Developing a New Business Model for the Latin-American Tourism Sector. A Proposal for a Senior Hostel Chain in Mexico

Bachelor Thesis, 2018

112 Pages, Grade: 1,1

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Table of Contents

List of Abbreviations

List of Figures

List of Tables

1 Introduction
1.1 Research subject
1.2 Research objectives & questions
1.3 Research methodology

2 The global tourism sector
2.1 Economic impacts
2.2 Main destinations of tourists & developments
2.3 Travel behaviors & tendencies

3 The Latin-American tourism sector
3.1 Economic impacts
3.2 Main destinations of tourists & outbound travels
3.3 Tendencies & outlook

4 Geographic focus: tourism in Mexico
4.1 Economic impacts
4.2 Main destinations of tourists
4.3 Tendencies & opportunities

5 Tourism services
5.1 Travel agencies
5.2 Tour operators
5.3 Tourist information centers
5.4 Tourist attractions
5.5 Transportation services
5.6 Food & beverage services
5.7 Platform services
5.8 Accommodation

6 Senior tourism
6.1 Ageing populations
6.2 Definition: Senior tourism
6.3 Market segmentation
6.4 Impacts of senior tourism
6.5 Travel behavior & opportunities
6.6 Challenges of senior tourism for the travel industry

7 Research survey analysis
7.1 Approach
7.2 Descriptive statistics
7.3 Analysis of the research questions

8 Business models
8.1 Definition
8.2 Business model Canvas
8.3 Application of business model Canvas: senior hostel chain
8.4 Application of Porter’s Five Forces
8.5 Choice of Mexico for a senior hostel chain

9 Implications & recommendations for global tourism

10 Conclusion

11 Limitations of the study

12 References

13 Appendices


I hereby declare that the thesis submitted is my own unaided work. All direct or indirect sources used are acknowledged as references.

I am aware that the thesis in digital form can be examined for the use of unauthorized aid and in order to determine whether the thesis as a whole or parts incorporated in it may be deemed as plagiarism. For the comparison of my work with existing sources I agree that it shall be entered in a database where it shall also remain after examination, to enable comparison with future theses submitted. Further rights of reproduction and usage, however, are not granted here.

This paper was not previously presented to another examination board and has not been published.

Monterrey, May 3rd, 2018 Marion Wirth


As one of the largest and most important economic sectors, the tourism industry is facing global growth and increasing tourist arrivals in many regions of the world (World Tourism Organization UNWTO, 2018). However, since technologies, lifestyles and travel behaviors of people are constantly changing, tourism business have to consider those developments and adapt their activities and offers to the current needs of customers. One emerging tendency in the travel industry, that builds the focus of this thesis, is the so-called “Senior Tourism”. The increasing willingness and ability of elderly people to go on vacations offers many opportunities and promising perspectives to businesses in the tourism sector. Those developments underline the importance for companies to restructure and reconsider their strategies in order to grow and remain successful in the tourism sector. (Alén, Dominguez, & Losada, 2012).

This thesis presents one proposal for a business model which focusses on this current trend of senior travelers and their specific needs and requirements regarding a holiday accommodation. An extensive literature review complemented by an empirical analysis was conducted to obtain and analyze customer behaviors, factors that influence their decisions and requirements of the target consumers, hence this paper shows off how a hostel can set itself apart from competitors and be successful addressing a particular type of customers, namely elderly people.

Keywords: accommodation sector, business model, Canvas model, hostel, senior tourism, tourism in Mexico, tourism services, travel behaviors

List of Abbreviations

GDP – Gross Domestic Product

OECD – Organization for Economic Co-Operation and Development

List of Figures

Figure 1: Tentative Conceptual Model 4

Figure 2: International Tourist Arrivals worldwide 6

Figure 3: Total Annual Expenditure on Enrichment/Experience vs. Material Goods 16

Figure 4: Total Contribution of Travel & Tourism Industry to GDP in Latin America 23

Figure 5: International Tourist Arrivals to Latin America 24

Figure 6: Contribution to Tourism GDP 27

Figure 7: Domestic and international arrivals in hotels in Mexico 29

Figure 8: International visitors to Mexico arriving by air 29

Figure 9: Importance of digital platforms for private tourism services 37

Figure 10: Worldwide revenue Uber 39

Figure 11: Population aged 60+ 44

Figure 12: Travelers by Age Group in Latin America 47

Figure 13: Employment status of the participants 54

Figure 14: Preference of travel season among participants 56

Figure 15: Answers to the question "Imagine a shared dorm with 6 people costs 10 € (= 12 USD or 230 Mexican Pesos) per person per night. How much would you be willing to pay more for a private room ?" 59

Figure 16: Amount respondents are willing to pay per night per person for a holiday accommodation 60

Figure 17: Business Model Canvas 63

Figure 18: Map of Mexico with planned Senior Hostel Locations 84

List of Tables

Table 1: Top 10 Countries in Travel Spend 8

Table 2: Total outbound trips and types of holidays 14

Table 3: Summary Business Model Canvas applied on Senior Hostel Model 76

1 Introduction

1.1 Research subject

The global tourism industry is booming. More than ever, people want to travel, within their country as well as to other continents and distant countries (World Tourism Organization UNWTO, 2018). Thanks to the latest technologies and modern services, it is also easier than ever to organize journeys, to find a comfortable accommodation and to enjoy holidays. The invention of the airplane, the construction of complex infrastructure and transportation systems – those are just examples of innovations that have made it possible for us to travel around the world and to explore our planet. People can move from one side of the world to another, from Asia to Africa, across Europe up to North- or Latin America. You can be in Germany and arrive to Mexico on the same day, almost 10 000 km in less than twelve hours. (Georg, n.d.) Nothing seems to be impossible in the 20th century.

Besides the benefits that traveling brings to us individuals, tourism has also favored the worldwide economy. International tourist arrivals are constantly increasing as well as the tourism sector’s contribution to the GDP. Moreover, this industry has created many jobs during the last years and still offers a wide range of workplaces. (World Travel & Tourism Council (WTTC), 2017a)

Focusing on the Americas, the Latin American region makes up an essential part of the business in terms of tourist arrivals, GDP growth and employment. South America and Central America experienced a strong travel demand in 2016 with countries like Chile, Colombia and Costa Rica as top destinations. Also, Mexico increased its arrivals significantly, compared to the United States where arrivals declined by 2,2% in 2016. Those key facts underline the importance of tourism in the Latin American countries. As leisure travels are enjoying great popularity, questions about how to attract tourists, how to satisfy their needs and how to make profit out of tourist services need to be considered constantly. (World Tourism Organization UNWTO, 2017)

At the same time, traveling has become an emerging activity among elderly and retired persons. Populations are ageing, people are getting older due to modernized technologies and improved health care services. Life expectancies are increasing while the retirement age was decreasing in the last years. Hence, seniors are more likely to travel compared to their ancestors. (Patuelli & Nijkamp, 2015)

Regarding these demographic tendencies, there is a special need for research in the accommodation sector, since so-called “sharing platforms” like AirBnB experienced a rise in recent years and are strongly competing with traditional hotel and hostel models (ITB Academy Berlin; IPK International, 2016). Moreover, cultural issues and differences in lifestyle are affecting the tourism sector and are leading to changes in the choice of accommodation (Euromonitor International, 2017).

In order to point out factors of success and shortcomings of tourist accommodation types, those emerging tendencies and tourist behaviors need to be observed and examined. The emphasis of this thesis is put on the potential of hostels with the objective of proposing an innovative business model for a senior hostel chain in Mexico.

1.2 Research objectives & questions

The aim of this thesis is to analyze global developments in business models and tendencies in the tourism sector, more specifically in the Latin-American tourism industry, in order to build up a business model for a senior hostel chain in Mexico. Due to the modern characteristics of elderly people as flexible, open-minded persons, the accommodation type of a hostel is chosen (Spasojevic & Bozic, 2016). Also, this lodging type is most commonly known as a “backpacker accommodation”, thus this paper presents a new, innovative model that addresses the needs of a different target customer segment with promising future prospects. The idea of the business model could be generalized and applied in tourist countries worldwide, however, this senior hostel model is specifically created for the Mexican tourism market because of its popularity and growth indicators as a tourist destination (emphasized in Chapter 4 “Geographic Focus: Tourism in Mexico” ).

By examining the factors that increase customer satisfaction among elderly tourists in hostels and significantly impact their travel experience, this proposal aims to attract international shareholders to invest in the growing Latin-American tourism industry.

Therefore, this paper is divided in three main parts: The theoretical background section describes the global tourism industry, its developments and tendencies as well as tourism services and their activities. The second part emphasizes the current situation, the emerging trend of “Senior Tourism” and its influence on the tourism industry, more specifically on the tourist accommodation sector. The focus is put on hostels, the evaluation of advantages and shortcomings of this accommodation type and the opportunities that senior tourism offers in this area. The last part consists of the empirical study which helps to answer the research questions and to derive conclusions for the proposal of a senior hostel chain in Mexico.

The main research questions for this paper are the following:

- What are the factors that influence a customer’s choice, and specifically a senior customer’s choice, for a travel accommodation?
- What are specific offers that the market segment of elderly people wants or expects concerning their travel accommodation in Mexico?
- Which importance do senior tourists accord to different aspects of hostels like, price, quality, safety or privacy?
- How does the health factor affect senior travelers and their needs regarding housing services?
- How promising is the concept of a senior hostel chain in Mexico regarding future developments and travel tendencies?
- What challenges will the tourism industry and specifically the tourist accommodation sector face in the following years?

This paper follows the deductive method of structuring, from a general overview to the specific focus subject. In order to follow this structure more easily, the following tentative conceptual model should provide a guideline.

Abbildung in dieser Leseprobe nicht enthalten

Figure 1: Tentative Conceptual Model, own creation

1.3 Research methodology

Literature-based research and the analysis of statistics is the main source to describe the current progresses in global business models as well as the developments in the tourism industry.

To answer the research questions above, the empirical field study is based on quantitative and qualitative data, obtained through an online survey which is mainly distributed on social media channels. The type of survey is a cross-sectional survey in form of an online questionnaire. This type facilitates the collection of information from a wide range of people in a short period of time. (Sincero, 2012) These research methodologies are used to get a realistic and direct view of hostel guests’ experiences and hence, to create determinants and improvements for a successful business model.

2 The global tourism sector

To understand the global tourism sector, its activities and developments, first, the term “tourism” must be explained. Primarily, tourism can be defined as a business area that offers services to travelers and people on vacation (Cambridge Dictionary - "Tourism", n.d.), thus, it is assigned to the tertiary economic sector (Pettinger, 2016). [I1] The UNWTO describes this term more precisely: “Tourism […] entails the movement of people to countries or places outside their usual environment for personal or business […] purposes.” (Westcott, 2012). According to that, “these people are called visitors […] and tourism has to do with their activities, some of which imply tourism expenditure” (Westcott, 2012). Travel agencies, tourist transportation systems, leisure activities offered by tour operators or holiday accommodations – those are examples of services that belong to the tourism industry and which are described in Chapter 5: ”Tourism Services”. (Westcott, 2012)

The tourism industry makes up an essential part of the worldwide economy and at the same time influences every single country that is providing tourism services. In the following subchapters, the economic impacts of touristic activities will be emphasized, also with regard to the main destinations of travelers and the emerging tendencies that can be noticed.

2.1 Economic impacts

During the last years, the travel and tourism industry has become one of the fastest growing economic sectors worldwide. One main reason is the enlargement of the society’s middle class and its increasing income levels. At the same time, innovation and technology led to more affordable travel possibilities. (Visa Performance Solutions; Oxford Economics, 2016) 1.32 billion international tourist arrivals in 2017, 10.2 % of total contribution to the Gross Domestic Product GDP in 2016 and one out of ten jobs worldwide belong to the tourism and travel sector. (World Travel & Tourism Council (WTTC), 2017a) and (World Tourism Organization UNWTO, 2018)

2017 specifically has been a record year in terms of international tourist arrivals worldwide. To clarify, international tourist arrivals count all the people who arrive in a country that is not their country of residence and outside their general environment, for a stay less than one year and without earning money there. Mainly, the purposes of those visits are holidays and leisure activities. (World Tourism Organization UNWTO, 2017)

Figure 2 shows that the number of arriving tourists climbed from approximately 1.24 billion to 1.32 billion that year, which corresponds to a 7% growth rate. Compared to the steady 4% growth since 2010, this result is remarkable (World Tourism Organization UNWTO, 2018). Also, it is striking that the number of tourist arrivals more than doubled during the last ten years and was growing steadily, with two exceptions in 2003 and 2009. The most significant decline in 2009 clarifies how global economic crisis like the financial crisis in that year affect the tourism industry (United Nations Global Pulse; United Nations World Tourism Organization; International Labour Organization, 2011). However, after this shock, the tourism sector recovered well and continuously attracted more tourists every year. According to WTTC forecasts, international tourist arrivals should exceed the 2 billion mark in ten years (World Travel & Tourism Council (WTTC), 2017a).

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Figure 2: International Tourist Arrivals worldwide, 1995-2017 in million, Source: (World Tourism Organization UNWTO, 2018)

Regarding its total contribution to the GDP, it becomes clear how indispensable the tourism industry is for the world economy. Accommodation businesses, tourist restaurants and other travel services achieved an amount of approximately USD 7.6 trillion in 2016, which represents 10.2 % of the total GDP1. The total amount is expected to rise to USD 11.5 trillion during the next ten years. Thereby, the major part is generated by leisure travels; travels for business purpose made up less than a quarter of the whole direct contribution to GDP in 2016. Also, it is striking that the expenditures of domestic travelers accounted for over 70% of the direct GDP contribution, while spending of foreign visitors only created a minor part[I2] . However, foreign travel expenses are predicted to show a higher growth rate than domestic travel spending during the following years. (World Travel & Tourism Council (WTTC), 2017a)

Another key factor that underlines the success of tourism activities is the employment rate. In 2016, one out of ten jobs was provided by the travel and tourism sector. Almost 300 million people were employed in transportation companies, travel agencies, tourist accommodations or other related services.2 It is predicted that until 2027, around 90 million jobs will be created. (World Travel & Tourism Council (WTTC), 2017a)

Tourists represent a lucrative business for holiday destinations, since traveling and going on vacation also means spending money. Due to the continued rise of international tourist arrivals, the same tendency is revealed for visitor exports, the expenditures of foreign visitors in a country. Approximately USD 1.4 trillion were earned all over the world in 2016, this represents almost 7% of global exports. (World Travel & Tourism Council (WTTC), 2017a)

Table 1 illustrates the ten countries that spent the most on holidays and travel in 2015 and their estimated expenditures in 2025. China and the United States are on top of the ranking with more than USD 100 billion. It is striking that three of the largest emerging countries (Brazil, Russia and China), also called BRIC countries3, will increase their spending for tourism activities by more than 80% until 2025. In contrast, developed countries like the United States, Germany and France will rise their expenditures by a much lower percentage.

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Table 1: Top 10 Countries in Travel Spend, 2015 and 2025 in USD billion, Source: (Visa Performance Solutions; Oxford Economics, 2016)

Tourism accounts for one of the most important export sectors worldwide, only the chemicals and fuel industries are more successful in this point. Especially developing nations are highly dependent on the generation of visitor exports as their main source of income. (World Tourism Organization UNWTO, 2017)

International investors have also noticed those high achievements and provided funds to participate in the success of tourist businesses. Over USD 800 billion were invested in 2016 and the estimated growth rate per year is 4.5%. In 2027, capital investments are forecast to exceed USD 1.3 trillion. (World Travel & Tourism Council (WTTC), 2017a)

These economic impacts created by the tourism business show that although incidents like terrorist attacks and political uncertainties posed threats on many countries and regions during the last years, the overall tourism sector and its growth remain stable. People continue to travel and to spend their holidays in outbound countries, however, their favored destinations are changing. (ITB Academy Berlin; IPK International, 2016) and (World Travel & Tourism Council (WTTC), 2017c).

The next subchapter describes the altering choices of the main leisure destinations.

