Tour Operators’ Influence on Hotels in Mallorca

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Introduction

Tourism is rooted in the history of ancient civilisations. Over the years, the industry has grown to become one of the most lucrative sectors for the generation of foreign revenues in many nations. Franscesco Frangialli, the WTO secretary-general, posits, “Tourism at the turn of the century is growing faster than even our most optimistic predictions, which continuously simulate its development worldwide” (Rita, 2010, p.435).

The economic development of the Balearic Islands is strongly dependent on the inflow of tourists. Mallorca stands out as one of the biggest islands among the Balearic Islands in Spain with many three-star and five-star hotels. At present, governmental organisations and private companies attempt to find ways of attracting people from foreign countries to the Balearic Islands. Amongst these organisations, tour operators’ organisations influence the nature and magnitude of inflow of tourists into the Balearic Islands.

Literatures on factors affecting tourism attractions mainly focus on infrastructural development, the presence of natural or cultural sites, and the development of the tourism industry among others factors, thus leaving out the roles of travel agencies insufficiently addressed. For instance, some studies highlight why a certain place can attract the attention of travel agencies without showing the impacts of the agencies on the hospitality facilities such as hotels.

This challenge is aggravated by the inadequate or even lack of data showing how these organisations shape the development of tourist destinations. This study seeks to close this gap by restricting its concerns to the impacts of tour travel operators on hotels in Mallorca. Consequently, this study examines how the power of tour operators influences various hotels in Mallorca. This interrogative presents practical implications.

Precisely, the determination of influence of the power of tourists’ travel on hotels in Mallorca is important in the development of strategic plans, which are consistent with the considerations addressed by various tour travel operators in recommending various accommodation facilities for their clients.

Aims and objectives

The inflow of tourists within a given geographical region is influenced by factors such as political, state of economic development, and even social factors. One important factor that is not significantly studied, which guides the objective for conducting this research, is the power of tour travel operators.

Researchers in the hospitality industry focus on the mechanisms of increasing the popularity of certain tourist destinations. Indeed, several studies have aimed at examining the factors that affect the development of the tourism industry (Izquierdo-Yusta & Martınez-Ruiz, 2011, p.77). While appreciating the significance of these factors in influencing hotels in Mallorca, the main aim of the current research is examining the influence of travel agencies on various hotels in Mallorca.

This study has two main objectives, viz.

To use primary data to demonstrate the impacts and influences of tour travel operators on hotel bookings in Mallorca.
To study positive and negative impacts of the above influences coupled with how they affect anticipated service value by clients seeking hotel bookings.

Research questions

Research questions help in setting the stage for a study. They act as guides into what qualitative and quantitative research seeks to achieve (Cohen & Crabtree, 2008, p.332). Two research questions consistent with the objectives of this research are investigated in this study as follows:

Do tour travel operators in Mallorca help in the creation of preconception and anticipations about the quality of services offered at hotels?
What factors, specific and unspecific to hotels, do tour travel operators consider when recommending a hotel facility to a tourist?

Literature Review

Travel operators are involved in direct communication with potential hotels’ clients in various tourists’ attractions sites. The first section of this literature review offers a discussion of the likely impacts of such communication on the quality of services anticipated by clients on arrival at Mallorca. In the second part, disparate literatures on selection of destination sites for promotion by tour travel agencies are considered since this element also influences the places where tourists seek accommodation and other related services.

The principle focus of the research rests on the roles of tour travel operators on hotel branding – a term coined from the wider contribution of tour travel agencies in destination branding (Jalilvand, Esfahani & Samiei, 2010, p. 235). In the third section, literature gap prompting the necessity for conducting the proposed research is discussed coupled with the practical implication of the research sealing such gaps.

Examination of the past research on the influence of tour operators on hotels seeks to identify the impacts of the operators on specific tourists’ destinations. Consequently, in the identification of the literature gaps, a discussion of appropriateness of selection of Mallorca as a research geographical segment is also considered.

Tour travel agencies take part in the formation of the clients’ perceptions and attitudes toward a certain tourist site, recreational, or hospitality facilities. In many cases, buyers pay attention to the reputation of a travel agency (Ferencová, 2012, p. 309). Consequently, they can significantly increase the popularity of a hospitality facility (Denvir & McMahon, 2009).

