What Are The Desired Outcomes Not For Profit Leisure Service Provide
The Economic science of Recreation, Leisure and Tourism. 2011 : 27–49.
Recreation, leisure and tourism organizations
Public-sector organizations
Public-sector organizations are those endemic by the government. This can be national regime or local regime.
Local government organizations
Leisure and tourism provision in the local government sector may include:
- • leisure centres and swimming pools
- • libraries
- • arts centres
- • parks and recreation facilities
- • tourism support services.
It should exist noted that sometimes services are gratis, sometimes they are subsidized and sometimes they are provided at full commercial rates. For case, charges for swimming pools are oftentimes subsidized only sometimes cover the total toll of provision. On the other hand, facilities such as parks, libraries and children's playgrounds are generally provided without charge.
Sources of finance
The finance of these organizations comes from:
- • charges for services where applicable
- • central government grants
- • grants from other sources (e.one thousand. lotteries)
- • local authorities taxation
- • local authorities borrowing.
Ownership and control
In essence, local authorities organizations are owned past the local population. Policy decisions or decisions of strategic management are taken on their behalf by the local council. Each local government area elects councillors or members to represent them. The party which holds the majority of seats on the council volition more often than not exist able to dictate policy and such policy will be determined through a series of committees such as:
- • libraries and arts
- • recreation and leisure
- • planning and resources.
The planning and resources committee is a particularly powerful one every bit it determines the medium- to long-term strategy of the quango and thus provides the fiscal framework within which the other committees must operate. The twenty-four hour period-to-day or operational management of local government-run services depends on the nature of the service being provided. Council employees are responsible for overall management and services which are spread out beyond a local government surface area, such as parks, will exist run from the council offices. Larger services such every bit leisure centres will have their ain management which in turn will be responsible to a service manager at the council offices.
Aims and missions
The aims of local government and its organizations are largely determined by the political party or coalition of parties who concur the bulk. This often means that leisure provision, for example, volition vary between neighbouring local government which accept different political parties in power. Administrations to the right of the political spectrum favour lower local taxes and market-driven provision. Those to the left favour public provision financed out of revenue enhancement revenues and offered free or at subsidized prices. To make up one's mind the differing aims of political parties we need to consult their manifestos as well every bit review their actual provision. However, political parties do not operate in a vacuum. They volition be influenced by:
- • pressure groups
- • trade unions
- • local printing
- • national authorities.
Edgecombe (2003) examined a major dilemma facing local regime leisure facility managers in Australia – that of providing recreation services, whilst at the same fourth dimension minimizing financial deficits and avoiding pregnant negative impacts on private enterprises providing like services.
National regime organizations
National government-owned organizations can be further subdivided into public corporations, government departments and other government agencies.
Public corporations are sometimes known as nationalized or land-run industries. They generally supply goods or services to the public. Examples of these include:
- • the British Dissemination Corporation (UK)
- • Societe National des Chemins de Fer (SNCF; National Track Network, France)
- • Air India (Exhibit 2.1 ).
Simply the extent of nationalization of recreation, leisure and tourism industries depends on the politics of individual countries. So in the USA, near tv set stations and airlines are in the individual sector, and in the Great britain, railways are run past private-sector organizations.
Government departments perform an executive role on behalf of governments in implementing policy. At that place are a number of government departments which impinge on the recreation leisure and tourism sector of the economy. Examples include:
- • The Department of Culture, Media and Sport (DCMS) (Britain): This department has the responsibleness for tourism, arts and libraries, sport and broadcasting.
- • The Department of the Interior (USA): This department protects America's natural resources and heritage, honours U.s.a. cultures and tribal communities, and supplies the energy to ability its hereafter. Its responsibilities include overseeing the National Parks Service.
- • The Department of Resources, Free energy and Tourism (Australia): This department provides advice and policy back up to the Australian government regarding Australia's resources, energy and tourism sectors. It also develops and delivers policies to increment Commonwealth of australia'south international competitiveness, consequent with the principles of environmental responsibleness and sustainable development.
Other authorities agencies tend to work at a smaller level than government departments and provide more specific services. Examples include:
- • Tourism Australia
- • Visit Britain.
Aims and missions
The aims of nationalized industries vary from state to state. In some cases, public corporations aim for public service provision without the limitations imposed past the turn a profit motive and are able to provide services that are loss making. In these instances, the rigours of efficiency and individual-sector direction styles may non be apparent. In other parts of the world (notably in the U.k. and in the USA) public corporations have been subjected to efficiency targets, performance indicators and target rates of return on investment, all of which have made them more closely mimic private-sector organizations. Nationalized industry's aims are more often than not independent within their charters or constitutions.