2.2 Main destinations of tourists & developments

2.2.1 Region: Europe

Europe remains the leading tourist destinations of visitors worldwide. In 2017, the continent experienced a growth of 8% in international tourist arrivals, which represented a total of more than 670 million tourists (World Tourism Organization UNWTO, 2018). Compared to the 2% growth rate in the previous year, the tourism sector recovered well in 2017. Moreover, the continent is ahead of all the other regions in terms of international tourism receipts. In 2016, the expenditures of inbound visitors represented USD 447 billion, which was equivalent to 37% of all global receipts. (World Tourism Organization UNWTO, 2017)

France defended its first place in the ranking of international tourist arrivals in 2016 with 82.5 million visitors, followed by Spain and Italy. However, the growth rate of -2% makes clear that France lost visitors compared to the previous year, due to security concerns and the threats of terrorist attacks. Same tendency accounted for Belgium, where the number of tourists decreased by 10%. In contrast, Spain was one of the winners concerning the growth rate as the number of international visitors increased by 10% up to 76 million. (World Tourism Organization UNWTO, 2017)

Also, North European countries like Iceland (39% growth rate) and Norway (12%) as well as the islands Cyprus (20%) and Malta (10%) in Southern Europe attracted much more tourists than they did the previous years. (World Tourism Organization UNWTO, 2017)

2.2.2 Region: Asia and the Pacific

From 284 million visitors in 2015, to 308 million in 2016 and 324 million in 2017 – the region of Asia and the Pacific was by far the fastest growing during the last years. Consequently, more tourists spent more money, thus, the region also increased its inbound tourism receipts, which made up 30% of the receipts worldwide in 2016. (World Tourism Organization UNWTO, 2018) and (World Tourism Organization UNWTO, 2017)

China remained the leader among the top destinations, followed by Thailand, Malaysia and Japan. Countries with a great potential and good prospects for the future are Korea, which recorded a growth rate of 30%, Japan (22%) and Vietnam, where tourist arrivals climbed by more than 2 million (26%) in 2016. Those developments show that traveling to the Asian-Pacific region got easier due to better flight connections, lower prices and simplified immigration processes, in contrast to earlier times. (World Tourism Organization UNWTO, 2017)

2.2.3 Region: Americas

The so-called “Americas” which is composed of North-America, the Caribbean, Central America and South-America welcomed more than 200 million tourists during the last year who spent over USD 300 billion (World Tourism Organization UNWTO, 2018). Although the United States remained the top destination of the region, the country attracted less travelers in 2016 than the year before. According to the American newspaper “The New York Times” and the U.S. Department of Commerce, this development could be a consequence of president Donald Trump’s proposals about an entry ban for Muslims and a wall at the border to Mexico (Glusac, 2017). However, Canada and Mexico could profit from a rise in the number of visitors, with Mexico as the second largest travel destination in the Americas and Canada on the third rank. (World Tourism Organization UNWTO, 2017)

Moreover, the growing popularity of Latin-American countries was remarkably in 2016. With an increase of 7% in international tourist arrivals, South America was the leader compared to the other three sub-regions. (World Tourism Organization UNWTO, 2017) Chapter 3: “The Latin-American Tourism Sector” of this paper puts the emphasis on those developments in Latin-America.

2.2.4 Region: Africa

With regard to the travel region of Africa and its developments, the continent still makes up a relatively small part of the world’s total international arrivals with 62 million in 2017 (around 5% of worldwide arrivals) (World Tourism Organization UNWTO, 2018). Africa constantly has to deal with health problems and diseases among the populations, political unrests and other economic uncertainties that may threat incoming visitors. However, the growth rate of 8% could predict a better future for the tourism sector. (World Tourism Organization UNWTO, 2017)

The Sub-Saharan region was more popular than the North African part with nearly twice as many visitors two years ago, but this may also be due to the greater geographical extent of that region. Morocco and South Africa both attracted around 10 million visiting people and earned the highest amount of international tourist receipts, thus, they were considered as the definite top destinations in Africa in 2016. (World Tourism Organization UNWTO, 2017)

2.2.5 Region: Middle East

The less touristic region worldwide, as measured by the number of tourist arrivals, was the Middle East with a total of 58 million visitors in 2017 (World Tourism Organization UNWTO, 2018). Saudi Arabia and the United Arab Emirates counted the most international travelers and the highest tourism receipts two years ago, but only showed a slight growth compared to 2015. Egypt, that ranked third among the top destinations, experienced an extreme drop of 4 million tourists which equals a harsh decline of 42% percent in tourism. (World Tourism Organization UNWTO, 2017) Similar to the African region, the causes mainly lie in political challenges and terrorist threats (Cull, 2017).

2.2.6 Outbound travels – Who travels the most?

Concerning outbound travels4 in 2016, the number of people traveling outside of their residence country climbed by approximately 4%, showing a stable growth rate (ITB Academy Berlin; IPK International, 2016). The European residents who were traveling the most outside their own country were German, British and French people. On a global basis, those countries also ranked among the top 5 source markets of outbound travel. (World Tourism Organization UNWTO, 2017)

On top of the ranking, China remained its position with 135 million Chinese travelers, a 6% increase compared to 2015. Overall, the international tourism expenses of Chinese people were double as high as those of US-citizens, who took the 2nd place in outbound trips. (World Tourism Organization UNWTO, 2017) A growth rate of 5% was measured regarding Latin American tourists and their travels (ITB Berlin; IPK International, 2018).

2.2.7 Outlook & opportunities

To summarize the facts in the previous subchapters, it is notable that Europe and Africa were the fastest-growing regions worldwide with a growth rate of 8% in international tourist arrivals. However, the South American region also showed high results (7% growth) with some outstanding, popular destinations (more in Chapter 3: “The Latin-American Tourism Sector”).

All in all, it is predicted that the number of international tourist arrivals will grow continuously, hence, more and more people will travel and the tourism industry will keep booming. According to reports by the UNWTO, in 2030, 1.8 billion visitors are expected to be received by their holiday destinations (World Tourism Organization UNWTO, 2017).

Special attention should be put on emerging countries. Destinations in Asia and Latin America for example are forecast to receive more visitors than ever before and should outpace developed countries in terms of international tourist arrivals until 2020. (World Tourism Organization UNWTO, 2017)

2.3 Travel behaviors & tendencies

Like most other businesses and sectors, also the tourism industry and the related business activities mainly depend on customer demand and their needs. But, with innovation and technology, people also tend to change their preferences and travel behaviors, for example regarding destinations, transportation means or accommodation types. In order to satisfy the consumers’ needs and to remain successful in the tourism business, companies and organizations need to adapt to those changes and new values. (Deloitte Center for Industry Insights, 2017)

In the following, emerging tendencies of travel behavior and consumer choices are analyzed.

Firstly, a promising fact is the current tendency that people prefer to spend more money on travels than on buying new products. While expenditures for products like cars or clothes were decreasing during the last years, consumers tend to dedicate more of their savings for travel and holidays. (Langford & Weissenberger, 2018)

2.3.1 Types of holidays

Among European tourists, it was remarkable, that the overall tendency of holiday destinations switched to places that were perceived as safer, especially regarding the latest terrorist attacks and political unrests in 2015 and 2016. However, people preferred to travel within Europe instead of visiting countries in other parts of the world. 5.5% of European trips were for holiday purpose and leisure time. Among those holiday trips, city trips were the most popular type with a sharp increase of 20% during the first eight months of 2017. “Sun and beach” destinations were also attractive to European outbound travelers with a 7% growth rate. Moreover, Europeans tended to spend more money on holidays with an average expenditure of 945 € per trip (ITB Berlin; IPK International, 2018).

Regarding the Asian travel behaviors, there was an enormous rise in “sun and beach” destinations from January to August 2017 (15% growth). City trips also remained very popular. Most Asian people preferred to travel to their neighbor countries or near regions, however, outbound travels to Europe performed well and grew by 7% during the first eight months of the year. (ITB Berlin; IPK International, 2018)

From January to August 2017, North American citizens mainly traveled on holiday purpose as well as to visit members of their family. With a 15% growth rate in the same period, cities as travel destinations proved more popular than leisure time at the beach. (ITB Berlin; IPK International, 2018)

Holidays of Latin Americans rose by 6%, but in contrast to their northern neighbors, their visits of family members and friends declined by a huge amount of 7%. The main reason therefore is the critical relationship between the USA and Mexico, leading to decreasing outbound travels to the United States. Generally, Latin American citizens favored city trips and tour holidays over beach destinations. For 2018, a total increase of 6% in outbound travels is forecast for the Latin American region. (ITB Berlin; IPK International, 2018)

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Table 2: Total outbound trips and types of holidays, January to August 2017, in percent, Source: (ITB Berlin; IPK International, 2018)

2.3.2 Demographic factors

Demographic factors like age, gender or educational level also influence choices of people concerning their travels and holidays. The following subchapters examine the impacts of those factors on the travel behavior, how they are characterized and how the tourism industry needs to adapt to those features. Millennials

One key market segment that has significant effects on the tourism industry and its offers is the so-called generation of “millennials”5 or “Generation Y”, that usually includes people born between the 1980s and the year 2000. Their lifestyle, modern values and changing priorities constantly pose a challenge to tourism businesses that try to adapt their services to the consumers’ needs. (McDonald, 2015)

The importance of millennial travelers was emphasized by the IPK International World Travel Monitor in 2015. According to this organization and its data reports, one third of all European outbound travelers were young adults aged 15 to 35. This trend was also reflected in the Chinese society in 2016, where almost 2/3 of all travelers were millennials. (ITB Berlin; IPK International, 2018) and (ITB Academy Berlin; IPK International, 2016)

One target group that could become indispensable for the tourism industry are Muslim millennials. An indicator therefore is the striking number of young Muslims under 30 years old, which almost make up 2/3 of all Muslims worldwide. Those young adults are traveling a lot and numbers are expected to grow continuously. In less than ten years, the Muslim tourism market is forecast to generate USD 300 billion; over one third of that amount will be contributed by millennials. A challenge for tourism business and services will be the adaption of their offer to the Muslim religion and traditions, such as specific food or praying rooms. (ITB Berlin; IPK International, 2018)

Despite the lower expenditures of young international tourists on holidays, their travel behavior, for example regarding the type of accommodation or the length of stay, was similar to the one of older travelers. However, significant characteristics that describe the millennials’ travel behavior lie in their motives and expectations of traveling. (ITB Academy Berlin; IPK International, 2016)

The “Generation Y” is primarily looking for independence, life-experience and authenticity during their trips. They want to get to know different cultures and local people, experience a unique stay and create many personalized, memorable moments. They prefer to collect experiences than products, experiential terms are getting more valuable than material things. This development is illustrated in Figure 3. While expenditures for material things will only slightly increase during the following years, people will spend much more money on experiential terms like holidays and trips. (Deloitte Center for Industry Insights, 2017) and (Future Foundation; Amadeus Traveller Trend Observatory, 2015)

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Figure 3: Total Annual Expenditure on Enrichment/Experience vs. Material Goods, in billions of €, January 2015 Forecast, Source: (Future Foundation; Amadeus Traveller Trend Observatory, 2015)

Therefore, businesses in the tourism industry need to provoke feelings of appreciation and personalization to their customers, in order to be successful and gain their loyalty. (Deloitte Center for Industry Insights, 2017) An example is the luxury hospitality industry. This specific accommodation sector needs to adjust its concepts and specialize on experience-based offers, not solely on high quality luxury products. Ideas of improvement could be more wellness and spa areas or comfortable common rooms to enhance interaction and communication among the guests. (ITB Berlin; IPK International, 2018) Global aging and elderly travelers

While millennials are a key target group for tourism businesses because they account for a high amount of travels worldwide, an emerging demographic tendency will have a strong impact on the tourism sector during the next years – the increasing number of elderly people. Since the world population is aging continuously, also more and more older tourists will travel and spend their money on holidays. Thus, the tourism sector needs to observe those changes and adapt to the new preferences and needs of this large market segment. (Visa Performance Solutions; Oxford Economics, 2016) and (Euromonitor International, 2017) As a key part of this thesis, Chapter 6: “Senior Tourism” will analyze this trend more in detail and focus on this new opportunity for tourism businesses. Female empowerment

Regarding gender differences, the trend of female empowerment is not only a current topic in work environments, it is also an emerging tendency in the travel sector. Solo travelling gained overall popularity during the last years. People searching for freedom and liberty while discovering the world alone. However, this tendency is mainly driven by women solo travelers and is predicted to spread and grow worldwide. (Barrell, 2016)

Many women nowadays decide to go on a journey on their own. They are looking for independence, new experiences and confidence. According to a survey by TripAdvisor6 in 2015, 74% out of 9000 female respondents stated that they already got experience by travelling solo or that they would plan to go on a journey alone in 2015 (Barrell, 2016). Their main concerns thereby are related to security issues. Consequently, tourism businesses like accommodation services need to reassure woman about their safety conditions and prove themselves as a safe place to stay. This can be outlined by reviews and recommendations on online blogs or websites like TripAdvisor. (Barrell, 2016) and (Euromonitor International, 2017)

Although female rights and their empowerment are increasing, gender inequality is still present in work life or private environments. This state can also be observed in the tourism industry. Woman are still mostly represented in workplaces considered “for women” according to stereotypes, while men are mainly dominating higher positions. Examples are flight attendants, a job mostly occupied by women and pilots, generally executed by men. The latter is thereby the higher, more prestigious position. The United Nations and other organization for women are constantly trying to reinforce female rights, however, the future will reveal the development of female empowerment. (World Tourism Organization (UNWTO); UN Women, 2011) Influence of work-life on travel

The working environment and job conditions are changing constantly and steadily enhancing flexibility. Traditional jobs with fixed working hours are substituted by flex-time7, self-employment or so-called zero-hours contracts8. People have more opportunities to manage their working schedule and to plan their life outside the workplace. Those changing lifestyles consequently influence our travel behavior. Instead of placing one’s vacation days to a fixed period of time, people are more flexible to travel almost whenever they want. (Future Foundation; Amadeus Traveller Trend Observatory, 2015) As an example, the trend of self-employment is rising in Latin-American countries, hence, those workers or managers have more possibilities to balance their job and their life activities. (Euromonitor International, 2017)

At the same time, executives are increasingly going on business trips. Beside the work experience of those journeys, business trips also enhance the cultural skills of employees and widen their global understanding. Moreover, those travelers usually enjoy leisure time at their destination, thus, they represent an important consumer group for the tourism industry. (Future Foundation; Amadeus Traveller Trend Observatory, 2015)

Referring to the topic of gender inequality in the previous subchapter, it is worth adding, that men clearly dominate the section of business trips. Only 34% of all business travelers are women. (McGuire & Noon, 2014)

2.3.3 Technology & connectivity

One crucial element that also impacts this personalization and authenticity tendency is the digital connectivity. Young travelers like to get individualized offers for example through booking applications on their smartphone. Mobile Internet access and technologies allow us to receive information about journeys at any time, to travel with our online flight ticket or to find the direction to the next tourist attraction. While enjoying our travels, we can upload and share our unique experiences on platforms like Instagram or Facebook. Those online resources and social media trends have an increasing influence on our travel decisions, especially the ones of younger generations, and even start replacing traditional travel agencies, books or maps. (Deloitte Center for Industry Insights, 2017) and (Visa Performance Solutions; Oxford Economics, 2016)

“Connectivity is not just a facility – it is also a lifestyle” (Future Foundation; Amadeus Traveller Trend Observatory, 2015, p. 20). This does not only account for millennials like emphasized above, it rather applies for many groups among society. For instance, business managers need to manage their work on holidays or business trips. They are reliant on the newest technologies and global connectivity. (Future Foundation; Amadeus Traveller Trend Observatory, 2015)

Regarding the future, new technologies and innovations will shape the tourism industry: Wi-Fi connections and mobile networks will get faster, cashless payment methods will be extended and flight tracking systems will be improved. According to a report by the “FutureFoundation” and “Amadeus”, the prospective question of tourists will not be whether there is Wi-Fi in a place but rather how fast the wireless connection is (Future Foundation; Amadeus Traveller Trend Observatory, 2015).

