Chapter 1 Introduction

 

1.1 Background

Tourism has become one of the most dynamic and important industries around theworld. It is a key player in global economy, export revenues and employment generation.Only in 2015, travel and tourism industry contributed US$7.2 trillion to world GDP,representing 9.8% of global GDP and generating 284 million jobs or, in other words, 1 in11 of all jobs worldwide (World Travel & Tourism Council, 2016). International tourismgrew 4.4% during 2015 reaching a record of 1,184 million arrivals, with more than 50million more tourists compared to 2014 (UNWTO, 2016). In fact, over the last six decadesand despite slowdowns in some economies and industries, tourism has shown constantgrowth. International tourist arrivals have grown from 25 million in 1950, to 278 million in1980, 527 million in 1995 and 1,133 million in 2014 and, in the following years, it isexpected to increase by an average of 4.0% a year reaching 1.4 billion international arrivalsby 2020 and 1.8 billion for 2030. Emerging economies such as Asia, Latin America,Central and Eastern Europe, Eastern Mediterranean Europe, the Middle East and Africawill grow at double the rate (4.4%) than advanced economies destinations (UNWTO,2015). All of this opens good opportunities in the industry of travel and tourism, especiallyin developing economies such as Chile, the first South American country in becoming amember of the OECD (OECD, 2010).Chile is the longest country in the world (Centro y Sur, 2013) therefore; it has a hugevariety of natural resources and different climates, from the driest place on earth (AtacamaDesert) through the Magellan Strait and the Antarctic Continent. This diversity and itsstable economy make Chile one of the most prosperous and interesting places to visit.During the last 5 years an average of 3.7 million tourists from different countries visitedChile (Sernatur, 2016), generating an estimated amount of 2.5 billion dollars for thecountry (Sernatur, 2015). 

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1.2 Current status

During the last years, the industry of travel & tourism has evolved to new anddifferent practices; phenomena such as globalization and internet have certainly changedthe way that tourist attractions and accommodations are managed and also, the informationthat customers are able to handle in order to make a decision of where to stay and/or whereto go.Worldwide Tourism has experienced a sustained rise during the last decades and hasbecome one of the sectors with the fastest growth. Figure 1.1 shows the evolution thatInbound Tourism has have until 2015 and the projections estimated by the World TourismOrganization for 2030.As shown in Figure 1.2, in 2015 for 6thconsecutive year, the International touristarrivals grew mainly to the good performance of Europe, America and Asia and the Pacific.This growth had a magnitude of 4.4% compared to 2014, reaching a total of 1,184 million.The regions with best performance were Europe, America and Asia and the Pacific withgrowth rate of +5%. South America also boasts a growth rate of 5%. Between 1995 and2015 arrivals have grown more than 125% from 527 million in 1995 to 1,184 million in2015.

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Chapter 2 Literature Review

 

2.1 Literature review

The literature review will describe and analyze previous research on some relatedtopics. In this chapter we will not only string with what other researchers have found,instead of that, we will discuss and analyze the body of knowledge with the ultimate goalof determining what is known and is not known about the topics. In some cases, of course,we may determine that replicating previous research is needed.The industry of tourism has many different definitions that are usually understood forthe ones who work or have some connection with the industry; however, once we startedanalyzing information we realized that some definitions that we thought we had them clear,could be easily mixed, understood in a different way or simply mistaken. Thus, it isimportant to be clear about these wide spread concepts and their definitions in order to bealigned with the information and comparisons that some studies make.If we think about the word ―Tourist we would probably think about someone whotravels, and we would be almost close to the definition that the dictionaryMerriam-Webster gives: ―a person who travels to a place for pleasure (Merriam-Webster,2016). For The Oxford Dictionaries the definition would be a bit more extended: ―Apersonwho is travelling or visiting a place for pleasure (Oxford Dictionaries, 2016). However,associations such as The United Nations and also the Tourism National Service (Sernatur,Chile) define ―Tourist as: ―A visitor (domestic, inbound or outbound) is classified as atourist (or overnight visitor) if his/her trip includes an overnight stay…(United Nations,2008). This definition also explains another important concept: ―Excursionist, andaccording to them the difference between both is: ―A visitor (domestic, inbound oroutbound) is classified as a tourist (or overnight visitor) if his/her trip includes anovernight stay, or as a same-day visitor (or excursionist) otherwise. But now, what is avisitor? The concept ―Visitor is also explained by the United Nations: ―A visitor is atraveller taking a trip to a main destination outside his/her usual environment, for less thana year, for any main purpose (business, leisure or other personal purpose) other than to beemployed by a resident entity in the country or place visited. These trips taken by visitorsqualify as tourism trips. Tourism refers to the activity of visitors. For the purposes of thisproject, we will use the United Nations definitions and the World Tourism Organization(unless previously explained otherwise) which are also widely spread used by differentinstitutions tightly related to the Tourism Industry.

