chapter
9
Commercial
Recreation
and Tourism
Welcome to the World
of Commercialism in Recreation
• Consists of 90% of the leisure industry.
• Is the overarching umbrella to the leisure
service industries aimed at profit or
financial self-sustainability.
• Is a gigantic industry where businesses
compete for a customer’s discretionary
dollars.
• Tourism organizations may also run as
nonprofit or public operations.
Leisure Industry Model
• Local commercial recreation includes the following:
– Entertainment
– Activities and programs
– Retail products
• Travel and transportation includes the following:
– Ability to move people
– Services
• Hospitality includes the following:
– Accommodations
– Food and beverage
– Amenities
• Facilitators in each area are from a variety of
employment sources: travel agents, wholesalers,
and visitor and convention bureaus, to name a few.
Defining Types
of Commercial Recreation
• Commercial recreation: The provision of recreationrelated products or services by private enterprise for a
fee, with the long-term intent of being profitable.
• Commercialized public recreation: The provision of
selected recreation-related products or services by a
governmental or nonprofit organization in a commercial
manner, with much or all of the costs covered by fees,
charges, or other nontax revenues.
(continued)
Defining Types
of Commercial Recreation
(continued)
• Entrepreneurial recreation: The actions of a
recreation-related organization that searches for trends
and changes in its environment, then brings together
and manages resources to exploit those changes as an
opportunity.
• Intrapreneurial recreation: Creating and providing
innovation of any kind within an organization; working
in a bureaucracy, such as a governmental agency, to
capitalize on opportunities.
Tourism Defined
• Tourism: Activities of people traveling to and staying in
places outside their usual environment for leisure,
business, or other purposes.
• Tourist:
– One who travels at least overnight for business,
pleasure, visiting relatives and friends, or other
purposes outside of the traveler’s residential area.
– May travel for extended amount of time, up to a
year.
– After a year, may be considered residents of the
place traveled to.
Challenges of the Tourism Industry
• One tourist’s expectations may be so
different from another’s that it is difficult to
satisfy all of the needs and expectations of
the travel experience.
• Because of the cost of travel, a visitor may
be very disappointed if the experience is
less than perfect.
• There is constant pressure to organize
services so that the traveler experiences
maximum enjoyment.
Types of Travel
• Pleasure:
– Accommodations and food are essential.
– Locations of experiences must be convenient.
– Tourists engaging in “new” recreational experiences may put
their health and well-being at risk.
• Business:
– Supports business needs.
– Visits to sites must conveniently fit into the business day or
period.
• Travel for other purposes:
Educating residents about attractions is an important way to attract
this group of travelers who may be visiting with family.
Characteristics of a Tourist
• Mass tourists prefer to be with large
groups:
– Will follow the crowds to events, attractions, and
other mass approaches.
– Happy being bussed, carted, fed, and thrilled with
millions of others.
• Individual tourists enjoy individualized
pursuits away from the crowd, e.g., a skilled
canoeist wants to be alone or nearly alone
on a river.
Characteristics
of the Tourism Industry
1. Accommodations include myriad lodging
opportunities.
2. Food service provides for one’s need for food.
3. Transportation moves people from place to place.
4. Recreation and amenities are the variety of leisure
activities that attract travelers.
5. Managing the tourist experience includes two major
systems for coordinating travel for tourists:
– Destination management organizations (DMOs)
– Meeting management organizations (MMOs)
Types of Tourism
• Ecotourism: Responsible travel to natural
areas that conserves the environment and
improves the well-being of local people.
• Agrotourism: Diversification of the agriculture
industry to incorporate a tourism focus, e.g.
wineries.
• Sport tourism: Travel to participate in sport or
to observe sport.
• Cultural tourism: Being involved in the cultural
heritage of a locale.
Commercial Recreation
and Tourism Segments
• Singles (individuals and groups for social
bonding)
• Families (with or without children)
• Students (affluent teens)
• Elderly (55+)
• Diverse segments (multicultural)
• Lifestyle segments (hobbies and clubs)
• Ability (Americans with Disabilities Act)
Running a Commercial Recreation
or Tourism Enterprise
The differences between a leisure enterprise and a
typical manufacturing enterprise include the
following:
• A service is less tangible than a product.
• Chief value of leisure experience is in doing and reliving.
• Has a 3- to 5-year profit window compared with a manufacturing
business profit window of 1 to 2 years.
• Presents the challenge of constantly responding to change and
being proactive with services as customers move from activity to
activity and fail to stay loyal to a standard set of experiences.
Leisure Services As a Product
1. Leisure experience can be produced and
consumed simultaneously.
2. Product itself is intangible and therefore
hard to measure.
3. It is difficult to measure one’s satisfaction.
4. Leisure consumer is hard to figure out.
5. Factors of leisure experience are often not
figured into a marketing plan.
Elements of Success
• Business data. Use it to make organizational
decisions.
• Product. Market a sound idea or concept to a definitive
population.
• Demographics. Identify the right combination of
characteristics to market.
• Management. Develop a business concept that can be
effectively and efficiently run.
• Finance. Determine and secure sources, projections,
and ways to organize.
• Location. Find an accessible site that attracts people.
Organizational Aspects
of Commercial Recreation
and Tourism Enterprise
The business plan is important for the
following reasons:
• Is the heart of a business enterprise.