Besides these digitalization developments, the geographical connectivity will play a key role in future tourism. Infrastructures will continue to improve and reinforce global connections with more airports, better airplanes and many direct flight connections. (Visa Performance Solutions; Oxford Economics, 2016) Also, the use of robots is considered in order to personalize journeys, for example as personal tourist assistants or “luggage robots” in hotels. (ITB Berlin; IPK International, 2018)

2.3.4 Travel risks & their influence on tourism

Regarding the terror attacks, natural disasters and economic crisis that occurred during the last years, tourists have become more volatile and sensitive concerning their decisions. Many are expressing security concerns and are worried about the risks of travelling to specific destinations. According to findings by IPK International and ITB Berlin, more than 40% intend to modify their holiday plans and change destinations due to terror warnings. Most people are not willing to give up their holidays completely but switching to destinations that are perceived to be more secure is considered as a good option. (ITB Berlin; IPK International, 2018)

Moreover, people worldwide responded differently to those threats. Asians were much more frightened by terroristic acts and were more likely to change their holiday plans than European citizens. Thereby, countries like Spain, the United Kingdom and the United States were especially considerer as dangerous and unsafe. (ITB Berlin; IPK International, 2018) and (Visa Performance Solutions; Oxford Economics, 2016). Indeed, people should be aware of external risks like terror attacks and not neglect them, however, as shown in figures by the World Travel Monitor, criminal acts and health problems are more common risks than terrorist attacks (ITB Berlin; IPK International, 2018).

2.3.5 Overtourism

Due to the extremely high numbers of travelers during the last years and especially in 2017, a negative side effect has emerged as well: Overtourism and Overcrowding. Multiple destinations worldwide received so many visitors, that tourists started to feel negatively affected by overcrowded places. A large amount of 25% felt annoyed by the mass of tourists and almost one person out of ten saw the quality of their trip decreasing. This tendency was mostly revealed by Asian tourists. Concerning the type of travels, ski and winter holiday destinations were the most affected. However, also popular cities like Shanghai, Amsterdam or Barcelona had to face crowds of tourists. (ITB Berlin; IPK International, 2018)

To stop those negative impacts on peoples’ holidays caused by overtourism, the travel industry needs to improve its managing strategies. According to the CEO of IPK International, Rolf Freitag, the growing tourism sector and increasing number of travelers do not pose the main threat. It is rather an issue of tourists’ preferences regarding specific regions and seasons. More unknown destinations need to attract more visitors in order to balance the distribution of tourists worldwide. (ITB Berlin; IPK International, 2018)

3 The Latin-American tourism sector

In 2015, the region of Latin American and the Caribbean (LAC) achieved a combined GDP of USD 5.3 trillion, which puts it on the fourth rank compared to worldwide economies. Only the European Union, the United States and China reached higher numbers. The region also includes over 630 million citizens that form one of the largest markets worldwide. One indispensable sector for the Latin America and the Caribbean economy is the tourism industry. (OECD, 2017a) The following subchapters explain what economic impacts travel and tourism have on this region and specify on the main destinations.

3.1 Economic impacts

As already mentioned in Chapter 2.2.3: “Region: Americas”, the Latin-American region achieved higher results in terms of growth than its neighbors in North America. In 2016, South America welcomed 7% more international visitors than the previous years, similar tendency for the Caribbean and Central America with a 5% increase both. Approximately 33 million foreigners travelled to the southern subregion, over 25 million to the Caribbean and 10 million to countries in Central America. In terms of international tourism receipts, the Caribbean was the most successful region with more than USD 30 billion, making up almost 10% of all tourism receipts in the Americas. (World Tourism Organization UNWTO, 2017).

As shown in Figure 4, all together, the Latin American tourism industry contributed a total of USD 328 billion to the GDP in 2016. This is equivalent to 8.8% of the total GDP. The tendency is positive, since the contribution is expected to rise by 3.5% per year until 2027. (World Travel & Tourism Council (WTTC), 2017d)

Concerning the type of travel, leisure holidays accounted for more than 82% of the direct GDP contribution in 2016. This clarifies the importance of leisure travels compared to journeys for business purpose, which only made up around 18%. Also, expenditures by domestic tourists (80.3% of direct GDP contribution) were much more significant than foreign visitor spending (19.3% of direct GDP contribution). (World Travel & Tourism Council (WTTC), 2017d)

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Figure 4: Total Contribution of Travel & Tourism Industry to GDP in Latin America, 2016, in USD billion, forecasts for 2017 and 2027, Source: (World Travel & Tourism Council (WTTC), 2017d)

Regarding the employment rate, over 16 million people were working in the Latin American tourism industry in 2016. Hence, this industry generated 7.8% of all jobs in Latin America. During the next ten years, 4 million people more are expected to get employed in the sector. (World Travel & Tourism Council (WTTC), 2017d)

Since international tourist arrivals are increasing in Latin America, simultaneously the expenditures of visitors are growing. Those visitor exports accounted for USD 44 billion in 2016 and are expected to jump dramatically. In 2027, almost twice as many tourists will arrive in the region, hence, spending by visitors are forecast to double. (World Travel & Tourism Council (WTTC), 2017d)

Moreover, the Latin American tourism industry attracted many investors that spent USD 42 billion in capital investment in total two years ago. Similar to the overall tendency for this regional market, investments are also estimated to grow, namely by 4.3% per year until 2027. (World Travel & Tourism Council (WTTC), 2017d)

3.2 Main destinations of tourists & outbound travels

Among the most popular destinations for international tourists in Latin America illustrated in Figure 5, there is one remarkable winner with almost 35 million visitors in 2016: Mexico. Further details will be revealed in Chapter 4: “Geographic Focus: Tourism in Mexico”. Brazil ranks second with approximately 6.6 million tourists, followed by the Dominican Republic and the South American countries Chile and Argentina. All in all, 13 Latin American countries welcomed more than 2 million people each in 2016. (Statista, n.d. (a))

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Figure 5: International Tourist Arrivals to Latin America by country, in 2016, in millions, Source: (Statista, n.d. (a))

Chile, which ranks fourth in the figure above, was by far the winner in terms of growth rate with a rise of 26% in the number of international arrivals. The country was followed by Columbia, Uruguay and Peru which all attracted around 10% more tourists than the previous year. In Central America, Costa Rica received the most tourists and also attained the highest growth rate. Panama had to face a decline of 5% but still ranked second in the total number of arrivals in the central part of the continent. (World Tourism Organization UNWTO, 2017)

Regarding outbound travels, Latin Americans increased their international journeys by 5%, whereas holidays in the countryside, city trips and organized touring holidays were the most popular. (ITB Berlin; IPK International, 2018)

3.3 Tendencies & outlook

Currently, the Latin American tourism sector is facing three main tendencies regarding the demographic factors of consumers: Senior tourists, self-employed workers and independent female travelers.

In the case of self-employed workers for example, it is notable that the amount of “boss-less” employees constantly exceeded the number of employers in Latin America from 2013 until 2016. People are enjoying more flexibility and changes in their lifestyle towards more traveling. (Euromonitor International, 2017)

Those factors were already described in Chapter 2.3.2: “Demographic Factors” since they also account for the global tourism area. The focus on senior tourism is in Chapter 6: “Senior Tourism”.

To conclude the economic findings and main destinations, travel and tourism in Latin America shows promising results and growth rates that offer profitable prospects for the future. The South-American continent (7% growth in tourist arrivals) as well as the individual country Mexico (2nd rank: number of tourist arrivals in the Americas) offer a great potential for further business activities and investments in the tourism industry of this region. Tourist arrivals, GDP contribution, employment and investments are all estimated to rise during the next years and will thereby promote the popularity of Latin American countries in the tourism sector. Hereby, the most striking destination concerning tourist arrivals, Mexico, will be analyzed in detail in the following chapter. (Statista, n.d. (a)) and (World Travel & Tourism Council (WTTC), 2017d)

4 Geographic focus: tourism in Mexico

Lonely beaches along “Riviera Maya”, traditional colonial towns in the center of the country or the big city life in Mexico’s heart, Mexico City. People from all over the world have the desire to explore the Caribbean Sea, the mountains and natural parks, the culture and traditions. The North-American country has many diverse places to offer, attracting more and more tourists every year. Consequently, during the last years, Mexico experienced a boom of the tourism industry. Rising numbers of tourist arrivals, growing GDP and increasing amounts of workplaces in this sector underline the importance and potential of the Mexican travel industry. (OECD, 2017b) The following subchapters analyze the economic consequences, the most popular travel destinations and the tendencies for future developments.

4.1 Economic impacts

The extraordinary popularity of Mexico as a holiday destination is emphasized by its number of tourist arrivals from all over the world. For example, 8.1 million visitors arrived in January 2017. Compared to January 2016, this number is 3.4% higher than the previous year. (Datatur & Sectur, 2017)

As already mentioned earlier, in 2016, Mexico was the second country in the Americas to welcome the most visitors with almost 35 million, just behind the United States. This equals a growth rate of nearly 9% compared to the previous year. On a worldwide basis, Mexico ranked 9th in 2015. (World Tourism Organization UNWTO, 2017)

Another indicator of success is the GDP contribution. 16% of the total GDP accounted for the Mexican travel and tourism industry, namely USD 166 billion, in 2016. This number is expected to jump during the next years. Thereby, a striking fact that is illustrated in Figure 6 is the importance of leisure travel for the North-American country. Almost 89% of the direct Tourism GDP was created by leisure holidays, while travels for business purpose only generated 11% of the GDP. Also, the tourism sector is much more dependent on domestic travel spending (83% of GDP) than on expenditures by foreigners (16%). (World Travel & Tourism Council (WTTC), 2017e)

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Figure 6: Contribution to Tourism GDP, business spending vs. leisure spending and domestic spending vs. foreign spending, 2016, in percent, Source: Own illustration, according to (World Travel & Tourism Council (WTTC), 2017e)

Jobs directly and indirectly9 created by the travel industry in Mexico are estimated to exceed the 10 million benchmark, which corresponds to nearly 18% of total employment (EFE News Service, 2017). Hereby, most people were employed in restaurants, bars and clubs, many were also working in public transportation areas and a minor part in the accommodation sector (OECD, 2017b).

Concerning visitor exports, the expenditures of tourists in Mexico are constantly rising since 2011. While the country generated approximately USD 20 billion two years ago, this number is expected to climb up to USD 34 billion in 2027. The reason for this is the estimated boom of visitors. Around 56 million international tourists are forecast to arrive in the country, willing to spend their savings on holidays in Mexico. (World Travel & Tourism Council (WTTC), 2017e) and (World Tourism Organization UNWTO, 2017)

Those promising estimations and tendencies count as key factors to attract investors. Over the next ten years, capital investment is forecast to rise by almost 6% per year, yielding to USD 14 billion in 2027. (World Travel & Tourism Council (WTTC), 2017e) However, to tie up capital and to ensure the attractivity of Mexico for investors, the country needs to evaluate strategies against the rising competition. (OECD, 2017b)

4.2 Main destinations of tourists

Most tourists associate Mexico with sun, white sand beaches, turquoise water and ancient Mayan sites. Those impressions are also revealed in statistics about the most popular destinations. The majority of international tourists booked their holidays at the Caribbean Sea, namely in Cancún and the Riviera Maya, or in Los Cabos in Baja California. In 2014, almost 50% of all international visitors stayed in the state of Quintana Roo in the Southeast of Mexico. Mexico City ranked second, followed by the states of Jalisco and Baja California. (OECD, 2017b)

Obviously, the same tendency is represented in the numbers of arrivals at different airports. In January 2017, the most frequented airport was Cancún with approximately 690 000 foreign arrivals in one month, followed by Mexico City, Puerto Vallarta at the West coast and Los Cabos. (Datatur & Sectur, 2017)

On the other side, Figure 7 shows that domestic travelers are more likely to spread their holiday destinations around different regions of the country. They preferred places like Veracruz in the center, Acapulco or the capital city. It is notable that over 80% of visitors in the center region were domestic travelers, while only a minor part of foreigners visited this area. The South-Southeast region is clearly the most popular destination among internationals, however, the number of national tourists is still particularly high. (OECD, 2017b)

All in all, national citizens account for a much larger part than international travelers and thus, play an essential role for the Mexican tourism industry.

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Figure 7: Domestic and international arrivals in hotels in Mexico by region, 2014, in millionsn and percent, Source: (OECD, 2017b)

4.2.1 Main visitors

Due to their geographical proximity, Mexico’s key market of visitors by country are US Americans. In 2014, almost 80% of all international visitors came from the United States, followed by Canada. For better visualization and understanding, the pie chart (Figure 8) shows the distribution according to the arrivals by air in January 2017. Arrivals from other parts of the world are also expected to increase, for instance, from the United Kingdom, Colombia and Argentina. The source market of European citizens is forecast to grow as well. (OECD, 2017b)

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Figure 8: International visitors to Mexico arriving by air in January 2017, Source: (Datatur & Sectur, 2017)

Moreover, “border tourists” are increasingly present in Mexico. Many visitors from the United States or Belize and Guatemala, who are living near the border, travel to Mexico for a short stay or daytrips. Reasons therefore are currency exchange rates, price differences or the visit of families and friends. (OECD, 2017b)

4.3 Tendencies & opportunities

In order to estimate future developments and opportunities for the Mexican travel and tourism sector, current tendencies must be observed and analyzed. The importance of tourism for the country and its overall economy was revealed in previous chapters, however, Mexico needs to evaluate its possibilities and potential to enhance growth in this industry. Therefore, the following trends will elaborate factors and markets, the Latin-American country needs to focus on.

As explained and illustrated in Figure 6 before, Mexico’s focus point in the tourism industry remains the domestic tourism market. For instance, many national citizens travel to destinations that are unknown or unattractive for foreign visitors, hence, they balance the touristic contributions among different regions. However, regarding the length of stay, international visitors are more likely to spend several nights at one place, while domestic travelers stay shorter times. Also, many foreigners choose expensive hotels for their holidays, while national citizens are less willing to spend much money on accommodation. (OECD, 2017b)

The main international target visitors in the future could be Europeans and Asians, since they showed the highest intentions to travel outbound. China, for example, remains a small market for the Mexican tourism industry, but it could emerge in numbers of arrivals and GDP contribution during the next years. US citizens looking for holiday destinations nearby and “border tourists” will remain a key group of customers, that the tourism industry should focus on. (World Tourism Organization UNWTO, 2017) and (OECD, 2017b)

Moreover, developments in the demographic landscape could influence the tourism industry. Like mentioned earlier, the global aging population is one aspect that needs to be considered in Latin America and specifically in the Mexican consumer market. Elderly people as well as independent workers or female solo travelers could shape the future travel sector, hence adaptions to their needs and wishes must be done. (Euromonitor International, 2017)

Although the country currently benefits of its rising popularity, it also faces serious security issues that pose threats to visitors. Drug-trafficking, organized crime or shootings are not uncommon and can endanger citizens’ and tourists’ safety and thus, scare travelers off. In Acapulco, for example, hotels have seen tourist arrivals decreasing due to perceived insecurity and feelings of danger. While some areas in the North and South are not recommended to visit, indeed this is not the case for the main tourist destinations, which were mostly considered as trouble-free. Also, most travelers have not experienced any security problems during their stay in Mexico and have never been victims of crimes, because usually tourists are not targeted. Consequently, foreign governments advice their citizens to be aware of crimes and to travel cautiously, but at the same time not to be afraid of visiting the country. However, to improve Mexico’s image towards a safe holiday destination and to remain popular, the country will need to fight against drug cartels and reduce criminal actions. (Monterrubio, 2013)

Besides those security threats, external risks and natural disasters like earthquakes scare potential visitors. It is known that some parts of Mexico have a higher risk of earthquakes than other countries and that the consequences are disastrous. The latest earthquake in September 2017 in Mexico City caused the death of over 340 people and besides that, enormous economic losses and destroyed infrastructures. Natural disasters also impact the tourism industry, creating anxiety and insecurity among visitors. But, catastrophes like these can occur in many parts of the world and obviously, they cannot be influenced or avoided by governments or citizens. Additionally, the probability to get affected by an earthquake or natural disaster as a holiday tourist is very low, hence, the tourism services continue to promote the country and to attract visitors. (Amador, Salazar, & Serrano, 2017)

5 Tourism services

The tourism industry accounts as a third industry sector providing services to customers. Those service providers mainly include accommodation businesses like hotels, food and beverage companies like tourist restaurants, tour operators, travel agencies or city marketing offices. (Westcott, 2012) In order to get an overview about the various business activities in the tourism industry, this chapter will present briefly the main travel-related services.

5.1 Travel agencies

The purpose of travel agencies is to facilitate the communication and interaction between suppliers in the tourism industry and customers. Thereby, suppliers can be accommodations, car rentals or tour operators offering their services to tourists. Usually travel agencies promote organized tours and packages by tour operators which already include flights, transportation, hotels and activities. Persons employed in travel agencies, the so-called travel agents, act as contact persons for travelers who need advice concerning holiday destinations, tours or current travel highlights. They provide information and also offer the service to manage the booking and organization of journeys for tourists who prefer not to organize it on their own. Cruise holidays account as one of the main journeys booked through travel agencies. (Board of Intermediate Education AP, n.d.)

