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Stakeholders in tourism: Who are they and why do they matter?

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Stakeholders in tourism. This is a phrase often used in both academia and the tourism industry, but what does it actually mean?

The word stakeholder is a term that often throws people. In fact, it is commonly confused with the term shareholder . Whilst the two terms are not entirely dissimilar, the two mean two different things. So, lets clarify this- what exactly do we mean by stakeholders in tourism?

Stakeholders in tourism: What does it mean?

Stakeholder theory in tourism, stakeholder analysis in tourism, tourism organisations and operators, small and medium enterprises, utilities and infrastructure, communities, stakeholders in tourism: conclusion, further reading on stakeholders in tourism.

In this article I am going to explain to you want is meant by the term stakeholder and who the stakeholders in tourism are…. but before you read on, take a look at this short video that I created on the topic (and don’t forget to hit the like button too- thanks a million!)

A stakeholder is quite literally anyone who is involved with a particular project, organisation or industry. To put it simply, they hold a metaphorical ‘stake’.

A stakeholder in tourism can be an individual person, such as a tourist or a taxi driver. They could be a group of people such as a student group or a family. They could be a company or organisation.

A stakeholder is different from a shareholder . A stakeholder is a person, group or organisation who is in some way involved with a project. Whereas a shareholder is a person, group or organisation who owns part of the project (i.e. a share).

Therefore a stakeholder and a shareholder are two different things.

As such, when we refer to a stakeholder in tourism, we are NOT talking about somebody who is necessarily financially involved. Instead they could have a wide range of involvements, that are not necessarily related to ownership or money.

Stakeholder Theory is all about the way in which stakeholders should be taken into account when making business decisions.

Most of the world nowadays is built upon a capitalist society, within which there is a complex web of interconnected stakeholders. From customers through to suppliers, employees, investors and local communities, it is important that their needs and desires are taken into account in order to yield optimal results.

As such, Stakeholder Theory presupposes that an organisation should take into account and create value for all stakeholders when undertaking their planning and operational activities.

Stakeholder Theory was first introduced by R. Edward Freeman in 1984. Since this time businesses and organisations in a range of industries throughout the world have utilised Edward’s theoretical contributions in their operational plans.

Stakeholder Theory has become a key consideration in the research of business ethics and has served as a platform for further research and development in the area.

In order to ensure that a business, whether in tourism or in another industry, is effectively considering stakeholders needs and requirements, the organisation must carry out some form of stakeholder analysis.

Stakeholder analysis is a process whereby key stakeholders are identified and grouped according to levels of participation, interest and influence. The organisation must then determine how best to work with and satisfy said stakeholders.

In the context of tourism this could involve considering how best to work with the host community or working with the Government on tax policies, for example. Or it could involve investigating what products would be most popular with the tourists and what working conditions must be provided to yield the best outcomes from company employees.

To put it simply, stakeholder analysis is a complex task where each person, group or individual must be assessed in terms of their value to the organisation and what their needs and requirements are.

Theoretically then, if the organisation operates with all of its stakeholders’ needs and requirements in mind, they are more likely to satisfy stakeholders and therefore to conduct successful business operations.

Here is a bit more on exactly what stakeholder analysis is-

Who are the stakeholders in tourism?

The tourism industry is one of the biggest industries in the world. This means that there are many individuals, groups and organisations who are involved at some level or another.

As demonstrated in the diagram above, there are a number of key stakeholders who are commonly involved with the tourism industry. Through his work on the stakeholders in tourism, Peter Burns has classified stakeholders according to the type of engagement that they have: External, secondary or primary. This is demonstrated below.

I will provide a brief outline of the typical involvement that the above stakeholders are likely to have.

The Government plays in a key role in the tourism industry. Throughout the different levels of tourism policy and planning , the Government will dictate a variety of rules, requirements and practices.

From visa policies to the maintenance of public infrastructure, most tourism business will operate closely with Government.

There are a wide range of tourism organisations and operators.

From travel agents and airlines through to DMOs (Destination Management Organisations) and travel bloggers , to restaurants, hotels and tourist attractions, all of these organisations are key players in the tourism industry.

