Theoretical Basis of Tourism and the Role of Tourism in Economic Development

CHAPTER 1: THEORETICAL BASIS OF TOURISM AND THE ROLE OF TOURISM IN ECONOMIC DEVELOPMENT

1.1. Concepts : tourism, sustainable tourism; tourists; tourism products; tourism industry; types of tourism and the role of tourism in socio-economic development.

1.1.1. Tourism, sustainable tourism

The term “Tourism” is becoming more and more popular among people. Tourism is a word derived from the French word “Tour” which means to go around, to walk; and the word “Tourist” means a person who walks around. Tourism is associated with rest and entertainment to restore and improve people’s health and working ability, but first of all it is closely related to their movement of residence.

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In 1991, the World Tourism Organization (WTO) agreed on the definition of tourism as follows: "Tourism includes the activities of people traveling to and staying in places outside their usual environment for less than one consecutive year for leisure, business and other purposes" (According to Charles R. Goeldner & others, Tourism: Principles, Practices, Philosophies, 8th edition, Johnwiley & Sons Publishing House, New York 2000, Ch.1, p.6).

According to the Vietnam Tourism Ordinance: Tourism is a human activity outside of one's regular residence to satisfy the needs of sightseeing, relaxation, entertainment... for a certain period of time.

Due to negative changes in the environment, in 1999, the World Tourism and Travel Council (WTTC), the Earth Council (CT) and the WTO defined sustainable tourism as follows: “Sustainable tourism is tourism that meets the current needs of tourists and host regions while ensuring and improving resources for the future. Sustainable tourism leads to a way of managing all resources so that economic, social and aesthetic needs are satisfied while preserving the integrity of culture and the living environment”.

1.1.2. Tourists

In September 1968, the WTO Conference held in Rome officially defined the categories of tourists and international tourists as follows:

Tourists are people who stay at least one night in a place other than their home and whose purpose of travel is not to earn money.

International tourists are those who go abroad for the purpose of visiting relatives, resting, receiving medical treatment, participating in international conferences, seminars, diplomacy, sports, performing official duties (signing sales contracts, market research...) and staying overnight there.

1.1.3. Tourism products

Tourism product is a synthesis of different elements to provide tourists with a complete travel experience and satisfaction.

Tourism products are usually made up of the following 7 elements:

- Natural heritage: Hills, mountains, rivers, seas, waterfalls, streams, forests, islands...

- Heritage created by humans: Pagodas, temples, museums, architectural works, monuments, parks...

- Social factors: Attitude of people in the area or country receiving guests, of service staff when interacting with guests...

- Administrative factors: Immigration procedures, export of goods...

- Technical facilities serving the tourism industry: Restaurant systems, hotels, entertainment areas...

- The economic, financial and political situation of the country...

- Public services: Traffic system, means of transport, communications...

Because it is made up of the above elements, tourism products often have the following characteristics:

- Tourism products are sold before customers see or consume them.

- Tourism products are abstract, intangible but easy to imitate.

- Tourism products are a type of composite product that other business sources have to spend time and money before using it.

- Customers buying tourism products must be fully informed about the trip.

- Tourism products are often located far from where customers live. Therefore, it is necessary to have a distribution system through the use of intermediaries such as travel agents, tourism agencies... that is, units that have the ability to influence potential tourists.

- Tourism products have a short life cycle, are easily changed due to fluctuations in currency exchange rates; economic, political, social situations... and they cannot increase quickly according to tourists' wishes.

- Customers who buy tourism products are often less loyal or not loyal to the tourist destination, creating instability in the source of customers.

- Customer demand for tourism products, except for business travel, is largely flexible and highly competitive.

1.1.4. Tourism industry

Tourism is a comprehensive economic sector, involving many different sectors directly or indirectly.

According to Victor TC Middleton in Marketing in Travel and Tourism (second edition, Bulterworth Heinemann Publishing House, Oxford 1994, p.4), the five main areas in the tourism industry include:

- Transportation area: Including airlines, shipping lines, ferries, boats, trains, bus operators, coaches, car rental companies, etc.

- Accommodation area: Including hotels, inns, restaurants, resorts, conference centers, exhibition centers, apartments, villas, farms, etc.