In order to strengthen the customer relation and to answer the travelers’ questions more precisely, many travel agents work in an office which is accessible for every interested person. However, since mobile devices and the use of internet for holiday bookings are constantly gaining popularity, more and more travel agencies decide to operate online. Internet platforms like and are two of the most popular online travel agents. (Westcott, 2012)

5.2 Tour operators

The main task of tour operators is to collect elements of a journey like hotel rooms, transfers and flight tickets, to combine those services and to offer an organized tour package to the customer. Therefore, tour operates constantly negotiate with airlines, hotels or restaurants to provide relatively cost-efficient packages to the travelers. Despite the tour operators, the main resellers of those organized tours are travel agencies. (Westcott, 2012) The target customers are tourists who want to go on holidays but prefer a completely planned package with all the components included instead of arranging it on their own. They can either book independent packages and travel alone or choose organized group tours. (Saffery, Morgan, & Tulga, 2007) The importance of this tourism segment is underlined by statistics about the profitability of travel activities and tours. According to a report by Deloitte, 10% of the worldwide revenue of tourism services is generated by tourist attractions, holiday activities and organized tours. This represents almost the double amount of the car rental market. (Langford & Weissenberger, 2018)

5.3 Tourist information centers

An essential service to promote cities or places and to attract tourists is the destination marketing. This is primarily realized through tourist information centers or visitor bureaus. The aim is to develop marketing strategies that assure the popularity of this destination for visitors. At the same time, it provides tourists with all necessary information, attractions or tours their holiday place has to offer. Therefore, tourist offices often work together with tour operators or travel agencies. (Westcott, 2012)

5.4 Tourist attractions

Like the term already suggests, the main purpose of tourist attractions is to attract people and to create a need to visit those places of entertainment or culture. Tourist attractions basically build the basis for all other tourism services. Without places of attraction and interest, tourists may not have the incentive to travel. They would neither need travel agencies nor tourist accommodations or flights to the other side of the planet. Hence, popular sights, amusement parks or untouched natural places are examples that generate the wish to go on holidays and to explore the world. (Westcott, 2012)

Because of their diversity and wide range, tourist attractions can be divided into different categories according to Morgan Westcott, the main author of “British Columbia Open Textbook”. “Heritage attractions” (Westcott, 2012, p. 130) for example include cultural and natural places like historic sites, ancient monuments, wonders of the world as well as museums and galleries. Theme or water parks, festivals, sports activities and all related offers with the purpose to amuse visitors account to the categories of entertainment or recreation. “Commercial attractions” (Westcott, 2012, p. 130) comprise all retail activities related to tourism, for example souvenir shops or sales of handcrafted goods. Activities like wine tasting, the visit of a brewery or tours in factories are part of the “industrial attractions” (Westcott, 2012, p. 130). Obviously, most tourist destinations are not limited to one category but rather offer a mixture of activities to attract tourists. (Westcott, 2012)

5.5 Transportation services

People travel from place to place, faster than ever. Whether by plane, bus, train or car, tourists can easily move around the world. In order to guarantee this flexibility and rapidity, transportation systems must be perfectly organized and constantly adapted to new standards or technological developments. (Juniac, June 2017) Every mode of transport has its advantages and disadvantages and passengers mainly decide regarding the following factors: distance of the destination, speed of the transportation mean, costs, comfort and safety. The next subchapters will briefly present the benefits and limitations of different tourist transportation modes. (Mammadov, 2012)

5.5.1 Air transportation

One of the main transportation means used by tourists is the airplane. The most outstanding advantage compared to other means like busses and trains is the possibility of long-distance journeys in record time. 3.8 billion people worldwide traveled on 40.4 million flights in 2016, spending approximately USD 650 billion all together. Economies are highly benefitting from this part of the industry in terms of GDP, but also in job market. Around 67.7 million jobs in the supply-chain were generated by the air transportation sector in 2016. (Juniac, June 2017) Moreover, to ensure the success of air travel and the trust of passengers, safety standards are constantly being improved. Accident rates decreased in 2016 and security measures were improved. (Juniac, June 2017)

Among the top airlines regarding customer satisfaction, Qatar Airways, Singapore Airlines and Emirates scored the highest in 2017 according to the “World Airline Awards” by Skytrax (Skytrax, 2017). One trend that poses a challenge to traditional airlines is the emerging popularity of low-cost airlines. Those increasingly attracted passengers with low flight prices during the last years and still represent a threat to traditional, more expensive airlines. Future developments will reveal how cost strategies were reconsidered or how low-cost airlines increased their profits. (Langford & Weissenberger, 2018)

5.5.2 Automobile transportation

One of the most common transportation means for short or medium distances is the car. Many travelers prefer to take an automobile to reduce costs and save time. While flights are comparatively fast, the time spent to reach the airport, to go through all the security measures and to get to the final destination after the flight is relatively high. Cars therefore represent a more flexible and cheaper alternative to move, especially for short distances. (Mammadov, 2012)

A tourism sector that highly benefits of this transportation mode is the car rental industry. In 2016, around 2600 car rental businesses generated a total revenue of USD 31 billion all together. The main contributors in terms of market share are the companies Hertz (28%) and Avis (21.4%). (Statistic Brain, 2016)

Besides cars, automobile transportation in a broader sense also includes journeys by bus. Bus companies usually attract customers with low prices, a wide range of destinations and well-equipped seats for a comfortable travel. (Mammadov, 2012)

5.5.3 Railway transportation

While airplanes, cars and busses are popular transportation means among tourists, railways were more likely to be used for the transportation of large amounts of goods earlier on. However, since technological advances have created many opportunities and innovation, high-speed trains have experienced increasing demand. Therefore, countries are steadily investing in the infrastructure of their railway systems, as well as the expansion of metro lines or tramways within cities. (Mammadov, 2012)

5.5.4 Sea transportation

The most popular mode to travel on water is the holiday cruise. Cruise travels offer their customers accommodation facilities on a ship, entertainment during the journeys and the possibility to explore countries, mainly through daytrips in port cities. Although cruise holidays are very expensive, almost 22 million tourists travelled on water in 2014. Hereby, the most popular destination by far was the Caribbean Sea with 37% of all cruises, followed by the Mediterranean and Northern Europe. This mode of transportation also offers a high number of workplaces. Depending on the size of the ship and the cruise type, cruises usually employ more than one thousand workers. (Westcott, 2012) and (Mammadov, 2012)

5.6 Food & beverage services

The food and beverage industry primarily includes restaurants, cafeterias, bars and delivery services that offer meals or drinks to their customers. This can be either in the establishment itself, to take out or an order for delivery. It plays an essential role in the tourism industry since travelers want to experience the local culture combined with the tastes and typical dishes. Moreover, many people have the desire to go out to eat or drink on holidays instead of preparing meals by themselves. Hence, tourists represent a target group for holiday destinations. In order to benefit from it, restaurants, bars and related services need to enhance their guests’ satisfaction and build on their customer relationship. (World Tourism Organization UNWTO, 2015) and (Westcott, 2012)

Current trends in the food and beverage sector comprise delivery applications like UberEats. People are given the opportunity to order food and drinks whenever and wherever they want. Restaurants can use this emerging distribution channel as a possibility to increase their sales volumes and profits. Another factor that businesses in this sector should consider is the popularity of modern, alternative ways to eat. Food trucks, snack bars or street food markets offering local, unique experiences are more and more replacing traditional restaurants. (Langford & Weissenberger, 2018)

5.7 Platform services

Since digitalization and the use of internet became vital to our daily life, these innovations also impacted the tourism sector. Digital platforms were created to facilitate services in the transportation, accommodation or information sector and they are continuously expanding. Figure 9 shows how important a sample of 102 respondents rated the provision of digital platforms in the respective areas. It is notable that digital services are mostly important for information purpose, followed by the accommodation sector and transportation. As an example, TripAdvisor is one of the most widespread digital information services for travelers to compare prices, find recommendations or popular attractions to visit. In the hospitality sector, applications like AirBnB, couchsurfing or Hostelworld are commonly used to book a holiday accommodation. (World Tourism Organization UNWTO, 2015)

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Figure 9: Importance of digital platforms for private tourism services, conducted February 2017, Source: (World Tourism Organization UNWTO, 2015)

5.7.1 Excursus: the sharing economy

A rising phenomenon which is especially present in the digital transportation section is the so-called “sharing economy”. This implies the fact of sharing goods or services between private persons, from peer to peer. Examples are uber, blablacar and AirBnB. Private persons upload their offerings like guest rooms (AirBn) or car rides (uber, blablacar) on community-based websites or online applications. After that, interested persons can demand those services against an agreed payment. The sharing economy or “collaborative consumption” model is considered as sustainable and ecological because consumers share resources. It connects people who can share underutilized items of property or services at low transaction costs. Simultaneously, they create a win-win situation for both parties and benefit economically through cost reduction, conservation of resources and the protection of the environment. (Hamari, Sjöklint, & Ukkonen, 2016) and (Gururaj, 2015)

The three main sectors using sharing economy models are the transportation area, hospitality and the food and beverage sector. Those will be emphasized in the following subchapters. Transportation

Regarding transportation, one of the most popular and widely used services is Uber. Uber was founded in 2009 by two US Americans and has its headquarters in San Francisco. Currently, Uber is available in over 630 cities worldwide and is constantly increasing its revenue (Uber, 2018). Figure 10 emphasizes the revenue development of the service company during the last four years. It is striking that the amount has quadrupled from 2015 to 2016 with a jump of USD 5 billion in 2016. There was a slight increase in 2017 and the revenue is estimated to rise during the next years. (Statista, n.d. (b))

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Figure 10: Worldwide revenue Uber, 2013-2017, in USD billion, Source: Own creation based on (Statista, n.d. (b))

The concept is based on the sharing of car rides provided by private persons who drive their “guests” to their destination. It works as on-demand technology which means that consumers can demand a ride on the service platform anytime, they get connected with a driver through the application and finally pay a rate fixed by Uber. Similar services are car-pooling platforms. Since transaction costs of these new technologies are low and the provided car rides are relatively cheap, traditional taxis are more and more being replaced, by local citizens as well as by tourists. (Gururaj, 2015) Hospitality

Among the great diversity that the lodging industry has to offer, one business has emerged remarkably during the last decade – the service platform AirBnB. It was founded in 2008 by three American citizens in Silicon Valley. Today, it is one of the most commonly used online platforms to book a room, apartment or other type of accommodations. AirBnB accounts to the sharing economy services because it connects private persons through a marketplace on their website and enables them to make agreements about the hospitality. Hosts can offer their spare room for a certain price and rent it to guests looking for a place to stay. Currently, AirBnB is present in over 190 countries worldwide and counts 4.5 million listings offered on the platform. More than 300 million guests were received by the accommodation providers since AirBnB was started. It creates revenue by imposing service fees to the room providers and guests. (AirBnB, n.d.) Thereby, the business’ value was estimated at USD 31 billion in May 2017 (Statista, n.d. (c)).

Besides the benefits regarding lodging prices and more authentic experiences in the environment of a local citizen, security and trust issues as well as concerns about the quality and cleanliness are the main threats posed to potential guests. Many tourists still prefer to stay in a popular hotel known for its qualitative service than to rent an accommodation offered by a stranger. (pwc, 2015)

Moreover, those private lodging services put pressure on traditional hotels and hostels regarding the pricing power that is increasingly switching towards AirBnB and similar services. The sharing economy platform provides a much more diverse range of offers, from basic rooms and whole apartments to more spectacular accommodations in treehouses and castles. Flexibility and simplicity are further advantages of the company AirBnB. There is no need to build and open a new hotel because the website markets existing housing facilities, thus, it does not require high investments. (Zervas, Proserpio, & Byers, 2016) and (AirBnB, n.d.) Referring to the topic of this thesis and the business model of a senior hostel, AirBnB represents a main competitor to the hostel start-up. To defend its position on the market, the hostel model needs to convince tourists of its services and emphasize the advantages compared to other housing services. Food & beverage

Regarding the area of food and beverage, sharing platforms enable users to select their favored food or drink at any time and from everywhere and guarantee a fast on-demand delivery. Those applications or online websites like UberEats and Food Panda constitute a combination of traditional restaurants and delivery services on the other side. The advantages of these modern services for users include the simple and personalized payment methods, a clear and comprehensive listing of restaurants and food offers and the tracking of delivery. (Gururaj, 2015)

A similar, newer model is the online platform “EatWith” that connects local cooking chefs and guests through culinary food experiences outside a restaurant. Whether it is a cooking class or a rooftop dining party, people come together to eat and talk, they explore other cultures and food habits in different cities all over the world. (pwc, 2015) and (EatWith, n.d.)

Due to its exceptional advantages like cost reduction, on-demand processes and the more sustainable use of neglected resources, those described sharing economy models are emerging and gaining popularity worldwide. To maintain their success and position on the market, the traditional counterpart businesses need to observe developments and improve their models to compete with those strong opponents. (Gururaj, 2015)

5.8 Accommodation

Hotels, Hostels, AirBnB or private apartments – the range of accommodation types that tourists can choose from to spend their holidays is large. The segment of tourist accommodation includes all establishments that offer housing to travelers for a fixed payment. Hotel businesses, hostel owners or landlords provide furnished guest rooms or apartments to visitors for the purpose of their holidays or business travels. Often, the service also includes housekeeping activities by the staff, food and beverage offerings and the provision of parking spots and common facilities. Most visitors stay for a short period, varying from several days to a few weeks. (World Tourism Organization UNWTO, 2015)

Tourist accommodations are usually divided in two sections: the traditional housing options like hotels and motels and the supplementary types. Those mainly include hostels, bungalows, villas or lodges. In contrast to hotels and motels, supplementary accommodations are based on the provision of a guest room, but do not necessarily provide extra services. (Tsyganok, n.d.)

The hotel industry is currently facing a continuous growth rate and is estimated to reach a record in terms of gross bookings in 2018 with USD 170 billion. However, private accommodation providers like AirBnB are constantly rising their profits and gaining popularity (see Chapter “Hospitality”). Thanks to the development of digital media and the availability of online information, it is easier than ever to compare prices, quality or reviews of hospitality options. Potential visitors can swipe through the numerous offers and choose their accommodation according to their preferences. (Langford & Weissenberger, 2018)

5.8.1 Focus: Hostels

Hostels are often considered as the cheaper alternative to hotels. Indeed, this accommodation type is defined as a more budget-oriented lodging possibility mainly for short-term stays. The typical hostel offers dormitories with several bunk beds that can be booked individually, hence guests usually share a room with strangers. Those rooms can have between 2 and 29 beds, the most common forms are shared dorms of 6 or 8 people which include a shared bathroom. However, many hostels also provide private rooms. Furthermore, hostels offer common facilities like common rooms with entertainment, book rental a bar or pool area as well as a kitchen that can be used by all guests. The aim of those communal areas is to create a social environment for the interaction of guests and a comfortable, open-minded ambience. Many also include bike or car rentals and have their own tour operating desk. (Bunda, 2014) and (Somlai, 2014)

Hostels can further be divided in categories according to their main objectives or target groups. For instance, backpacker hostels mainly attract youth travelers during their backpacking trips and eco-friendly hostels put an emphasis on sustainability and environmental protection. The focus on this paper is the category senior hostels, a housing service for elderly people. Moreover, hostels are usually owned by independent owners, some also exist as chains. (Bunda, 2014)

Compared to this type of accommodation, the more traditional lodging services are hotels. Those usually offer private rooms with own bathroom and extra features like wake-up service or cleaning of the room. Normally, hotels are rated by the star ranking system from 1 star hotels that are the less expensive option up to the luxurious 5 star hotels. According to their offers and quality services, many different categories of hotels can be observed like business hotels, residences, resorts, family hotels etc. (Bunda, 2014)

For the proposal of this paper, the housing type of a “hostel” was chosen because it is an innovative modern business idea to combine the customer segment of seniors with the more “youth-oriented” concept of hostels. It is common that elderly travelers spend their holidays in hotels, however current developments regarding pensions, financial resources and changes in lifestyle may shift the preferences of seniors towards more flexible, low-budget accommodations. Those tendencies and the general term of “Senior Tourism” are derived in the next main chapter of this thesis.