There are a wide range of businesses that are seen as stakeholders in tourism.

These may be directly associated with travel and tourism , such as an airline.

They may also be indirectly associated with tourism, such as a waste removal company (who deals with the waste created by tourism).

There are also many NGOs (non-governmental organisations) that are associated with the tourism industry.

These might include charities or non-profit organisations. Examples include the Tourism Society and The Travel Foundation .

Tourists are at the very heart of the tourism industry. Without tourists there would be no tourism!

The tourism industry relies on a wide range of suppliers.

From factories producing bedding used in hotels, to farmers growing the vegetables served in restaurants, there are many suppliers who work either directly or indirectly with the tourism industry.

One of the key stakeholders in tourism is the workforce.

Some have argued that the travel and tourism industry employs more people, directly and indirectly, than any other industry in the world (see my post on the economic impacts of tourism for more details).

Employees in the tourism industry are commonly undertaking low-paid jobs in areas such as hospitality, catering and customer service.

The education sector is also a stakeholder in tourism.

Many educational courses will involve visits to tourism areas to enhance the educational provision offered. For example a school history trip to the D-Day beaches in France .

Education is also offered to many employees who work in the tourism industry in the form of training.

In order for the tourism industry to function, certain utilities and infrastructure is required.

This means that the local power plant is a stakeholder in tourism, because it provides energy.

It also means that the builders, road workers and engineers are stakeholders in tourism, because they provide and maintain the necessary infrastructure.

Read more: You might also be interested in the following posts – What is the sharing economy and how does this influence tourism? – Authenticity in tourism: Explained -What is McDonaldisation and how does it work? – Economic leakage in tourism explained – How to write an awesome literature review

There is a strong relationship between transport and tourism .

In fact, the very definition of tourism , prescribes that a person must travel away from the place that they live in order to be a tourist (although with the growth of virtual tourism I would argue that there is a need to revise this widely used definition).

As such, the method of transport between point A and point B is an integral part of the tourism system, thus making the transport providers (airlines, trains, taxi etc) important stakeholders in tourism.

The final stakeholder in tourism that is worth mentioning is the community. In fact, many would argue that this is one of the most important stakeholders in tourism.

In my post on the social impacts of tourism , I outline how important it is for tourism organisations to work with the local community and what the consequences can be if tourism operators do not listen to the needs and requirements of the host community.

Good tourism management often involves community-level briefings, consultations and ongoing communication in order to ensure that this important stakeholder is empowered throughout the process of tourism development planning and operation.

Hopefully this post has helped you to understand what is meant by the term stakeholders in tourism. You should also now be familiar with the concepts of stakeholder theory and stakeholder analysis. There are many, many stakeholders in tourism and in this post I have provided you with lots of examples. Want to learn more? I have suggested some key texts for additional reading below.

• The 10 Major Types of Events
• The 8 Major Types of Cruise
• 150 types of tourism! The ultimate tourism glossary
• 20 Popular Types of Hotels Around The World
• 21 Types of Tourists Around The World

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The future of tourism: Bridging the labor gap, enhancing customer experience

As travel resumes and builds momentum, it’s becoming clear that tourism is resilient—there is an enduring desire to travel. Against all odds, international tourism rebounded in 2022: visitor numbers to Europe and the Middle East climbed to around 80 percent of 2019 levels, and the Americas recovered about 65 percent of prepandemic visitors 1 “Tourism set to return to pre-pandemic levels in some regions in 2023,” United Nations World Tourism Organization (UNWTO), January 17, 2023. —a number made more significant because it was reached without travelers from China, which had the world’s largest outbound travel market before the pandemic. 2 “ Outlook for China tourism 2023: Light at the end of the tunnel ,” McKinsey, May 9, 2023.

Recovery and growth are likely to continue. According to estimates from the World Tourism Organization (UNWTO) for 2023, international tourist arrivals could reach 80 to 95 percent of prepandemic levels depending on the extent of the economic slowdown, travel recovery in Asia–Pacific, and geopolitical tensions, among other factors. 3 “Tourism set to return to pre-pandemic levels in some regions in 2023,” United Nations World Tourism Organization (UNWTO), January 17, 2023. Similarly, the World Travel & Tourism Council (WTTC) forecasts that by the end of 2023, nearly half of the 185 countries in which the organization conducts research will have either recovered to prepandemic levels or be within 95 percent of full recovery. 4 “Global travel and tourism catapults into 2023 says WTTC,” World Travel & Tourism Council (WTTC), April 26, 2023.