- Travel organization area: Tour operators, wholesalers, travel brokers,

retail travel agents, conference organizers, booking agents…

- Tourist attractions: Including amusement parks, museums and art galleries, national parks, wildlife parks, historical sites and sports and commercial centers...

- Destination organization area: Including national tourism agency (NTO), regional tourism agency, local tourism agency and tourism associations...

1.1.5. Types of tourism

Tourism is becoming more and more diverse, rich and popular. To classify, we often have to base on some criteria such as:

1.1.5.1. Based on customer needs: There can be the following types:

- Resort and medical tourism: Meet the needs of medical treatment and health recovery of customers. Nowadays, some countries with favorable natural conditions have effectively combined the exploitation of mineral water sources, hot springs, medicinal mud, fresh sea air... with business services for tourists.

This type of tourism requires good natural conditions such as beaches, rivers, lakes, plateaus, etc., places with fresh climates.

- Sightseeing tourism: These are trips to many tourist destinations, especially cultural and historical relics, architectural works, etc. It is associated with the need to increase visitors' understanding of the economy, society, and customs of the local people where they visit. Tourists are often very interested in means of transportation and information about attractions.

- Sports tourism: The needs and interests of visitors are related to a certain sport. This type of tourism can be divided into 2 types: Active and Passive.

+ Active: Tourists are athletes who go to areas with potential for sports such as mountain climbing, skiing, hunting, swimming, surfing... or to areas where competitions are held to compete directly or participate in those sports activities as a need for physical training or entertainment.

+ Passive: Tourists go to these places to watch the matches.

- Professional tourism: It is closely related to professional requirements. Tourists go to a certain place with clear purposes and they have prepared for the content that needs to be solved at the destination. Tourists of this type are often scientists, technicians or researchers of history, ethnicity, religion, scientists of nature, environment or culture and art, and also those who attend conferences, scientific seminars, talent shows... Tourists set clear purposes and require to learn about the places they visit are often very high, very specific, at the same time they also have high demands for equipment, facilities and helpers to serve the content related to the field of research.

- Business tourism or tourism combined with work: The main customers are those who attend conferences, fairs, celebrations, discuss and sign cooperation documents, exchange on politics, economics, culture, science and technology... This type of customer has high demand for bedrooms, restaurants, meeting rooms and accompanying service facilities such as translation, movie projectors, telephones... sightseeing programs, entertainment and ancillary services.

- Social tourism: Tourists combine tourism with visiting relatives, hometowns... This type of tourist mainly develops in countries with many foreign residents such as Vietnam, Italy, England, Yugoslavia, Spain; regions with large religions such as India, the Middle East...

- Ecotourism, green tourism...: These are types of tourism that are developing very strongly. We are living in an industrial environment, exposed to machinery, noise, hot and dusty air, urgent working style according to rules and always stressed... Therefore, there is a need to return to nature, to relax in the fresh air of the pristine environment; learn about people, life and the mysteries and wonders of nature, at the same time contribute to preserving and conserving resources and the environment by creating job opportunities and increasing income for local communities, economic benefits for localities, organizations and management entities.

1.1.5.2. Based on the nationality of the guest: can be divided into 2 types

- Domestic Tourism: Is a type of tourism in which citizens of a country

travel in any form within the borders of one's own country.

- International Tourism: Is a type of tourism in which citizens of one country travel to other countries. Economic and cultural relations between countries on the basis of mutual benefit have a positive impact on the development of international tourism.

1.1.5.3. Based on the means of transport that tourists use to travel: There can be types such as traveling by bicycle, motorbike, car, train, boat, plane... Recently, there has been a type of tourism by spaceship to fly into space, although it is still quite new and the cost is quite high, but this type promises strong development in the future.

1.1.5.4. Based on the characteristics of accommodation facilities: Can be divided into types of tourism such as hotel tourism, motel tourism, hostel tourism, or camping tourism...

1.1.5.5. Based on length of stay: There are 2 main types of tourism: short-term tourism (travel time is weekends or lasts no more than 2 weeks) and long-term tourism (travel time lasts more than 2 weeks but no more than 1 year).

1.1.7. The role of tourism in socio-economic development

The relationship between tourism development and socio-economic development is a two-way relationship. As a country’s economy grows, people’s demand for travel increases, thus creating conditions for the tourism industry to develop. The development of the tourism industry will be the driving force for the development of other related industries, creating more jobs for society, improving the living conditions of a segment of the population… and thus, the development of the tourism industry contributes to further economic development.