• Determines how a business will receive and use
fiscal resources to gain a profit over a projected
period.
• Includes marketing and financing projections that
turn into a work plan for the business start-up and
continuance.
Feasibility of a
Commercial Recreation Business
Conduct an analysis of whether the
proposed business will work according to
several levels of analysis: administrative,
legal, market, service, and site.
•
•
•
•
•
Is it administratively sound?
Will the legal form of organization work?
Is the site appropriate?
Will the financial plan work?
Is the market appropriate?
Legal Formation of Business
• Sole proprietorship. Owners take financial
and legal responsibility for the business. One’s
personal finances are at risk.
• Full and limited partnership. Two or more
people either fully share the financial burden or
assign the financial responsibilities to limit
liability. Risk is either fully shared by the
partners or divided by agreement.
(continued)
Legal Formation of Business
(continued)
• Corporation. A corporation lowers tax liability
and personal legal responsibility and assigns it
to the corporate entity. It is usually selected
once profits are being earned.
• Franchise. A franchise consists of a chain of
existing businesses that allows owners to buy
into the business. The franchiser makes
available many resources for start-up.
(McDonald’s is a form of franchise.)
Elements of Marketing
1. Substitution. Plan for changes in consumer interests.
Prepare business for new activities that may be
substituted for those that are no longer popular.
2. Niche. Identify unique feature of your business and
promote it.
3. Guerrilla marketing. Aggressively market to uncover
new markets and other ways to get to the customer.
4. Value. Consider value system of each niche group and
play to those values in promoting services.
5. Campaigns. Plan long-range and short-range
campaigns that increase volume and customers.
Funding Sources
• Venture capital. Provided by companies and
investors willing to take a risk on a new
enterprise that may not necessarily have a
strong track record.
• Personal. Comes from personal sources such
as friends, relatives, and personal savings.
Money is put up as a part of the total
investment against loans applied for through
small-business investors or banks.
(continued)
Funding Sources (continued)
• Bank loans and other sources. Start-up
finance, cash-flow funding, and inventory
funding are available through conventional
financing or Small Business Administration
(SBA) funding.
• Going public. A business that is successful
eventually may go public by selling stock to
investors. This source of income results in a
sharing of corporate wealth with
“shareholders,” who buy stock and receive a
return on investment.
Alternatives to Traditional Financing
• Franchises:
– Have already provided a proven product and make low-cost
financing and resources available to the franchisee.
– Low-cost loans, marketing assistance, and operational
consulting during start-up may save the business owner money
before realizing a profit.
• Buying an existing business:
– Provides collateral, reputation, and good will.
– Financing is easier to secure. Start-up costs may be lower
because of existing location, decor, inventory, trained staff, and
other advantages.
(continued)
Alternatives to Traditional Financing
(continued)
• Incubators: Acquisition of small grants to support
product development, feasibility analyses, and other
forms of start-up activity.
• Extensions of an existing business: Adding a feature
that will make a business more profitable and result in
greater success without borrowing more money.
• Public–private cooperative venture: Close
cooperation with local government may yield a
business partnership that involves tax breaks, use of
public land instead of buying property, use of buildings,
and securing investment in infrastructure.
Playground Discussion:
Trends in the 21st century
What will be the most influential trend(s) of
the commercial recreation and tourism
industry in the 21st century and why…be
sure to fully support your answers?
Why Businesses Fail
Poor planning, impulsive decision making, and
organizational conflicts between partners
contribute to failure in the following ways:
1. Undercapitalization
2. Inability to anticipate changes in economy
3. Poor succession management
4. Poor operational management
5. Inflexibility
Career Paths in the Leisure Industry
• Recreation specialist. The programmer is essential to
all leisure experiences regardless of the setting.
• Meeting manager. Possess the leadership and
programming skills necessary to become an excellent
organizer of conventions and meetings.
• Event manager. Same skills of meeting manager may
be converted into a variety of events designed for small
and large groups.
• Tour guide. Coordinates tours for various interests.
• Administrator. Moving into top management in any
one of the tourist and commercial recreation segments
is appropriate for one with training in recreation and
resource administration.
Trends in the Commercial Recreation
and Leisure Industry
•
•
•
•
•
•
•
Baby boomers will generate the highest volume of
travel in the United States.
Tourists are willing to pay to protect the environment.
Global capacity for cruise ships will be reached in the
near future.
Vacation residence ownership will increase.
Greater emphasis on partnerships with public sector
will increase the number of commercial recreation
businesses on public land.
Technology will affect the way people access leisure
and plan for use of facilities and area.
Continued effects of terrorism are changing the nature
of travel for most tourists.
Discussion:
Subject “dynamic trends”
•
Select one of the following dynamic trends that will affect the
burgeoning commercial recreation and leisure industry in the
coming years:
– Baby boomers will generate the highest volume of travel in the United States.
– Travelers will be increasingly more willing to pay more to protect the
environment.
– Worldwide capacity for cruise ships will be reached in the near future.
– Increases in vacation residence ownership will occur.
– A greater emphasis on partnerships with the public sector will increase
commercial recreation business on public land.
– Technology will affect the way people access leisure opportunities and plan for
use of facilities and areas.
– Terrorism will continue to change the nature of the travel of most visitors.
•
Instructions
– Identify the strategies to counteract the challenges that face the commercial
recreation and tourism industry.
– Then, pose questions and responses to your posting.