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2.2 Models/concepts/frameworks and theirApplications

PESTEL analysis is used when conducting an environment scan; to reviewcompetitors, markets and the situation in which an organization finds itself. PESTELstands for: Political, Economic, Sociological, Technological, Legal and Environmental.Political: It includes the factors that could affect the organization originated basicallyfrom the government e.g.: tax policies, labour laws, tariffs, trade restrictions, etc.Economic: Factors originated by the economy e.g.: economic growth/slowdown,interest rates, inflation, minimum wage, etc.Sociological: Social and cultural factors that could affect the performance of theorganization e.g.: Population growth rate, age distribution, education, etc.Technological: Factors originated by technology e.g.: New technologies, automation,R&D, etc.Legal: Basically factors originated by laws and regulations e.g.: health and safety law,companies‘regulations, etc.Environmental: Factors originated by ecological and environmental sources e.g.:Weather, climate, etc.By analyzing these variables the company/project will be able to have anunderstanding of the risks associated to market, and by this, generate suitable strategies toface them.

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Chapter 3 The Opportunity......33

3.1 The opportunity........... 33

3.2 Industry analysis ......... 41

3.2.1 SWOT + Current competitive situation + PESTEL+ Model Canvas .......... 41

3.2.2 Projected strategic moves by current players .......... 46

3.3 Contributions to the industry by the new venture.............. 46

3.4 Sources of differentiation and competitive advantage....... 46

3.5 Ethics and sustainability ........ 47

Chapter 4 The company and team......49

4.1 Legal structure and Ownership ......... 49

4.2 The management team ........... 52

Chapter 5 Marketing plan ........58

5.1 Identification of customers .... 58

5.2 Number of potential customers and potential sales revenues ....... 62

5.3 Requirements of various customer segments.......... 65

5.4 7P Analysis ...... 66

 

Chapter 6 Operating and Financial plans

 

6.1. Conversion of inputs into outputs

There will be key operating processes which will convert our inputs into outputs. Themain processes we have identified are the following:Booking Process: For our guests there will be four main channels of booking a room:Website of the Hostel, Booking Websites, Email/Phone and Walk in.Email/Phone and Walk ins have direct contact with reception; therefore, the bookingis immediately registered in our Booking Records (PMS: Property Management System).If the booking is through our website or by booking websites (like booking.com orexpedia.com) this is automatically sent to the channel manager system which one allocatesthe reservation in our Booking records (PMS). The channel manager works the oppositewhen bookings are cancelled on booking websites, it take the reservation out of ourbooking records. The use of the channel manager facilitates being checking differentbooking websites and creating or cancelling reservations.Supplies: The process for acquiring and storing supplies will be based on bar codes.Minimum inventories will be calculated according to the season and updated into the barcodes system. Once the products arrive they will be entered to the system using bar codescanners. Every time the product inventory gets to the minimum, the system will advisebuying a minimum order. Purchases will be made by the managers/supervisors ofdepartments to a list of suppliers.

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Conclusions

 

After analyzing all the information we could collect, it is interesting and educationalto summarize the main points that will lead us to decide whether we keep going with theproject or not.As shown, Chile is a good and safe country for investing; it has been the first SouthAmerican country in becoming a member of the OECD and its political and economicsituation remains stable. Moreover, Chilean entities have realize that tourism has thepotential to become an important and profitable activity for the country, and by this, themain entities related to this sector have created new policies focused on encouraging asustainable and successful management of tourism.Another important factor relays on the expansion of international and domestic flightbusiness in the country. Prices have become more attractive for international tourists andthe country has started to migrate to low cost flights companies. Indeed, in 2015 the firstlow cost airline started operations and according to the experts, this tendency will remain,generating higher competition, thus, better pricing. The city of Puerto Natales itself hasalso extended its airport, allowing now the landing of commercial flights. In fact, the firstcommercial flight, operated by the international company ―Latam Airlines‖ landed with174 passengers on December 11, 2016 (La Prensa Austral, 2016). This, of course, wouldencourage the visit of more tourists, since reaching this destination will be faster andcheaper.It is also important to highlight that the region where the project would be located isincreasing its demand for accommodations and the arrival of tourists as well. Thereputation of the National Park has attracted many tourists and it will keep attracting moreand more travelers.

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References (abbreviated)