6 Senior tourism

Lower birth rates, higher life expectancies and an ageing population have raised questions about the importance of older people for the society, the economy and, more specifically, for the tourism sector. Only few research has been conducted about the influence of seniors on the travel industry and their significant position as consumers, therefore this chapter will point out opportunities and limitations of senior tourism for future developments and adaptation. (Alén, Dominguez, & Losada, 2012)

6.1 Ageing populations

In around ten years, one billion people more will be living on this planet.

A striking fact hereby and an enormous challenge worldwide is the ageing of populations. People are getting older and healthier, life expectancies are increasing and thereby shifting the demographic age structure. This shift in distribution is emphasized in Figure 11. While the population aged 60 or more made up a small part with around 200 million persons in 1950, the number tripled during the 50 years that followed. It is expected to triple again until 2050, reaching a record of 2 billion elderly people (60+). (United Nations Population Division, 2001b) Comparing regions, it is surprising that less developed nations will account for many more people aged 60+ than more developed regions. However, more developed countries show higher percentages of older citizens in the society. Currently, the countries with the most elderly people in terms of total numbers are China, India and the United States. (United Nations Population Division, 2001a)

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Figure 11: Population aged 60+, worldwide development and regional, 1950 - 2050 forecast, in millions, Source: (United Nations Population Division, 2001a)

These high numbers of elderly people can be traced back to the generation of baby boomers, people born right after the second World War until around 1964. At that time, birth rates were extremely high leading to a “baby boom”. Those newborns are now turning to the senior age, creating this large group of older people. (Spasojevic & Bozic, 2016)

The striking developments of the last years are expected to continue since the older population is already growing faster than the total population. The difference in the growth rate is forecast to rise continuously. This implies that demographics of societies will shift towards more and more older citizens, less young people and workers. The median age in 2030 is estimated at 33.2 years, compared to 29.6 currently. Regarding the proportion of older persons, in the year 2000, 10% of the world population was aged 60 or more. In 2050, more than one fifth of the world will account for this age group. In Europe, this proportion of elderly people is estimated to be the highest in 2050 with 37% of the total population. (United Nations Population Division, 2001a) and (Balderas-Cejudo, Leeson, & Urdaneta, 2017)

Those socio-demographic changes increase the significance of seniors as a market segment in the overall economy. The group of elderly people in the society has emerged to an extremely attractive consumer target group. Referring to the topic of this paper, it impacts the tourism industry worldwide and forces it to adapt to new lifestyles and needs of customers. (Balderas-Cejudo, Leeson, & Urdaneta, 2017) The next chapters will focus on those challenges and opportunities of older travelers for the tourism sector.

6.2 Definition: Senior tourism

To define the term “Senior Tourism”, first it must be identified what a “senior” is. According to the Oxford Dictionary and other international definitions, a senior is “an elderly person, especially an old-age pensioner” (Oxford Living Dictionaries - Senior, n.d.). This implies that seniors are a group of older people and most likely, they are already retired. Consequently, senior tourism includes touristic activities of businesses specialized on elderly visitors. (Utama & Bagus, 2012) The following chapter will characterize this specific group in detail.

6.3 Market segmentation

Consumers, in this case tourists, have diverse needs, preferences and desires regarding their travel destination, holiday activities or the accommodation type. This implies that tourism business need to apply target marketing to specialize on key market segments instead of trying to please the whole consumer group. Therefore, market segmentation is a widely used tool. Hereby, people with similar criteria are grouped together and create one homogenous segment. Those criteria can be socio-demographic factors like age and gender, behavioral, geographical or psychographic ones like the personality of an individual. Consequently, industries can identify society groups with homogenous interests and needs and satisfy their desires more easily. (Tsiotsou, 2012)

Concerning the tourism industry, several segments can be identified through the analysis of different criteria. Among the most frequently used criteria, the demographics play an essential role. Dividing groups by age range, profession or income levels was revealed as an effective strategy. Many tourism businesses also use geographical factors like the country of origin as one indicator to separate visitors. Others focus on the behavioral aspects and preferred types of holidays, for example beach holidays or ecotourism or the favored activities. (Tsiotsou, 2012) and (Dolnicar, 2008)

Referring to the paper’s topic, the society group of seniors has created a new market segment for the tourism industry during the last years. Concerning this group, the demographic segmentation is the most reasonable because this segment primarily differs from the others regarding the age factor. (Tsiotsou, 2012) First of all, there is no universal definition of the age range of seniors, many research reports use different scales to define elderly people. The majority uses a range from 55 years and more to explain their findings. Among this group, the number of retired persons, namely citizens aged around 60 or more depending on the country, is the highest. (Utama & Bagus, 2012) Consequently, this paper will use the same age range to describe this senior group.

The aim of this subchapter was to give a general explanation of market segmentation tools and criteria used to form the senior segment. A detailed market segmentation for the group of elderly people in the tourism industry will be derived as part of the business model application in Chapter 8.3 “Application of Business Model Canvas: Senior Hostel“.

6.4 Impacts of senior tourism

6.4.1 Economic impacts

While the amount of elderly people is constantly growing, this also means that seniors will make up a larger part of tourists worldwide. This society group will mostly be wealthy and able to afford journeys and trips frequently. At the same time, improvements in the medical sector provide better health services, hence, citizens will get healthier and more willing to travel even in their higher years. Elderly people will increasingly enjoy their liberty and free time on holidays and thereby enhance the international tourism sector. Since tourism accounts as one of the major economic sectors worldwide, these demographic developments will contribute to a high degree to the travel and tourism industry. Economies of many destinations will boost, creating new jobs and reinforcing the countries’ economic indicators like the GDP. (Patuelli & Nijkamp, 2015) and (Alén, Dominguez, & Losada, 2012)

Currently, younger tourists usually travel twice as much as their older counterparts aged 65 or older. However, in less than 10 years, one out of eight international trips will account for elderly people aged 65+. This group of tourists will travel twice as much as they do now, resulting in over 180 million international journeys in 2025. (Visa Performance Solutions; Oxford Economics, 2016)

Regarding the region of Latin-America, Figure 12 points out that people aged 50 or more are already overtaking the tourism market compared to other age groups. The number of travelers increased by almost 20 million from 2010 to the present time and is forecast to rise to 88 million in 2020. This represents an extreme growth rate of 40% in 10 ten years. Obviously, children and teenagers do not travel a lot, followed by young people aged 15 to 24. The working-age class from 25 to 49 years also shows constant growth but not as extremely than the oldest segment.

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Figure 12: Travelers by Age Group in Latin America 2010-2020, in millions, Source: (Euromonitor International, 2017)

To conclude, those significant changes and developments of the demographics in the tourism market imply that global spending of seniors on tourism will increase by considerable amounts. Consequently, if the travel and tourism industry succeed to please those new target consumers, the overall economy will benefit. (Balderas-Cejudo, Leeson, & Urdaneta, 2017)

6.4.2 Healthy lifestyle & happiness

Besides those positive economic impacts of senior tourism, it was revealed that the wellbeing of older people increases while they are travelling. Leisure holidays rise their quality of life and satisfy their needs. They feel happier, more active, physically and mentally, and healthier. Health is a much-discussed topic within the field of travelling and especially concerning the seniority group, but only little analysis and research have been conducted about that. However, it was pointed out in reports, that holidays reduce stress and the risk of health problems like heart diseases. Travelling supports people to relax and contributes to their active ageing process. It makes them feel younger and strengthens their self-perception. (Balderas-Cejudo, Leeson, & Urdaneta, 2017)

Moreover, wellness and fitness offerings in tourist accommodations are gaining popularity. More and more travelers base their decision for a destination or an accommodation on the availability of wellness spas, fitness rooms or beauty studios with anti-aging services. (Langford & Weissenberger, 2018)

Another emerging trend in this area is the so-called “medical tourism”. Reports by Visa (2016) revealed the significance of this new combination that offers medical help during vacations. More and more people use their holidays to cure their health issues or to get medical treatment abroad. Reasons are either financial motives, higher quality standards or because the service is not available in their home country. Currently, the number of medical tourists is estimated at 14 million and is expected to grow. Thereby, the United States is by far the country that received the most tourists for medical purpose. At the same time, this type of journey allows the travelers to explore new destinations and can enhance relaxation. (Visa Performance Solutions; Oxford Economics, 2016)

Since many older persons struggle with disability issues, “accessible tourism” has been reinforced during the last years. This term tries to improve the accessibility for disable people to tourism services, accommodations and activities. Even though people suffer from physical or mental disabilities, opportunities should be given to them to enjoy their holidays without or with less limitations. Hence, infrastructure concepts should be implemented to help disabled people and to facilitate their mobility or access to touristic offers. It is notable, that most people with disabilities are still motivated and able to travel and do not give up their holidays because of accessibility issues. (Alén, Dominguez, & Losada, 2012)

Those implications underline the necessity of the tourism industry and its services to adapt to this emerging trend of senior travelers and enhance the active ageing process. Health-related activities, accommodations including health services or more active holiday tours could be offered. Also, disabilities of travelers should be taken into account, since approximately 35% of people aged 65 or more have to face disability problems (Alén, Dominguez, & Losada, 2012).

6.5 Travel behavior & opportunities

In order to benefit from this emerging traveler group and to satisfy their needs, the tourism industry must observe and conclude travel behaviors and trends of senior tourists. Those cannot be equated with other tourists’ interests, for example of students or self-employed workers, neither can they be derived from the behaviors of former seniors. Lifestyles and mindsets of people nowadays are different. Regarding elderly people, those are usually more independent, more comfortable with modern technologies and more flexible. Obviously, these characteristics influence their travel choices, holiday destinations and activities. They get on holidays more often, they are more likely to choose destinations far away and they prefer to stay there longer. (Spasojevic & Bozic, 2016)

According to traditional considerations, older persons are usually described as persons in need or people that are dependent on support and help by others. In contrast to that image, more and more retirees decide to take smaller jobs and thus, contribute to the overall workforce and economy. Also, senior and retired persons are getting richer, more[m6] independent and technology-savvy compared to their ancestors of the same age group. (Vidovicova, 2018) and (Balderas-Cejudo, Leeson, & Urdaneta, 2017)

Although modern technologies and the use of internet are gaining popularity among this market group, many still trust in their consumer experience and “word of mouth” advice through family members or friends. Also, traditional media channels like newspapers and the radio highly influence elderly people’s travel choices and are frequently used as a source of information. (Alén, Dominguez, & Losada, 2012)

Travel motives are similar to the ones of “non-seniors”. People primarily go on journeys to collect new experiences, to relax and to enjoy local activities. In addition, older tourists are specifically interested in the culture, architecture and nature of their holiday destination. They seek comfort, social environments and possibilities to broaden their personal growth and mind. (Spasojevic & Bozic, 2016)

Regarding the preferred type of holidays, many seniors favor tour holidays or packages that include city tours, sightseeing of the most important attractions and historic places. These organized journeys offer them comfort, social interaction and safety, three of the most important travel characteristics for elderly people. (Alén, Dominguez, & Losada, 2012)

The senior market is also characterized by consumers with the highest level of free time compared to other society groups like workers or students. Older people are not restricted to limited holidays defined by a company, they also travel during low seasons. These travel patterns and behaviors offer many benefits to the tourism industry, that is less dependent on high season tourists. Revenues are spread more equally throughout the year, the economy of many destinations will rise extremely and consequently favor the job market. (Spasojevic & Bozic, 2016) and (Alén, Dominguez, & Losada, 2012)

Also, this new target group has a purchasing power due to savings and their retirement pension. They are usually wealthier than younger tourists, they can afford more expensive journeys and are more willing to spend higher amounts of money. (Visa Performance Solutions; Oxford Economics, 2016)

A new trend regarding travel behaviors is the so-called “3G” or multigenerational constellation, which refers to common holidays of three generations. More and more families like to spend their vacation all together; grandparents, parents and their children. This forces tourism services like hotels to adapt, for example concerning the size of apartments, and to offer diversity to please all generations. (Nikitina & Vorontsova, 2015)

In order to develop perfectly suitable offerings to senior tourists, all those characteristics and behaviors need to be considered and included. Those descriptions of a senior traveler profile will be used to develop the hostel model in Chapter 8.3 “Application of Business Model Canvas: Senior Hostel”.

6.6 Challenges of senior tourism for the travel industry

According to research data, a challenge that is posed to tourism services is the diversity of desires of elderly people among the seniority group. While young travelers usually show similar preferences, older people highly differ in their interests and expectations. For instance, they usually expect a higher quality and better, practical services. Also, it is often harder to fulfill their expectations and to satisfy their needs completely. (Spasojevic & Bozic, 2016)

Moreover, the flexibility and ability to travel wherever and whenever they want mainly accounts for seniors in developed countries. Older people in developing countries usually do not possess enough financial resources to go on expensive or frequent holidays. Even in developed countries, money plays a key role concerning their travel decisions. Although retirees benefit of their pension, this income is much less than their usual income at working age. Serious health issues, the lack of cultural knowledge or the language as well as safety concerns are other factors that discourage elderly people to travel. Other barriers can be loneliness and missing companionships. The latter is a specific phenomenon of older people who start losing contact and communication to friends or colleagues once they stop working. Retirement implies more free time, that can be filled with new leisure activities like traveling but many feel that they are missing travel partners. (Spasojevic & Bozic, 2016) and (Nikitina & Vorontsova, 2015)

Another challenge for the tourism industry could be the low responsiveness of older consumers to advertisements or promotions. Seniors mainly rely on their experiences, they are not easily influenceable by advertising tools, appearances or trends. They usually focus on the benefit and functionality of a product or service and take decisions according to those features. (Nikitina & Vorontsova, 2015)

To conclude, those characteristics of seniors, their behavior towards holidays and travelling as well as changes in mindsets and lifestyles give a first theoretical impression of how tourism businesses can attract elderly people and adapt to their needs. The following main chapters develop features of senior travelers more practically through the empirical study.

7 Research survey analysis

In order to build up a business model for a senior hostel chain in Mexico, first of all, information about the target group like demographic factors, purchasing behavior, preferences and needs must be collected. A widely used research method therefore are surveys. Surveys are created to gather data about a specific sample, usually a certain group of population and to draw conclusions out of the data analysis. (Visser, Krosnick, & Lavrakas, 2000)

Surveys mainly appear in two different ways, as a questionnaire or as an interview. Moreover, questionnaires can be divided in self-administered (or mail survey), group-administered and household drop-off methods. Among researchers, the first method is the most frequently used, because it is inexpensive, effective and it allows to reach a wide sample of people. In contrast to questionnaires, interviews are much more time-consuming (Trochim, 2006)

7.1 Approach

For the purpose of this thesis, the self-administered questionnaire in form of an online survey was used in order to reach a wide range of people in different countries. It allows to collect much data in little time and without costs. The survey was created and published on the website and advertised on social media platforms to get a wide range of responses as well as by mail to target customers. It was developed for all age groups with the notice “Please imagine you are 55+.” (except the demographic questions) for people aged less than 55. Thus, it is based on the actual opinions of elderly people (55+) as well as on the expectations of younger generations for their future.

The survey included 28 questions about the demographics of the respondents, their behavior on holidays and their preferences concerning holiday accommodations. This will be described more in detail in the next chapters. Overall, 98 people participated in the survey which indicates a representative quantity to analyze.

7.2 Descriptive statistics

To develop a hostel model in Mexico for senior tourists, the main questions of the research paper (listed in 1.2 “Research Objectives & Questions”) refer to the factors influencing the choice of travel accommodation, the preferences of senior travelers and the importance of health tourism for elderly people but also for younger generations and their expectations.

To answer the research questions and to be able to derive conclusions, the survey can be separated in four parts:

The first part includes demographics and general information about the respondents. The following section contains questions about the travel behavior of the respondents and their preferences concerning destinations, travel partners etc. The third topic refers to the holiday accommodation sector and the factors influencing people’s choice as well as their expectations concerning the offer and price. The last part addresses the subject of senior and health tourism. It examines the behavior and measures that people take in order to stay active and healthy in their senior life and how those are connected to holidays and the accommodation. The following subchapter describes the data and results obtained through the online survey.

7.2.1 Distribution of the sample

In this chapter the general demographic information about the respondents is elaborated. The average age of all respondents is 33.7 years, with the youngest participant aged 19 and the oldest aged 65, which represents a wide range. Regarding the gender, around 57% of all respondents were female and 42% male.

