seaside located hotels will
suffer more fluctuating demand than a
city based business focussed hotel; due to
weather, habit, and school holidays
manipulating demand.
In many cases, the use of hotels increases
in the off peak season, as the figures
produced by the Dorset tourist board
highlight. The percentage of visitors
staying in a hotel peak season is 10.2, this
increases to 15.4 off peak. This again is
due to lower prices and special offers.
Price discrimination.
One technique Hotels can use is
price discrimination. ‘Charging
different people different amounts
of money for the same service in
order to manipulate demand.’
This can be seen in the table
opposite, as it shows the prices for a
Marriott hotel both midweek and
weekend. As you can see weekend
customers pay up to 25% less for
the same service.
This is a good method of demand
manipulation, however this is only
applicable to city centre type hotels.
Resort based hotels (e.g. seasides)
may need to do the opposite to this
by lowering prices midweek, as
there is sufficient weekend demand
most of the time.
Quality Exec king King & Sofa
Feb. Midweeek
109
134
144
Feb. Weekend
70
95
105
Mar. Midweek
109
134
144
Mar. Weekend
75
100
110
Jul. Midweek
109
134
144
Jul. Weekend
75
104
124
Aug. Midweek
109
134
144
Aug. Weekend
75
104
124
Nov. Midweek
109
134
144
Nov. Weekend
70
95
105
Suite
154
115
154
120
154
134
154
134
154
115
Source: Marriott hotels price list. Hollins Hall.
Location.
Seasonalityof TourisminDorset.
Jan
Mar
May
Jul
Sep
Nov
200000
150000
Visitor
100000
numbers.
50000
0
S1
Month.
Source: Dorset tourist board figures.
As previously mentioned, the
location of a hotel can have a
great bearing on its
seasonality. Hotel based around
resorts or attractions suffer the
same peaks and troughs as the
resorts themselves.
In the example of a seaside
resort; tourists only really visit
in the summer months. This
leaves a large 8 or 9 month off
peak period of low demand.
Seaside resorts are not
synonymous with business or
conferences, therefore people
have very little reason to visit
them in the shoulder season,
causing a major ‘trough’ in the
economy.
Reverse yield management.
Hotels employ the concept of reverse yield management
in order to try and ensure they have high utilisation and
reduce the effects of seasonality.
Unlike the airline industry where the earlier you book
the flight the cheaper the ticket. In the hotel industry,
the longer you leave it before booking the room, often
the cheaper it is. This is because the marginal cost of
renting a room is very small, and as long as a booking is
covering the variable costs and is at least making a
contribution to fixed costs, most hotels will accept a far
reduced price for the room rather than have it vacant.
Hollins Hall Hotel.
‘It is only a 10-minute
drive from Leeds/Bradford
International Airport.
Business travellers will
find a welcome retreat in
the hotel's 200-acre site
with its extensive meeting
facilities & Country Club.’
‘This is an ideal base
from which to explore
local attractions such as
Salt's Mill, with the
David Hockney
Exhibition, Bronte
Country, Harewood
House, York and
Harrogate, Museum of
Film, Photography &
Television.’
We will now focus on a real life
hotel, and how they seek to
overcome the problems of
seasonality.
Hollins Hall Hotel is part of the
Marriott chain, it is situated in
Shipley, about 5 miles from the
management centre.
It is mainly marketed as a business
hotel, as the main features are its
close proximity to local businesses,
as well as as the cities of Leeds and
Bradford. Business services are well
advertised also.
The hotel is also described as being
‘perfectly located in the heart of
Yorkshire.’ The local tourist
attractions are also listed in order to
appeal to leisure travellers.
Source: www.Marriott.com
Demand management.
Core business.
Price discrimination. Up
to 25% cheaper to stay
on a weekend.
Marriott reward scheme.
Senior travellers discount
of at least 15%.
Theatre breaks.
Conference facilities.
Weddings.
Subsidiary activities.
Golf course.
Gymnasium.
Conferences.
Weddings.
Parties.
Champagne Sunday
brunch.
Conclusion.
The concept of seasonality can never be fully resolved, however there
are methods that tourist functions can employ in order to reduce the
negative effects. These can include:
Pricing strategies – price discrimination.
Accurate forecasting of demand.
Diversification.
Flexibility of resources.
Despite these methods to help resolve negative impacts there are
natural phenomenon that can not be manipulated by any management
techniques. For example:
Climate.
Disasters. War & Weather.
Recommendations.
Generate accurate demand forecasts
Further diversification needs to be undertaken:
New markets, ‘Adventure holidays is the fastest
growing market in the tourist industry.’ Source:
www.hyron.nf.ca/tourism
New customers. E.g. 50 + winter breaks.
Try to create relationships with third parties. Ie
schools trips in off peak periods.
Educate people, in order to reduce dependence on
tourism, by promoting other industries.
Any Questions?