Seasonality pressures and the tourism industry

During the high season, service inconsistency and reduced levels of customer satisfaction can be experienced.

Getting the right products in the right place at the right time is crucial in the holiday season. Holiday stress can be felt by the accommodation industry as the holiday season places pressure on getting it right where a large proportion of revenue is earned in a very short time.

The tourism industry is characterised by tight capacity in the high season, affected by competition from favourable commissions and loyalty discounts offered to customers by the large chains, rising fuel prices, rising import prices in general, a shortage of quality seasonal workers and currently inflation rising above earnings growth. All of these factors place pressure on profitability and sustainability.

During the seasons, the industry is impacted by competition from favourable commissions and loyalty discounts offered to customers by the large quality standardised chains such as Marriott, Starwood and Intercontinental.  These large scale providers agree commissions with popular travel websites such as Expedia to favourably promote their services. In addition, the large scale accommodation providers retain customers by the use of attractive loyalty schemes across the world. This competition can make it difficult for Small and Medium size Enterprises (SMEs) to survive.

However, it is believed that SMEs have better scope for creativity and have a special identity where there is no need for standardisation of brand guidelines that lack local relevance. Customers are savvy and are often willing to shop around for a unique experience.  Knowledge of and adoption of the role of points of local interest in tourism can provide a personal experience. Additional extras that do not focus on price such as local excursions, local food and drink, complimentary services such as spa facilities and free wi fi can help to satisfy customers and retain them.  In order to combat fierce competition from the large scale accommodation providers, a number of SMEs have joined forces with consortiums like for example the Leading Hotels of the World and the Small Luxury Hotels of the World groups to benefit from marketing economies of scale where search engine optimisation plays a role in sustainability of bookings.

Brexit has heightened the problem of obtaining quality seasonal workers as the number of people entering employment in the UK faces decline. This in turn puts pressure on the demand for higher wages and sinks into profit margins. The fall in the value of the pound following the announcement of Brexit is a factor which has led to inflationary pressures due to increased import prices and we now face a situation where price rises are above earnings growth; thus resulting in a turbulent business environment.

So, how can capacity challenges be met during the holiday season and during such an uneasy economic period?

  • Forecast key events and seasonal events and how to resource them.
  • Start online promotions early as this will attract customers in advance, create positive cash flow, enable the business to invest and enable the business to accurately anticipate demand.
  • Recruit staff with the ability to multi task as this will lower overall staff costs and enable customer needs to be more effectively met during the peak season.
  • Invest in staff by training them so waste is keep to a minimum, cost savings are made and customers remain satisfied. Encourage staff to take holiday during the low season.
  • Invest in facilities so that customers are not disappointed by out of date or poorly maintained provision. Refurbish in the low season when there is less demand on resources and during the low season take idle accommodation out of use to conserve.
  • Make use of lean production management principles to include developing long term strategies with suppliers. Just In Time (JIT) techniques gained momentum in businesses over the past decade based on having close relationships with suppliers where supplies are delivered at the moment they are needed, reducing waste and adding value.  Reducing the levels of stock can prevent waste if items are not needed or if tastes change. It also helps cash flow and limits the cost of warehousing and insurance.

Unneeded staff, unneeded processing steps, non-value adding activity should be removed to ensure maximum efficiency. In advocating lean production principles, a focus on quality and continuous improvement is needed; increased responsibility in employee roles in involving staff in decision making is integral.  If products are quality assured before reaching the customer by dedicated employees, then customer satisfaction should be fulfilled. Employees can also be encouraged to take a full part in evaluating the need for improvement whilst tasks are completed.

  • Be energy efficient – see energy training module: www.smartourproject.eu
  • Make use of market segmentation with identification of niche markets including markets with local relevance to maximise revenue where concentration on the needs of such a market can bring competitive gains. Promoting the benefits of low season which include promotional pricing, reduced congestion and quieter relaxation to target markets such as the older generation or empty nesters that are not limited to taking a break during school holidays can be beneficial in controlling demand.
  • Concentration on customer relationship marketing by actively listening to customers, closely meeting their needs and taking action where there is customer dissatisfaction should lead to repeat business.

Coping with seasonal fluctuations in demand presents challenging decision making. Smartour has been developed to provide an insight into these challenges with training modules and an opportunity to share in developing sustainable tourism:  www.smartourproject.eu

By Vicki Disley, Newcastle under Lyme College

UPDATE – The SMARTOUR Tool is now online and covers this topic if you want to learn more 

Useful links

Project website – http://www.smartourproject.eu/ and links to our online training tool and events across England and Italy

Twitter @tourismsu   #SMARTOUR

Facebook page – https://www.facebook.com/smartourproject/

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