Due to the distribution method through social media, the survey reached many people from different countries and nationalities. The majority with 44 participants are Germans, followed by 20 French citizens, 10 Mexicans and many other nationalities like Croatians, Spanish and Chinese.

Figure 13 represents the answers according to the employment status. Most of the respondents are students, many are employed in a full-time job, some part-time or self-employed. 10% of the overall sample are retired persons.

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Figure 13: Employment status of the participants, Source: own survey on

Regarding the marital status, the majority of participants is single (55%), approximately a fourth is in a relationship and some are married or engaged.

7.2.2 General results about hostel experience & Mexico as holiday country

With reference to the question if the respondents have ever stayed in a hostel before, it is striking that 67% answered “Yes”. This high result can be explained by the relatively high number of student participants who are likely to stay in hostels during their travels. Almost 35% of the whole sample have already visited Mexico yet or are currently staying there.

An outstanding fact is the popularity of Mexico as a holiday destination among the respondents. Over 85% would definitely like to travel to Mexico or are already planning a trip there and further 12% answered with “maybe”. Only 2 people out of 98 are certain not to spend their holidays in the Latin-American country.

7.3 Analysis of the research questions

For the questions of the following parts, the participants were asked to answer according to the expectation that they were 55 or older. To describe it in a more understandable and clear way, the further analysis is written in present tense but should also refer to the “imaginary” answers and expectations of people aged below 55 at this point of time. The aim of those parts is to answer the established research questions of the paper that will build the basis to create the business model of a senior hostel.

7.3.1 Travel behavior & preferences

Referring to the frequency of journeys, the majority of respondents (41.8%) is travelling 3-4 times per year which represents an average frequency. A few are going less on vacations (21% for 0-2 times) and some are going more, namely 36% travelling 4 times or more per year. Thereby, it is striking that the duration of stay is relatively low. Most tourists are usually booking 4-7 nights[m7] or 8-12 nights at their destination, while only a fifth book stays for more than 12 days. Those results suggest that elderly people mainly stay on short-time vacations but therefore, they are going on holidays more often.

Regarding the period of the year most people go on journeys, Figure 14 clearly states that more than half of all respondents do not have a preference about the season and rather go on vacation during the whole year. However, an outstanding fact is the high proportion accounting for the low season. Around a third of all participants prefer the low season, whereas only 1 person choose to travel during the high season. This observation can be explained by the fact that many seniors are already retired or do not have to organize their vacation around school holidays like families and therefore favor the low, less crowded seasons.

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Figure 14: Preference of travel season among participants, Source: own survey on

Most people in senior age also prefer to organize their holidays on their own instead of booking a whole tour package with all included services. That observation underlines the fact that senior nowadays are more flexible and self-responsible than their ancestors. Concerning the travel partners, 78 out of 98 respondents usually go with their wife/husband or girlfriend/boyfriend, followed by family members and friends. But, it is notable, that a fifth of all participants decides to explore cities or countries alone. Thus, it can be concluded, that elderly people still have the incentive to travel even though they do not have a partner or they prefer to go on journeys on their own.

Regarding the main source of information to organize holidays, it is notable, that a large proportion of 73% uses internet and social media, followed by recommendations of family or friends. Consequently, it can be assumed that elderly people are increasingly familiar with modern technologies and the use of online networks, like emphasized in Chapter “6.5 Travel Behavior and Opportunities”. This is underlined by the fact that only a fourth of all participants would choose a traditional travel agency to get information.

The most popular holiday destinations include city trips as well as sun and beach vacations. Wellness and adventure holidays are also among the top choices, whereas organized tours and cruise holidays were less successful among the sample. Many like to do sports during their trips, mainly walking, hiking or swimming. On the other hand, winter sports is less likely to be exercised.

7.3.2 Expectations about holiday accommodations

In this part, one of the research questions about the factors influencing the choice for a holiday accommodation should be answered. First of all, the respondents were asked to evaluate the importance of given factors when choosing their holiday accommodation. Those possibilities could be answered according to a 5 point Likert scale form “very important” to “not important at all”. The participants could also accord the same importance to multiple aspects. This method was chosen because of its effectiveness and clarity compared to rankings for example, where participants are “forced” to put more importance to a factor than to another.

Among seven options, the ones considered as “very important” for the choice of accommodation were relaxation, the nearby nature and landscape and health/well-being offers. Sports and cultural features were also measured as important, whereas religion and nightlife are not important to the majority of the sample. This evaluation of factors reflects the interests of elderly people quite well. Most of them are not interested in organized nightlife events in the hostel like their younger counterparts may be, however their focus is on relaxed holidays in a cultural and natural environment. Also, they have the incentive to feel healthy and active, hence the aspect of well-being must not be neglected.

A related question asked about more general factors that may be decisive when booking a holiday stay. Hereby, all choice options, namely “comfort”, “price”, “location”, “safety”, “cleanliness”, “atmosphere” and “equipment” are considered as “important” or even “very important”. Safety and cleanliness are the most essential factors whereas equipment and the room interior are seen as less crucial than the other aspects. The safety factor could be explained by the critical image of Mexico as a country of “danger” or “crime”, as well as its risk of natural catastrophes like earthquakes, see Chapter 4.3 Tendencies & Opportunities.

Furthermore, to know what potential guests expect from their housing on vacations, they were asked to evaluate different options about the facilities. One offer that is considered as indispensable by most respondents is a restaurant that is part of the accommodation. Also, a pool and sauna or spa are seen as important. Same accounts for a tour operation service offered by the housing place. Less important to elderly tourists are shared facilities like common rooms and a common kitchen as well as a fitness center on the property. That observation strengthens the previous findings that senior tourists want to relax on holidays while staying active and enhancing their health conditions for example through spa sessions. Moreover, as stated earlier, elderly people increasingly prefer to organize their holidays on their own, however, they consider tour operators in their accommodation as helpful. Those are primarily planning day trips and sightseeing tours around the city or nearby places. The option of common rooms for the interaction between guests is valued less important for most respondents. This[m8] behavior can lead to the perception that elderly tourists favor to spend and enjoy their holidays with their travel group or partner and enjoy privacy.

A question about the preferred type of room with multiple choice possibility supports the previous finding, that seniors are more likely to choose privacy and personal environment rather than shared lodging. Three-quarter of the sample would choose a private room with double bed and around 18% would choose the same room but with two double beds. 15% would be likely to book a shared dorm with six people, whereas only 9 persons out of 98 would take the option of a shared room with 8 people. Those dorms are mainly shared with strangers. More than half of all respondents also stated that they would never share a room with strangers, even if the price was significantly lower. A fourth would still be willing to share a room if the price was significantly lower. The small group of 13 people would be willing to sleep in a dorm anytime, no matter what the price difference to a private room would be.

To get a more detailed impression about this behavior and the relevance of the price for the choice of room, the next question asked the following: “Imagine a shared dorm with 6 people costs 10 € (= 12 USD or 230 Mexican Pesos) per person per night. How much would you be willing to pay more for a private room?” Similar to the tendency of the previous question, most respondents would prefer to pay twice the price in order to get a room for themselves or together with their travel partners. Around one third would be willing to spend 50% more. Although, the majority would pay more for this additional privacy, almost a fifth stated that they would not spend more money for another, private room. Hence, it can be concluded, that most people favor privacy and luxury but also take into consideration the price. The previous question only asked about their preference without involving the price factor, whereas this question included the price aspect. If the price difference is high between the two options, some may rather choose the simple, cheaper alternative of dorms instead of private rooms.

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Figure 15: Answers to the question "Imagine a shared dorm with 6 people costs 10 € (= 12 USD or 230 Mexican Pesos) per person per night. How much would you be willing to pay more for a private room ?", Source: own survey on

To examine the price behavior of tourists, two questions were asked. The Euro was used as the currency because most respondents are from European countries. The first question refers to all expenses per person during one day on vacation including accommodation. The results are widespread. With 28% each, the biggest parts are constituted by the sections of “51-70 €” and “71-100 €”. A fifth of the sample would pay 101-150 € and a small fraction would be willing to pay more than 150 €, same accounts for the “cheapest” option of less than 50 €.

Hereby, the answers according to accommodation costs are equivalent. Most elderly people would spend 31-50 € or 51-70 € per night per person, other 20% would even pay more than 70€ for the hospitality. On the other hand, approximately a fifth of all participants would not be willing to pay more than 30 € per night, see Figure 16.

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Figure 16: Amount respondents are willing to pay per night per person for a holiday accommodation, Source: own survey on

It is difficult to see a straight tendency of those results, since it is obvious that one major group of respondents does not have the wish to spend large amounts of money every day on their vacation and especially for the accommodation. On the contrary, the other main group is not that price sensitive and is willing to spend more, probably for more luxury and higher quality.

Moreover, for 99% of all participants, breakfast should necessarily be included in the price. Only 10% would like to have a lunch service offered and around a fourth consider dinner as part of the housing service. To clarify the percentages, multiple answers were allowed to this question.

7.3.3 Aspects of health & well-being of tourists

The last section of the survey examined the behavior and measures that elderly people are taking in order to stay healthy and active. As analyzed in Chapter “6.4.2 Healthy Lifestyle and Happiness” the health aspect is an emerging factor of tourists and especially senior travelers. Hence, to create this health aspect to the hospitality sector and to draw conclusions for the business model of a senior hostel chain, the questions should reveal what expectations this target group has and how they consider to stay active.

Therefore, the first question asked to value several options on a 5 point likert scale according to their importance, from “very important” to “not important at all”. While all five options are seen as “important” or “very important”, the most essential factors to enhance the healthy lifestyle in senior age are sports activities, traveling and wellness. Hereby, it is striking that 91 participants consider fitness and sports as crucial, whereas nobody stated not to exercise at all. Many respondents are likely to control their nutrition through a healthy diet and others also want to practice their mental health through learning processes. Those results show that elderly people care much about their health and well-being and that they are taking measures to remain active and fit during their ageing process.

Focusing on holiday accommodations, the participants were further asked to evaluate given options provided by housing services that try to emphasize this healthy lifestyle during vacation. The one that is considered as most essential is a restaurant that is part of the accommodation and which offers healthy menus. Moreover, around 60% consider guided sports activities outside as “important” or “very important”. In the wellness area, massage services and beauty offerings are also popular services that should be provided by the lodging according to the respondents. However, personal fitness classes as well as cooking classes should not necessarily be part of the housing service.

Those observations complement the previous, general findings in the way that for example a healthy diet should be supported by meals offered in the hotel, hostel or other hospitality and sports activities should be organized by the accommodation as well. Furthermore, to strengthen the relaxation aspect, wellness and massage services are appreciated by many guests.

To conclude the analysis of the survey, the main research questions about the travel behavior of seniors, the factors influencing their choices as well as the emerging importance of the health aspect could be answered and will further support the development of a business model.

8 Business models

This chapter first explains theoretical assumptions about business models and describes one of the most popular proposals to create business models, the so-called Canvas Model. Furthermore, the key parts of the Canvas Model are applied to the business idea of a senior hostel chain. The aim is to develop a complete business model for this hostel start-up, which builds the basis to further establish and grow this business.

8.1 Definition

Business models build the basis of any business idea and further innovation. Without a clear concept of a business model, start-up companies are likely to fail and won’t be able to establish their position in a highly competitive market. A business model creates a path towards one of the main goals of a company: the generation of value. Hence, it describes how the firm plans to create revenue and how it will enter the market with its business idea and the aim of getting successful. Thereby, similar business ideas can have completely different business model both leading to a positive value creation. (Osterwalder, Clark, & Pigneur, 2010)

In order to mention all aspects that need to be addressed in a business model, Osterwalder, Clark and Pigneur have created the so-called “Canvas Model” that is widely used by start-ups. The following chapter will describe this model which will also be used for the senior hostel business model.

8.2 Business model Canvas

The business model Canvas is based on nine blocks which need to be considered when starting a business. Those are illustrated in Figure 16. (Osterwalder, Clark, & Pigneur, 2010)

Figure 17: Business Model Canvas 9 Blocks, Source: (Osterwalder, Clark, & Pigneur, 2010)

The part “customer segments” (Osterwalder, Clark, & Pigneur, 2010, p. 20) refers to the target customers of the new business and is essential in a way that a company cannot exist without clients. It should be defined, who exactly the firm wants to serve with its products or services. Therefore, consumers can be grouped by their interests, habits or common needs and hence, the relevant group or groups will build the segment/s. (Osterwalder, Clark, & Pigneur, 2010)

“Value propositions” (Osterwalder, Clark, & Pigneur, 2010, p. 22) aim at convincing potential customers to buy the products or services offered by the specific company. Therefore, the main question is: “What does our product/service offer and what value does the consumer gain from it?” It proposes several benefits and features of the firm’s offer that should satisfy the buyer’s needs or represent an innovative, problem-solving tool. Examples are cost reduction, high performance, innovation or design. (Osterwalder, Clark, & Pigneur, 2010)

“Distribution Channels” (Osterwalder, Clark, & Pigneur, 2010, p. 26) build the bridge between the customer segment and the value propositions in a way that those channels aim to attract the target customers with their value offers. Companies need to communicate with their clients in order to distribute their products and services and to become popular. There are different types of channels. Direct channels are created and owned by the firm itself, for example the online website, whereas indirect channels include the distribution in retail stores or through externally owned websites and hence, account as “Partner Channels” (Osterwalder, Clark, & Pigneur, 2010, p. 27). Usually, five specific phases can be distinguished. Firstly, customers need to get aware of the products or services offered, then they should be able to evaluate the proposed values. Next, distribution channels have to enable clients to buy that product or service and thereby, to benefit of the promised value. Finally, after the sales process, help and support must be guaranteed in the case of questions or uncertainties. (Osterwalder, Clark, & Pigneur, 2010)

The fourth block of the Canvas Model is the “Customer Relationships” (Osterwalder, Clark, & Pigneur, 2010, p. 28) segment. It includes the way a company interacts with its customers and how they build up a relationship with specific customer segments. Hereby, different relationships can be established, based on personal connection, community creation or self-service for example. Every category focuses on other aspects to maintain a relation between the business and its clients. (Osterwalder, Clark, & Pigneur, 2010)

“Revenue Streams” (Osterwalder, Clark, & Pigneur, 2010, p. 30) comprise the generation of revenue of a company and the willingness of customers to pay a certain amount for the good or service offered. In order to earn money and to drive a business, companies must derive one or more revenue streams and pricing mechanisms. Two types of revenue streams can be differentiated: Revenues resulting of one-time payments by consumers and repeated on-going payments. Revenue streams can be asset sales that sell “ownership rights to a physical product” (Osterwalder, Clark, & Pigneur, 2010, p. 31), usage or subscription fees, revenues out of renting, leasing or licensing and others. Thereby, depending on the category of revenue stream, two different pricing mechanisms can be applied. The fixed menu pricing uses predefined prices whereas dynamic pricing mechanisms rather depend on the current external conditions like supply and demand on the market. (Osterwalder, Clark, & Pigneur, 2010)

The next Canvas block refers to “Key Resources” (Osterwalder, Clark, & Pigneur, 2010, p. 34) that build the basis for every further business activity. Without resources, companies are not able to offer the predefined values of their business and to attract customers. Thereby, every firm requires different ones depending on its activity, products and services. The main categories of resources are physical assets, intellectual, human and financial resources. (Osterwalder, Clark, & Pigneur, 2010)

A related section to build up a business model are “Key Activities” (Osterwalder, Clark, & Pigneur, 2010, p. 37). This includes all important activities a company has to realize in order to create the value proposed to the customers. Similar to the key resources, they type of company defines its main activities. Some may put more emphasis on production and manufacturing processes, others are more related to problem-solving activities or to networking. (Osterwalder, Clark, & Pigneur, 2010)

Besides key resources and activities of a company, key partnerships present a crucial element of every business model. Partnerships build the connection to suppliers, distributers or strategic partners in general. Those can be essential contributors for the resource management and acquisition, they can provide knowledge or technical factors to optimize processes and thereby to avoid risks against competitors on the market. Partnerships can occur between non-competitors as well as between competitive firms. Other common types of relationships are joint ventures with the aim of creating a new joint company and agreements between buyers and suppliers. (Osterwalder, Clark, & Pigneur, 2010)

The last building block emphasizes the cost structure and strategy of a business model. Running a business, offering value to customers, maintaining relationships with partners and ensuring the supply of key resources to perform the key activities – all those processes involve costs. Depending of the type of company and its strategy, some may put more importance to a low-cost structure, others would rather opt for a value-driven strategy that usually implies higher costs. Those different cost strategies may be characterized by fixed costs, variable costs, economies of scale or economies of scope. (Osterwalder, Clark, & Pigneur, 2010)

8.3 Application of business model Canvas: senior hostel chain

Based on the implications of Osterwalder, Clark and Pigneur about their Canvas Business Model, this chapter applies the model and its segments to the business idea of a senior hostel chain in Mexico. Therefore, all further applications and implementations are based on the Canvas Model but adapted to the specific type of a senior hostel.