Longer-term forecasts also point to optimism for the decade ahead. Travel and tourism GDP is predicted to grow, on average, at 5.8 percent a year between 2022 and 2032, outpacing the growth of the overall economy at an expected 2.7 percent a year. 5 Travel & Tourism economic impact 2022 , WTTC, August 2022.

So, is it all systems go for travel and tourism? Not really. The industry continues to face a prolonged and widespread labor shortage. After losing 62 million travel and tourism jobs in 2020, labor supply and demand remain out of balance. 6 “WTTC research reveals Travel & Tourism’s slow recovery is hitting jobs and growth worldwide,” World Travel & Tourism Council, October 6, 2021. Today, in the European Union, 11 percent of tourism jobs are likely to go unfilled; in the United States, that figure is 7 percent. 7 Travel & Tourism economic impact 2022 : Staff shortages, WTTC, August 2022.

There has been an exodus of tourism staff, particularly from customer-facing roles, to other sectors, and there is no sign that the industry will be able to bring all these people back. 8 Travel & Tourism economic impact 2022 : Staff shortages, WTTC, August 2022. Hotels, restaurants, cruises, airports, and airlines face staff shortages that can translate into operational, reputational, and financial difficulties. If unaddressed, these shortages may constrain the industry’s growth trajectory.

The current labor shortage may have its roots in factors related to the nature of work in the industry. Chronic workplace challenges, coupled with the effects of COVID-19, have culminated in an industry struggling to rebuild its workforce. Generally, tourism-related jobs are largely informal, partly due to high seasonality and weak regulation. And conditions such as excessively long working hours, low wages, a high turnover rate, and a lack of social protection tend to be most pronounced in an informal economy. Additionally, shift work, night work, and temporary or part-time employment are common in tourism.

The industry may need to revisit some fundamentals to build a far more sustainable future: either make the industry more attractive to talent (and put conditions in place to retain staff for longer periods) or improve products, services, and processes so that they complement existing staffing needs or solve existing pain points.

One solution could be to build a workforce with the mix of digital and interpersonal skills needed to keep up with travelers’ fast-changing requirements. The industry could make the most of available technology to provide customers with a digitally enhanced experience, resolve staff shortages, and improve working conditions.

Would you like to learn more about our Travel, Logistics & Infrastructure Practice ?

Complementing concierges with chatbots.

The pace of technological change has redefined customer expectations. Technology-driven services are often at customers’ fingertips, with no queues or waiting times. By contrast, the airport and airline disruption widely reported in the press over the summer of 2022 points to customers not receiving this same level of digital innovation when traveling.

Imagine the following travel experience: it’s 2035 and you start your long-awaited honeymoon to a tropical island. A virtual tour operator and a destination travel specialist booked your trip for you; you connected via videoconference to make your plans. Your itinerary was chosen with the support of generative AI , which analyzed your preferences, recommended personalized travel packages, and made real-time adjustments based on your feedback.

Before leaving home, you check in online and QR code your luggage. You travel to the airport by self-driving cab. After dropping off your luggage at the self-service counter, you pass through security and the biometric check. You access the premier lounge with the QR code on the airline’s loyalty card and help yourself to a glass of wine and a sandwich. After your flight, a prebooked, self-driving cab takes you to the resort. No need to check in—that was completed online ahead of time (including picking your room and making sure that the hotel’s virtual concierge arranged for red roses and a bottle of champagne to be delivered).

While your luggage is brought to the room by a baggage robot, your personal digital concierge presents the honeymoon itinerary with all the requested bookings. For the romantic dinner on the first night, you order your food via the restaurant app on the table and settle the bill likewise. So far, you’ve had very little human interaction. But at dinner, the sommelier chats with you in person about the wine. The next day, your sightseeing is made easier by the hotel app and digital guide—and you don’t get lost! With the aid of holographic technology, the virtual tour guide brings historical figures to life and takes your sightseeing experience to a whole new level. Then, as arranged, a local citizen meets you and takes you to their home to enjoy a local family dinner. The trip is seamless, there are no holdups or snags.