The aim of government departments is to deport out the policy of the government of the day and includes planning, monitoring and reviewing of provision and legislation. Showroom 2.ii illustrates the aims of the Government Section of Resources, Energy and Tourism in Australia. This department covers the three areas of energy, resource and tourism. From the exhibit it can be seen that this department, as with other similar departments worldwide, is to provide both policy communication and implement programme-delivery services. Sometimes leisure, tourism and recreation fall under the same government department, but sometimes equally in this instance they are separated. The aims of other regime agencies are specific to each organization and are more often than not targeted to a quite narrow field.
Sources of finance
National government organizations in the public sector are financed in the principal from:
- • taxes
- • trading income.
The dependence on tax funding tin mean that public-sector organizations are very sensitive to the changing priorities of the government of the day. Equally if the state of the economic system as a whole is unhealthy, spending cuts will generally be imposed through the public sector.
Ownership and control
National government organizations are endemic by the government on behalf of the population at big. However, each type of organization is controlled in a dissimilar way.
- • Nationalized industries are typically given some autonomy and generally take a legal identity divide from the government. At the indicate of nationalization a police force is passed outlining the aims, arrangement and control mechanism for each industry. A typical construction is one where a board of directors is established responsible for the day-to-solar day running of the industry. The chair of the board and its other members are appointed by an appropriate authorities government minister and strategic decisions will be taken past the minister in consultation with the regime.
- • Regime departments are headed past a government minister and staffed past government employees. Their actions are directly accountable through a minister to the national assembly such every bit parliament. The offices of government departments are more often than not located close to the national assembly. The degree of political control exerted over government departments is thus more direct than for nationalized industries.
Individual-sector organizations
Individual-sector organizations are those which are not-government-owned. They can exist further subdivided into turn a profit-making organizations and non-profit-making organizations.
Profit-making organizations
Profit-making private-sector organizations consist of those with unlimited liability, those with limited liability and companies which are quoted on the stock exchange.
Unlimited liability
Unlimited liability means that the owners of such companies face no limit to their contribution should the arrangement go indebted. Most of their personal avails can be used to settle debts should the business stop trading. This includes not only the value of anything saleable from the business, but also housing, cars, piece of furniture and stereos. Because of the discipline that unlimited liability brings, there are oft very few formalities required to start trading equally this course of business. Sole proprietorships and partnerships are examples of this type of concern organization and advantages include:
- • independence
- • motivation
- • personal supervision
- • flexibility.
Equally at that place are some disadvantages which include:
- • unlimited liability
- • long hours of work
- • lack of capital for expansion
- • difficulties in case of disease.
Limited liability
In contrast, the germination of a limited liability company enables its owners to create a separate legal identity and this enables them to limit their exposure and liability in the example of company failure. Incorporation confers separate legal identity on the company. This may be contrasted with the position of unlimited liability organizations where the owners and the organization are legally the same. Limited liability places a limit to the contribution by an investor in an system to the amount of capital that has been contributed. Should i of these organizations stop trading with debts, an investor may well lose the original investment, only liability would cease there and personal assets would not be at risk.
The benefits of the express liability company hateful that they are spring by closer rules and regulations than are unlimited liability organizations. Typically such companies need to provide details of:
- • the name and address of the company
- • details of the directors
- • the objectives of the company
- • details of share capital issued
- • details of the internal affairs of the company including procedures for annual general meetings
- • audited accounts.
Limited liability companies are further subdivided into private companies and public companies. It is the latter's shares which are freely tradable on the stock commutation. There are benefits and drawbacks of moving from a private limited company to a public limited company. Ability to raise more than capital is a key advantage of becoming a public limited company every bit the stock exchange provides access to thousands of potential investors. On the other manus, in that location are considerable actress costs associated with flotation. These include the costs of bringing a company to the market as well as the costs of reporting and more burdensome governance requirements. Also there is a constant need to perform and produce high profits in the short term as a public limited company, and the risk of loss of command. The free access to share ownership and lack of control on transfer of shares mean that it is more difficult to retain command of public than private express companies as groups of shareholders can build upwards controlling interests. Exhibit 2.3 provides an illustration of a visitor flotation in the travel industry. Amadeus, a leading travel It visitor, was refloated on the Madrid Stock Substitution in 2010 meaning its shares were made available to the public and that the owners of the visitor were able to raise a large amount of capital.