This assertion suggests that tour travel agencies contribute to the rate of inflow of tourists into a given hospitality industry within a given tourist destination geographical region. Stemming from their mode of operation, tour travel operators are service companies acting as an intermediary between tourists and other hospitality institutions such as hotels, airlines, restaurants, or cruise liners.

These organisations provide information to clients about particular tourist destinations. Therefore, they are responsible for the Mallorca destination branding. This aspect implies that they take active roles in the development and communication of the value that a certain tourist destination can bring to a client (Tsiotsou & Goldsmith, 2012, p. 52).

The power of tour travel in influencing hotels and destinations selection

Tour travel operators make considerations on various factors while selecting tourist destinations for promotion. These factors include the presence of natural or cultural sites, climate, and service industry in a particular region, infrastructure, and security (Prebežac & Mikulić, 2008, p. 170; Blázquez, Molina, & Esteban, 2012, p. 167). This observation suggests that tour travel operators are incredibly interested in destinations that would satisfy clients in terms of both desired comforts and perceptions of security.

Mariutti, de MouraEngraciaGiraldi, and Crescitelli (2013, p.17) note that the governments of developing countries are extremely concerned about the attitudes of travel agencies as they can influence the decisions of customers. In this context, tour travel operators help clients in learning more about various characteristics of a tourist destination. Where perceptions of insecurity are high, hospitality facilities such as hotels located in such destinations are also likely to receive low number of bookings (Holloway, 2008).

A study conducted by Mihajlović (2012) suggests that tour travel operators have the capacity to affect the choices of consumers profoundly by highlighting the advantages of going to particular destinations. One of such issues encompasses the provision of complete guides on various hotels coupled with services offered in them. This move aids clients in making informed decisions or making prior psychological preparations on what to expect.

In a bid to avail information on the services offered at the hospitality facilities located in various tourists destination within a nation, tour travel operators conduct an evaluation of the service industry in a certain destination (Budeanu, 2012, p.15). In this sense, Denvir and McMahon (2009) argue that these organisations are the major intermediaries between customers and service providers.

Budeanu (2012) adds that clients are likely to put trust in the recommendations or assessments offered by travel agencies. Therefore, their contribution in influencing the clients’ perceptions at Mallorca hotels is inevitable for consideration by any hotel’s management and strategic decision makers.

Research conducted by Buhalist (2000) found out that distribution channels, especially travel agencies, affect the performance of many hospitality organisations. The study suggests the hospitality organisations need to accept the power of travel agencies in influencing their operations. In fact, tour travel agencies, through their assessment reports on hospitality organisations in tourists’ destinations, reduce the perceived risk expected by clients (Buhalist, 2000, p.115).

This argument agrees with Budeanu’s (2012) assertion that tour travel operators facilitate communication between customers and service suppliers in the tourists’ destinations. If this link is absent, a client is not likely to go to a certain tourist destination. Buhalist (2000, p. 136) notes that the competitive positioning of a hotel depends on its cooperation with tour operators.

This role of the tour operators in influencing the clientele in the hospitality facilities in the tourists’ attraction destinations becomes important in the information age. Many consumers rely on the Internet to acquire information about various resorts, tourist sites, or airlines (Mihajlović, 2012, p. 153). Very often, clients use the websites of travel agencies. The information provided on the travel agencies’ websites is instrumental in influencing the clients’ hotel selection and bookings.

The Mallorca Island is located in the Mediterranean Sea. Studies on factors influencing choices for tourists wishing to travel in the region are also important in the development of strategic decision making by hoteliers in the region. In one such researches, Izquierdo-Yusta and Martınez-Ruiz (2011, p. 78) note that tour travel operators facilitate the clients’ search for information. They help customers and suppliers in establishing mutual trust (Izquierdo-Yusta & Martınez-Ruiz, 2011, p. 80).