This scenario features less human interaction than a traditional trip—but it flows smoothly due to the underlying technology. The human interactions that do take place are authentic, meaningful, and add a special touch to the experience. This may be a far-fetched example, but the essence of the scenario is clear: use technology to ease typical travel pain points such as queues, misunderstandings, or misinformation, and elevate the quality of human interaction.

Travel with less human interaction may be considered a disruptive idea, as many travelers rely on and enjoy the human connection, the “service with a smile.” This will always be the case, but perhaps the time is right to think about bringing a digital experience into the mix. The industry may not need to depend exclusively on human beings to serve its customers. Perhaps the future of travel is physical, but digitally enhanced (and with a smile!).

Digital solutions are on the rise and can help bridge the labor gap

Digital innovation is improving customer experience across multiple industries. Car-sharing apps have overcome service-counter waiting times and endless paperwork that travelers traditionally had to cope with when renting a car. The same applies to time-consuming hotel check-in, check-out, and payment processes that can annoy weary customers. These pain points can be removed. For instance, in China, the Huazhu Hotels Group installed self-check-in kiosks that enable guests to check in or out in under 30 seconds. 9 “Huazhu Group targets lifestyle market opportunities,” ChinaTravelNews, May 27, 2021.

Technology meets hospitality

In 2019, Alibaba opened its FlyZoo Hotel in Huangzhou, described as a “290-room ultra-modern boutique, where technology meets hospitality.” 1 “Chinese e-commerce giant Alibaba has a hotel run almost entirely by robots that can serve food and fetch toiletries—take a look inside,” Business Insider, October 21, 2019; “FlyZoo Hotel: The hotel of the future or just more technology hype?,” Hotel Technology News, March 2019. The hotel was the first of its kind that instead of relying on traditional check-in and key card processes, allowed guests to manage reservations and make payments entirely from a mobile app, to check-in using self-service kiosks, and enter their rooms using facial-recognition technology.

The hotel is run almost entirely by robots that serve food and fetch toiletries and other sundries as needed. Each guest room has a voice-activated smart assistant to help guests with a variety of tasks, from adjusting the temperature, lights, curtains, and the TV to playing music and answering simple questions about the hotel and surroundings.

The hotel was developed by the company’s online travel platform, Fliggy, in tandem with Alibaba’s AI Labs and Alibaba Cloud technology with the goal of “leveraging cutting-edge tech to help transform the hospitality industry, one that keeps the sector current with the digital era we’re living in,” according to the company.

Adoption of some digitally enhanced services was accelerated during the pandemic in the quest for safer, contactless solutions. During the Winter Olympics in Beijing, a restaurant designed to keep physical contact to a minimum used a track system on the ceiling to deliver meals directly from the kitchen to the table. 10 “This Beijing Winter Games restaurant uses ceiling-based tracks,” Trendhunter, January 26, 2022. Customers around the world have become familiar with restaurants using apps to display menus, take orders, and accept payment, as well as hotels using robots to deliver luggage and room service (see sidebar “Technology meets hospitality”). Similarly, theme parks, cinemas, stadiums, and concert halls are deploying digital solutions such as facial recognition to optimize entrance control. Shanghai Disneyland, for example, offers annual pass holders the option to choose facial recognition to facilitate park entry. 11 “Facial recognition park entry,” Shanghai Disney Resort website.

Automation and digitization can also free up staff from attending to repetitive functions that could be handled more efficiently via an app and instead reserve the human touch for roles where staff can add the most value. For instance, technology can help customer-facing staff to provide a more personalized service. By accessing data analytics, frontline staff can have guests’ details and preferences at their fingertips. A trainee can become an experienced concierge in a short time, with the help of technology.