Examples of companies that are quoted on the stock markets include:
- • Imperial Caribbean (USA)
- • Carnival (United states of america)
- • MGM Resorts (USA)
- • Avis Budget Grouping (United states)
- • Qantas (Australia) (see Exhibit two.4)
- • Living and Leisure Australia Group (Australia)
- • Innovo Leisure Recreation Holdings Limited (Hong Kong)
- • British Airways (U.k.)
- • EasyJet (Uk).
Exhibit 2.4 examines the case of the Qantas group – the major national and international airline operating in Commonwealth of australia. Every bit the exhibit explains Qantas was formerly a nationalized industry run by the Australian government and this was the case for many airlines. Government ownership meant that the airline was funded mainly from taxes. Some governments nonetheless maintain buying of national airlines since information technology is believed that they play a strategic office in the economy. Additionally, airlines demand to make very big capital purchases and these can be difficult to finance in the private sector. All the same, nationalization often means that competition and enterprise are stifled resulting in a poorer service for air travellers. Besides every bit air travel is still something of a luxury information technology is argued that the state should not subsidize this sector out of taxes. Finally, state-run industries tin can be run on bureaucratic lines significant that they are inefficient and inflexible.
Sources of finance
Sources of finance available to sole proprietors and partnerships are limited to:
- • majuscule contributed past the owners
- • ploughed-dorsum profits
- • bank loans.
Since these sources by and large are simply available to supply limited funds, this is a fundamental reason why pocket-size firms remain pocket-sized. On the other hand limited liability, incorporated firms are able to raise capital letter through the boosted routes of:
- • shares (equity)
- • debentures.
A share, or equity or stock (U.s.a.), represents a small portion of ownership of a visitor that is sold. The company issues shares certificates in return for uppercase. The price of shares goes up and downwardly according to relative demand and supply in the market place identify – in this example a stock exchange. Shares can exist seen from the perspective of a shareholder and of a company. From the visitor's point of view, share capital is generally of depression risk since if the visitor does not brand whatever profits then no dividends are paid. And then different with bank loans a company is not saddled with the need to make payments if it is going through an unprofitable menses. Shareholders are attracted to shares past the prospect of dividend payments (related to the level of company profits) equally well as growth in the capital value of shares. Of course, at that place is some hazard as there is no guarantee of dividend payments and the value of shares can go downwardly also as upward, indeed the value of shares in declining companies will often become worthless.
Debentures can exist seen equally a form of loan as they carry a fixed charge per unit of interest. Thus to the company they pose a problem when profits are low because they still have to pay out the fixed interest, but their stock-still interest charge per unit is attractive when profits are loftier as the company will retain more than of its profits. Debenture holders get a guaranteed rate of return and are paid before shareholders so they are mostly less risky than shares. On the other hand, there is no opportunity to do good from higher dividends when a company is growing and making practiced profits.
Table two.1 illustrates many of the aspects of financing mentioned earlier through the case of Eurotunnel. Eurotunnel is the name given to the rail tunnel that was congenital between England and France in the 1990s. Of course, a massive amount of majuscule was required to finance this project. Several points emerge from Table 2.one which illustrates the financing of Eurotunnel. First, Eurotunnel's uppercase represents a mixture of loans from banks which behave interest payments until they are repaid, and share issues which will not pay dividends until profits are earned. If profits from the tunnel are insufficient to repay loans and involvement, the visitor may be forced into liquidation by the banks. The avails of the company would then be sold to repay the banks. Under this scenario, shareholders would get nil. This is because shareholders are assigned a lower priority than loan providers. All the same, because their liability is express, neither would they stand up to lose any personal assets, just the value of their shares. Under a more optimistic, high-turn a profit scenario, payments to the banks are limited to previously negotiated rates, leaving substantial profits to be distributed in the form of high dividends to shareholders. 2nd, three different forms of share upshot are illustrated by this case:
- • A placing in 1986: This is where Eurotunnel'due south shares were placed directly with institutions such as pension funds and insurance companies. This represents a direct negotiation between the merchant banking concern selling the shares and the target groups they wish to sell to.
- • An offer for sale in 1987: This is where shares are advertised and offered to the public. This is a more open and competitive market, but there is a hazard that not all the offer volition be taken up or that the price offered will exist lower than anticipated.