8.3.1 Customer segments

The division of customer segments according to the Canvas Model is closely related to the marketing tool of market segmentation. Therefore, the following parts involve both methods to define the target segment for a senior hostel model. Travelers are at the center of the tourism industry and build the main reason for all tourism services and their business activities. However, enterprises cannot satisfy every individual’s needs with their offers, hence it is essential to divide the whole market into homogenous groups with similar interests and behavior. (Cook, Yale, & Marqua, 2006)

Regarding the concept of a senior hostel, the demographic segmentation based on the variable age is the most evident method. The senior hostel primarily aims to reach the society group of seniors which were earlier defined as people aged 55 or older and who are often retired. Thus, the main target customers are tourists from 55 up to 75, who are mentally and physically able to travel.

The psychographic segmentation can also be used to create a homogenous segment. This method is based on people’s lifestyle, their interests and activities they like to do, thus it describes their personality. (Cook, Yale, & Marqua, 2006) Taking into account the findings of the research survey, it can be revealed that interests like relaxation, recreation and health were essential for most participants. Many also showed similarities regarding activities on holidays like outdoor sports activities, hiking or visiting cultural cities. Their opinions about privacy and safety in the accommodation were further commonalities. Regarding the length of stay, senior tourists favor short-term stays and they preferably travel with their partner of family members. Those characteristics together with others that will be detailed in the further application of the Canvas model, build up the profile of senior travelers.

Referring to the book “Tourism – The Business of Travel” by Roy A. Cook, Laura J. Yale and Joseph J. Marqua, after having selected the market segmentation method and identified the profile of the target group, estimations about the market potential of this segment must be derived. Chapter “ Global aging and elderly travelers” underlined the extreme extent and importance of senior travelers for the future tourism industry. In less than ten years, over 1.2 billion people worldwide will be senior citizens and by 2050, these numbers will rise to a fifth of the world population. The profitability of this segment is obvious. “Mature Travelers” (Cook, Yale, & Marqua, 2006, p. 61) are likely to spend much more money for their holidays than younger tourists. In the United States for example, a significant difference of 30% in expenses was shown. In addition to the money factor, elderly people usually have more time to travel and go on holidays more often, like the research survey revealed. Hence, forecasts about the market potential of senior tourists show a positive tendency with an extremely increasing market size and promising opportunities of high profitability. (Cook, Yale, & Marqua, 2006)

Among the nationality of the target customers, US Americans and domestic travelers build the most important part since those two groups account for the highest amount of travels in Mexico (Milenio, 2018) and (OECD, 2017b). However, in a global perspective, it was revealed that people go on holidays more often and they tend to choose destinations far away (Spasojevic & Bozic, 2016). This suggests that the senior hostel model should also consider foreign elderly tourists for example from Europe or Asia as important customers (compare Chapter 2.2.6 “Outbound Travels – Who travels the most?”).

To conclude this part of the application, the customer profile for the senior hostel model includes elderly people aged 55 up to around 70 who mainly travel for relaxation purpose and who want to pursue the healthy and active lifestyle on their a short-time stay.

8.3.2 Value propositions

The business idea of a senior hostel puts an emphasis on four important values that make customers benefit from the offered services.


Firstly, senior hostels are a new, innovative concept of tourist housing for elderly people that is not widely spread. Hostels mainly target the group of young, backpack travelers but often ignore the needs of elderlies and the opportunities this segment can offer. (Bunda, 2014) Seniors have different interests and expectations; for instance, the importance they accord to their health and activeness represents a new, modern senior lifestyle. Consequently, the senior hostel business model creates value to those potential customers in a way that it tries to meet their current needs which are not or less emphasized by other, similar companies.


Moreover, the offered services are tailored according to the specific requirements of the client segment, which were revealed during the online survey. For example, many seniors wish for a pool and massage service inside the hostel which contributes to their sense of activeness. Since a relatively large part of the respondents also stated that they like to exercise Yoga and enjoy swimming, morning outside classes like aqua aerobics and Yoga or Pilates are offered daily for free.

A further specific wish of mature travelers, derived through the survey, is the offering of a tour operator desk in the hostel. Guests are able to collect information about the destination and local activities and to book day trips or guided tours. More detail is given in the section “Key Partnerships”. Besides the tour operator desk, the hostel organizes transportation services for guests on demand. Taxis will pick up guests who prefer a private transportation instead of public transport or walking. For larger groups of people, shuttle busses will be operating.

Also, breakfast is included in the price and healthy meals for dinner are served optionally for a specific price, depending on the meal. Since a restaurant is typically not part of a hostel and would increase costs and thereby the price for guests by a large amount, dinner is prepared in the hostel kitchen by professional cooks and served in the common areas, which enhances the community feeling. In the common areas, novels, documentaries and travel magazines are offered as well as games like chess and a billiard table.

Elderly people are more likely to stay in private rooms instead of dorms, thus the senior hostel mainly offers private rooms with one or two double beds, some single bed rooms and a few shared dorms for six people maximum. They are all equipped with comfortable mattresses and there are air conditioners in every bedroom. Every booking also includes a bathroom, suitable for wheelchairs, besides the bedroom. To address the trend of multigenerational travel groups, larger apartments are furnished with double beds and cribs for kids.

Often, elderly people have to face physical limitations and require support to access facilities. Therefore, the hostel guarantees accessibility to all rooms, bathrooms and common areas through wheelchair ramps or elevators.

The importance of safety and security does not only occur for senior travelers, it is rather a general issue of tourist accommodations. People want to feel safe on their holidays, outside but also inside their lodging. Therefore, the hostel is located in secure environments and provides a 24h reception in case of any issues. The main entrance gets closed at midnight to avoid strangers to come in and camera security systems are installed. To provide a secure place for the guests’ valuables, lockers are installed in every room and at the reception.


An important value to most customers is the price. If people can obtain similar offers, similar quality and standards for a lower price, they are usually likely to choose the cheaper alternative (Osterwalder, Clark, & Pigneur, 2010). As presented in the survey findings, tourists also take into consideration the price when choosing their holiday housing. The majority would select accommodation options in the medium price class with privacy as one main priority. However, if there is a significant price difference for example concerning the choice of room type, some a more likely to choose the cheaper alternative. Although they may be able to afford more expensive offers, many travelers show a price-sensitive behavior. This observation supports the business model of a hostel, a more budget-oriented way of lodging. Consequently, prices per night in the senior hostel are generally lower than in comparable accommodations like hotels. Hereby, beds in the shared dorms are cheaper than private rooms. The basic standards include breakfast, access to all common facilities, the free morning sports classes, a coffee machine and free water as well as cleaning service once per day. As a comparison, hotels in Cancun with similar services (breakfast included, pool and massage service) charge minimum MXN 1000 (Mexican Pesos) per night, which equals around USD 55 or EUR 45 (, n.d.). But, it is worth saying that those hotels have 2 or 3 stars and are mainly located at the beachfront. Since the senior hostel has the purpose of offering a budget-oriented accommodation combined with tailored services for elderly customers, the price range will be around MXN 560 up to MXN 900 per night per person, which equals USD 30 to USD 47 or EUR 24 up to EUR 38. The exact prices primarily depend on the location and room type.

8.3.3 Distribution channels

The main question of this section is based on the Canvas Model: “How does the senior hostel reach its target customers and delivers the proposed values, explained in the previous chapter?”

First of all, the business uses partner channels like the online travel platforms and booking websites or to make potential guests aware of the accommodation. The choice of a partner website instead of an owned, direct channel has primarily the advantage that a large range of customers can be reached. The company can profit of the popularity of those partners and save operational effort to create and maintain an own website. However, the margin is lower since partner channels claim fees. (Osterwalder, Clark, & Pigneur, 2010)

In order to convince customers of the senior hostel, the values of this new housing service are emphasized on the partner websites. Pictures of the facilities are presented, the housing description includes all services like pool, massage, sports classes, breakfast and dinner options. Availability of the rooms and the corresponding prices are outlined with the possibility of booking the preferred option. The value delivery takes place during the stay of the guests in the senior hostel and the “after sales” phase then comprises opinions, comments or questions of the customers concerning the offered service and their experience.

Feedback and recommendations of guests will support the hostel to gain popularity and to attract more customers. Since the majority of elderly respondents stated in the survey that they are familiar with modern technologies and primarily use the internet for information research about holiday accommodations, the marketing and distribution is mostly online. Besides the presentation on partner websites, the marketing primarily takes place on social media channels as well as through word-of-mouth. In the long run, travel agencies may become further partner channels, however, this alternative is too cost-intensive for the beginning.

8.3.4 Customer relationships

For a company to remain successful in the long run, it is essential to keep and strengthen relationships towards its customers. People will most likely purchase a good or service again, if they were satisfied and established a connection with the firm. (Osterwalder, Clark, & Pigneur, 2010) Thus, the senior hostel needs to create a relation with its guests. Since the offer of housing is mainly based on personal interaction between the host and the guest, the customer relationship category of “personal assistance” is the most appropriate. The hostel owner and the staff communicate with the visitors, they offer them services inside the accommodation as well as outside, for example help concerning activities recommendations about restaurants. This human interaction and trust factor is very important to create a long-lasting relationship. Guests want to feel “at home” and welcomed at their holiday lodging and they are more likely to recommend the hostel to friends or relatives, if they were satisfied with the overall service, including the offered help and friendliness of the staff. Hence, the workers in the senior hostel are advised to provide a comfortable, personal atmosphere with the guests, to offer assistance for any problems or doubts. Elderly people may especially be reliant on physical assistance or particular requirements; thus they will definitely appreciate supportive behavior. Moreover, the offered services like massage and aqua sports classes are adapted to the target customers’ needs and wishes and should create a feeling of “personalization” to the tourists. Visitors will also be more likely to give positive online feedback about their stay, an essential factor of success for housing services.

8.3.5 Revenue streams

Regarding the business model of a hostel chain, first of all, the revenue streams are based on one-time transactions by guests, since they only pay their stay and it is not an ongoing payment process. This generation of revenue by the hostel can be assigned to the category “Usage fee”, which implies that people pay for a specific service they use and depending on the time or volume used. In this case, guests are asked to pay according to their “usage”, which is represented by the number of nights they are staying in the accommodation. The longer they are staying, the more they pay. (Osterwalder, Clark, & Pigneur, 2010)

Regarding the pricing mechanism, housing prices are usually dynamic due to fluctuations on the market. The most commonly used mechanism for the hospitality sector as well as for aviation is the so-called “Yield management”. This type takes into account the time period of purchase as well as the stock or inventory. Prices of holiday accommodations highly depend on the season, usually rooms are more expensive in the high season when many people are going on vacation. During the low season, the same housing services are offered to much cheaper prices. Hence, the senior hostel charges different prices depending on the time of stay of the guests. (Osterwalder, Clark, & Pigneur, 2010)

8.3.6 Key resources

The main key resources for a hostel business are human and financial resources combined with infrastructural factors. Firstly, appropriate buildings and infrastructure are needed. In order to build up the hostel, to furnish the rooms and apartments and to install all facilities like the kitchen or pool, financial assets are required. Without financial support or investments, the management will not have the opportunity to realize the business model and to open a hostel. Therefore, the company is using savings and is heavily relying on investors. (Osterwalder, Clark, & Pigneur, 2010)

Secondly, human resources are needed. Skilled people are required for managing the business and evaluating strategies from “outside”. Creative and open-minded persons enhance the direct customer experience inside the hostel and contribute to its success. Moreover, staff members are responsible for the satisfaction of customers concerning all offered services like the massage offers and sports classes. Therefore, the company hires professional masseur and aerobic coaches for the sports classes as well as cooks for the breakfast and dinner offers. The tour operator desk is occupied by an external tour agent who has experience in the tourism sector and knowledge about the local environment. (Osterwalder, Clark, & Pigneur, 2010)

8.3.7 Key activities

Considering the previous implications about the financial and human key resources for a hostel, one of its main activities consists of establishing the accommodation and all its facilities. In the first period, before the hostel opens the doors to customers, this involves renovating and furnishing all rooms, initiating the technical installations and requirements and designing the accommodation.

Once the hostel is started and receives guests, lodging and the overall housekeeping build the core business activities. The additional services including sports classes, massage, tour organization and food offers are activities assigned to specific workers, like mentioned in the previous subchapter. Furthermore, administrational tasks include the organization of reservations and allocation of rooms as well as the main customer service through email and phone contact.

Improvements and modernization measures will take place regularly in order to keep the hostel on the newest standards and wishes of customers.

8.3.8 Key partnerships

The key partnerships of the senior hostel model include the distribution channels and online websites that present the accommodation to potential guests. Among those, HostelBookers, Hostelworld and are commonly used and popular, hence those play a key role as distributive partners for the senior hostel (Martin, 2007).

Another important relationship is the partnership with tour operators. Those external tour agents or operators possess the expertise and specific knowledge to optimize the hostel’s offer. Instead of performing this task by itself, the hostel can benefit from qualified people and their know-how. Similar advantage accounts for the transportation service. The hostel works together with taxi and bus companies to provide a private transport for guests on demand.

To ensure the financial requirements and stability of the business, relationships towards investors and financial partners need to be maintained. Those key partners furnish essential resources in terms of money and investments that enable the hostel to become established and to further expand.

8.3.9 Cost structure

Since the business model of a senior hostel enhances the specific requirements of senior tourists and adapts its offer to their needs, a value-driven cost structure may be more appropriate. However, one of the main characteristics of a hostel is its low-budget housing service, thus the values proposed are at a relatively low price, compared to other accommodation types. To be able to offer this cheaper lodging possibility with included, tailored services (detailed in previous subchapters), the senior hostel simultaneously needs to reduce its costs. It can be concluded that the cost structure of this business model is a composition of both categories, focusing on the promised value delivery adapted to the customer segment while minimizing costs.

Regarding the type of costs, the senior hostel model mainly deals with fixed costs like salaries of the employees, rent and maintenance costs for the facilities. In the beginning, costs are high due to the whole furnishing, renovation and designing of the accommodation as well as the installation of the bathrooms, pool and kitchen. Costs for electricity and water, insurances and taxes regularly incur. Depending on the development of the business in the medium and long-run, costs for the expansion of rooms and beds may be considered.

The following table summarizes the key segments of the Canvas Model, applied to the business model of a senior hostel chain.

Abbildung in dieser Leseprobe nicht enthalten

Table 3: Summary Business Model Canvas applied on Senior Hostel Model, Source: own creation

8.4 Application of Porter’s Five Forces

Besides the internal business model itself, a start-up business also has to take into account external influences caused by the industry it is going to enter. Those external factors are described by Porter’s Five Forces Model, which was developed in 1985. Companies use this model to examine the market according to five different categories: “the threat of new entrants, intensity of rivalry, threat of substitutes, bargaining power of buyers and bargaining power of suppliers” (Ogutu, 2015, p. 3)

8.4.1 Threat of new entrants

The threat of new entrants is determined by the degree of barriers the industry presents to new competitors. If barriers are low, entering the market is easier for start-up firms. High barriers pose more difficulties and thereby reduce the threat of new entrants for existing firms in this sector. Barriers can be caused inter alia by governmental policies, financial requirements or access to marketing channels. (Ogutu, 2015)

Referring to the hospitality industry, building up a business is very capital intensive, the infrastructure, furnishing, maintenance and costs for employees and partners are relatively high. Hence, high investments are required which represents a barrier to many entrants. Moreover, local regulations and governmental restrictions may pose difficulties to businesses that want to open a holiday accommodation. Those legal issues may reduce the supply of possible locations for hostel start-ups. Another threat that is posed to new entrants is the long-term purpose of housing services. Hotels or hostels are usually not traded like goods; thus it is important to enhance growth and success continuously. If the company is not able to manage its business well as soon as it enters the industry, it will not be competitive and will not remain on the market. (Cheng, 2013) and (Ogutu, 2015)

To conclude with respect to the business model of a senior hostel chain, the threat of new competitive entrants is moderate since financial and legal reasons present a crucial barrier to enter the industry sector. Also, the aspect of tailored services and the emphasis on elderly customers represents a very specific and differentiated housing offer that is less likely to have many direct competitors with the same services.

