Answer to Question #298397 in Management for Yaku

Question

(a)  How can adventure of tourism impact your profit margin, in terms of value chain?

Answer 1

The profit margin of tourism can be impacted by adopting an economic upgrading approach, particularly in terms of its value chain. Tourism's economic upgrading has centered on various strategies to boost productivity and shift the industry up the value chaiProduct, process, and functional upgrading making up for the main approaches.

Product upgrading relates to steps performed by tourism enterprises with state assistance to improve the efficacy of their product/service offerings and tourist value for money. Its focus is on delivering better, value-added goods and services. For instance, hotels within the Maldives can add more amenities such as spa treatments, lounge areas, and so on to shift from being 4-star hotels to 5-star hotels, an aspect that will increase its profit margins.

Tourist businesses expanding their proportion of value contributed in established global value chains by proper organization and internal systems, as well as the utilisation of enhanced technology and management systems, is known as process upgrading. For instance, a museum in the UK might employ virtual reality to conduct virtual tours of its exhibits to tourists across the globe.

When tourism enterprises expand into new, enhanced value dimension of the value chain, they undergo functional upgrading. This is determined by the business having a bigger share of the product or service's value added. A hotel in Panama, for instance, purchasing an online travel agent that offers special vacation packages to a high-net-worth customer is an example of functional upgrading that increases the firm's profit margins.