Apps and in-room tech: Unused market potential

According to Skift Research calculations, total revenue generated by guest apps and in-room technology in 2019 was approximately $293 million, including proprietary apps by hotel brands as well as third-party vendors. 1 “Hotel tech benchmark: Guest-facing technology 2022,” Skift Research, November 2022. The relatively low market penetration rate of this kind of tech points to around $2.4 billion in untapped revenue potential (exhibit).

Even though guest-facing technology is available—the kind that can facilitate contactless interactions and offer travelers convenience and personalized service—the industry is only beginning to explore its potential. A report by Skift Research shows that the hotel industry, in particular, has not tapped into tech’s potential. Only 11 percent of hotels and 25 percent of hotel rooms worldwide are supported by a hotel app or use in-room technology, and only 3 percent of hotels offer keyless entry. 12 “Hotel tech benchmark: Guest-facing technology 2022,” Skift Research, November 2022. Of the five types of technology examined (guest apps and in-room tech; virtual concierge; guest messaging and chatbots; digital check-in and kiosks; and keyless entry), all have relatively low market-penetration rates (see sidebar “Apps and in-room tech: Unused market potential”).

While apps, digitization, and new technology may be the answer to offering better customer experience, there is also the possibility that tourism may face competition from technological advances, particularly virtual experiences. Museums, attractions, and historical sites can be made interactive and, in some cases, more lifelike, through AR/VR technology that can enhance the physical travel experience by reconstructing historical places or events.

Up until now, tourism, arguably, was one of a few sectors that could not easily be replaced by tech. It was not possible to replicate the physical experience of traveling to another place. With the emerging metaverse , this might change. Travelers could potentially enjoy an event or experience from their sofa without any logistical snags, and without the commitment to traveling to another country for any length of time. For example, Google offers virtual tours of the Pyramids of Meroë in Sudan via an immersive online experience available in a range of languages. 13 Mariam Khaled Dabboussi, “Step into the Meroë pyramids with Google,” Google, May 17, 2022. And a crypto banking group, The BCB Group, has created a metaverse city that includes representations of some of the most visited destinations in the world, such as the Great Wall of China and the Statue of Liberty. According to BCB, the total cost of flights, transfers, and entry for all these landmarks would come to $7,600—while a virtual trip would cost just over $2. 14 “What impact can the Metaverse have on the travel industry?,” Middle East Economy, July 29, 2022.

The metaverse holds potential for business travel, too—the meeting, incentives, conferences, and exhibitions (MICE) sector in particular. Participants could take part in activities in the same immersive space while connecting from anywhere, dramatically reducing travel, venue, catering, and other costs. 15 “ Tourism in the metaverse: Can travel go virtual? ,” McKinsey, May 4, 2023.

The allure and convenience of such digital experiences make offering seamless, customer-centric travel and tourism in the real world all the more pressing.

Three innovations to solve hotel staffing shortages

Is the future contactless.

Given the advances in technology, and the many digital innovations and applications that already exist, there is potential for businesses across the travel and tourism spectrum to cope with labor shortages while improving customer experience. Process automation and digitization can also add to process efficiency. Taken together, a combination of outsourcing, remote work, and digital solutions can help to retain existing staff and reduce dependency on roles that employers are struggling to fill (exhibit).

Depending on the customer service approach and direct contact need, we estimate that the travel and tourism industry would be able to cope with a structural labor shortage of around 10 to 15 percent in the long run by operating more flexibly and increasing digital and automated efficiency—while offering the remaining staff an improved total work package.

Outsourcing and remote work could also help resolve the labor shortage

While COVID-19 pushed organizations in a wide variety of sectors to embrace remote work, there are many hospitality roles that rely on direct physical services that cannot be performed remotely, such as laundry, cleaning, maintenance, and facility management. If faced with staff shortages, these roles could be outsourced to third-party professional service providers, and existing staff could be reskilled to take up new positions.

In McKinsey’s experience, the total service cost of this type of work in a typical hotel can make up 10 percent of total operating costs. Most often, these roles are not guest facing. A professional and digital-based solution might become an integrated part of a third-party service for hotels looking to outsource this type of work.

