Entrepreneurship in the Hospitality, Tourism and Leisure Industries

Michael Rimmington, Clare Williams, Alison Morrison

• Publisher: Routledge
• Year: 2009
• ISBN:
  9781136405563
• Edition: 1
• Topic: Business
• Subtopic: Hospitality, Travel & Tourism Industry
• Index: Business

Entrepreneurship is the engine that drives any successful industry or economy. In the rapidly evolving hospitality, tourism and leisure sector worldwide this is particularly true. This new text is designed to develop a greater understanding of the process and context for entrepreneurship as well as to provide key concepts which will enable the reader to become more entrepreneurial themselves. The text unites appropriate theory with copious real world examples giving the student, manager or trainer a powerful framework for understanding every aspect of this vital business function. Rigorously developed by authors with wide teaching and industry experience it contains:
*Clear learning objectives and teaching structure *Up-to-date cases throughout *The widest possible coverage of the latest research and literature *A clear focus on the dynamic hospitality, tourism and leisure sector.Entrepreneurship in the Hospitality, Tourism and Leisure Industries is an essential teaching tool and reference on all serious academic and professional courses and gives a uniquely powerful overview of the subject for students and trainees.

Part One Concepts, Principles and Environment Associated with Entrepreneurship

The process of entrepreneurship

DOI: 10.4324/9780080505749-2

The objective of this chapter is to develop an understanding of what is meant by the process of entrepreneurship in both economic and social terms. Specifically, the chapter will:

• introduce and define the process of entrepreneurship;
• identify key participants in the process;
• develop understanding of entrepreneurship's contributing elements and features;
• consider the application of the process within the hospitality, tourism and leisure industries.

Introduction

Over the last two decades the business environment in the UK has undergone tremendous change. The result is a restructuring of economic and social systems in a way which has led to increased levels of business formation, innovation, new organizational forms, and more general shifts in attitudes and behaviour. This mirrored a transition from a managerial to an entrepreneurial society which was evident in the USA in the 1970s, and was described by Naisbitt (1982) as an entrepreneurial explosion. Timmons (1994) views the transition as a silent revolution which may affect the twenty-first century as much as, and probably more than, the Industrial Revolution of the nineteenth century. This revolution is revitalizing economies, creating millions of jobs and forging new prosperity. It is built on the back of dynamic fast-track companies driven by ambitious entrepreneurs. Such entrepreneurs are willing to take risks on the road to success. Across Europe entrepreneurs are launching businesses which grow at well over 25 per cent per annum, and are operating in all industry sectors (European Foundation for Entrepreneurship Research, 1996).

Embodied in this revolution is the process of entrepreneurship, central to which is the requirement for the personal initiative of the entrepreneur. Thus, according to Fass and Scothorne (1990) the process of entrepreneur-ship is recognized as being at the heart of an economic development task and driven by the motivations of individuals, who are seeking to satisfy their personal goals. As such, the ultimate aim of economic development is to create opportunities for personal fulfilment through economic activity. This implies a partnership between policy-makers and entrepreneurs in order to achieve economic renewal and prosperity. At a local level, the above illustration shows how this process was approached in Cardiff.

Illustration: Cardiff docks, process of entrepreneurship

The rapid metamorphosis of the old Cardiff docks into four square miles of commercial, industrial, housing and leisure development is revitalizing a region which has witnessed a large decline in traditional industries. The success of Cardiff Bay depends on the skilful integration of a strong supply-led tourism strategy working at local, regional and national levels. Central to the process has been attracting and securing investment from a wide range of entrepreneurs in visitor attractions, restaurants, water sports activities, bars and hotels. By the end of 1996 Cardiff Bay had attracted £8000 million private capital and the Bay already generates an estimated £144 million a year for Cardiff. It is forecast to attract two million visitors a year by the year 2000 and is expected to create 30 000 jobs throughout South Wales.

Source:Cramer, 1996

However, it is considered important to temper the euphoria of the entrepreneurial revolution with the reality of why people are turning to entrepreneurial careers. Such people are, in fact, ‘buying’ personal independence and control through the process of new venture creation. In this respect, entrepreneurship may be seen as an aspect of the theory of choice (Reid and Jacobsen, 1988), where people are pulled towards entrepreneurship. The universal truth of this interpretation in a situation of substantial change in labour markets is questionable. Such restructuring has effectively forced some to choose entrepreneurship, as the only alternative is not to have a job. In this scenario individuals may also be pushed into entrepreneurship through the lack of alternative employment opportunities. This moves discussion of entrepreneurship into a choice between earning money or not having gainful employment. Thus, it is important to recognize that the route towards entrepreneurship may be varied - a response to a crisis situation or exploitation of a market opportunity, or both.

Definition

There is no universally accepted definition of entrepreneurship. Attempts have traditionally been made to describe it relative to: an economic function; ownership structure; degrees of entrepreneurship; size and life-cycle of firm; and a resource base. These descriptions are outlined below.