In addition, tourist destinations in the Mediterranean region are not likely to enjoy popularity when travel agents fail to pay attention to them in their promotional strategies. Tour-travel operator organisations can demonstrate that certain hospitality organisations are suitable for various types of clients differing in terms of income level, marital status, interest, and values among other tastes and preferences. Therefore, tour travel operators can increase performance of hotels located in a particular tourist destination.

Tour operators can increase or decrease hotels’ services demand. Irrespective of the industry in which an organisation operates, increased performance ensures longer existence of an organisation in a competitive market. Therefore, in the hotels sub-sector of the hospitality industry, performance is an essential tool for the evaluation of the ability of an organisation to remain in business in both short-term and long-term.

According to Beechler and Woodward (2010, p.275), profit-making organisations deploy profitability levels as measures of their performance. In this extent, profitability encompasses a desired organisational output, which can be affected by the tour operators through their recommendations on hospitality organisations’ meeting tastes and preferences of specific clients.

In Mallorca, it is desirable that hotels indentify all factors that may affect their profitability. One of such factors may encompass the reduction in service demand levels. Indeed, the lower the demand for services offered by a hotel, the lower the sales levels. Hence, the capacity to offset costs is reduced. Arguably, any variable or factor increasing demand for services offered by organisations in the hospitality organisations operating in tourism destinations may be positively received by hotels in Mallorca.

As argued before, tour operators may influence the demand of services offered by different hotels in Mallorca with overall implication of affecting the performance of the hospitality industry. This assertion suggests that tour operators affect tourism destination hotels’ aspects defining their organisational performance.

These aspects are “financial performance (profits, return on assets and return on investment), product market performance (sales and market share), and shareholder return (total shareholder return and economic value added” (Devinney & Yip, 2009, p.529). In this sense, the standard approach of measuring performance in hotels entails setting targets for the desired outputs and then measuring the actual outputs against the targets.

Hotels can only set targets on a certain number of anticipated customers seeking accommodation and other services over given period. For reliable targets, the capacity of tour operators to influence the clientele in the hotels implies that the hotels need to establish good relationships with customers to increase their probability for promotion.

Tour travel operators interact with various types of companies located in a particular tourist destination and in this process of interactions, they can increase international awareness about a certain destination. While interacting with hotels, they can increase inflow of travellers and higher number of rooms’ reservation by directing clients to the suitable hotels (Navickas & Malakauskaite, 2009).

Depending on the service satisfaction of a client visiting a hotel for the first time, service loyalty may develop. The client may also recommend another person to stay in a particular hotel or even consider seeking hospitality services from the hotel during his or her subsequent visits. This argument implies that tour travel operators may be pivotal in branding hotels in various travel sites including Mallorca.

Research shows that the development of tourism is directly dependent on the degree to which tour operators are aware about a tourist destination and hospitality facilities. For instance, Ferencová (2012) indicates that in various European countries, at least 20 percent of the population relies on travel agencies while selecting a place for holidays (p. 311).

The case of Balkan as discussed by Mulec and Wise (2012, pp.182-183) perhaps explains the roles played by tour travel operators in fostering inflow of clientele in the hospitality organisations located within a given tourist destination site. Balkan boasts many natural and cultural sites. However, these sites do not attract a great number of foreign tourists as tour operators and travel agents are not familiar with them (Mulec & Wise, 2012).

Hotels in different geographical regions compete to increase their market share. This aspect also applies to hotels in the Mediterranean islands, including Mallorca. Considering the roles played by tour travel agencies in influencing the performance of hotels located in various tourism destination sites, it may create the impression that only travel agencies affect their performance.

Patsouratis et al. (2005, p. 1865) disputes this position by arguing that the exchange rate can be a powerful factor that shapes the purchasing decisions of clients. Burgess et al. (2011) maintain that the competiveness of the tourism industry depends on the ability of various organisations to make use of information technology to create consumer awareness (p. 221).

This assertion suggests that despite relying on tour travel operators to create awareness of the services offered by hotels and other hospitality facilities within tourists attractions destinations, hotels can also deploy information technology tools to induce customer awareness directly without depending on the tour travel operators.