One of the lessons learned in the aftermath of COVID-19 is that many tourism employees moved to similar positions in other sectors because they were disillusioned by working conditions in the industry . Specialist multisector companies have been able to shuffle their staff away from tourism to other sectors that offer steady employment or more regular working hours compared with the long hours and seasonal nature of work in tourism.

The remaining travel and tourism staff may be looking for more flexibility or the option to work from home. This can be an effective solution for retaining employees. For example, a travel agent with specific destination expertise could work from home or be consulted on an needs basis.

In instances where remote work or outsourcing is not viable, there are other solutions that the hospitality industry can explore to improve operational effectiveness as well as employee satisfaction. A more agile staffing model  can better match available labor with peaks and troughs in daily, or even hourly, demand. This could involve combining similar roles or cross-training staff so that they can switch roles. Redesigned roles could potentially improve employee satisfaction by empowering staff to explore new career paths within the hotel’s operations. Combined roles build skills across disciplines—for example, supporting a housekeeper to train and become proficient in other maintenance areas, or a front-desk associate to build managerial skills.

Where management or ownership is shared across properties, roles could be staffed to cover a network of sites, rather than individual hotels. By applying a combination of these approaches, hotels could reduce the number of staff hours needed to keep operations running at the same standard. 16 “ Three innovations to solve hotel staffing shortages ,” McKinsey, April 3, 2023.

Taken together, operational adjustments combined with greater use of technology could provide the tourism industry with a way of overcoming staffing challenges and giving customers the seamless digitally enhanced experiences they expect in other aspects of daily life.

In an industry facing a labor shortage, there are opportunities for tech innovations that can help travel and tourism businesses do more with less, while ensuring that remaining staff are engaged and motivated to stay in the industry. For travelers, this could mean fewer friendly faces, but more meaningful experiences and interactions.

Urs Binggeli is a senior expert in McKinsey’s Zurich office, Zi Chen is a capabilities and insights specialist in the Shanghai office, Steffen Köpke is a capabilities and insights expert in the Düsseldorf office, and Jackey Yu is a partner in the Hong Kong office.

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Perspectives: How public, private sectors can partner to address tourism’s challenges

29th November 2023 By Contributor

There is a tension in tourism between its economic benefits and its impacts but there are ways the public and private sectors can work together to create positive change, according to Visa’s global head of merchant sales and acquiring , Jennifer Munday.

Despite travel and tourism supporting an estimated  10% of global gross domestic product  and roughly one in 10 jobs worldwide, consumers are increasingly aware of the environmental impacts of their wanderlust. 

While many tourists are aware of sustainable travel and tourism,  research conducted by Visa and Oxford Economics  found that 41% feel they lack information about sustainable travel options, and 36% feel that available information is not credible.

As a global network facilitating payments across these journeys, Visa has a unique view of travellers’ consumption choices and patterns – and an incredibly powerful data set that can help transform the future of travel. But it will take more than the private sector alone to successfully implement change. 

As the world’s leaders gather in Dubai this week at the United Nations Climate Change Conference, also known as  COP28 , here are four ways that the private and public sectors can think about teaming up in their effort to slow the impact of travel and tourism and protect local communities and ecosystems:

1. Speak the same language

I’m not suggesting that the Tower of Babel could solve the issue of sustainable travel, but the public and private sectors need to come together to agree on a framework for measuring trends in sustainability. Having access to and agreed parameters about how to collect and use high-quality data is a vital resource, allowing policy-makers and businesses to set targets and gauge progress.

Frameworks such as the World Economic Forum’s  Travel and Tourism Development Index  and the European Commission’s  European Tourism Indicators System  have proliferated, yet there remains a lack of clarity regarding what constitutes a sustainable travel choice. The private sector can help the public sector close that gap by leveraging the power of alternative sources such as payment transaction data, AI and more.

2. Help close the ‘say-do’ gap

There has long been a notable  “say-do” gap  in travellers’ stated preferences versus their actual consumption patterns. Visa’s research finds that this gap is largely driven by information barriers: both informational gaps like a lack of accessible information and credibility gaps where information is available but not trusted. 