- • A rights result in 1990 and 1994: This is where existing shareholders are able to buy new shares at a discount. Their right to buy new shares is related to the size of their existing shareholding.
Table 2.1
Financing Eurotunnel
| 1986 | Concession to build the aqueduct Tunnel awarded to Eurotunnel |
| £46 million seed corn disinterestedness raised | |
| £206 million share placing with institutions | |
| 1987 | £5 billion loan facility agreed with 200 syndicate depository financial institution |
| 770 meg disinterestedness funding from public offer in the UK and France | |
| 1990 | £i.viii billion additional debt from syndicate |
| £300 million loan from European investment banking company | |
| £650 meg rights result | |
| 1994 | £700 million raised from banks |
| £850 million rights issue, priced at 26 per cent discount and entirely underwritten. |
Source: Adapted from Press Cuttings.
Finally, the underwriting of share issues means that insurance has been taken out against the eventuality of shares remaining unsold. Should this exist the case the underwriting house would purchase the unsold shares at a pre-agreed cost.
Share prices and the stock market
Shares which are sold on the stock market are second-mitt shares and thus their purchase does not provide new capital to companies. Prices of shares are adamant by supply and demand. The stock market approximates to a perfect marketplace (see Chapter iii) and thus prices are constantly irresolute to bring supply and demand into equilibrium. The demand for and the supply of shares depend upon the following:
- • Price of shares.
- • Expectations of future price changes: This can be very important when the market place suffers a long menstruation of price falls (comport market) or a period of sustained price rises (bull market).
- • Present and time to come profitability of the business firm: This increases the prospect of higher dividends.
- • Toll of other assets: The price of gold and property prices can influence the attractiveness of holding shares.
- • Involvement rates: A rise in involvement rates can crusade a fall in demand for shares past making savings more attractive.
- • Authorities policy.
- • Tax considerations.
Showroom 2.4 illustrates the changing fortunes of the shares in the airline Qantas. It shows how share prices can get up and down. In particular, information technology shows how global economic events can affect share prices. The worldwide economic recession that was evident in 2008 saw the toll of Qantas shares fall from a high of AUS$6.00 the previous yr to a price of AUS$1.40. This also represented a fall in value of more than 20 per cent as compared with even the flotation price thirteen years earlier in 1995. It also demonstrates the potential benefits and risks of holding shares. Anyone investing AUS$1000 in Qantas in 1995 would have been able to purchase 526 shares. If they had sold those shares in 2007 they would take earned AUS$3156 – a profit of AUS$2156. Still, if they had sold the shares in 2008 they would take earned simply AUS$736 representing a loss of AUS$244.
Aims, missions, ownership and control
The main aim for organizations in the private sector is by and large to maximize profits. For instance, Showroom ii.five illustrates the objectives of 'The Walt Disney Company' where it can be seen that maximizing long-term shareholder value is a prime number concern. The individual sector consists of both small- and medium-sized enterprises (SMEs) and large corporations. These have previously been classified as sole proprietors and partnerships and limited liability corporations. Understanding small-concern organizations is straightforward. The owner is the manager and this can act every bit a strong incentive to maximize profits. However, it may also hateful that turn a profit maximization is subject to personal considerations such as environmental concerns or hours worked. Indeed, the term 'Lifestyle Entrepreneur' has been used to describe small-business organization owners who construct a business around a hobby that enables them to earn an income whilst pursuing their interest.
For corporations, size of operations and number of shareholders make the film more complex. Companies are run along standard lines: the managing manager is responsible for directing managers in the mean solar day-to-mean solar day running of the organisation. The board of directors is responsible for determining company policy and for reporting annually to the shareholders. This can atomic number 82 to a division between ownership (shareholders) and control (managers) and a potential conflict of interests. Shareholders generally wish to see their dividends and uppercase gains, and thus visitor profits, maximized. Managers will generally have this equally an important objective since they are ultimately answerable to shareholders. Withal, they may seek other objectives – in detail, maximizing personal benefit – which may include kudos from concluding deals, expert pension prospects and a variety of perks such as foreign travel, well-appointed offices and high-specification visitor cars.
Not-profit making organizations
Not-profit organizations in the private sector vary considerably in size and in purpose. They span national organizations with big turnovers, smaller special interest groups, professional associations and local clubs and societies, and include:
- • The National Trust (U.k.): This is a charity trust and independent from the government. It derives its funds from membership subscriptions, legacies and gifts, and trading income from entrance fees, shops and restaurants. Information technology is governed by an act of parliament – the National Trust Act 1907. Its main aim is to safeguard places of celebrated involvement and natural beauty.