Roles of tour travel agencies in shaping hotel clients’ perceptions of service quality

The literature review in the previous section indicates that tour travel operators play important roles in inducing service quality anticipations by potential clients to hotels within tourism destinations. In a bid to study the impacts of the information availed to customers on hotels and other hospitality facilities in any destinations including Mallorca, it is important to investigate scholarly evidence on impacts of customer-service satisfaction anticipations on hotels.

Parasuraman et al. (1988) attempt to investigate perceptions of customer satisfaction anticipations coupled with hotel attributes. The research argues, “Intangibility, inseparability, variability, and perishability of services degrees of customer satisfactions depend on their perceptions of service attributes and facilities” (Parasuraman et al., 1988, p.31).

In consideration of the attractiveness of a hotel for tourists, its attributes should then come first. They include quality of rooms, hotel reputation, and classification such as five-star or three-star, and the nature of service delivery to the customers (LeBlanck & Nguyen, 1996).

Tour travel operators mainly focus on ensuring that they direct their clients to the best facilities to enhance their reputations in comparison to other competing travel operators. Consequently, they prefer to associate themselves with the best hotels within a given tourism destination (Lew & McKercher, 2006). This argument suggests that when selecting hotels to recommend clients, tour travel agencies are interested in the degree of satisfaction of customers while eating and accommodated in a hotel.

Consistent with this assertion, Konecnik and Gartner (2007) believe that the performance of hotels is well conducted when evaluated by examination of their attributes. Gooroochurn and Sugiyarto (2009) also find this approach important. They conducted an extensive review of studies done between 1984 and 2000 on the attributes of hotels coupled with how the indentified attributes induce customer satisfaction.

In the 173 hotels studied by 21 researches investigated by Gooroochurn and Sugiyarto (2009), hotel image, nature of rooms, nature of beverages, and foods influenced the customers’ satisfaction. Therefore, tour travel operators are more likely to engage in promoting hotels with these attributes as they help in associating the agencies with offering best services and satisfaction.

Hudson and Miller (2011) indicate that the quality of communication between clients and hotels’ employees affects the satisfaction of clients in the hospitality industry. Indeed, organisations collaborating with hotels in tourism destinations only prefer establishing relationships with hotels appreciating and investing in good interpersonal communication between the hotels’ operators and clients.

Customer satisfaction in the service industry is a function of the speed of service delivery. Employees in any organisation attend to customers. The nature and quality of service and products delivered determine the employees’ contribution in enhancing the competitive advantage of the organisations (Rust, Zeithaml & Lemon, 2008; Philport & Arbittier, 2010).

This argument implies that organisations in the hospitality industry such as hotels may determine their preference rates or recommendations’ probability by tour travel operators through the degree of reported customer satisfaction with their services and products.

Yelkur (2013) contends with this argument by adding that in the service sector organisations, quality is enhanced through the deployment of strategies for enhancing customer satisfaction with services, the utility of the service, and the speed of service delivery (p.110).

Through their researches, tour travel operators have adequate information on various services attributes for any given hospitality organisation in a given tourist destination. They deploy this information to rate different hotels and then base their accommodation advisories on the acquired data.

The above discussion associates travel operators closely with the determination of hotels selected by clients well before the actual visit. However, there exists scholarly research suggesting that tour travel operators do not possess the principle power to determine the customers’ preferences for hotels within tourist attractions sites.

For instance, Kau and Lim (2012, p.236) argue that leisure travellers served by hotels are more interested in the actual quality of service offered as opposed to the perceived quality as communicated to them by other parties such as tour travel operators.

Wuest, Tas, and Emenheiser (2009) argue that leisure travellers consider “clean, comfortable, well -maintained rooms, convenient location, prompt and courteous service, and safe and secure environment important when selecting a hotel for the first time” (p.77).

Although actual assessments on these factors may form strong motivation or de-motivation for seeking repeated services in a hotel, arguably, clients are not likely to try hotels without preconceived perception about the hotel’s likelihood to offer the best services.

Choi and Raymond (2001) maintain that demonstrated courtesy, cleanness, security, and offering services commensurate to the service charges are important factors in determining the selection of hotels by tourists. This aspect is perhaps incredibly important for the Mallorca hotels and motels.

