Travel Reference
In-Depth Information
2
COMMUNITY BASED TOURISM,
HOMESTAY AND REVENUE
MANAGEMENT
allocating limited capacity to the different segments
in a way that maximizes company's revenues. Cross
(1997) highlighted the seven principle of revenue
management as dynamic pricing, demand manage-
ment, market segmentations, capacity management,
forecasting, product management and profitability
management. Thus, the literature review will focus
on these seven variables in establishing the theoreti-
cal aspect of revenue management.
2.1 Community based tourism
Community based tourism starts during 1950s and
1960s; as community development was introduced
as an approach to rural development. It was popu-
larized by the United Nations during the same
period as many countries in the less developed
world gained independence and were decolonized
(Catley, 1999). Since then, it has evolved into rev-
enue generating tourism industry in which it pro-
motes cultural experience as well as community
based development and economic gains. Commu-
nity-based homestay tourism is a form of tourism
that is closely related to nature, culture and local
custom and is intended to attract a certain segment
of the tourist market that desires authentic experi-
ences (Jamal, Othman and Nik, 2012).
The origin of homestay programme was first
detected as early as the 1970's where it began in
Kampung Cherating Lama, Pahang when a local
lady by the name of Mak Long has provided all
the accommodation including breakfast and din-
ner to the 'drifter enclave' at home (Amran, 2008).
Aminudin and Jamal, (2006) added that Malaysian
homestay is a type of community based tourism
that employs a somewhat different concept than
homestay tourism in other region. Homestay is an
alternative tourism product that has the potential
to attract tourists due to a marked increase in inter-
national demand for tourism that enhances tourist
knowledge by allowing them to observe experience
and learn about the way of life of the local residents
of their destinations (Tourism Malaysia, 2012).
2.2.1 Dynamic pricing
Pricing strategies are more flexible than other
marketing strategies and more easily adjusted to
a changing environment. They are closely related
to seasonality, price regimes and different facilities
(Espinet, Saez, Coenders and Fluiva, 2003). Kimes
(2003) supported that pricing and demand based
on pricing strategies would be useful for revenue
managers as they are really popular in revenue
management strategies.
2.2.2 Demand management
Demand management refers to the ability of the
operators to understand demand pattern. As for
tourism product it is usually affected by various rea-
sons. According to Nadal, Font and Rosello (2004)
the first element relates to temporal variations in
natural phenomena, particularly those associated
with climate and season of the year. Seasonality
is one of the unique, indeed a major problem, that
tourism industry has to face (Jang, 2004). Gurbuz
(2011) discussed that demand generation is the art
and science of creating, nurturing, and managing
purchase interest in your products and services
through campaign management, lead manage-
ment, marketing analysis, and data management.
Thus, it revolves in the issue of generating demand
when the right seasonality or time comes.
2.2 Revenue management and homestay
The nature of homestay business is similar to the
operation of a hotel as managing bookings, cus-
tomer segmentation, promotions, pricing and etc.
In line with these statements is a valid ground to test
the revenue management in this particular setting
and looking into the criteria of revenue manage-
ments set by Kimes (2003) who discussed revenue
management as technique to optimize the revenue
earned from a fixed, perishable resource. The main
challenge was to sell at the right resources to the
right customer at the right time without neglecting
the basic principles of supply and demand eco-
nomics in a tactical way to generate incremental
revenues. Haddad, Roper and Jones (2008) added
revenue management as follows: Revenue man-
agement is an important tool for matching supply
and demand by segmenting customers into differ-
ent segments based on their willingness to pay and
2.2.3 Market segmentations
Most literature defines market segmentation as to
select the best market for the business. It can be
accomplished using different types of data, includ-
ing geographic, demographic, psychographic, and
behavioral variables (Reid and Bojanic, 2006). Dif-
ferent segments demand different prices. To maxi-
mize revenue and stay competitive, prices must
vary to meet the price sensitivity of each market
segment. A simple understanding of market seg-
mentation strategy by Kozak and Martin (2011)
focused on identifying and nurturing the most
profitable customers is an alternative to maximiz-
ing visitor counts. It focused on selecting the right
target market in business.
2.2.4 Capacity management
Fixed capacity and perishable inventory provides
a credible threat heightening acquisition risk,
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