Seasonality.

Team Members

Jean-Pierre NordmannAndrew CroasdellMark BriggsKirk GrangerAndy WilsonDaniel MahonKeir Birch

Background.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.

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Global tourism demand

Skiiing

Sea/Sun

Global

Causes of seasonality.LocationWeather (Sun & Snow)Holidays school / worksAttractions Festive holidaysBehaviouralFinancialEconomic climateSocial / fashionableMedia influence

Consequences of seasonality.Seasonal employmentBoom bust economic cycleOver/under utilisation of resourcesDependence 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 operatorTourist attractionHotel

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%

22%

18%

14%

24%

Thomsons

Airtours

Thomas Cook

First Choice

Others

Seasonality.SOURCE: Keynote Market Report, Travel Agents and Overseas Tour Operators, 2002

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15

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Jan/Feb May August Nov/DecMonth

Percentage of Holiday Makers Per Month in 2001

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 backgroundAttractions 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.

DestinationAccommodation

TransportAttractions

CateringOrganisers

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.

ProblemsSeasonality 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 holidaysAt 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 - £5.00 for children- £6.50 for adults

Peak season - £6.00 for children- £8.00 for 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.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.

Type of accomodation. % Peak season % Off peak season

Hotel 10.2 15.4Guest house / B&B. 16.3 5.1Self catering flat / cottage 26.5 18.8Caravan / tent 15.3 40.2Home of friend / family 18.4 13.7Second Home 3.1 6.8Other 10.2 N/A

Source: Dorset tourist board figures.

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 SuiteFeb. Midweeek 109 134 144 154Feb. Weekend 70 95 105 115Mar. Midweek 109 134 144 154Mar. Weekend 75 100 110 120Jul. Midweek 109 134 144 154Jul. Weekend 75 104 124 134Aug. Midweek 109 134 144 154Aug. Weekend 75 104 124 134Nov. Midweek 109 134 144 154Nov. Weekend 70 95 105 115

Source: Marriott hotels price list. Hollins Hall.

Location.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.

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Visitor numbers.

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Seasonality of Tourism in Dorset.

Source: Dorset tourist board figures.

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.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.

‘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.’ Source: www.Marriott.com

Demand management.

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.

Golf course.Gymnasium.Conferences.Weddings.Parties.Champagne Sunday brunch.

Core business. Subsidiary activities.

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 forecastsFurther 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?