Most clients for these two groups of organisations are mainly leisure travellers as evidenced by statistics from Datamonitor (2011) indicating that the Spanish “hotels and motels industry had total revenues of $19,195.4 million in 2010, representing a compound annual rate of change (CARC) of 1% between 2006 and 2010” (p.9). The leisure segments accounted for US$17, 238.4 million in the entire hotels and motel industry’s value.

If tour operators play roles in positively influencing the selection of the tourists’ destinations, then the hotels and motel industry in Spain will continue to contribute significantly to the national GDP. This argument makes sense considering that the “performance of the industry is forecast to accelerate with an anticipated compound annual growth rate (CAGR) of 3.2% for the five-year period 2010-2015, which is expected to drive the industry to a value of $22,430.1 million by the end of 2015” (Datamonitor, 2011, p.9).

However, despite the ability of tour operators to create more awareness on the services and satisfactions of customers in the Mallorca destinations, it is also possible for the first-time experiences of the currently visiting tourists to foster this expected growth in the future by presenting good publicity about the services offered at the Spain’s motel and hotel industry.

Although the arguments that the capacity of first experience with services offered at a hotel can induce repeated booking may be convincing, awareness for existence of a hotel in the first place is important. Such awareness may emanate from a hotel or from collaborating agents such as tour travel organisations. Arguably, where the information is communicated in both ways, it is readily likely to convince potential clients to seek booking in such a hotel.

Where tour travel operators back up brand positioning efforts of the hospitality organisations within a given tourist destination, the agency acts as an essential link between service producer (the hotels) and service consumers (tourists). Selwyn (2008) supports this assertion by claiming that tour operators constitute one of the most influential players in the hospitality industry.

Data derived from the World Tourism Organisation (WTO) in year 2000 indicated that for “over 663 million people who travelled abroad in 1999 spending US $453 billion on various tourism travel products and services, 80% of the trips used services of a tour operator” (Budeanu, 2012, p.3). This realisation suggests that the tour operators also offered guides on the hospitality facilities to the largest proportion of people consuming tourist products coupled with services.

Stemming from the above arguments, the dependency of international travellers on services offered by tour travel operators highlights the importance of consideration of their impacts on hotels in Mallorca. In this context, it also becomes important to examine whether tour operators are “wholesalers of tourism services or producers of travel package” (Budeanu, 2012, p.6). Although there is no scholarly agreement on this debate, tour operators take bulk information on available hospitality facilities and present it to clients. This way, they function as wholesalers while hotels operate as producers of services and products.

With the emergence of two-way communication platforms permitting organisation to contact their customers directly, the roles of tour operators in the hotel industry is seemingly dwindling. In fact, according to Tapscott and Williams (2010) web 2.0 applications permit clients across the globe to make a hotel booking without seeking assistance from an intermediary organisation. However, arguably, tour operators cannot lose relevance in the hotels industry.

Budeanu (2012) Support this line of thought by asserting, “By buying in bulk, the operator takes from the producer the burden of selling products and absorbs the risk of having unsold products” (p.7). For instance, where several hotels operate in one area, and are promoted by one tour operator, customers may consider all the hotels as offering state-of-art services simply by association with their trusted tour operator. This aspect minimises the degree of rivalry between organisations for fair distribution of hotel bookings.

Tour operators minimise the time required by clients to track accommodation facilities to determine their appropriateness to meet the desired comfort and utility. Denvir and McMahon (2009) note that tour operators offer various services including flight followed by transfer services such as offering guide on hotels bookings. This aspect implies that tour operators act as the link between a service producer, such as hotels, and the service consumer like tourists.

The services offered by tour operators are incredible in helping clients to save valuable time and energy. Additionally, ” by buying in bulk, the tour operator gets better deals from the direct producers, which allows them to offer low prices for the entire packages, which are very hard to obtain by individual customer” (Budeanu, 2012, p.6). Consequently, for reasons related to time coupled with price, the services of tour operators are inevitable in the hospitality industry.

