Public and Private Sector in Tourism and Hospitality Management

Table of Content

1. Public and Private Sector in Tourism and Hospitality Management
2. The Public Sector
3. Main Characteristics of the Public Sector in the Tourism and Hospitality Industry
4. The Private Sector
5. Main Characteristics of the Private Sector in the Tourism and Hospitality Industry
6. The Role of Entrepreneurship
7. Challenges Faced by the Public Sector
8. Bibliography

Public and Private Sector in Tourism and Hospitality Management

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

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

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.

Challenges Faced by the Public Sector

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.

Bibliography

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).