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Travel and tourism products are quite different from physical products like clothes or electronics. Two key characteristics that make them special are their intangible and perishable nature. Understanding these characteristics helps us see why tourism businesses operate the way they do.
Key Definitions:
Unlike a new pair of trainers that you can try on before buying, tourism products can't be tested before purchase. When you book a holiday, you can't sample the hotel room or test the flight experience beforehand. You're essentially buying a promise of an experience.
Tourism products have a shelf life of exactly one day. An unsold hotel room tonight can never be sold again for tonight. Similarly, an empty seat on today's flight is lost revenue that can never be recovered. This makes timing incredibly important in tourism.
Intangibility means you can't physically touch or test a tourism product before buying it. This creates unique challenges for both businesses and customers.
A travel agent can't show you the actual beach holiday experience in their shop. They can only show pictures, videos, or descriptions.
Customers must trust that the tourism provider will deliver what they've promised in their marketing materials.
It's hard for customers to compare different tourism products objectively before experiencing them.
Tourism businesses use several strategies to help customers overcome the challenge of not being able to try before they buy:
TripAdvisor has become one of the world's largest travel websites by addressing the intangibility problem. By collecting millions of traveller reviews, photos and ratings, it helps potential customers "see" what they're buying. Hotels with higher ratings and positive reviews can charge premium prices because they've overcome some of the uncertainty caused by intangibility.
Perishability refers to the fact that tourism products cannot be stored for future use. This creates significant challenges for capacity management and pricing.
Tourism products are tied to specific dates and times. A hotel room for tonight cannot be sold tomorrow.
Unsold capacity represents permanent revenue loss. An empty restaurant seat or theatre ticket can't be stored.
Tourism demand varies by season, day of week and even time of day, making capacity planning difficult.
Tourism businesses use several strategies to manage the challenge of perishability:
Premier Inn, a UK hotel chain, uses sophisticated dynamic pricing to manage perishability. Room rates change constantly based on demand, booking patterns and remaining inventory. A room might cost £49 on a quiet Tuesday in November, but £129 on a Saturday in August. This helps them maximise revenue and manage the perishable nature of their hotel rooms.
When these two characteristics work together, they create unique challenges for the travel and tourism industry:
Theme parks like Alton Towers face both intangibility and perishability challenges. The experience is intangible – visitors can't "try" a rollercoaster before visiting. It's also perishable – an unsold ticket for today is lost revenue forever. To address these challenges, Alton Towers uses virtual ride videos online (addressing intangibility) and offers cheaper tickets for less busy days (addressing perishability).
Airlines like British Airways sell an intangible service (the flight experience) that is highly perishable (once the plane takes off, empty seats represent lost revenue). They address these challenges through detailed cabin photos and service descriptions on their website and through complex yield management systems that adjust prices constantly based on demand and remaining capacity.
Successful tourism businesses develop strategies that directly address the challenges of intangibility and perishability:
Understanding the intangible and perishable nature of tourism products is essential for both businesses and customers in the travel and tourism industry. These characteristics create unique challenges but also opportunities for innovation in marketing, pricing and service delivery. By developing strategies to address these characteristics, tourism businesses can thrive in this dynamic industry.