Effective functionality of the hospitality industry is dependent on the good fit between organisations operating in the industry and the tour operators. Budeanu (2012) amplifies this argument by adding that tour operators are important for both consumers of tourism products and services coupled with their producers. This importance emanates from contributions of tour operators in influencing decisions made by tourism products and service producers, which affects the process of evolution of hospitality markets (Budeanu, 2009).

By engaging in the promotion of certain tourism attractions sites, tour operators can stir up the hospitality organisations’ promotional campaigns and positive customer perceptions about the quality of services offered in various hotels located within different tourism destinations. This way, tour operators function as means of placing products and services offered in the hospitality industry to their potential consumers.

Stemming from the above discussion, tour operators are evidently distribution networks for tourism services and products. In the words of Lew and McKercher (2006), they “are the main information channel through which the customers’ preferences reach producers and services reach markets” (p.416).

In the execution of this role, they can indentify levels and patterns of hotel demand coupled with supply, and influence the equilibrium through influencing the customer decision-making processes, especially on the most preferred destinations’ hotel selections. Hudson and Miller (2011) posit that the degree and threshold of influence provided by tour operators on processes of the decision-making process for hospitality service producer are amplified in transactional tourism (p.309). Mallorca hotel organisations belong to this category.

Scholarly gaps in literature on the influence of tour operators in hotels

Tour operators play significant roles in influencing the performance of organisations operating in the hospitality industry. However, no scholarly research focuses on specific roles played by operators in influencing the operations of hotels in the Mallorca Island. Nevertheless, in understanding the development and growth pattern of the Mallorca’s hospitality industry, the work of Datamonitor (2011) and Buswell (2011) are incredibly important.

Datamonitor (2011) provides statistics on the expected growth in the hospitality industry with particular focus on the hotels and motel industry sub-sector. The statistics indicate that over 85 percent of the hotel and motels incomes are derived from leisure travellers with business travellers only making a contribution of less than paltry 15 percent (Datamonitor, 2011).

However, Datamonitor (2011) does not provide any statistics on the percentage of incomes earned by hotels and motels in Spain through contributions of tour operators in drawing clientele into the hotel and motels. A scholarly gap emerges via the search of scholarly works on how tour operators affect the operations of hotels in Mallorca.

The work of Buswell (2011) mainly focuses on the historical development of hotels in Spain. Research is constrained by various resources such as money and time. Consequently, it is important to restrain research to a small, but reliable geographical research segment. While studying the influence of tour operators in Spanish hotels, Mallorca is the most preferred geographical research, as “about a quarter of all Spanish hotels are located in the Balearic island with three quarters of these hotels being situated in Mallorca” (Buswell, 2011, p.140).

Furthermore, Buswell (2011) notes that Mallorca has a persistent preference of three-star hotels despite recognition of the benefits accruing from economies of scale. He states that for Mallorca, “by 2001, 55.2% of hotels were three-star, with 60.2% of all hotels places, by 2008, these figures were 52.8 percent and 58.2% respectively, showing that in this century this category has lost some ground” (Buswell, 2011, p.140). Five-star hotels also emerged in 1988 in Mallorca and they received unparalleled public attention.

Considering arguments developed before in the literature review, tour operators are likely to associate themselves with and promote hotels offering splendid services. This aspect may help in inducing customer satisfaction, thus leading to better rating for a given tour operator organisation. The continued persistence of the three-star hotels in Mallorca as stated by Buswell (2011) raises questions whether tour operators consider promoting hotels based on perceived customer service quality and value or actual service quality and value.

In Mallorca, five-star hotels only accounted for 3.6 hotels’ market share by 2008 (Buswell, 2011, p.140). If tour operators promote collaboration of organisations, does it mean that in Mallorca they prefer promoting three-star hotels opposed to five-star hotels. Is the star rating for a hotel not a criterion for promotion? What specific factors do they consider when recommending a hotel in Mallorca for tourists?

Apart from sealing the scholarly gap in the hotels industry studies in Mallorca defined by the needs to respond to these interrogatives, research is also necessary to determine the influence of tour operators in both three-star and five-star hotels in Mallorca. Sealing this gap has practical implications on the development of strategic plans for increasing performance of hotels operating in the Mallorca tourists’ destination.

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