Economic function

Economists are attracted to the subject of entrepreneurship because they see it as a means of stimulating the economy through the harnessing of personal initiative in the creation of firms and jobs. Thus, it is seen as an economic function. In these terms Cantillon (1755) stated that entrepreneurship entails bearing the risk of buying at a certain price and selling at an uncertain price. Implicit in this activity is a risk-bearing function. Say (1800) broadened this economic perspective to include the concept of the bringing together of the factors of production, within which the entrepreneur is primordial. This approach assumes an entrepreneur who responds to an outside force, which then impacts on the market system. Stoke-on-Trent is an illustration of how entrepreneurs co-ordinated to bring together the factors of production which compose tourism.

Illustration: Stoke-on-Trent, co-ordination of factors of production

Stoke-on-Trent has achieved considerable success as a city-break tourist destination. This is a result of the potteries, hotels, restaurants and coach-tour firms coming together to produce an attractive package, which has been successfully marketed. A wide range of customers are attracted. Potters from overseas, collectors, and some foreign tourists, travel to Britain for the area known as the Potteries before all else. Most foreign tourists arrive on organized coach parties. Empty-nesters (couples whose children have left home) dominate the domestic weekend-break market. Alton Towers’ visitors and the Staffordshire Moorland's holiday-makers pop into the Potteries for a day of tableware tourism and shopping. Forty-odd factory shops and museums are dotted all around the Potteries conurbation of six towns that is the City of Stoke-on-Trent. Thus, capitalizing on the enterprise of the entrepreneurs of days gone by, such as Josiah Wedgwood, today's entrepreneurs are taking the initiative, stimulating the process of entrepreneurship. Locally, this is resulting in job creation, tourist expenditure and environmental improvements.

Source:Dixon, 1996

Ownership structure

Entrepreneurship has also been defined relative to ownership structure, represented as the creation of a new enterprise, which has the entrepreneur as the founder. This approach deliberately excludes firms which have a different ownership structure, such as the shareholder-owned corporate groups, charities, or public-sector organizations. It suggests that the process of entrepreneurship is not appropriate to, or applied by, such organizations.An illustration of a firm with the owner as the founder is that of the bed and breakfast operation. As we will explore in the following chapters, such ownership-restricted views of entrepreneurship have now been largely superseded. Entrepreneurship is widely agreed to take place within all sizes and types of organizations.

Illustration: bed and breakfast accommodation, ownership structure

Bed and breakfast accommodation appeals to tourists, especially those from overseas, because owners allow guests into their homes and give a great insight into the British way of life. In addition, as this type of accommodation is generally less expensive than hotels it is attractive to those travelling on limited budgets. It is estimated that there are more than 25 000 bed and breakfasts in the UK. By far the majority are run by the owner as a part-time activity or by retired people to supplement their income.

Source:Hyman, 1996

Degrees of entrepreneurship

Efforts have been made to categorize the degree of innovative and creative behaviour which can be deemed to represent entrepreneurship. For instance, to what degree can the bed and breakfast illustration really be considered as an example of entrepreneurship? Is the originator an entrepreneur or a small-firm proprietor? Furthermore, many small-firm owners create the business then simply maintain it, providing a reasonably steady-state lifestyle income. Firms which have been inherited are often run by the next generation in the same manner as did their forebears. To what degree can these three categories, small firm, steady state, and inherited, be classed as examples of entrepreneurship? Dale (1991) proposes that the focus for the measurement of entrepreneurship should be on the degree of success achieved through the change initiated. Such measures could be related to growth factors such as market size, return on personal investment, number of employees, and increased diversity of products/services. If the degree of entrepreneurship is to be measured by apparent success achieved through the change initiated, then Groupe Chez Gerard offers a good illustration.

Illustration: Croupe Chez Gerard, degrees of entrepreneurship

Laurence Issacson and his partner Neville Abraham are, respectively, Deputy Chairman and Chairman of Croupe Chez Gerard, which celebrated its tenth birthday in 1996. The group owns ten restaurants, and serves around 11 000 customers per week. With a weekly turnover of £300 000 Groupe Chez Gerard has been remarkably successful in targeting its market and growing the business. The group employs 400 people, but expects to increase that number within three years to 800-1000 as it expands.

Source:Fox, 1996

Size and life-cycle of firm

Frequently, entrepreneurship is perceived as being associated with young start-up businesses. Many firms seem to start out as high energy, dynamic, small entrepreneurial businesses only to mature into a mirror image of the more sluggish, established corporate bureaucracies. However, there appears to be no loss of entrepreneurial vitality in the following illustration of Harry Ramsden's; despite having already developed so rapidly, the company shows no sign of reducing its entrepreneurial activity.

Illustration: Harry Ramsden's, size and life-cycle of firm

Harry Ramsden's, the Yorkshire-based fish-and-chip restaurant group started as one unit in Le...

Table of contents

• Cover Page
• Half Title Page
• About the Authors
• Title Page
• Copyright Page
• Contents
• Foreword
• Preface
• Part One Concepts, Principles and Environment Associated with Entrepreneurship
• Part Two Finance, Business Planning, Operations Management, Marketing and Strategy
• Index