- • The New York Road Runners/NYC Marathon (USA): This not-turn a profit organisation is dedicated to promoting the sport of running for health, recreation and competition. It organizes over 75 races each year.
- • Surf Life Saving Commonwealth of australia (SLSA): This is Australia's major h2o safety and rescue dominance and one of the largest volunteer organizations in the globe. Their mission is 'to provide a safe embankment and aquatic environment throughout Commonwealth of australia'. SLSA provides lifesaving patrol services on most of Australia's populated beaches in the pond flavor.
- • Ethnic Tourism Rights International (USA): This is an indigenous peoples' system collaborating with indigenous communities and networks to protect their territories, rights and cultures. Their mission is to commutation experiences in lodge to sympathize, claiming and take control of the ways in which tourism affects our lives.
- • Tourism Business concern (UK): The vision of Tourism Concern is 'A earth free from exploitation in which all parties involved in tourism benefit as and in which relationships between industry, tourists and host communities are based on trust and respect'. Tourism Concern's mission is to ensure that tourism always benefits local people. Tourism Concern works with communities in destination countries to reduce social and ecology problems connected to tourism and with the outgoing tourism industry in the Great britain to discover ways of improving tourism so that local benefits are increased.
The aims and missions of voluntary groups are generally not profit driven. They include protection of special interests, promotion of ideas and ethics, regulation of sports and the provision of appurtenances and services which are not catered for by the free market place. Andersson and Getz (2009) offered a helpful exam of the differences between private, public and not-for-profit concepts with using festivals as their context. Plate 2 shows tourists (including the writer on the correct of the photograph) at the David Sheldrick Wild animals Trusts' Orphans' Project in Nairobi, Kenya. This is a clemency organization which depends entirely on donations. It has the specific aim of rehabilitating orphaned elephants.
Not-turn a profit-making organization: The Orphan Elephant Projection, Nairobi, Kenya
Source: The author.
Review of key terms
- • Public sector: government owned.
- • Private sector: non-regime-owned.
- • Council member: elected councillor.
- • Council officer: paid official.
- • Private express company: company with restrictions governing transfer of shares.
- • Public express company: company whose shares are freely transferable and quoted on stock market.
- • Public corporation: public-sector commercial-style arrangement.
- • Nationalized industry: industry owned and run by government.
- • Dividend: the distribution of profits to shareholders.
- • Limited liability: liability limited to amount of investment.
- • Flotation: floating a individual limited company on the stock market, thus becoming a public limited company.
Multiple choice
-
i
Which of the following is most likely to contribute to a autumn in the share price of Qantas Airways?
-
(a)
A fall in involvement rates.
-
(b)
A rise in profits.
-
(c)
A bear market.
-
(d)
None of the higher up.
-
-
ii
Unlimited liability means:
-
(a)
A firm tin can be sued for damages.
-
(b)
A firm's owner is liable for all of its debts.
-
(c)
A firm has been incorporated.
-
(d)
A business firm may be sued for libel.
-
-
three
Tourism Concern is:
-
(a)
A non-profit-making organization.
-
(b)
A local government organization.
-
(c)
A nationalized industry.
-
(d)
Quoted on the stock exchange.
-
-
4
Which of the following is a valid reason for belongings shares:
-
(a)
A take a chance to benefit from a company's profit.
-
(b)
Guaranteed to get your investment back.
-
(c)
The avoidance of adventure.
-
(d)
Guaranteed minimum dividends.
-
-
five
Which of the following statements is not truthful?
-
(a)
Public-sector organizations are authorities owned.
-
(b)
Debentures are less risky than shares.
-
(c)
Shareholders are not liable for more than than their initial investment.
-
(d)
Nationalized industries e'er seek to maximize profits.
-
Review questions
-
1
Distinguish between the public sector, public express companies and nationalized industries, giving examples of each in the recreation, leisure and tourism sector.
-
ii
What is the major benefit of incorporation?
-
iii
Who determines strategic policy for:
-
(a)
Local government organizations?
-
(b)
Public limited companies?
-
(c)
Nationalized industries?
-
-
4
What are the benefits and drawbacks for a company thinking of floating on the stock exchange?
-
v
Identify four quoted corporations in the leisure and tourism sector.
-
(a)
Research and record movements in their share prices over the by 24 months.
-
(b)
Propose reasons for the movements in these share prices.
-
Source: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7152065/
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