8.4.2 Intensity of rivalry

The degree of rivalry between competitors in an industry is mainly determined by the amount of companies in that sector and their size. Rivalry is influenced by many factors like product differentiation, price differences, marketing campaigns or general improvements of a business who aim for the largest market share. If a company succeeds to offer a completely new, differentiated product for example or a service to lower costs than any other firm, its intensity of rivalry towards competitors can remain low. It is outstanding and sets itself apart from firms in the same industry. (Ogutu, 2015)

Regarding the tourist accommodation sector, rivalry is high since many competitors share the market and try to surpass each other by welcoming more guests and achieving higher profits. The number of hotels and hostels with similar offers is high, customers have many opportunities to choose. Moreover, fixed costs are relatively high for each accommodation company, hence it is more challenging to get cost advantages over other firms. (Cheng, 2013)

To lower the degree of rivalry for a business, it requires differentiated offers like additional services based on the customers’ values and needs. Also, [m9] the price represents a decisive factor. Usually guests tend to book the cheaper alternative if quality and offer of two hotels or hostels are the same or similar. (Cheng, 2013) With reference to the senior hostel, this business model can profit of low rivalry since the service is tailored to the specific customer segment of seniors and is unique compared to basic offers of other firms in the hospitality industry. Additionally, its low-budget strategy aims to attract many tourists that prefer cheaper lodging alternatives.

Obviously, competition in typical tourist destinations in Mexico like Cancun, Tulum or La Paz is high especially regarding the offer of low-budget hostels, however the needs of elderly travelers concerning their holiday housing are mostly disregarded. For example, there are no strikes for the specific term “Senior hostel in Cancun” on Google, there are solely recommendations of hotels or resorts suitable for elderly people. (TripAdvisor, n.d., b) This observation underlines again the importance and need for this niche market and new business model, derived in this paper. To avoid rivalry and strong, direct competitors, the senior hostel has to satisfy the guests’ needs with perfectly tailored, qualitative services and build on its reputation and brand recognition. The long-term aim is to operate a chain of senior hostels in Mexico that will profit of brand image and customer loyalty and thereby further reduce the threat of rivals.

8.4.3 Threat of substitutes

Substitutes are products or services that are the same or similar to each other regarding their function and satisfaction of customers’ needs. The risk of substitute products/services is especially increasing when companies are able to offer those substitutes more cost-effective or provide better quality than other, similar firms. Hence, they will enlarge their market share and outperform their competitors.

Regarding the overall hospitality industry, substitute products do not pose a major threat to accommodation providers. Travel behaviors or preferred destinations may vary over time, but tourist housing will always be required. Substitute products to hostels could be motels or cheap hotels. Price-sensitive customers may opt for a cheap hotel that offers more qualitative services for the same price than a similar hostel. However, the degree of risk or threat that those substitutes may pose to hostel companies depends more on the strategy of the business and the preferences of customers.

For the specific case of a senior hostel, substitutes can be cheap hotels or other hostels with the same or similar tailored services. But, compared to those accommodations, the new business concept is completely specialized on elderly travelers in terms of services, staff training, equipment and accessibility for example. The senior traveler builds the center of all business activities, whereas similar tourist housings rather offer additional services in case that elderly tourists stay there. Consequently, the threat of substitutes for a senior hostel remains relatively low since it attracts customers of a specific niche market.

8.4.4 Bargaining power of buyers

The power of buyers refers to the ability of buyers to influence the market through shifting demand, changing expectations and thereby reducing prices. Products or services that are rather standardized and not differentiated show a higher bargaining power of buyers since consumers can easily switch between similar products/services and simultaneously lower prices. Information and the possibility to compare offerings enable customers to switch to alternative products or services that are cheaper or of better quality. (Ogutu, 2015)

The overall tourist accommodation sector shows a rather high bargaining power of buyers since supply of holiday rooms is high and guests can choose from a large range of lodging possibilities, mostly with similar services. However, if buyers are powerful or not mainly depends on the type of accommodation, its strategy and target customers. (Cheng, 2013)

For the special case of a senior hostel, two aspects need to be considered. Firstly, elderly tourists who want to spend relaxed holidays and enjoy many services in their accommodation can also book a stay in a hotel or resort that offers adapted services instead of the staying in the specialized senior hostel. In this case, bargaining power of buyers would be high since they have many alternatives to choose from. However, keeping in mind the factor of qualitative, tailored services at a low-budget price, power of buyers is rather low because this business model presents differentiated services at a lower price than comparable accommodations. There is a quite limited range of housing offers with the same or similar services focusing on elderly visitors and emphasizing the price aspect. Customers cannot easily switch to alternatives, except hotels or resorts that charge much higher amounts per night. Hence, bargaining power of buyers regarding the business model of a senior hostel remains relatively low and will not highly influence prices in the short-run.

8.4.5 Bargaining power of suppliers

The power of suppliers refers to the dependency of a customer on its supplier or suppliers. If a business shows a wide range of suppliers that can provide the required materials or information for the offered product or service, then bargaining power of suppliers is low. Customers can easily switch between alternative suppliers that offer better quality or lower costs. On the other hand, if firms are dependent on one or few specific suppliers, their negotiation power and influence on prices increases. Also, if their provided input is essential for the further production or service offer, those suppliers gain power, they will be able to charge higher prices and shift costs. (Ogutu, 2015) and (Cheng, 2013)

Concerning the tourism and hospitality industry, important suppliers include property or real estate owners, architecture and furnishing companies, tour operators, other service providers and the workforce. Usually, those suppliers have a moderate bargaining power due to the relatively wide range of options buyers can choose from to get their required material, information, services etc. For example, hostel managers are not highly dependent on one specific furnishing company or one architect, they can easily exchange those suppliers in case they find cheaper or more qualitative offers. (Chouhan, 2014)

Regarding the senior hostel, similar facts account for the tour operators, cooking chefs, sports trainers or staff members. Their bargaining power remains relatively low since their services can easily be accomplished by similar, alternative providers. Suppliers that may have comparably higher negotiation power in the case of the senior hostel are the property owners. Opening and operating a hostel firstly requires a suitable property and a proper location. Once the property is chosen, high investments are made to build up the hostel and to run it on a long-term basis. Thus, this long-term perspective implies that hostel managers cannot easily switch to another location or property without losing large amounts of money. Consequently, they are dependent of the property owner, who can vary prices of rent according to the current market situation for example.

To conclude, the bargaining power of suppliers of a senior hostel remains relatively low with a small ability to influence prices or shift costs of the business.

8.5 Choice of Mexico for a senior hostel chain

The previous chapters put an emphasis on the development of a business model for a senior hostel chain in a global context, without specifically focusing on the hostel location Mexico. Therefore, this subchapter concentrates on the choice of Mexico to create this business, the advantages and opportunities of the country with respect to specific regions and cities and the target customers.

First of all, the business’ location of Mexico was mainly chosen because of personal experiences and impressions while traveling through the country. Thereby, many opportunities and areas of improvement in hostels could be noticed, especially regarding offered services and the personal interaction between staff and guests. At the same time, the popularity of Mexican hostels was proven through high occupancy rates of the rooms and the satisfaction of most guests (as considered through the personal perspective as a guest, conversations with other guests etc). While some hostels also welcomed elderly guests, the lack of senior tourists in this accommodation type was obvious. Consequently, the leading thought about the necessity of hostels to attract guests of higher age ranges arose.

A closer look on the holiday destination Mexico underlines those impressions. Like emphasized in Chapter 3 “The Latin-American Tourism Sector” and Chapter 4 “Geographic Focus: Tourism in Mexico”, the Latin-American region and especially the country of Mexico are increasingly growing in terms of international tourist arrivals and GDP contribution of the tourism industry. In 2016, Mexico received the most international tourists right after the United States and therefore accounts as the most attractive and essential tourist destinations in the whole Latin-American region. Since the overall tourism industry is expected to rise continuously, it is also estimated that this region will welcome more and more visitors during the next years. (World Tourism Organization UNWTO, 2017) and (OECD, 2017b)

Destinations in the states of Quintana Roo, Baja California and Jalisco showed the greatest popularity among international and domestic travelers in previous years. Especially the Riviera Maya with famous holiday destinations like Cancun, Tulum and Playa del Carmen accounted for half of all international visitors in Mexico in 2014. (OECD, 2017b) Consequently, those locations represent a lucrative opportunity for the senior hostel to attract tourists from all over the world, including a high percentage of elderly travelers (see Chapter 6 “Senior Tourism”). The coastal cities along the Riviera Maya are usually more expensive than cities in the countryside, thus prices of the senior hostel are comparatively higher (, n.d.). However, since the majority of visitors are foreigners who are usually willing to spend higher amounts of money on their holidays, those prices are reasonable (Future Foundation; Amadeus Traveller Trend Observatory, 2015).

In Baja California, the cities Tijuana, La Paz and Los Cabos are among the most popular holiday spots. Due to their proximity, the main visitors come from the United States. In general, US American tourists make up the largest part of foreign visitors in Mexico with more than 50% of all international arrivals by air. (Milenio, 2018) Hence, regarding the business model of the senior hostel, the named locations in Baja California are also considered to build up the hostel chain. US citizens represent a key group, mainly as border tourists that stay for a short-term but also as tourists enjoying longer beach vacations. (OECD, 2017b)

Another popular tourist destination is the capital of Mexico, Mexico City. Since “city trips” accounted as one of the favorite holiday types among the respondents of the survey (see Chapter 7.3 “Description and Analysis of main questions”), this destination is also chosen as a location for a senior hostel. Hereby, it is also notable, that Mexico City accounts as a famous holiday place for domestic travelers. Those mostly prefer shorter stays and are likely to consider low-budget accommodations. Moreover, domestic travelers make up a larger part of the tourism industry in Mexico than international visitors, liked emphasized in Chapter 4 “Geographic Focus: Tourism in Mexico”. Therefore, in cities like Mexico City, Acapulco and Veracruz the senior hostel will focus on elderly domestic travelers looking for a relatively cheap, short-time lodging. (OECD, 2017b) and compare Chapter 4.2 “Main Destinations of Tourists”.

The state of Jalisco with touristic cities like Puerto Vallarta and Guadalajara represents another focus location for the senior hostel chain. Those destinations mainly account for their cultural traditions and attractions like for example the city of origin of the worldwide known Mexican alcoholic beverage, Tequila. Consequently, the target guests of the senior hostel in this region are tourists that are interested in cultural trips, traditional Mexican towns and their history. (Elite Traveler, n.d.)

To conclude, the senior hostel chain aims to start with hostels in Cancun, Tulum, Mexico City, Cabo San Lucas and Tijuana as top destinations of the main target guests. It will further expand towards La Paz, Puerto Vallarta, Guadalajara, Acapulco, Veracruz and Playa del Carmen to attract and please more customers. The following map shows the planned hostel locations all over Mexico.

Abbildung in dieser Leseprobe nicht enthalten

Figure 18: Map of Mexico with planned Senior Hostel Locations, Source: (One World Nations Online, n.d.) with own supplement indications

9 Implications & recommendations for global tourism

After having explored the theoretical parts about the current global and regional tourism situation as well as the developments in this sector, the survey analysis provided practical implications for the creation of a business model. Considering the theoretical and practical analysis, recommendations for the future tourism industry can be derived.

Since the tourism industry is booming and worldwide tourist arrivals continuously increase, the necessity to emphasize tourism services, to observe and adapt to new travel behaviors in order to satisfy travelers’ needs is evident (World Tourism Organization UNWTO, 2018). One major challenge thereby is presented by the demographic development and the rise of ageing populations, that was emphasized in this paper. People are getting healthier and older, more flexible and motivated to travel. (United Nations Population Division, 2001a) Hence, the tourism industry will increasingly face the challenge of elderly tourists looking for suitable tourism services adapted to their needs and wishes. Tourism services will have to reconsider their strategies and offers with the aim of attracting many customers and fulfilling their expectations. Tour operators need to tailor their tour offers to make them accessible for seniors, travel agencies have to consider new destinations or transportation possibilities to please elderly tourists and holiday accommodations should propose services in accordance with the specific interests or requirements of senior travelers.

Senior tourists represent a large market segment and thus, a lucrative target customer group for tourism firms. If companies succeed to address the interests and special needs of senior tourists through their proposed services, they will have the opportunity to benefit of high sales numbers, rising revenues and general growth.

10 Conclusion

This paper presented the major global tendencies in the tourism sector with special focus on Latin-America and Mexico as a tourist country to start a business. The emerging trend of senior travelers combined with the promising perspectives of Mexico regarding the future travel and tourism industry support the proposal of a senior hostel chain in the Latin-American country. The target market of elderly people is constantly increasing as well as demand for tourist accommodation in Mexico. Therefore, the new, innovative idea of housing services adapted to the needs of seniors offers a positive outlook and opportunity to grow a business.

Moreover, the empirical study revealed essential information about the opinions and travel behaviors of the key market and thus, helped to draw conclusions for the business model. The formulated research questions were answered throughout the survey and could be applied to the proposal.

A further step, that was not in the scale of this paper, is the creation of a business plan including marketing, operational and financial plans as well as the company’s strategies and values. This requires a detailed market analysis, the observation of competitors and their influence and exact calculations concerning financial sources, investments, revenues and expectations. (CBDC, n.d.)

However, the developed business model based on the key segments of the Canvas Model as well as the Porter’s Five Forces solely builds the basis to establish the start-up. The aim of this thesis was to offer a proposal for a senior hostel model in Mexico with successful perspectives and thereby to convince international investors of this business idea. If the idea succeeds and wins international recognition, further actions can be taken to start this business and to raise it.

11 Limitations of the study

One weakness of the study is the fact that not only elderly persons aged 55 or more answered the survey, but also younger generations including students and people at working age. Respondents were asked to answer according to their expectation about the senior age group, however opinions of people below 55 may be influenced by stereotypes or vague imagination and may not correspond to the actual mindset and behavior of the focused group. Moreover, the sample of 98 people represents a suitable quantity to analyze, but it may be too small to make general conclusions about the overall age group of people aged 55 to 75.

This thesis proposes a business model for a senior hostel in Mexico based on the key segments of the Canvas Model as well as on the Porter’s five competitive forces with the aim of creating a start-up. It does not include a complete business plan, which requires a detailed market research and analysis. This will be the further step.

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13 Appendices

Appendix 1: Survey published on

Abbildung in dieser Leseprobe nicht enthalten

1 These numbers also include direct, indirect and induced contributions like investment spending, government collective spending, purchases of suppliers and induced impacts (World Travel & Tourism Council (WTTC), 2017a).

2 These numbers also include effects from investments, government collective spending, purchases of suppliers and induced impacts (World Travel & Tourism Council (WTTC), 2017a).

3 Brazil, Russia, India, China ( (Investopedia, n.d.)

4 people traveling outside of their country of residence (see Definition in, retrieved on February 5th 2018)

5 Definiton Millennial: “people reaching young adulthood in the early 21st century” (Oxford Living Dictionaries - Millenial, n.d.)

6 "world's largest travel site, […] TripAdvisor provides travelers with the wisdom of the crowds to help them decide where to stay, how to fly, what to do and where to eat” (TripAdvisor, n.d., a)

7 Definiton “Flex-Time”: “ a system that allows employees to choose their own times for starting and finishing work within a broad range of available hours” (Merriam-Webster - "Flextime", n.d)

8 Definition “Zero-hours Contract”: “an employment contract which does not oblige the employer to provide regular work for the employee, but requires the employee to be on call in the event that work becomes available” (Collins English Dictionary - "Zero-hours Contract", n.d)

9 “Including wider effects from investment, the supply chain and induced income impacts” (World Travel & Tourism Council (WTTC), 2017e, p. 4) , see also p.7 of this paper

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Developing a New Business Model for the Latin-American Tourism Sector. A Proposal for a Senior Hostel Chain in Mexico
Pforzheim University
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accomodation sector, business model, hostel, senior tourism, tourism in Mexico, Tourismus, Canvas Model
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Marion Wirth (Author), 2018, Developing a New Business Model for the Latin-American Tourism Sector. A Proposal for a Senior Hostel Chain in Mexico, Munich, GRIN Verlag,


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