- Developing international tourism will rapidly increase foreign currency revenue for the locality and the country. Many economists have affirmed: Tourism is an invisible export industry or tourism is an on-site export industry with high economic efficiency. When tourists come to visit and relax, they will consume a large amount of agricultural products and food in the form of dishes, drinks and buy goods and products of light industry, food industry, handicrafts, etc. Thus, the locality will earn a large amount of on-site foreign currency with high efficiency.

- The development of the tourism industry is a driving force for the production and business of other industries in the economy. Especially agriculture, handicrafts and consumer goods. The tourism industry has opened up a consumer market in its own country by providing a large volume of products of these industries to tourists. From there, it promotes industries to improve techniques, production and business processes... to create many new types of products. In addition, it also indirectly leads to the development of a number of related industries such as construction, transportation, banking, post and telecommunications...

- The tourism industry contributes to expanding and strengthening foreign relations and economic exchanges between countries in the world through expanding means of transport for tourists, exchanging goods... and most importantly, increasing mutual understanding between different peoples and countries in the world.

- Tourism development will bring about changes in the character of the region and locality through the construction of infrastructure and technical facilities for tourism, the development of industries to provide tourism products and the exchange between local people and tourists.

- Developing domestic tourism not only contributes to fully utilizing the capacity of technical facilities, ensuring that local people can use the services of tourism businesses, mobilizing idle money from the people... but it is also one of the forms of reproduction of human labor, an important means to help educate political ideology, the tradition of national struggle, patriotism and trust between people.

1.2. Theory of strategy

1.2.1. Concept of strategy

The term strategy comes from the military field with the meaning of indicating large and long-term plans on the basis of certainty of what the opponent can do, what the opponent cannot do. From there the term business strategy was born, according to the traditional view, strategy is the determination of the basic long-term goals of an organization to then develop specific action programs along with the reasonable use of resources to achieve the set goals.

According to Alfred Chandler (1962): "Strategy includes the basic long-term goals of an organization, and at the same time chooses the way or course of action, allocates essential resources to implement those goals". According to William J. Glueck: "Strategy is a unified, comprehensive and coordinated plan, designed to ensure that the basic goals of the organization will be achieved".

The author supports the view of Michael E. Porter (1996) that “Strategy is the art of building solid competitive advantages for defense”. According to this approach, strategy is to create a difference in competition, find and do what has not been done (what not to do), the essence of strategy is to build competitive advantages.

Thus, it can be concluded that strategy is a systematic orientation for the company's steps from the present to the future, where the organization must gain competitive advantage through combining resources in a challenging environment, in order to best satisfy the needs of the market and meet the desires of the agents related to the organization. These orientations help the company shape its path, gradually accumulate resources and use those resources in an optimal way.

1.2.2. Types of strategies

In an organization, strategic management can be carried out at three basic levels: corporate level, business unit level and functional department level. The strategic management process at each level has the same form including the basic stages: environmental analysis, defining tasks and objectives, analyzing and selecting strategies, organizing implementation and checking strategies. These three basic strategic levels are not independent but have a close relationship with each other, the upper level strategy is the premise for the lower level strategy, at the same time the lower level strategy must adapt to the upper level strategy for the strategy implementation process to be successful and effective.

Figure 1.1: Relationship between 3 strategic levels

Corporate Strategy

(Corporate Strategy)

Business strategy

(Business Strategy)

Functional strategy

( strategic function )

1.2.2.1. Corporate level strategy

Corporate level strategy determines the long-term orientation of the organization to complete tasks and achieve growth goals. In business, it often answers the question of which business areas the business operates in? How will the business allocate its resources to those business areas? Accordingly, in the future, the business can develop based on current business activities, or expand new business activities, or may have to narrow down. Therefore, corporate level strategy has the following types:

- Concentrated growth strategy: Is a major strategy that focuses on improving existing products or markets without changing any other factors. When pursuing this strategy, businesses try their best to exploit every opportunity available in the products they are currently producing or the markets they are currently consuming by doing better the work they are doing. Including market penetration strategies, market development, product development.

- Growth strategy through integration: Strategy of seeking growth by taking ownership or increasing control over the supply source

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