In the payments industry, offering  sustainability-focused benefits to cardholder products  can enable cardholders to understand the environmental impact of their spending, potentially helping to narrow the say-do gap by encouraging sustainable consumption. How much change we can drive depends on how successful the public and private sectors are at coming together to ensure that consumers have easy access to credible information about sustainable choices.

3. Make local transit truly accessible

Whenever someone visits me in London for the first time, their knee-jerk (and jet-lagged) response to landing at Heathrow is to hop in a taxi. Not only is that a carbon-intensive means of getting around – it’s just not that efficient given traffic and other delays. Tap your phone to ride on the Heathrow Express and you’ll get into the city much quicker, or those on a budget can take the London Underground.

The public and private sectors need to continue to come together to make public transit a simpler way to get around as a tourist. Removing entry barriers with contactless payments is one important way – but there’s even more innovation to be done as new hyper-customised trip-planning apps and technology become available that can tell tourists the fastest or most sustainable way to get around town.

4. Realize that sometimes it  is  about the destination

When too many people visit an attraction at one time, it may have negative repercussions for local communities and ecosystems. The public and private sectors must come together to encourage attractions and destination management in order to prevent overtourism.

Beaches are a prime example of destinations that are often overcrowded, to the detriment of the local ecosystem. Some national parks in the US, on the other hand, are good examples of places that have successfully implemented reasonable limits on visitors. For example, Muir Woods National Monument in Marin County, California  requires visitors to book a reservation in advance .

By taking steps such as imposing reasonable limits on the number of visitors, promoting off-season travel, and introducing dynamic pricing, attractions can limit the likelihood and  negative impacts of overtourism . 

For example, Visa Destination Insights helped the Lake Tahoe Visitors Authority manage both overcrowding and seasonal lulls at the ski and holiday hotspot on the California/Nevada border. Ultimately, sustainable management of attractions will require careful stewardship and close collaboration between the public and private sectors.

There’s a lot of work ahead – but by bringing together the strength of the public and private sectors, we can strive towards meaningful change.

This article is republished from the World Economic Forum under a Creative Commons licence. Read the  original article here .

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Public and Private Sector in Tourism and Hospitality Management

Table of Content

The Public Sector

• Main Characteristics of the Public Sector in the Tourism and Hospitality Industry

The Private Sector

• Main Characteristics of the Private Sector in the Tourism and Hospitality Industry
• The Role of Entrepreneurship

Challenges Faced by the Public Sector

Bibliography

Selling products or providing service to consumers is the primary job of business, and the company earns profits and benefit from trades. There are different types of activities, and there are also different types of organizations: the public sector and the private sector. These two organizations are distinguished by its operator, whether an individual configuration of business organizations with various features. The two types of organizations in tourism and hospitality management are either private-run or government-run. Even if they are separately defined, they both have an enormous impact on tourism and hospitality management.  

The public sector is made of organizations run by the government. Organizations in this sector usually deal with the production, ownership, sale, provision, delivery, and apportion goods and services. The public sector plays a vital role in encouraging tourism development by providing a range of services.  Air India is an example of the public sector. Air India is the oldest, largest airline in India and a Public Limited Company incorporated under the Companies Act of 1956. As they stated, they are one of the largest Airlines in Asia and partly owned by India`s government. The management and the Board of Directors implement and framed its policies. The advantage of public listing on the stock exchange is that many shareholders can provide a large financial base for the company. For security issues, they keep most of their money in a bank account in India’s state bank (SBI). As a public limited company, they raise funds and capital by selling its shares to the public and could have five or more owners in a company. Shareholders are the owners of the company, and they elect a board of directors. These elected directors manage the system and the company.

Main Characteristics of the Public Sector in Tourism and Hospitality Industry

• Public accountability
• Multiple objectives
• Rights, powers and responsibilities (Constitutional or devolved)
• Lack of equity ownership
• Operating and financial frameworks set by legislation
• The importance of the budget
• Governance structures
• Nature of resources
• Non-exchange transactions

The private sector produces goods and provides service to consumers and earn profits. Most organizations in the area of tourism are owned and operated in the private sector. The private sector is defined as sole traders, limited companies, or partnerships. Christine King described this classification in 2005. These organizations’ primary purpose is to profit and pay the owners or shareholders who invested their money. Most of the organizations in the travel and tourism industry are owned and operated in the private sector. One prominent example is Marriott International, Inc .   which was formed in 1927 as an international hospitality company. They manage, franchise, own, and develop Marriott-brand hotels and resorts worldwide. As a private limited company, they are in the private sector and set up as its name. In this type of company, the shares are not traded on a stock market unless other shareholders agree with trading. The owners only contribute shares for the capital, which cannot be issued to the general public. Therefore, more money can be raised, but growth would be limited since the maximum shareholders are 50. 

 Main Characteristics of Private Sector in Tourism and Hospitality Industry

• Profit motive
• Private ownership and control
• No state participation
• Independent management
• Private finance
• Work culture of employees

The Role of the Entrepreneurship

In the contemporary era, the primary concerns in industrialized countries and emerging countries are individual rational and creativeness of entrepreneurial business. The philosophy of entrepreneurship ultimately lessens the employment rate and incredibly educated young generation. Investigating the tourism industry and tourism industry processes are the principal phase to empowering the educated youth to undertake the tourism entrepreneurship business. The tourism industry is considered as the agent of change in economic and social changes. The rise of the country’s GDP resulting from tourism entrepreneurship boosts the country`s fiscal growth and development but removes societal problems. Employment has continually been a central subject of evolution. Engagement is significant to successful and feasible growth. The tourism business is one of the largest, fastest-growing sectors and is considered to possess an indispensable role in job creation. Overall, this paper reviews the impact of the tourism and hospitality business in reducing unemployment and clarifies the tourism and hospitality industry`s vitality nowadays.

Our life changes technology develops, and our surroundings change too. Tourism is not an exception. Tourism, traveling, and hospitality management, such entertainment-related businesses will be most affected by these challenges. There are a few challenges toward which tourism and hospitality management must look.  

The first challenge is globalization. Nowadays, most significant companies interact with each other and create an ideal profit. In today’s aspirations, novelty is a much-needed element. Therefore, offering products and services that tourists and travelers have no experience with is significant. The  Unique Selling Point (USP) suggest that travel companies and Destination Marketing Organizations (DMOs) provide a rare and unique experience. However, localization is also essential. The company must know how to communicate with foreign travelers, and they must create translation services and multilingual websites. The tourist must feel welcome when they are away from home.

Secondly, taxation is one of the factors that significantly affect tourism and hospitality management. A simple glance at the taxes paid for airline tickets and hotel rooms will show how taxation takes up tourism. Accordingly, to balance the equation, the travel and hospitality industry must provide competitive prices to customers and guests.

Last, it is vital to update tourism and hospitality infrastructure. These days, the tourism infrastructure in many locations is outdated and undeveloped. The public sector in this area must look towards improving the recent infrastructure with provisions.

1.  Team, E., 2020. Top 5 Challenges Confronting Tourism Travel Industry . [online] Elite Asia ResourceCentre.Available at: < link > [Accessed 8 September 2020].

2. Rikachs. 2020. Public And Private Sector Of Travel And Tourism . [online] Available at: < link > [Accessed 8 September 2020].t infrastructure with provision.

3. Management Funda. 2020.  Characteristics Of Tourism Industry . [online] Available at: < link > [Accessed 10 September 2020].

4. Indeed.com. 2020. [online] Available at: < link > [Accessed 10 September 2020].

5. The institute of accounting, control and analysis in the globalization circumstances, 2017. The Characteristics of Public Secto[r in PUBLIC SECTOR ENTITIES. (3-4).

By Junseok Kim

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Travel, Tourism & Hospitality

Global tourism industry - statistics & facts

What are the leading global tourism destinations, digitalization of the global tourism industry, how important is sustainable tourism, key insights.

Detailed statistics

Total contribution of travel and tourism to GDP worldwide 2019-2033

Number of international tourist arrivals worldwide 1950-2023

Global leisure travel spend 2019-2022

Editor’s Picks Current statistics on this topic

Current statistics on this topic.

Leading global travel markets by travel and tourism contribution to GDP 2019-2022

Travel and tourism employment worldwide 2019-2033

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